Take positive steps to repair your credit following bankruptcy

Since there are usually financial ramifications which result from a decision to file for bankruptcy, the decision to do so is not one that many individuals take lightly. However, as noted recently in the Huffington Post, although most people are not eager to file for Chapter 7 or Chapter 13 bankruptcy, having to do so is a commonplace occurrence in modern America. In 2013, some 1,107,699 individuals and businesses in the United States filed for bankruptcy.

According to the U.S. News and World Report, many filers are initially stressed out by the belief that their debt problems are so severe that bankruptcy will not offer them any genuine financial relief. Others worry what friends or family may think and assume that their credit score will be destroyed forever. Most fears are unfounded since, "no matter how much debt someone owes, bankruptcy is always a viable option." Moreover, credit scores can be rebuilt.

Instead of fretting that bankruptcy will forever make you a financial pariah; the best way to view bankruptcy is that it will bring an end to the constant worry and stress of having to juggle enormous debt on a daily basis. Moreover, bankruptcy is specifically designed to provide people with a fresh start. Bankruptcy protection offers you the opportunity to ultimately regain control over your life and rebuild your finances together with your credit score.

Rebuilding credit

A good first step to rebuilding your credit is to create a realistic budget. According to Daily Finance, your budget will act as your spending plan enabling you to: (1) properly manage your cash flow; and (2) allowing you to cut out any unnecessary expenditures in order to avoid racking up new unnecessary debt. In addition, you need to make sure that you pay your existing bills on time. Making late payments will raise red flags thereby leaving yet another blemish on your credit reports.

Although it may sound counterintuitive, most experts agree that a vital strategy in rebuilding your credit score following your emergence from bankruptcy is to obtain a credit card. Nerdwallet advises that you should probably seek to obtain a secured credit card since this is often the easiest way to rebuild your credit score. By charging small amounts each month, and making prompt repayments, you can gradually rebuild your credit. It is a good idea to talk to the issuer of the secured card to make sure that the secured card activity will be reported to the credit bureaus.

Once you have demonstrated that you are being financially prudent, you can take the next step and apply for an unsecured credit card. Once you obtain a new unsecured credit card, strive to keep your debt balance well under your credit limit. High credit utilization could signal that you may be veering back into financial instability thereby causing your credit score to go down instead of going up.

Importantly, you need to constantly monitor your credit score after you emerge from bankruptcy. You should check your credit score frequently in order to detect any inaccuracies or mistakes that could lower your score. Never assume that the information possessed by the credit bureaus is accurate since it may not be.

Seek legal assistance

If you are struggling mightily to juggle a mountain of debt, you should contact a Massachusetts attorney who has experience in handling bankruptcy matters. After discussing your specific circumstances, an attorney will explain your options to you and advise you how to proceed.