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Rebuilding Credit After Bankruptcy: 3 Critical Steps

The following is a sponsored guest post by M. Sean Cydrus, an Ohio attorney specializing in bankruptcy.

Wading back into the murky world of debt can be nerve-wracking if you’ve just gone through bankruptcy. But if you have financial goals, it’s best to start now to work towards them.

Here’s your chance to take the “clean slate” that bankruptcy provides and run with it:

Step 1: Get your credit reports and credit score

First, request your free annual credit report.

Review the report to ensure everything is 100% accurate. All debts that were discharged as part of your bankruptcy should list a zero balance with “discharged in bankruptcy” or “included in bankruptcy” in the notes. The closing dates for these accounts should be within the month after your bankruptcy.  Contacting the credit reporting agency and providing your “Discharge of Debtor” document should be enough to get this fixed.

Then, purchase your credit score (a good source: This may hurt a little bit, as you see the full impact of bankruptcy on your credit score. But it’s important to know where you are to figure out how to improve, and to see how far you’ve come!

Step 2: Establish and stick to a spending budget

If spending is a problem for you, fix it first.

Create a budget that covers all of your living expenses, as well as some splurges like dining out and entertainment. Be sure there’s a piece of your income going to savings – 10% is a good place to start, although you may want more if you plan to buy a house or car in the next few years. After 90 days of keeping to the budget successfully, you can move to Step 3.

Step 3: Build positive credit

You have to use credit in order to build it. So next, you need to open a new credit account.

The best place to start may be a secured credit card, which is a card where you deposit money in advance that is used to pay for charges. Talk to local banks to find one with little to no upfront fees, and make sure the card will be reported to the credit agencies. Then, use it wisely, and put some extra money aside so that you can eventually deposit more money to raise your credit limit.

Many filers are surprised by an avalanche of credit offers after bankruptcy, but it’s actually very common. As you’re prohibited from filing for bankruptcy again for several years, credit card companies may see you as an attractive new customer. The credit offers received are typically unsecured credit cards. If you can get one, go ahead, but make sure it has no annual/up-front fees and that you pay the balance in full each month.

Your goal over time is to have a couple of accounts with banks and credit unions that are in excellent standing. Request a raise in your credit limit every 12 months, and pay the bill in full every time. This will do wonders for your credit score.

So when can I get a mortgage?

The best terms for mortgages go to buyers with good scores and sizeable down payments. Start saving and building credit now, and you’ll be ready to buy soon enough. A good rule of thumb is to wait two years before a home purchase. By then, better credit scores mean better mortgage terms, which means more house for less money – always a smart play.

Remember, your credit score can and will rebound quickly if you’re smart about your finances after bankruptcy. The end goal is a stable financial future and positive credit profile, which is completely within your reach.

M. Sean Cydrus is a bankruptcy attorney focused on helping individuals and families struggling with debt. His practices in Columbus and Chillicothe, OH, are dedicated to a personal approach to debt management. Find more information on bankruptcy at

Andrea’s note: As someone who has experienced bankruptcy, I can tell you that these tips are extremely helpful for rebuilding your credit. My attorney didn’t offer me any advice; he took my money, showed up in court, then I never heard from him again. If you’re near the Columbus, OH area, consider contacting M. Sean Cydrus for help with your debt questions.


  1. It is so important to check your credit report.  I do it every year, and I still find errors every now and then.  Even without a bankruptcy, you need to check!

  2. I have never been bankrupt before but a good friend of mine has and it took them 7 years before they could get any credit. They really penalize you. I often check my credit report just to see where things are at make sure there are no errors; it's one way to make sure I don't head down this bankruptcy road.

  3. Yes, there is still credit life after bankruptcy and the above tips to re-establish credit would do.Getting a secured credit card is a good start. Making sure to stick to a budget and not get into deep debt once more are probably the keys to getting back on financial track.

  4. why is nobody discussing a chapter 13 bankrupcy? It really hurts your credit score and then you have to pay back the balances on the credit cards. We had to do chapter 13 as we could not afford our house payment and the bank would not work with us. When can we get a credit card and when can we buy another house? How long does it take? We won't be paid off our bankrupcy for another 3 years of paying over $800 a month, hopefully neither of us will lose our jobs in the intereim.

    • Hi Susan. We are in the same boat as you. I would suggest using the tactics suggested above. Get a secured card. You should be able to get one now. Use it for standard purchases; if kids, buy school supplies and clothing, not splurge shopping. If no kids, use it for vehicle repairs or household repairs, etc. In other words treat it like a saving account with a spending plan for NEEDED items. I would recommend bumping the amount up periodically. This will do a lot to provide a pattern of good credit worthiness while you wait to pay off your Bankruptcy plan. After two years into your Bankruptcy, assuming you are on a five year plan, you should be able to apply for an unsecured credit card with your bank. If you are already there and they have declined you, get the secured card to establish credit again. They should be able to roll you over to an unsecured card within 6 to 12 months. If they aren't working with you, get another Bank. The advise above on the house buying is a good advice and should work well for you. Happy times ahead. 🙂

    • I did a chapter 13 bankrupcy almost a year ago. I make payments of $795 to a trustee fo another two years. I almost lost my house to forclosure but was able to work with JP Morgan Chase to modify my loan to a fixed with a reduction of the principal. I would reccomend getting a mortgage with JP Morgan Chase or Bank of America and maybe Wells Fargo but your banrupcy needs to be discharged and your credt score needs to be as high as possilble. My credit score is so bad I have to use a pepaid credit card from Green Dot. It is going to be quite awhile berfore I get another real credit card. The sooner th better.

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