Your Fresh Start

The effect of bankruptcy filing on your credit report will be challenging. A Chapter 7 bankruptcy stays on your credit report for the next 10 years and a Chapter 13 for sever years, so it is imperative to start rebuilding credit after bankruptcy right away. Your credit scores will drop substantially, anywhere from 150 to 250 points, and will stay there for some time. It will take time and concentrated effort to rebuild credit history and how long it takes will depend upon what credit rebuilding steps you take and how fast you work.

Few people manage to get their scores back in mid 600s in just over 28 months after declaring bankruptcy and be well on the way to completely rebuild credit history, while the majority have their scores in the high 400s or very low 500s after 3 years. The biggest misconception was and still is the popular notion that you can't get credit for at least 2 years after Chapter 7 bankruptcy. The fact is that you can't get a mortgage for 2 years and getting a car loan on decent terms is problematic…but getting a credit card is quite possible and is quite important when you consider rebuilding credit after bankruptcy.

Many believe that you must put time and distance from the bankruptcy filing date…some say up to a year or 18 months…you can try to get a secured credit card almost immediately. Once you get one, you can try to get another to continue rebuilding your credit history. And on the flip and brighter side, which you should look at, life after bankruptcy has its perks. For the first time in a long time, you don't owe any money and don't have to deal with debt collectors. More importantly, you probably learned a valuable lesson. Now let's consider steps you must to take in order to rebuild credit after bankruptcy – also known as your FRESH START:

Open a checking or savings account, possibly in a large bank, it will help you to get an unsecured credit card with this bank down the road when your credit history is getting better.
Try to save at least 25% of your paycheck and get a second job if necessary. Now that you have a fresh start it should be feasible. Once you have several hundred dollars saved, get a secured credit card either from the bank you opened and account with or any other bank with decent terms. The most important for you is that credit card issuer reports you to Experian, TransUnion and Equifax - to all three. The unsecured credit cards could be still difficult to get at this point, but keep them in mind for a future.
Pay every bill you still have, e.g. utility, rent on time.
Try to get grocery store and gas company credit cards. Don't apply for more than one in a week at this point. Get a cosigner if you have to.
Try to get an inexpensive used car in about 8 months after your Chapter 7 bankruptcy filing. You will need a cosigner of course. If you can pull this one, you will take a giant leap forward in your credit rebuilding adventure, as you will add an installment loan to your credit history. See if some GM or Ford dealers can help you obtain a car loan and, considering their current situations, they just might!
Live a bit below your means for the first 6 months to save as much as possible.
Check your credit reports every 4 to 6 months making sure that all information is accurately reported, especially bankruptcy related records.
Try to minimize the number of inquiries on your credit report once you have established a few good credit lines.

DO NOT DO THE FOLLOWING:

Don't pay your bills automatically from your checking account, unless you are monitoring it online quite diligently. Automatic bill payment can overdraft your checking account and payment can be rejected - thing you can't afford while rebuilding credit history.
Don't use payday loans. The fees and interest are too high. It is very easy to get sucked in and again get in trouble.
Don't try to erase bankruptcy from your credit report, it is not possible and will only make matters worse.
Don't use any outside help, no matter how legitimate it seems or even is. Do it yourself.

Rebuilding credit after bankruptcy means getting new lines of credit and keeping them in perfect standing. The Colorado Bankruptcy Center can help you…not just getting you through the bankruptcy…but also helping you get back on track.

The Colorado Bankruptcy Center is here to protect you and your future. Contact Us when you are ready for your FRESH START.