While bankruptcy can provide a fresh financial start, it’s not without its drawbacks. For example, your credit score could drop by 100 points or more in the immediate aftermath. Additionally, the actual filing will remain on your credit report for up to a decade. If you make smart money moves after discharging applicable debts, though, you can improve your creditworthiness over time until you qualify for financing, even with the bankruptcy still on your report.

How to Rebuild Credit After Bankruptcy

1. Stick to a Budget

After declaring bankruptcy, every on-time payment you make will help improve your creditworthiness. As such, it’s crucial to devise a budget that accounts for all household expenses — and then to stick to it.

For example, estimate how much you spend on household bills, auto payments and gas, groceries, and other necessary expenses every month. From there, you can decide what miscellaneous expenses you can afford on a daily basis.

2. Open a Secured Card

Secured credit cards are available to those with poor credit because they require an initial deposit, which serves as collateral. Opening this kind of account and using the card responsibly will boost your credit score gradually until you eventually qualify for a traditional credit card. You may even be able to convert the existing card into a traditional revolving account, depending on its terms.

3. Start an Emergency Fund

Saving up a small emergency fund will keep you from having to take on more debt in the event of an unanticipated expense. Try to put aside a small portion of every paycheck until you’ve saved about $1,000. This will provide enough of a cushion that you won’t have to resort to payday loans or credit card charges to cover most unexpected costs.

The knowledgeable team at Pearce Law Firm can explain all the ramifications of declaring bankruptcy so you can decide if filing is the right move. Located in Foley, AL, this firm is proud to help clients regain their financial footing. For over 15 years, attorney Allyson Pearce has been focusing solely on bankruptcy petitions, so you can be sure she knows how to resolve even the most complicated issues that can arise. To schedule your consultation with this bankruptcy lawyer, call (251) 971-2676 or fill out the form on her website.