Managing Debt

Bankruptcy Survival Guide

Comments 10 Comments

Bankruptcy RecoverySo you’ve been through bankruptcy. You’re probably feeling a mixture of emotions; perhaps you are relieved to get a fresh start, but at the same time are frustrated that you have to start over all over again to restore your credit. It will take time to process all the emotions from the setbacks you’ve been through. But while you do, there are some specific steps you can take to rebuild your credit and financial life.

The process of rebuilding your credit after bankruptcy is twofold. You must:

  1. Deal with the negative information on your credit reports and,
  2. Build positive new credit references

Here are detailed, step-by-step instructions for each:

1. Deal With Negative Information

Though you may be dreading it, you need to get a copy of your credit reports from each of the three major credit reporting agencies: Equifax, Experian, and TransUnion. You can order a free copy once a year from

You will not get free credit scores with your credit reports however.

If you are serious about trying to get your credit back on track, though, it’s a good idea to subscribe to a credit monitoring service that will also provide you with credit scores so you can follow your progress.

Tip!Tip: If you are only going to get your free annual reports, order them at least 60 days after your discharge date. If you are using a monitoring service, you can order them immediately after your bankruptcy is completed (discharged).

There are two main areas to focus on when you review your credit reports:

1. Accounts. Each account included in your bankruptcy may be listed as “charged off” (which means the debt was written off by the lender), or as “included in bankruptcy.” Any debt that was discharged in your bankruptcy should list a zero balance. Dispute any that are incorrect. Negative information about these individual accounts can be reported for seven years.

2. Public record information. You’ll see a section on your credit report which includes “public record” items reported by the courts. Your bankruptcy proceeding will likely be listed here. By law, all personal bankruptcies can be reported for as long as ten years from the filing date.  However, credit reporting agencies will remove Chapter 13 bankruptcies (bankruptcies where some or all debt is repaid) from reports seven years after the filing date.

Always look over your credit report carefully for any inconsistent or inaccurate information and be sure to dispute any mistakes.

Tip!Tip: Keep copies of your credit reports for your records in case you have trouble getting inaccurate items removed.

Removing accurate, but negative, information is not easy to do, no matter what you may have heard or read online. Credit repair clinics that make those kinds of promises are either helping consumers negotiate with creditors or collectors to remove positive information in exchange for payment (which doesn’t apply here, since most or all of your debts have been discharged) or by disputing accurate information in the hope that it will not be confirmed and will be removed as a result.

Don’t waste a lot of time or energy worrying about the negative information you can’t do much about. Instead, focus on what you can do, and that brings us to the next step:

2. Build Positive Credit References

Recent information has a major impact on your credit scores. That means you can start to rebuild your credit as soon as your bankruptcy is completed. You do this by making sure you have current positive credit references that can help boost your credit scores.

Debts you paid on time throughout your bankruptcy – such as a car loan, mortgage or student loans, for example – help. But you will also want at least one open major credit card listed on your credit reports. If you don’t have any, consider a secured card.

A secured card is a major credit card that requires a security deposit. The deposit will be held in a bank account as long as the secured card is open. If you manage your account properly, you will get your deposit back when you close the account.

Note that a secured card is different from a prepaid card. A prepaid card is a type of debit card. You load money on the account and then use the money you’ve loaded. These cards are not reported to the major credit reporting agencies, so they don’t help build your credit scores.

Watch Out for Scams!

After filing for bankruptcy, you will probably be deluged with offers of credit and financial services promising to help you rebuild your financial life. Some of these are genuine, but many are scams. Here are some to watch out for:

  • Advance Fee Loan Scams: Millions of consumers have been tricked into paying high fees up front for “guaranteed loans” that never materialized.’s forums are filled with stories of consumers with bad credit who lost hundreds or thousands of dollars to these criminals. Learn more about loan scams here.
  • New Credit Files Scams: Some companies promise to help you establish a brand new credit rating. “File segregation” is the official name of this scam. The company will instruct you to build a new credit history by using an EIN (employer identification number) rather than a social security number. Beware, this is illegal. In a worse case scenario, it can land you in prison or result in heavy fines.
  • Credit Repair Scams: Some firms promise to remove all negative information – including your bankruptcy – from your credit report. There are thousands of complaints to the FTC every year about these scams. While there are some situations where professional help can be useful, there are few reputable credit repair companies out there who can really deliver on what they promise you. Here’s free advice to get your credit back on track.

