Rebuilding Your Credit After Bankruptcy

Life After Bankruptcy

For most people, bankruptcy is a word that conjures up a negative emotional response. However, it is often the best strategic decision. In fact, a Chapter 7 bankruptcy is known as a “fresh start” bankruptcy.

Many wonder what the long-term effects of filing will be and how it affects them personally. At Hedtke Law Firm, your local bankruptcy lawyers, we not only believe there is life after bankruptcy — we show our clients how to emerge from the process and get back on their feet. Contact us today to schedule a free consultation.

How Long Bankruptcy Stays on Your Credit Report

A Chapter 7 bankruptcy remains on your credit report for up to ten years from the filing date. A Chapter 13 generally remains for up to seven years. That is the outside limit, not a prediction of how long it will take to qualify for credit again — many people are approved for a car loan well before the entry falls off, and for a mortgage after the waiting period for the loan type they are seeking.

It is also worth being realistic about the starting point. If your score was already damaged by missed payments, collections and charge-offs before filing, discharging those debts removes the thing that was driving the score down. The balances report as discharged with a zero balance, and the accounts stop generating new negative activity every month.

Credit Counseling Is Required Before You File

Before filing a bankruptcy petition, the law requires those filing for Chapter 7 or Chapter 13 to complete a course in credit counseling from an approved provider. It covers budgeting and understanding your finances, and it must be completed before the case can be filed. A second course, in financial management, is required before your discharge is entered.

What Actually Rebuilds a Score

There is no shortcut, but the mechanics are not complicated:

Check your credit reports after discharge. Accounts included in the bankruptcy should show a zero balance and a discharged status. Errors are common, and correcting them is free.
Pay every bill on time. Payment history is the single largest factor in most scoring models.
Keep utilization low on any card you do open.
Consider a secured card from a credit union, used lightly and paid in full each month.
Be patient with new accounts. Opening several at once works against you.
Do not pay anyone who guarantees a specific score or offers to remove accurate information. Under the federal Credit Repair Organizations Act, a credit repair company may not charge you before services are performed or promise results it cannot deliver.

Credit Repair Resources

At Hedtke Law Firm we provide clients with information on how to rebuild credit after a discharge. Some clients choose to enroll with a specialty credit repair company we are familiar with, 720creditscore.com, which offers discounted pricing to our clients and runs a webinar-based rebuild program. Results vary by individual circumstances; no company can guarantee a particular score or timeline. Using your post-bankruptcy income and credit wisely is what rebuilds your rating.

Schedule a Free Consultation

To schedule a free consultation, call Hedtke Law Firm today.

Fontana Office
Phone: (909) 457-0054
7426 Cherry Ave, Suite 210-312, Fontana, CA 92336

Neil R. Hedtke, bankruptcy attorney at Hedtke Law Firm in Fontana, California

Rebuilding Starts the Day You Are Discharged

Neil R. Hedtke has practiced law in California since 2010 and has filed approximately 3,000 cases. He earned his Juris Doctor from the University of La Verne College of Law and is admitted to the State Bar of California, bar number 273319 — which you can verify yourself at calbar.ca.gov.

Most people are surprised how quickly credit recovers once the accounts driving the score down are gone. Check your reports after discharge and dispute anything still showing a balance.

Call (909) 457-0054

General information, not legal or financial advice for your specific situation.