Filing for bankruptcy isn’t a decision that should be taken lightly. While it does help to readjust your assets, it can have a lasting impact on your credit score and cause a sudden downturn. Thankfully, there is a way to build everything back up. All you have to do is connect with an experienced bankruptcy lawyer and implement a few simple precautions.

A Guide to Bankruptcy & Your Credit Score

How Bankruptcy Affects Your Credit Score

The first option that bankruptcy lawyers have available is Chapter 7, which allows for liquidating non-exempt assets or valuable property in order to pay off debt. If there are not enough assets, then any non-repayments will appear as discharges on your credit score. These can drop your numbers by at least 160 points and remain visible for as long as 10 years.

The other option is Chapter 13 bankruptcy, which allows you to discharge some debt while partially repaying others over a period of time. While the discharges will appear on your credit score for approximately seven years, the fact that you’re working with a bankruptcy lawyer to fulfill part of the debt reduces the impact and allows for only a minor decrease in score numbers.

3 Steps to Rebuild Credit Score After Bankruptcy

Once you complete the filing process, make it a habit to check your credit score regularly. This will allow you to closely monitor current debt and ensure that it stays within a manageable range. Then, build your score by making regular payments. Open at least one or two new credit cards and use them on a consistent basis, keeping up with the bills to prevent getting caught with a late fee.

As for your older accounts, leave them open since they’re part of your credit history and can have a direct impact on your score. Closing them will only cause that information to be lost and negatively impact your numbers.

Our firm practices bankruptcy law and is considered a debt relief agency by federal law. We help people file for bankruptcy relief under the Bankruptcy Code.

If you’re considering bankruptcy, reach out to the experts at Pepping, Balk, Kincaid, & Olson, Ltd. in Silvis, IL. These attorneys serve more than 2,000 clients per year and boast more than 75 years of combined legal experience. They serve as bankruptcy lawyers as well as estate planning professionals and divorce attorneys, supplying the information their clients need to navigate each process. You can learn more about their services by visiting their website, or call (309) 755-5096 to set up an appointment.