After Bankruptcy

Now that you’ve completed your bankruptcy, you’re probably thinking about how you can rebuild your credit for the long term.

Rebuilding credit after bankruptcy

If you take the right steps after bankruptcy and also manage your credit responsibly, you can rebuild your credit reputation in a few years. Studies show that 18-24 months after discharge, most consumers can qualify for a home mortgage with favorable terms.

  1. Open a Low Balance Credit Card: The only way you can rebuild your credit is to use credit.You will likely have to pay an annual fee to obtain a high interest credit card, post bankruptcy. Start with a low balance credit card. For example, you may be approved for a $300 limit.
  2. Use only 10% of your available credit: Use about 10% per month, and always pay the balance in full when you get your statement. Six to twelve months of on-time payments will improve your credit score. Remember not to carry a balance and not to exceed 10% of your available credit.
  3. Review your credit reports at to make sure your old account statuses match the bankruptcy outcomes. You can receive them once a year for free. You may want to check them more often (for a fee) after bankruptcy just to make sure the right information has made its way to the credit bureaus.

Debts not discharged in bankruptcy

As you know, many debts are not discharged in bankruptcy. These include:

  • Income taxes
  • Child support/alimony
  • Student loan debt

If possible, work out affordable payment plans for these debts so you can keep them current. Make a schedule for yourself with a target “end date” – a day you can look forward to once they are paid off and you are completely debt free.