If you struggle to stay on top of your bills every month and feel like you will never get out of debt, bankruptcy may be a helpful option. There are two types of consumer bankruptcy, which include Chapter 7 and Chapter 13, and filing may help you move forward financially.
The Federal Trade Commission states that filing bankruptcy could help stop repossessions, foreclosures, utility shut-offs, wage garnishment and other debt-related activities. Although bankruptcy is helpful for many, it can damage your credit score, which is why you will want to take steps to rebuild your credit after filing.
1. Keep an eye on your credit score
Check your credit score and review your credit report on a monthly basis. While your bankruptcy filing will stay on your credit report for several years, you should still negate any errors or issues on your reports to ensure an accurate reflection of your creditworthiness.
2. Use debt carefully
You may feel hesitant to use debt after you finalize the bankruptcy process but doing so carefully can help you rebuild your credit. Try using a secured credit card or ask someone to co-sign on a loan application.
3. Work on your finances
Bankruptcy can give you the opportunity to make a fresh financial start. Create solid financial habits by creating and sticking to a budget, building an emergency fund and paying your credit balances on time.
It can take time to rebuild your credit score after you file for bankruptcy. But if you remain committed and work on your finances, you will likely start to see your credit score improve.