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Keeping a healthy credit score after filing Chapter 13 bankruptcy

It is fairly common to hear people discuss the effect personal bankruptcy filings can have on credit scores. The fact is that those who are in financially difficult circumstances have probably seen an impact on their credit score already, and things could worse if they don't take steps toward debt relief. If someone is concerned about their credit score before and after filing for Chapter 13 bankruptcy, it is important to know there are ways for Tennessee residents to improve their credit scores.

For people in the pre-bankruptcy stages who are hoping to revive the credit scores, the first thing to do is to organize debt. Every time a bill is paid late it affects a person's credit score. That is why it is so important to make sure that bills are fully paid and paid on time. One way to make sure that deadlines are being met is to set up auto-pay through their bank. A person's payment history is by far the largest percentage of their credit score, so it is certainly critical for credit health to keep a clean record going forward.

Another tip for people in the pre-bankruptcy stage is to consider negotiating debt with their various lenders. Many lenders are familiar with financial hardships and may be willing to work with borrowers to establish more workable payment plans. It is best to start with anything that has revolving debt such as a credit card. These have the biggest effect on your score, while paying off installment debts such as mortgages and auto loans have a smaller impact.

For those in the post-bankruptcy stages many observers suggest getting back into the game sooner rather than later. Obtaining a credit card to is one of the more efficient ways to reestablish solid personal credit scores. Specifically, with a secured credit card the borrower pays an upfront deposit, and in most cases the deposit will reflect the person's credit limit. It is also important to make sure the card is reported to all three credit bureaus to get the full benefit.

Above all, the important thing to remember is that personal bankruptcy is an effective, proven way to shed the burden of debt. Of course, it's not a decision to be made lightly, but many have emerged from the process in a strong position to rebuild their financial life.

Source: The Huffington Post, "5 Ways You Can Rebuild Your Credit," Jeff Hindenach, Aug. 29, 2012

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

Toll Free: 888-376-0282
Phone: 423-933-1606
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