Filing for a bankruptcy is the most serious financial decision you can make, and it has huge ramifications. Bankruptcies stay on your credit report for 10 years, and during that period of time they send your credit score into a nosedive. Bankruptcies will also lighten your debt and either liquidate your assets or set you up with a payment plan, but you won't benefit once you pay off your debts. If you have incredibly low credit due to your debts, you might actually see a boost in your credit rating after bankruptcy relieves you of your debts, but regardless of where you stand, after you file for bankruptcy you'll want to do some repair work.
Step 1
Obtain copies of your credit report from the three main bureaus (Equifax, Experian and TransUnion) and make sure all the accounts included in the bankruptcy are properly discharged, meaning their balance due should be reduced to zero.
Step 2
Continue paying off your other debts regularly. Some debts, such as student loans, often aren't discharged through bankruptcy, but this isn't a bad thing for your credit score. Making on-time payments will add positive listings to your credit report and help boost your score.
Step 3
Obtain a secured credit card, if you don't already have one, and use this to build credit through responsible spending. Spend no more than 10 percent of your card limit each month, and pay the card off in full each month to avoid paying interest.
Step 4
Write a letter to the credit bureaus explaining why the bankruptcy occurred, if it happened through means such as losing a job, and ask them to insert the letter into your credit file. This letter will be seen by all creditors evaluating your credit profile, and if you have a reasonable explanation for your bankruptcy--not one seeking empathy but one explaining your unfortunate circumstance in spite of your good spending habits--you could catch a break on occasion where credit is concerned.
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