Know how to rebuild your credit after a bankruptcy discharge

As we have often discussed on our Mason bankruptcy law blog, for many people, bankruptcy isn’t the end—it’s a fresh financial start. The benefits of filing for personal bankruptcy can be many: getting immediate debt relief, preventing foreclosure, and putting an end to creditor harassment, for example. But if you have worked through bankruptcy, there are other issues to think about. One of the most important is rebuilding your credit.

There are many ways that this can be accomplished. There is no single best way to start working on it, but there are several points about the process that might make it easier, and less painful, than you might expect.

First of all, creditors know that an individual can only file for bankruptcy once every eight years—though most people only do so once in their lifetimes. That means that people who have emerged from bankruptcy are good candidates to get credit—they have no debt.

It may be difficult to find an attractive credit card at this stage. Many cards offered to people in this segment often have substantial annual fees and high interest rates. Individual banks and credit unions may offer the best options for people, even if the initial credit limits for these borrowers are low. Even if the terms aren’t necessarily the best, people who have emerged from bankruptcy need to start somewhere. If doing this via a secured credit card is the most viable option, then it may be the best choice for someone who doesn’t necessarily have a lot of choices.

Source: Fox Business, “How Do I Establish Credit After Bankruptcy Discharge?” Justin Harelik, retrieved May 20, 2014