Improving Your Credit After a Bankruptcy

A few people have left me comments asking for information about how to recover or improve their credit after filing for bankruptcy. Although this is a situation that I encounter on a weekly basis, there is not too much one can do when faced with this difficult dilemma.

As easy as it is to say in retrospect, the best way to deal with this situation is to do everything possible to avoid bankruptcy. There are very few cases where it is the best option available and it will usually cause the most harm in the long run. That being said, if you have already declared bankruptcy, I hope you have at least one asset, such as a car, house, painting, etc., that is worth something.

When you possess a valuable asset, you can apply for a secured credit card, which means that the credit is backed by one of your assets and this item can be seized if you are unable to pay your balance. To help rejuvenate your credit, try to get a credit card like this as soon as possible and always be sure to pay it off in FULL every month.

If a secured credit card is not an option under your circumstances, you can ask a family member, girlfriend, boyfriend, etc. to piggyback on their credit. This means that they co-sign on a credit card or other small loan and are responsible for ensuring that you pay every debt according to the requirements. They must understand, however, that if you fail to pay, they will be responsible for your debts and may have their own credit score damaged as result of your actions.

After approximately 2-3 years of paying off your credit card or other small loans on time and in full, you may be able to get a loan for a larger item (like a car) at a somewhat normal interest rate. In addition, you may be able to refinance your car if you already have one to build more credit.

Declaring bankruptcy and overcoming the negative credit effects can take longer than you ever expected since the mark remains on your report for 10 years. However, with a few years of on-time payments and other positive attempts to re-build your credit and prove that you are not a significant risk, you should be able to overcome this dark period in your credit history. Since it is difficult to recover from bankruptcy and begin the uphill process of restoring your credit, consider seeking the advice of a non-profit credit counselor if you are considering bankruptcy or just declared bankruptcy.



  1. I appreciate your point of view, but I must disagree with the following statement, “Do everything possible to avoid bankruptcy.”

    I am a consumer bankruptcy attorney and everyday I see individuals who have taken this message to heart. In an attempt to avoid what they see as a disaster, they put too much of their paycheck towards debt and then when any day-to-day emergency comes along, they need to borrow more. Their interest rates sail ever higher and instead of saving any money for their future or their family, all their hard work goes into servicing their debt.

    In addition, people take out dangerous loans with high interest rates and sometimes criminal enforcement techniques. Bankruptcy is a safe way for decent people to get a fresh start and their credit scores do improve dramatically within a few years.

    I find most individuals even contemplating bankruptcy already have bad credit, and it is entirely possible to have decent credit within 2-3 years after bankruptcy. It is NOT possible to have decent credit if a person spends 2-3 years struggling and digging themselves further into a hole.

  2. Vladimir said

    You provide a very good tips and concepts on how to recover from this unfavorable downfall situation. Amy added ideas of this situation. Somehow expect a more questions and inquiries on your site. All I can say to our viewers is that overviewing this site is a Guarantee wherein you can have advices and tips. Just asking if ever after the bankruptcy, and no more assets are being left; only that you can apply for a new job;then what would be the best possible way to do? How long would it take to recover such situation?

  3. F. Aldrich said

    You’re not 100% correct in this, and I’ll side with the first gentleman’s remarks.

    Being a Credit Counselor, your motivations are funded by the credit card companies (that you are “non-profit” is but a smoke screen). You have a job because the credit card companies fund organizations like yours to do everything possible to get consumers to pay every cent, to prevent loss. Not always a bad thing, but you slither through the obvious issue where some consumers get into a situation they can’t possibly dig themselves out of, without many years of undue hardship.

    The credit card companies are tossing their money into lobbying for new laws. The new bankruptcy rules passed created yet another barrier for some consumers.

    It’s their primary motivation, and it’s why you have a job.

    I’ve a couple of friends that are doing just fine after their bankruptcy – what really matters is what you do AFTER your bankruptcy. Pay things on time, don’t take on too much credit.

    Nice web page, but you really would do a better service to give all the facts. Alas, in your profession, it’s not necessarily your motivation to do so. So I caution your readers to get their information from other sources, too.

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  11. I didn’t see anything about debt settlement as an option over bankruptcy – although I realize that the crux of the article is about acquiring credit after bankruptcy. Still – before you get to that point, you should try a LEGITIMATE debt settlement / debt negotiation company (be careful of scams, however – look for a solid BBB member). You can get debt settlement for 30 -50 cents on the dollar, and your credit back in repair tons faster than through bankruptcy.

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  14. Rajani Kanta Seth said

    What you have written about overcomming of bankruptcy, i think it is not helpful. Because I have credit card payment due, personal loan payment due, vehicle laon an to pay these loan I have to take credit from some private party. As I belong to middle class family, what shall have to do, I can not unerstand. It is so painful. Any idea, then kindly share with me. I want to live in this society,

  15. The credit card companies are tossing their money into lobbying for new laws. The new bankruptcy rules passed created yet another barrier for some consumers.

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