Man holding credit card while on computer

Filing for bankruptcy with help from a South Carolina bankruptcy attorney can be a good option if you feel in over your head with debt payments and can’t see a great way to get your finances back on track. When you file, you’ll trigger an automatic stay that keeps your creditors from hounding you for payments and, if you file for Chapter 7 bankruptcy, much if not all of your debt could be forgiven, giving you a fresh financial start.

Filing for bankruptcy can have a significant impact on your credit score, causing it to drop by several hundred points. This makes it hard to qualify for new loans and lines of credit until you rebuild your credit over time. Here are a few steps you’ll want to take after your bankruptcy case is settled and your debts are discharged.

1. Review and Monitor Your Credit Report

After your bankruptcy is settled, check your credit report to see where your score is currently. Bankruptcy can cause your credit score to drop by several hundred points in some cases. You can request a free credit report from each of the three major credit bureaus once a year through AnnualCreditReport.com. But you may also be able to access a free copy of your report through your bank, credit union, or credit monitoring service.

Once you know where your score is, get in the habit of reviewing your credit report at least once every three to six months. Check for errors like lines of credit you didn’t open or missed payments that you know you made on time and contact the credit bureau to dispute those errors if needed.

2. Take Steps to Rebuild Your Finances

Filing for bankruptcy can wipe out your savings, making it tough to cover unexpected expenses without going further into debt. Prioritize getting your finances back on track by setting a clear budget that helps you account for the money you earn each month. You should allocate funds toward things you need like rent, utilities, groceries, and insurance. Anything left should be divided into money set aside to rebuild your savings and money to cover items you want.

Try to prioritize rebuilding your savings if possible. This way, you’ll be able to cover unexpected costs more easily.

3. Explore Secured Lines of Credit

Any South Carolina bankruptcy attorney can tell you that rebuilding your credit score after filing for bankruptcy can be tough. But there’s one way to rebuild your score faster: using secured debt like secured lines of credit. Secured credit cards are typically easier to qualify for, even if you have a lower credit score.

These credit cards are secured by a cash deposit that you pay to the credit card issuer or bank, and the amount of your deposit functions as your credit limit. As long as you pay off what you spend up to the limit, you’ll be able to keep using the card like normal. If you fail to make payments on time and in full, the bank can use your deposit to settle your debt.

4. Only Borrow What You Need and Repay It A.S.A.P.

If you do take out a loan or start using a credit card, the best way to rebuild your credit is to only borrow what you need. Remember, borrowing more than you need to cover a certain expense puts you at risk of spending more than you should, potentially increasing your risk of getting deeper into debt than you can afford to be. The last thing you want to do is get back into the situation that caused you to file for Chapter 7 bankruptcy in the first place. Furthermore, borrowing only what you need can help keep your total debt-to- income ratio lower, which can help improve your credit score over time.

Ready to File for Bankruptcy?

Rebuilding credit after bankruptcy is possible, and these tips should help you get a jumpstart on the process after you file. But don’t let the drop in credit score keep you from exploring bankruptcy as an option if you’re feeling overwhelmed financially. Bankruptcy can give you the fresh start you need to get your finances back on track.
Want to learn more about your options? Contact Lam Law Firm today to speak with an experienced South Carolina bankruptcy attorney.

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