Kansas City Area Bankruptcy Firm
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Due to unfortunate circumstances, our firm is closing its doors. If you are looking to hire legal representation in Kansas we are currently referring clients to Skinner Law Firm and/or Coons & Crump, if you are looking to hire legal representation in Missouri we are currently referring clients to The Sader Law Firm. Thank you.

Life After Bankruptcy - Rebuilding Credit

Life After Bankruptcy - Rebuilding Credit

If you are struggling with massive debt and choose to alleviate it through bankruptcy, you are not alone. Many individuals, no matter their salary, deal with credit card, medical bills, student loans and other types of debt. Due to many misconceptions about bankruptcy, most people are uninformed about how bankruptcy affects credit — with many believing that they will no longer be able to obtain credit in the future. Here are some facts about life after bankruptcy you should know.

Best Ways to Rebuild Credit

It’s important to remember that bankruptcy is not the end, but rather, a new beginning and a fresh financial start. There are certain steps you can take toward rebuilding your credit after filing bankruptcy. The following are the best ways to rebuild credit:

  • Get a secured credit card: A secured credit card is a great option to start rebuilding your credit.
  • Create a budget and stick to it: Creating a budget is a good way to start toward repairing your credit—it can ensure that you don’t overspend.
  • Check your credit score: The three major credit bureaus (Equifax, TransUnion, and Experian) offer free annual credit reports. Note: only check your credit once per year.
  • Pay bills and credit cards timely and with more than the minimum amount: Paying off your bills on a timely basis each month can help to rebuild your credit. However, you should go a step further by making more than the minimum payment. It shows your creditors that you are serious and responsible about your finances.

How Secured Credit Cards Work

A secured credit card functions the same way as an unsecured credit card does, however, you are granted a credit card with the following criteria:

  • A secured credit card uses the money you place in a savings account which serves as collateral for your credit card.
  • Your credit line is based on the following:
    • Income,
    • Ability to pay
    • The amount of your cash collateral deposit —- For example, if you put $500 into the savings account, your available credit line will usually be $500.

Secured Credit Card Pro Tips

  • The best way to increase your credit score is to charge 20-40% of your credit limit (as per the example above - $100-$200) every month and PAY IT OFF IN FULL AT THE END OF EACH MONTH.
  • Do not carry a balance.
  • Don’t charge more than 20-40% of the limit each month. Best practice is to treat it like a gas card or to charge one of your utilities each month. Remember to pay off the card balance every month on time.

Through following the above steps and tips on secured credit cards, on average, our clients have been able to restore their credit within 18 months to 3 years. Usually, they find that their score will land between 650 and 700 within that time frame. Good credit does not happen overnight. This process takes time and discipline.

The Don’ts of Rebuilding Credit

  • DO NOT apply for multiple lines of credit during this time
  • DO NOT habitually check your credit more than once per year
  • Above all, DO NOT take out other loans and fall behind

The above will damage your credit as you are attempting to rebuild it.

What to Do if You are Still Getting Calls from Creditors After Filing

If creditors are still harassing you after you have filed for bankruptcy, you need to immediately contact an FCRA (Fair Credit Reporting Act) or FDCPA (Fair Debt Collection Practices Act) lawyer. Your bankruptcy attorney can generally provide a referral for you and determine whether or not your debt was discharged. If it was, then creditors who are still trying to contact you for collections are violating the law. Having an attorney on your side can make all the difference as they can contact the creditor on your behalf and inform them to cease the calls. However, if the creditor refuses, your lawyer can then request your bankruptcy case be reopened by the court to sanction the creditor.

Tips to Stay Out of Future Debt

After you have taken steps to rebuild your credit, you will want to ensure that you stay out of debt in the future. The following are some best practices to keep your finances on track:

  • Pay with cash instead of credit whenever you can.
  • If you must use a credit card, stay within your total credit utilization or 30 percent of your credit limit.
  • Resist impulsive purchases.
  • Avoid ‘buy now, pay later’ offers.
  • Bargain shop to get the lowest price possible.
  • Avoid borrowing to finance purchases.
  • Keep a record of all your credit card purchases.
  • Pay more than the minimum amount toward your credit card bills.
  • Limit yourself to only one or two credit cards.

Bankruptcy can help individuals get back to financial health. It is possible to rebuild your credit from scratch so that you can continue to stay debt-free. If you If you have been faced with an overwhelming amount of debt, bankruptcy may be the best option for you. No matter how dire your financial situation, Moore & Associates, LLC can help. Contact us at (913) 225-8330 for a free initial consultation today.


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