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Some steps to rebuilding credit after a bankruptcy filing

We have written before about the misconceptions many have about the fallout from filing bankruptcy. One thing uppermost in the minds of many who may be struggling with debt issues is whether filing for bankruptcy will wind up sending their credit scores into the coal scuttles.

There is no getting around the fact that bankruptcy will affect your credit score. But consider that if you are contemplating this step, your credit score is already in trouble. What that holds out is the reality that filing for bankruptcy, whether it is under Chapter 13 or Chapter 7, may represent the first step toward getting your life and your credit score moving in the right direction again.

As attorneys experienced in this area of law in Tennessee can tell you, credit is available after a bankruptcy filing, even if it is more expensive than you might want. And once under the protection of the courts, there are other steps you can take.

Investopedia.com offers some up in a list that includes the following:

1. Get a secured credit card. These cards look and operate like regular credit cards. They differ in that they are secured by cash you deposit with a bank. Shop around. Once you have the card, use it only to the point that you know you can pay off the balance each month.

2. Pay on time. By doing this you show you are in control. It may help to set things up on an auto-pay basis to avoid trouble.

3. Commit to saving. It doesn't have to be a huge chunk of change. It's the steady flow into the account that's important, building a financial cushion.

4. Find a mentor at your financial institution. The article suggests finding a staff person at your chosen financial institution who will serve to cheer you in your efforts.

5. Don't jump at new offers that come. They will come because lenders know that if you have filed for bankruptcy, you can't again for a set number of years. Experts cited by Investopedia suggest waiting at least a year and perhaps as many as five before taking on new credit, if then.

Knowing the full scope of your options is critical and if you fail to consult with an attorney, you do yourself a disservice.

Source: Investopedia.com, "Bankruptcy And Your Credit Score," Caitlin Kelly, accessed Oct. 22, 2014

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