Photo by Mikhail Nilov

Bankruptcy can be embarrassing, devastating, and painful to your credit standing, but its promise of a “fresh start” is authentic.

A bankruptcy causes a significant drop in your credit scores and persists as a negative entry in your credit file for many years. How long and strictly how much of a score drop depends on your score before filing, the status of your current credit accounts, and the type of bankruptcy you file. A Chapter 7 bankruptcy wipes out all your debts and has the most profound kick on your credit scores; it stays on your credit report for ten (10) years. On the other hand, Chapter 13 bankruptcy (which restructures your debts), so you pay off a portion of them in three to five (3-5) years, lasts on your credit report for up to seven (7) years, and is less harmful to your credit scores than Chapter 7.

Relatively, check out the Law Offices of Ronald E. Stadtmueller, the best Bankruptcy Law Specialist in San Diego.   With over thirty (30) years of professional expertise, we at Law Offices of Ronald E. Stadtmueller can aid you in filing for Chapter 7 quickly and efficiently. Also, our experienced bankruptcy attorney analyzes your financial situation to develop strategies and identify your best filing options. Do not let crushing debt drive you out of your home. Chapter 13 can protect your home, lower monthly expenses, and allow you to discharge a qualifying debt. 

 With a strong game plan, you can do much to recuperate from bankruptcy and bring back your credit within a few years. Before you look at practical steps for speedy bankruptcy recovery, consider first the damage you will be trying to undo.

Here are some critical steps to start rebuilding your credit after your insolvency.

Check Your Credit Reports. Start your recovery plan with a clear understanding of where your credit stands. Please check your credit reports, review them for accuracy, and dispute any entries that need rectifying. This process will be minorly different depending on which type of bankruptcy you file.

Check Your Credit Scores. Your scores may not have a pretty picture. Still, depending on how recently you filed your bankruptcy plan, they may not yet be at their lowest point: Your scores will significantly decline when you file bankruptcy, and if you file Chapter 7, they may dig further once the court has discharged your case. This process can take months (which may not be reflected in your credit file for several weeks). A Chapter 13 bankruptcy is not considered discharged until the end of the court-approved repayment period. Suppose overdue or defaulted credit accounts significantly hurt your credit scores before you turned to bankruptcy (a situation familiar to many filers). In that case, you may find that filing for bankruptcy has fewer impacts on your scores than you might have imagined. Your scores had already lamented about as far as they could. Some people with heavily damaged scores even see small scores escalate after filing for Chapter 13 bankruptcy—however, their scores are still in the poor territory. That can be hard to face, but facing it is how to begin your credit recovery plan exactly.

Avoid Repeating Past Mistakes and Making New Ones. Make your bankruptcy journey a learning experience by reviewing your past missteps and making sure not to repeat them. Re-examine your old spending patterns, borrowing, and repayment (or lack thereof) to understand precisely better what made you go bankrupt and take steps to ensure you would not go down that road again.

Work on Rebuilding Your Credit. Check your credit reports annually and plan to monitor your credit scores monthly once you have a solid sense of your credit picture. You can then take steps to start building up your credit. Start by reviewing the factors determining your credit scores and habits that help them improve.  

There Is Life After Bankruptcy

If you follow these steps and ensure avoidance of repeating past missteps, you will find that your credit scores will start improving within a few years only after filing your bankruptcy. And when the time comes that your default “falls off” your credit report after seven or ten years (you do NOT need to do anything to remove it), you may find yourself qualified for a wide range of credit at reasonable rates.

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