What Can I Do to Improve My Credit During Bankruptcy?

If you filed for Chapter 7 bankruptcy, most of your debts may get discharged, but your credit score may significantly plummet as a consequence. With a Chapter 13 petition, you may demonstrate your greater financial responsibility to the credit bureaus with your repayment plan, but this plan also means limiting your available credit for the time being. Either way, when it comes to having a consumer bankruptcy filing on your record, your credit may be negatively affected for many years to come. If you wish to take back control a bit, please follow along to find out the initiatives you can take to improve your credit during bankruptcy and how a proficient Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center can guide you on handling this and all other matters pertaining to your case.

How can credit-building techniques unintentionally violate court rules?

While we appreciate your initiative and motivation to change your financial ways right after filing for bankruptcy, we recommend that you get the Kentucky bankruptcy court’s approval before you take any significant financial actions. For example, as a general rule of thumb, you should avoid applying for unsecured credit cards and taking on any unsecured loans during your bankruptcy case, especially without consulting with or disclosing this to your appointed bankruptcy trustee.

This is because, first of all, you do not want to do anything that will increase your already unmanageable debt during your case proceedings. Especially in a Chapter 13 bankruptcy case, this new debt may interfere with your already approved repayment plan. And so, when you fail to align with the court’s orders and neglect to include your trustee’s oversight, there may come the presumption of fraud. If you receive a fraudulent debt ruling, your once eligible debts may no longer be discharged, your entire bankruptcy case can be dismissed, or you can even face criminal charges for bankruptcy fraud.

What personal initiatives can I take to improve my credit during bankruptcy?

Rest assured, applying for and paying back unsecured debts is not the only way to rebuild your credit. While your bankruptcy case is ongoing, it may be safe to apply for secured credit cards. This is because they require a cash deposit to serve as collateral. However, for this to be effective in proving your improved financial behavior, you must ensure that you budget properly and not overspend. This is so you can make continuous on-time payments on this card. So before getting one, discuss your current financial capabilities with your trusted lawyer.

A second thing you can do, that does not require taking on more debt, is reviewing your credit report regularly. This is because accidental errors disclosed in your report can negatively affect your credit score. So if you identify such, you may quickly address and rectify it with the credit bureaus. Last but not least, there may be no harm in asking the creditors not part of your bankruptcy case to negotiate settlements or set up payment plans for your outstanding debts. Simply put, this may help your continuous on-time payments more doable.

To conclude, there is no need to go through the important steps of bankruptcy and credit building alone. Please seek the support and assistance of a talented Louisville, Kentucky consumer bankruptcy lawyer. Contact Schwartz Bankruptcy Law Center today.