Good money practices rebuild credit scores after bankruptcy

Filing for bankruptcy typically represents a low point in the financial lives of people in Michigan, but the chance to clear out debts offers opportunity for the future. A bankruptcy will linger on a credit report for at least seven years and impact an individual's ability to rent apartments or obtain loans. Despite this, people can rebuild their credit scores with proper money management.

A crucial first step requires reflection on the causes of the bankruptcy. Someone who piled up debts because of excessive spending must commit to living within a budget and avoiding debt. Problems like unemployment or a medical crisis, however, might pass and allow a person who had normally been responsible with money to continue forward without falling into debt. After analyzing the source of financial woes, people need to set up budgets and strive to build an emergency savings fund.

Paying utility and insurance bills on time will begin to revive someone's credit score. A person might also open a credit account at a store or gas station. This action would create a new credit history, but the person must avoid charging any debts on the open credit accounts. The recovery period after a bankruptcy can provide the motivation to develop better financial habits.

When a person is in the throes of financial hardship, a consultation with an attorney may reveal options for escaping insurmountable debts or foreclosure. An attorney might inform a person about which debts a bankruptcy could discharge. Legal assistance may help a person file complete financial disclosures with the court and avoid delays or denials. An attorney might also confront creditors that continue to harass a person despite a bankruptcy filing. These services may help empower a person during a stressful time and pave the way to a fresh financial start.