Many times, unexpected events such as illnesses or job loss can cause a person to accrue high amounts of debt with no way to pay it off. While often a last resort, filing for Chapter 7 bankruptcy can help Florida residents eliminate overwhelming debt. However, a common misconception is that bankruptcy will ruin an individual’s credit forever. While bankruptcy will do some serious damage to credit scores, the damage is not irreparable. Here’s how to repair credit after a bankruptcy.
Pay non-bankruptcy accounts
Not all debt can be discharged with a Chapter 7 bankruptcy. For example, student loans require a showing of undue financial hardship eliminated. Credit scores will be impacted by any accounts that are still active. Be sure to pay these on time.
Stay away from credit repair establishments
It is common to see advertisements from credit repair companies claiming they can remove a bankruptcy from an individual’s credit report. However, there is nothing that credit repair companies can do that individuals can’t do themselves. Do not believe anyone who says they can clear a bankruptcy off of a credit report. Bankruptcies will fall off on their own typically after seven to 10 years
Pay new credit cards on time
The two things that help credit scores the most are positive and on-time payments. It can show up on a credit report any time a person is more than 30 days late making a payment, and stay on the report for seven years. Be sure to make timely payments each month on new credit accounts.
Remember, it takes time to rebuild credit. Take it slow, one payment at a time. It may take a few years, but any person with a previous Chapter 7 bankruptcy can eventually regain excellent credit scores. Those who have questions or want to learn more should consider discussions with an attorney who can give consumer credit counseling and also knowledgeable about bankruptcy law.