Get Out of Debt Guy

How Soon Can I Begin to Repaid My Credit After Bankruptcy? - Marvin

Posted April 15, 2013

WRAL Reader Question

My wife and I filed for and were granted Chapter 7 Bankruptcy three-and-a-half years ago. It was a life-saving move in that the debt was crushing us and it forced us to create and live by a budget so we won't get back into the same situation again. Both of us have improved our income (the family income now is about 50% more than it was when we filed).

I've heard the magic time frame for bankruptcy is 7 years. Following that, your credit is restored and you can get reasonable interest rates when using credit is a necessity. How true is this, how much does bankruptcy affect your credit long-term, and are there any ways to improve our credit scores during the 7-year time-frame?




Thank you so much for reaching out and asking me your question. I'm glad you didn't wait one more day to do so.

The time to begin rebuilding your credit is on the day you get the notice the debt has been discharged. In a chapter 7 bankruptcy this is typically around 90 days after filing.

There is no need to wait to get your credit back on track. If you start then, by the first year you'd be able to buy a new car, by the second year you'd be able to qualify for a mortgage, and by the third year your credit score would be back to new.

In fact creditors don't wait. Immediately after bankruptcy people start getting offers for new credit. 

After bankruptcy many people avoid credit. They associate credit with pain and I certainly understand. When I filed bankruptcy in 1990 I felt the exact same way. 

But the reality is that it is never the credit that gets people in trouble, it's the debt. It is possible and advantageous to have good credit without having bad debt. It's like owning sharp knives in the kitchen but not stabbing people with them.  You can do it.

Because of the association of pain and credit, people avoid credit after bankruptcy. That's the wrong move to make.

Rebuilding good credit is critical to your future financial success in order to pull your credit score up and make it shine. Having a good credit score does not mean you need to go out and get loaded up in debt. It just means that when that time comes when you may need to get a mortgage or finance a car, you'll pay the least amount in interest. It's a smart financial move.

A credit score is used for other things as well, like pricing insurance or screening. There is no disadvantage to having a good credit score.

Read my guide How to Easily Rebuild Your Credit and Have Good Credit Again and let's get you headed in the right direction quickly.

And on your question about how bankruptcy impacts you credit score long-term, it doesn't if you just follow my guide and get back in the game to build your credit back to better than before.

Steve Rhode

WRAL Get Out of Debt Guy

If you have a credit or debt question you'd like to ask, just click here and ask away.

If you'd like to stay posted on all the latest get out of debt news and scam alerts, subscribe to my free newsletter.


Please with your account to comment on this story. You also will need a Facebook account to comment.

Oldest First
View all

About this Blog:

Steve Rhode has had careers in opthalmology, real estate and as the head of a nonprofit debt counseling firm. On his blog, he offers hard-won, free advice about getting out of debt, consolidation and making the right choices as you manage your money.