Although discharging debt through bankruptcy makes financial sense for many Americans, it comes with a few major caveats. One of the biggest drawbacks is the impact filing has on creditworthiness. When lenders see a recent bankruptcy on someone's record, they're much less inclined to loan money to them—and if they do extend an offer, it’ll come with a sky-high interest rate. However, there are ways to start rebuilding credit immediately after filing so you look like a more reliable borrower when it does come time to apply for financing.

3 Tips for Rebuilding Credit After Bankruptcy

1. Devise a Budget

Creating a manageable budget—and then sticking to it—is perhaps the most effective way to boost your credit score over time. As long as the budget accounts for all your minimum monthly obligations, you'll never miss a payment. And with every on-time submission, you’ll appear even more reliable to potential lenders.

2. Obtain a Secured Credit Card

Secured cards are backed by a cash deposit, so even those with poor credit can usually obtain one. Getting a secured card and using it responsibly will gradually increase your score. To make the most of the account, look for a secured card that can eventually be converted to a traditional credit card.

3. Become an Authorized User

If you have a spouse or other relative who uses credit responsibly, ask to become an authorized user on one of the accounts. Even if you don’t actually use the card, all their on-time payments will be reported on your file.

The knowledgeable legal team at Pearce Law Firm is happy to explain bankruptcy—and all the consequences of filing—in terms their clients understand. If you're thinking about discharging debt, they can determine whether you qualify for Chapter 7 or Chapter 13 bankruptcy. Located in Foley, AL, this practice specializes in debt relief so they can provide the most comprehensive counsel possible. To request a consultation with attorney Allyson Pearce, call (251) 971-2676 or reach out on their website.