Rebuilding Your Credit If You've Filed for Bankruptcy Post-Divorce

Divorce and the events leading up to it can cause real damage to a person’s credit and financial state. As a result, many people end up having to file for bankruptcy either during or after divorce. Although this can seem terrible at the time since it will impact your credit history and score for up to ten years, filing for bankruptcy does give you a chance at a fresh financial start at the onset of your post-divorce life.
Once you have filed for bankruptcy and gone through the process, you can help boost your credit score afterward by working toward rebuilding and reestablishing your credit.

Get a Monthly Budget Together

Divorce does impact finances on its own, but you may also find that you have habits that contributed to your financial troubles. To help break those habits, draft a monthly budget and stick to it. A basic budget should include all regular sources of income; the amount and timing of your essential bills such as utilities, rent or mortgage, food and insurance; and optional costs, such as charitable giving and entertainment. When you have this all down on paper, you’ll be able to see exactly how much money is coming in and going out so you know what you have left over each month.

Work on Your Savings

With your bills largely handled in bankruptcy, you can start saving. By building savings, you can help protect yourself in the event of expenses that pop up and blow out your budget.
When you have a cash cushion, you’ll also be able to get some of the credit products that people with damaged credit use to re-build, such as secured loans and credit cards. Unlike traditional credit cards, a secured card is covered by an initial deposit you make. For a $500 secured credit card, for example, you’ll have to make a $500 deposit to open the account, and a secured loan works much the same way. These products are structured this way because they protect creditors against people who are considered a credit risk. As you make payments, however, they are reported to the credit bureaus, and this, in turn, will help rebuild your credit. Be aware that these types of products can be predatory, so do your research before you open any secured account.
It’s best to stick to just opening one account after bankruptcy. If you open too many, you can damage your credit more and end up in a worse position in the long run.

Pay Your Bills on Time

Making timely, regular payments is one sure way to help reestablish credit. This is a factor in the calculation of your score and something that prospective creditors want to see when they pull your reports. Just one late payment can ding your scores, and it can be tough to get them back up.

Watch Your Credit Report

Credit reports are not perfect. You may have errors on there, such as old, paid-off accounts shown as open, late payment reports that aren’t accurate, or even accounts that are not your responsibility. Keep an eye on your credit report to ensure all the information it contains is accurate. If you do find an error, you can dispute it with the credit card bureau providing the report.
It will take some time to rebuild your credit after a post-divorce bankruptcy, but it is possible and worth the effort. When you have better credit, you’ll receive better rates on credit products and have more providers to choose from. If you are struggling to manage your finances, consider taking some debt counseling sessions for help.