Filing for bankruptcy can be necessary to give you a fresh start, but doing so is not without consequences. One drawback of discharging debts in bankruptcy is that it will remain on your credit record for 10 years. Fortunately, you can “repair” credit after bankruptcy, but it takes time. It takes planning, patience, and discipline. Below, Rochester, NY’s Thomas A. Corletta, Attorney at Law explains how you can begin.

3 Tips for Rebuilding Credit After Bankruptcy 

1. Devise a Budget

Devise a reasonable budget and stick to it. Learn to live within your means. Do not incur new debt. As the saying goes, an ounce of prevention is worth a pound of cure. Sticking to a budget will help you protect your future financial health. 

2. Obtain a Secured Credit Card

You must show lenders you can be a reliable borrower. People with a recent bankruptcy on their credit report may not qualify for traditional loans or lower interest credit cards. They should be eligible for a “secured” credit card, or low credit line credit cards. A secured card is like a debit card. You deposit your own money into it, and that is your credit “limit”. Look for secured cards you can convert to traditional credit cards after making a certain number of regular payments. You can also get lower credit line credit cards, which usually have higher interest rates and/or a monthly fee, which you can pay off every month to show credit worthiness. These are useful for car rental or travel.

3. Take Out a New Car Loan

If you have an older vehicle on which you are “upside down”, it is best, if you can, to get rid of it in your bankruptcy and discharge the debt. Many auto lenders will then give you a new car loan at a higher interest rate because you discharged all your debt and cannot file again for at least 8 years. Although the credit costs more, you get a new reliable vehicle instead of the old one, on which you are “upside down”, and will probably fall apart before you are done paying for it. You can also establish a steady track record of payments on the new vehicle, which will lead to future loans.                

If you want to learn more about the benefits and consequences of filing for bankruptcy, turn to Thomas A. Corletta, Attorney at Law. With offices in Rochester and Farmington, NY, this criminal and civil trial attorney provides legal advice in several practice areas, including criminal defense, traffic and DWI, divorce and family law, and bankruptcy, all of in which he has developed a degree of expertise after nearly 40 years in practice. Visit his website to find the office nearest you, or call (585) 546-5072 to schedule an initial consultation and take the first step towards getting a fresh start.