Reestablishing Credit after Bankruptcy

Each year a number of people file for bankruptcy protection as a responsible means of getting their financial lives back on track. Across the United States, over eight hundred thousand individuals filed for personal bankruptcy in 2015 and in New Jersey that number was around 25,000. Typically a bankruptcy will reduce or eliminate debt. By also taking some proactive steps, recovering after filing may be faster than expected.

Initially, a bankruptcy typically lowers a filer's credit score. How far the score drops depends on several factors, including what the person's credit rating was initially. The higher the score, the higher it is after filing.

During the bankruptcy, reaffirming the debt on a car loan is helpful in creating a loan that will help build your credit. After completing the bankruptcy, a good starting point is to obtain a copy of your credit report. After checking for errors, the consumer can then work to get the score up a little higher each month. It is reportedly possible for a person to raise his or her score by 50-75 points over a one to two year period by paying bills on time and getting a small secured credit card and then paying off the entire balance each month.

It is understandable that after filing for personal bankruptcy, a New Jersey resident may be hesitant to get another credit card, but this can help re-establish credit more quickly. It's best to be patient and focus on improving the credit score over time. If a person is struggling financially but does not want to file bankruptcy because of concern of its impact on a credit score, it should be comforting to know that the sooner he or she takes positive steps forward after filing, the sooner they can bounce back onto a healthy financial track.

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