Get Out of Debt Guy

When Should I Start Rebuilding My Credit After Bankruptcy? - Ray

Posted April 29, 2013

WRAL Reader Question

Filed bankruptcy in 2011.

When the bankruptcy is over should I apply for credit cards to build up credit scores or should I apply for them right before the bankruptcy is over or should I leave them alone completly.

Ray

Answer

Dear Ray,

If you are still in a bankruptcy that was filed in 2011 then I am assuming you are in a chapter 13 bankruptcy. If that is a correct assumption then you should not apply for any credit without the approval of the bankruptcy trustee.

I understand your desire to get a jump on rebuilding your credit but I'd hate to see you do anything that might impact your current bankruptcy. However, applying for a secured card that will boost your credit again is not actually an extension of credit. But I would not suggest taking any chances. Ask permission first to apply for a secured card. They might say yes.

If you had filed a chapter 7 bankruptcy, where your debt is discharged in about 90 days, then you can start rebuilding your credit on day 91.

But all is not lost even if the bankruptcy trustee says you can't apply for secured cards yet. There are some things you can begin to do right now before you get your final discharge notice or permission from the trustee.

The number one thing to do would be to get a consolidated credit report or a free credit report from each of the major credit bureaus through AnnualCreditReport.com.

Once you lay them out in front of you I want you to look for two major items. The first is to make sure all your debt included in the bankruptcy is properly noted as being included. We don't want any included items showing as just being open and delinquent.

The second item is to look for any accounts or incorrect information and file a dispute with the credit bureaus to remove that information. Follow the instructions to do this that you will find on the credit reports.

At least with this approach we can lay the groundwork necessary to be ready for when you get your discharge notice and we can start boosting your credit score with new credit.

If you get a copy of your credit reports and you'd like for me to take a look at them for free, just come to the next Raleigh area Get Out of Debt Guy Support Group meeting.

Until then I think you'll find my guide, How to Easily Rebuild and Repair Your Credit After Bankruptcy, lays out all the steps necessary to finish the credit rebuilding job when you are ready.

Steve Rhode
WRAL Get Out of Debt Guy

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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.