Bankruptcy filings in the United States are not as uncommon as some may think. With over 1 million different individuals and businesses filing for bankruptcy in 2013 alone, it is important to recognize that bankruptcy can be a benefit to your financial scenario and is not a terrible financial maneuver. However, once you file for bankruptcy, it will take some time to rebuild your credit.

How Bankruptcy Will Affect Your Credit Score

Your credit score is the number that shows lenders and creditors how reliable it would be for them to lend you money. Those with higher credit scores are considered more likely to repay their debts and may be offered lower interest rates than those with lower credit scores.

Filing for bankruptcy will cause your credit score to take a noticeable drop since it shows to lenders that you may not be able to pay back the money they loan you. Depending on your credit score before bankruptcy, you may reach a credit score so low that lenders are skeptical about lending you money at all.

Steps to Help Financial Recovery

While it may take some work, filing for bankruptcy does not mean that there is no financial hope for you! There are ways that you can begin rebuilding your credit and get back on a good financial path.

In order to recover from bankruptcy, follow the following steps:

1. Obtain a free copy of your credit score to check for errors and develop a repayment plan.
2. Open new accounts at your bank and sign up for automatic bill-pay to ensure that all deadlines are being met.
3. Apply for a secured credit card to help build credit.
4. Get around credit card companies by applying for gas and company credit cards to help rebuild credit for purchases you often make.
5. Completely pay off balances during the month and do not rely on the bare minimum repayment amounts.
6. Continue monitoring your credit score for inaccuracies and to see how your hard work is paying off.

The best way to rebuild a credit score is to get back to the basics. Filing for bankruptcy can allow you to avoid the same mistakes that put you in debt to begin with and can be a good clean slate for your financial future. For example, if credit card debt caused many of your financial problems, opening up a credit card with a small limit and repaying that limit in full can develop good repayment habits while completely rebuilding damaged credit.

It can take some time for bankruptcy-damaged credit to be restored. By constantly practicing good-credit habits and monitoring credit scores for inaccuracy, you can help prevent bankruptcy from having more long lasting consequence on your financial future. Working with an experienced bankruptcy attorney can also be a part of developing your financial plan, so do not be afraid to reach out to one if needed!