One of the most common misconceptions about bankruptcy is that it destroys your credit. While creditors aren’t going to trust you immediately after you file, the bankruptcy will eventually be removed from your credit report. Also important to remember is the fact that creditors consider your recent credit history to be more important than stuff that happened in the past.

In the meantime, there are a number of steps you can take to start rebuilding credit after bankruptcy. The question, of course, is how do you get from here to there? What can you do in the meantime that will convince potential creditors that you are financially reliable? To learn more how about how to repair your credit after filing bankruptcy, contact our South Carolina Bankruptcy Attorney at Steadman Law Firm, P.A. today.

Remember That Bad Financial Situations Happen to Good People

First of all, bankruptcies happen for any number of reasons. Yes, there are those who run up their credit cards only to figure out later they have no way to pay it back. But there are also those who get into serious car accidents with folks that carry the bare minimum in policies. They end up requiring extensive rehabilitation periods and rack up major medical expenses all the while not being able to work. When they’re stuck with the bill, they have no other recourse other than to declare bankruptcy.

The point is that there are any number of reasons why a person files for bankruptcy. Not all of them can be explained solely in terms of a lack of financial responsibility.

1. Repair Your Credit

Depending on what chapter you’ve filed under, your bankruptcy will remain on your credit report for the next seven (Chapter 13) or ten years (Chapter 7). There’s nothing you can do about that. You can, however, give potential creditors something else to think about.

The thing that you should bear in mind is that, by the time you’ve had your bankruptcy processed, your credit report was in pretty rough shape already. In other words, the bankruptcy isn’t going to hurt you as much as you think. Overdrawn credit limits, active credit accounts, and other black marks will eventually be removed by the bankruptcy once those cases are settled.

The bankruptcy itself, however, will show up on the credit report. You therefore need to ensure that all of your accounts are cleared once you’ve filed for bankruptcy. Otherwise, they will survive the bankruptcy and still be on your credit report.

2. Get Secured Credit Cards and Secured Loans

Secured credit cards and loans are going to sound absurd. Basically, you give the bank or a creditor a specific amount of money, let’s say $500. The deal is that you give the credit card company $500 and they extend you a $500 line of credit. You can draw on the $500 to purchase items, but you have to pay it back. In this manner, you keep a minimum balance on the card. The $500 that you put down is a form of collateral. If you don’t make your payments, the creditor can use that money to pay off the difference.

While this may sound like a whole lot of nothing, the creditor reports this information to your credit report. Instead of having only black marks on your credit report, you now have a company vouching that you sustained a satisfactory credit arrangement with them. This is a necessary step in rebuilding your credit after bankruptcy.

A secured loan works in much the same way. Credit cards are great to establish good credit, but they only go so far. You can either pledge collateral, like an asset such as your car or some other valuable item or you can take actually apply for a car loan from a creditor who deals with high-risk borrowers. The trick, of course, is to make all your payments on time on a monthly basis.

3. Monitor Your Credit and Your Progress

Now, you’re establishing good credit. You can make bolder moves from there, but you want to be careful. You don’t want to overextend yourself financially and you want to make sure that you’re making your payments on time. During this period, you can monitor your credit report and see how you’re doing. If you don’t see instant results, be patient. Sometimes financial institutions can be slow to update your report. On a long enough timescale, however, things will be moving in the right direction.

You can begin considering applying for credit cards and other loans. It’s a process, but bankruptcy isn’t meant to destroy your life, it’s meant to give you a fresh start.

Talk to a South Carolina Bankruptcy Attorney to Learn More About Rebuilding Credit After Bankruptcy

If you’re in a debt spiral and you can’t figure a way out, the Steadman Law Firm can help you get a fresh financial start. Contact us today to learn more.