Financial hardship can arise at any time due to a number of reasons. Fortunately, bankruptcy offers an effective solution for obtaining debt relief. However, it’s common to experience a temporary drop in credit score after filing. If you’re concerned about how bankruptcy will affect your credit, it’s important to know you can recover quickly—as long as you put in the effort.
How to Regain Your Financial Footing Following a Bankruptcy
1. Monitor Your Credit Report
Your credit score comes from all of the information on your credit report, which is a detailed summary of your borrowing history. If there are any inaccuracies, it can harm your credit. As such, it’s essential to keep a close eye on the report and regularly check for any discrepancies. Should you find any errors, report them right away and request they be removed.
2. Establish a Budget
Having a budget to stick to is essential for avoiding financial trouble again. Come up with a plan that allows you to cover all of your monthly expenses and everyday household needs—without going above your means. This will encourage healthy spending habits and help you discover where you can cut back if you have more money going out than coming in.
3. Pay Bills on Time
A significant percentage of the credit score is based on payment history. Therefore, it’s crucial to be vigilant in making sure any bills you have after filing bankruptcy are paid on time every month. Just one late payment can negatively impact your score and undermine all of the hard work you’ve put in.
4. Consider Applying for New Lines of Credit
When managed responsibly, opening new lines of credit can help bring your score back up fast. Once a few months have passed after your bankruptcy case is closed, you may consider applying for a secured credit card. It’s best to pay off the balance each month, as this will prove your creditworthiness to lenders.
If you’re planning to file bankruptcy, turn to The Gil Law Firm for guidance. Based in Dothan, AL, they have provided numerous residents throughout Alabama, Georgia, and Florida with unparalleled legal representation. They will help you navigate all the complexities of filing and advise you on ways to successfully rebuild your financial health. Call (334) 673-0100 to set up a consultation, or visit their website to learn more about your bankruptcy options.