Deciding to file for bankruptcy requires careful consideration, research, knowledge of applicable Colorado laws, and carefully reviewing your specific circumstances down to the minor details. The next step is navigating the filing process and meeting all related obligations, which is no easy task.

Tip: As filing is complicated and the slightest mistake can send you back to step one, it is best to work with a knowledgeable Boulder bankruptcy attorney

Once you have completed bankruptcy, you may wish to begin the journey of restoring your credit. Many people in the U.S. believe those who declare bankruptcy will have a near-impossible time rebuilding their credit and cannot buy a home or other significant purchases. Such myths are simply not true.

Many fail to realize that filing bankruptcy can enhance their possibilities of developing better credit. Individuals who find themselves burdened by heavy debt or contemplating bankruptcy already have multiple marks against them regarding eligibility for credit offers, mortgages, and loans. Thus, filing for bankruptcy is a vital first step toward credit repair and financial rebirth.

Pulling Your Credit Reports 

Whether you’re filing Chapter 7 or 13 bankruptcy, you should request copies of your credit reports to understand your credit standing and start on the path to rebuilding.  When we file your case, we will get a credit report from all 3 bureaus.  You can continue to pull your reports and monitor credit after the case has been filed.

  • Obtain a copy of your credit reports from the three major bureaus: TransUnion, Experian, and Equifax. 
  • Next, please review the documents to ensure they are error-free.
  • Errors on a credit report are not uncommon, and you have the option to report and dispute any errors. Discrepancies can not only inaccurately depict your credit history but negatively impact your credit scores, causing you to struggle needlessly. 

Preparing an Explanation Statement

After examining your credit reports, you should provide the three credit reporting bureaus with a brief explanatory statement. The document should note financial challenges and any hardships you may have faced that could have impacted your ability to make on-time payments.

Note: Individuals are not able to alter credit reporting agency data. A statement and request to the credit reporting agencies are necessary. 

Studying your credit reports and addressing errors may help you understand your credit standing. 

Restoring Your Score and More

Now that you’ve filed or completed bankruptcy, you may have some pressing questions; for one, how do you give your credit score the boost it needs, especially when you don’t have a line of credit?

Building a credit history may seem daunting, but it is a crucial step toward financial success. The best way to begin is by researching and obtaining the right credit card (if you are ready for the responsibility). 

Credit cards get a bad reputation, especially if you have previously been in debt; however, they offer many advantages. To increase your credit score and capacity, you need a card to build your reputation among lenders and banks. 

Banks and credit card companies offer a wide variety of credit cards. There are two types of traditional credit accounts: unsecured and secured. 

Unsecured credit card approvals are based heavily on credit reports, credit scores, and standing. You don’t need to provide a security deposit or collateral. Cardholders are approved for a specific credit line or limit. Although these cards may come with high-interest rates and even hefty fees; (for example, if the cardholder fails to pay their balance within an agreed-upon timeframe), these cards also come with a variety of benefits or perks (travel points, rewards, cash back, and more)

Another option is a secured credit card, which functions via a security deposit provided by you to the credit company. The deposit essentially translates as your credit limit. The creditor can use your security deposit if you fail to repay the card balance. Secured cards typically have limitations (or safeguards), such as no overdraft ability. These cards are easier to obtain for individuals prepared to rebuild their credit and serve as stepping stones to unsecured accounts in the future. Your credit improves by making on-time payments and following the card’s terms and conditions. 

Before applying for any card:

  • Study the different cards available
  • Compare and contrast pros and cons
  • Check for preapprovals
  • Consider cards explicitly aimed at rebuilding credit scores. 

Applying for cards without research will likely result in denials and hard inquiries into your credit history, which can negatively impact your score. 

Tip: Discuss options with the creditor, like moving from a secured to an unsecured account in the future.

Creating and Practicing Positive Credit Habits

The most meaningful steps to rebuilding your credit are starting and maintaining positive habits concerning credit and your finances. Once approved, don’t be fearful but be responsible; use your card frequently within your budget and pay it off on time. 

If you believe your debt payments have become unmanageable and you would like to speak with an experienced bankruptcy attorney to discuss your options and eligibility, please contact our office today for a complimentary consultation.