Preparing for Post-Bankruptcy Credit Repair Before Filing Bankruptcy

Credit repair is a process in which individuals take steps to improve credit scores. For those entering bankruptcy, it is critical to consider things that can be done before filing bankruptcy that can have a lasting effect afterward. While most who are thinking about bankruptcy are hoping to be debt free, working to rebuild a credit score after bankruptcy can be challenging, unless you plan in advance.

Tips to Credit Repair

Before filing bankruptcy, take stock of your credit situation and your loans. The following tips can help individuals to prepare for bankruptcy with an eye on the future.

Under bankruptcy law, any creditor paid more than $600 in the last six months may be a red flag. Those funds may be confiscated from the creditor (who could be family or friends, too) to pay back all creditors. However, individuals should consider paying off any small balance credit cards in advance, under this amount. This will allow for the account to remain open and active after the bankruptcy, allowing the individual to use it very sparingly to rebuild credit.

Ensure all secured loans you plan to keep after the bankruptcy are paid and up to date. These may include mortgage loans, car loans or other secured loans. Pay them on time throughout to boost credit.
Make student loan payments on time. Borrowers cannot have these loans discharged during bankruptcy.
Focus on credit repair within the home, too. Make a budget that will allow for repayment of debt easily. Consider extra employment if needed to keep debts low.
Avoid applying for new credit card loans until after the bankruptcy. Wait at least a year to apply, though you can use secured credit cards before that point.
Be sure to protect any assets allowable in the bankruptcy through exemptions. This allows the individual to have valuable assets after the bankruptcy as well.

Credit repair tips like these should all be within the law. Most state and federal exemptions will protect the average person’s household goods and tools, but it is critical to take steps prior to bankruptcy on your own to protect your credit.

Hire an Attorney

When working with an attorney, the attorney will give advice and resources on how to get through the bankruptcy and how to keep credit in the best possible condition through it. Some attorneys will also help individuals with planning for credit repair after the bankruptcy as well.

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