2 Quick Tips on How to Rebuild your Credit after Bankruptcy

Credit Report

Here’s a quick case study on one client who recently filed a Chapter 7 bankruptcy, became debt-free and improved his credit rating in the process.

When he came into my office, he was bothered by the fact that he had recently been sued by a credit card company at his local magistrate. By the way, he was particularly miffed because he had been enrolled with a debt settlement company, so he found out the hard way that debt settlement doesn’t prevent credit card lawsuits.

Before he filed in August 2010, his credit scores were 518, 493 and 458 from the three credit bureaus. As a general rule, a lender would choose the middle score, so let’s say for the sake of this illustration that his score was 493.

His Chapter 7 case was filed on August 17th, his Chapter 7 meeting of creditors was held exactly one month later and he received his discharge order on December 29th.

His bankruptcy filing stopped the credit card lawsuit and wiped out $43,600 of unsecured debt. He successfully protected all of his property and chose to reaffirm his car loan, in which he owed approximately $8700.

He obtained a follow-up credit report on May 17th, and his scores were 646, 620 and 603. Thus, he was able to improve his middle-point credit score by 127 points. How did he do it?

–first, his current credit report has no errors. It’s important to check your credit report after filing bankruptcy because errors can occur;

–second, the fact that he’s reaffirmed his car loan (and importantly, he is diligently making his payments on time) is improving his score. A great deal of his current credit rating is due to the fact that he has no late payments.

This is simply one person’s story, but I’ve seen the same results in similar cases.

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