Protecting Your Rights And Your Future

After bankruptcy, rebuilding credit needs focus and good habits

| Dec 23, 2015 | Personal Bankruptcy

In Arkansas and all other jurisdictions, studies show that people in all age brackets file for personal bankruptcy protection. The age group that contains the highest number of bankruptcy filings is the 25 to 44 age bracket. According to a prominent financial economist and university professor, a person can indeed rebuild his or her credit rating after bankruptcy.

The economist also made the surprising point that because a person cannot usually file another bankruptcy for seven years after completing one, creditors generally regard them as better credit risks than many others. The key after bankruptcy is to maintain a methodical system of credit maintenance. Perhaps contrary to general opinion, credit should be used sparingly in order to recharge one’s credit score.

Actual money owed on credit cards, for example, should only be a small part of one’s available income. It is not good, moreover, to maintain several other substantial accounts with nothing owed. This is a signal to creditors that you may quickly run up a huge deficit of debt and create a personal financial crunch.

Another economic expert at a Midwestern university points out that rebuilding credit after bankruptcy will be a slow process. How soon the process improves one’s standing will depend on how fast the good, new accounts outweigh the old, bad ones. For example, paying one’s car loan faithfully on time each month will have a powerful positive effect within one to two years of payments, assuming that all other accounts remain meticulously up-to-date. The same applies, of course, to the maintenance of mortgage payments.

For those residents of Arkansas who have filed and completed their bankruptcies, it is important to develop and apply consistently good money management habits. This may include keeping to a budget, knowing your income and expense details, paying bills through automatic payment procedures and monitoring one’s credit record with an eye to correcting mistakes that may appear. In this way, a person who has successfully erased a large amount of debt in a bankruptcy may move forward to maximize the economic power provided by a fresh start and a clean slate.

Source:, “How To Rebuild Your Credit Before Turning 45“, Rebecca Sheppard, Dec. 21, 2015