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How Long Does it Take to Rebuild Credit After Chapter 7 Bankruptcy?

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If you have problems with unsecured debts and are falling behind on payments, Chapter 7 bankruptcy can provide a solution. It immediately puts a stop to harassing credit collection calls and can provide the fresh start you need. However, one of the concerns clients often have about filing for Chapter 7 bankruptcy in Indiana is how it will impact their credit rating. The fact is that it can actually be less damaging to your credit score than continuing to make payments and you can generally rebuild in as little as one year. 

How a Chapter 7 Bankruptcy Impacts Your Credit Score

Bankruptcy is available through the U.S. Court System and helps otherwise honest debtors who are struggling to pay their bills. Considering how credit card companies and other lenders often push people into taking on more debt than they can reasonably afford and then charge high-interest rates and penalty fees when they fall behind, bankruptcy helps to level the playing field. 

Bankruptcy does have a negative impact on your credit score, but the long-term benefits outweigh any short-term consequences. Being overextended and missing payments has already taken a heavy toll on your credit rating. Filing for bankruptcy in Indiana can actually help in the following ways: 

  • It shows that you are aware of your financial problems;
  • It reflects a willingness to address the situation;
  • It eliminates outstanding balances;
  • It provides a clean slate for rebuilding credit. 

Rebuilding Your Credit After Bankruptcy

Filing a Chapter 7 bankruptcy through the Illinois Bankruptcy Court allows you to eliminate credit card balances, medical bills, past-due utilities, and other types of unsecured debts. Your credit score will drop but you can rebuild it in just a short period. 

You cannot remove bankruptcy from your credit report but you can repair the damage caused by your prior debt problems in as little as one year. Steps that can help your rebuilding efforts include: 

  • Create a reasonable budget, outlining all living expenses;
  • Consider whether you need to either spend less or increase your income to have the lifestyle you want;
  • Make a reasonable purchase that requires monthly payments;
  • Open up an unsecured line of credit (this is surprisingly easy, even after filing for bankruptcy), charge modest amounts, and pay the balance promptly. 

Our Indiana Bankruptcy Lawyers are Here to Help

Dealing with overwhelming debts and harassing collections calls as your credit score plummets? Fortunately, you can regain control and rebuild your credit through Chapter 7 bankruptcy in a relatively short period. At Whitten & Whitten, we are here to help. To discuss your options, give us a call or contact our Indiana bankruptcy lawyers online and request a free consultation today.

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