Tips for rebuilding credit after a Chapter 13 bankruptcy

It’s no secret that a bankruptcy filing will remain on an Illinois consumer’s credit report for the better part of a decade. As the Federal Trade Commission points out, a Chapter 13 bankruptcy will typically be on a credit report for seven years though could potentially be there for up to 10 years, causing the score to be significantly lower.

Fortunately, there are a few ways that people who have filed for Chapter 13 can work toward rebuilding their credit. For example, as a report from Daily Finance notes, the first thing consumers should do is develop a budget. One requirement of filing for bankruptcy is taking a debt management course in which people learn how to determine their monthly revenue and expenses, prioritizing the necessities and hopefully saving a little money or paying off debts.

When filing for Chapter 13 bankruptcy, a consumer will have to work through a repayment plan and will be able to retain his or her assets. Once he or she has developed a sustainable budget, it is important to do the following: 

  • Check the credit report for errors and clarify any mistakes.
  • Pay all bills in full and on time.
  • Get a secured credit card, which is easier to obtain and is viewed as positive credit.

Experts agree that using a secured card with a limit at or above $1,000 is optimal, because it counts more toward your score than one with a lower limit. Also, as GetOutofDebt.org notes, consumers should try not to charge more than 35 percent of the limit on the card at a time.

Another requirement for filing for Chapter 13 bankruptcy is to take a credit counseling course, which can teach consumers how to use credit responsibly. This should help with managing new accounts. Rebuilding credit can take time, but it is worth it in order to have a brighter financial future.

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