Filing for bankruptcy may prevent creditors from taking your Iowa home or from taking other steps to collect a debt. In some cases, it may allow you to have debts discharged in a matter of weeks or months. However, bankruptcy can also have a significant impact on your credit score and ability to get loans after your case is resolved. Fortunately, it may be possible to rebuild your credit relatively quickly.
Start with a secured credit card
One of the easiest ways to start rebuilding your credit after bankruptcy is to apply for a secured credit card. A secured credit card is backed by funds held in a bank or credit union account. If you make payments on time, the funds used to secure the credit line will be released back to you.
Make remaining debt payments on time
It is unlikely that student loan debt balances will be discharged in a bankruptcy proceeding. Therefore, you are likely still on the hook for making payments each month. The good news is that each payment that you make can help to improve your credit score. You may also want to make car or other secured loan payments as well in an effort to show lenders that you can be responsible with debt.
Live within your means
Once your debts have been eliminated, it is important to ensure that you learn from your previous mistakes. Ideally, you will pay off credit card balances in full each month to avoid paying interest. You should also refrain from using payday loans or similar loan products as they come with high interest rates and other fees.
By filing for Chapter 7 bankruptcy, you may be entitled to an automatic stay of creditor contact. This means that you won’t receive letters or phone calls from student loan or credit card companies demanding payment. An attorney may be able to explain other potential benefits of filing for bankruptcy.