Rebuilding credit after bankruptcy

Filing bankruptcy is an extremely stressful process. If you have filed bankruptcy, I’m sure many factors brought you to your decision. You’ve received advice from your attorney and now you have the discharge papers from the courts. Do take a few minutes to review those papers, making sure all notices have been properly filed and received by creditors. Be sure to store those documents in a safe place. While you won’t get them out to reminisce about them, you may need to refer to them if there is ever a question about an account that was included in this filing.

Many clients tell us that once the bankruptcy is complete, they will never apply for credit again. However, in today’s financial world, that may not be not realistic. You might need a card to make purchases online, to make a reservation, or should you need to cover an unexpected expense. You might also need a car or home and finance it over time.

You’ve been managing without credit card while your case was working through the court system. So now, rebuilding credit is just another step that you are ready to start.

Perform a credit checkup. Obtain copies of your free annual credit reports by visiting Review your reports for accuracy. Accounts included in your bankruptcy should show that they have been discharged.

Start saving. Next, set yourself a goal of establishing an emergency savings fund. If the task seems daunting, start small by aiming to save two weeks’ worth of pay in your account.

Reestablish your creditworthiness. When you are ready to begin reestablishing your credit, consider a securing credit card. A secured credit card is safe alternative to a traditional card. With a secured card, you deposit a specified amount of money in a financial institution which then issues you a bank credit card. The amount you deposit becomes your credit limit. With timely payments, you credit limit may increase and eventually the account may no longer need to be secured by your savings.

Filing for bankruptcy can help you get a fresh start, but recovery can be a challenge

Kim McGrigg is the former Manager of Community and Media Relations for MMI.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.

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