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How can I rebuild my finances after chapter 7?

While filing for chapter 7 can help you get a handle on massive debt, your credit score will be negatively impacted. While bankruptcy typically stays on your credit report for ten years, there are steps you can take to begin immediately rebuilding your credit and restoring your finances. Nerdwallet offers some tips on credit repair post-bankruptcy. 

Create a budget

Even though most of your debt will be discharged, it's important to create a post-bankruptcy budget and stick to it. This will hone your ability to use money wisely, as well as ensure that your daily expenses are covered sufficiently. Sticking to your budget will also allow you to put money away for an emergency savings fund. Even a minimal fund will help you deal with unexpected expenses, such as vehicle repairs or medical costs. It will also prevent you from relying too heavily on credit, which can be problematic. 

Check your credit score

You want to check your credit score frequently after bankruptcy to track your progress. It's best to stick with the same reporting bureau, as different bureaus tend to offer different scores based on varying factors. If you notice any errors with your score, contact the reporting agency right away to have the issue rectified. Even a seemingly minor issue could bring your score down quite a few points, which can be a real issue for someone fresh out of bankruptcy.

Apply for credit

While it seems counterintuitive, a portion of your credit score is based on credit utilization. That's why it's a good idea to apply for new credit at some point after your bankruptcy, although be aware that most lenders will be reluctant to work with you. You can get around this by applying for a secured credit card, which requires a deposit. You can also ask a trusted friend or family member to co-sign on a loan or credit card for you, which makes them responsible in the event you can't pay your bill. 

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