Bankruptcy filings have reached epidemic proportions. To understand the true size of this ever growing issue, check out’s One Bankruptcy Every 15 Seconds an Infographic.

Tip icon courtesy of Jacob Hnri 6, via Wikimedia Commons

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • John Hoerschgen

    I filed Chapter 7 Bankruptcy in January 2008 due to disablity in that began in October 2005. The bankruptcy was discharged on April 29, 2008.

    I’ve been trying to correct errors on my credit report ever since.

    Included in the bankruptcy was my mortgage and a credit card that I had with Washington Mutual Home Loans. J. P. Morgan Chase is now the servicer for my mortgage and it is in good standing.

    However, J. P. Morgan Chase is reporting the credit card to the credit bureaus. They are reporting it as sold. They are also reporting it as included in bankruptcy. The way I see is that they can’t repot it as sold and included in bankruptcy. I filed the bankruptcy in January 2008. They did not take over Washington Mutual Home Loans until around September 2008. The questions that I have are as follows.

    If the bankruptcy was discharged in April 2008, that was before they acquired Washington Mutual Home Loans. Therefore, Chase should not be able to report the account as sold because it would have been discharged in bankruptcy prior to them acquiring Washington Mutual Home Loans.

    If by chance, Washington Mutual Home Loans sold the account prior to my filing the bankruptcy, then Washington Mutual Home Loans would not have owned the account when Chase took over Washington Mutual Home Loans.

    I have disputed this information several times. But, the information is reproted as confirmed by Chase. What can a consmer do about this.

    I getting nowhere with this issure.

    Thank you.


    • Gerri

      John, I am not sure whether it is worth the fight to try to get the account reported differently. Whether it was reported as sold doesn’t affect your credit scores one way or the other. It also doesn’t affect the time period that account can be reported. Am I missing something?

  • Pingback: Your Post-Bankruptcy To-Do List | The Bankruptcy Blog

  • don

    I need a car, should I buy the car prior to filing bancruptcy, I’m not late on anything but when the lower interest timeframe expires I’ll have to fold

  • Gerri

    Don – I always recommend consumers consult with a bankruptcy attorney sooner rather than later, and certainly before making major financial moves if they are contemplating bankruptcy. Taking on new debt, or selling or transferring property prior to filing for bankruptcy, is not something I recommend doing without first talking with an attorney.

  • Pingback: Bankruptcy on the Rise in U.S. |

  • vgunzales

    Gerri, my situation is Im trying to determine if bankruptcy should be my option. Im married with 2 children. My wife works partime, Im fulltime employed earning 83k per yr.
    We currently owe approx 30k in credit cards, 53k on a home equity loan which is currently in default for almost 1 yr now. My wife has a student loan owing 20k.We were able to modify our primary residence mortgage and are current with it. Everything else is continuosly late or not getting paid. I dont know if I should be considering bankruptcy as
    we’ve tried everything else. Tried selling our home and with the poor market we were not
    able to sell. I cant find a second income, not sure what to do . 50 year old needs help!!
    Can you advise?? ..thank you very much!!

  • Gerri Detweiler

    Vgunzales -

    The only way to know whether bankruptcy might help you is to meet with a consumer bankruptcy attorney. The consultation should be free, and it will be confidential. No one (including your creditors) will know you are seeking that kind of help, so there’s really no reason not to at least meet with one to find out whether it is a legitimate option for you.

    Please go to to find an attorney in your area and set up an initial consultation. I am not saying it will be the right choice for you, but you need to find out what it can or cannot do for you.

    One of the things you’ll want to ask the is whether you could discharge some or all of your home equity loan if you file bankruptcy. In some situations this is possible.

    Let me know how this goes for you.

  • t. s. allen

    My husband and I filed bankruptcy and it was discharged on October 1, 2010. Two and a half years later I am finding it nearly impossible to rent an apartment/home. My husband makes $80,000 a year. Our credit score is 626/630. We have perfect rental history but that clearly doesn’t matter. If we can’t find a place to live our family of five will be living in our mini van. It seems odd we could qualify for a home loan (which we don’t want to do at this time) but can’t find a place to live because of the bankruptcy. What can we do?

    • Gerri Detweiler

      How incredibly frustrating! Are you in a part of the country where the rental market is particularly tight? Do the landlords tell you specifically that your bk is the problem?

      • t. s. allen

        This has occurred in both the Seattle area and DC/Baltimore area too. It appears to be the BK and the resulting credit score.

        • Gerri Detweiler

          I wish I knew what to tell you. Ironically, you’re less of a risk than someone who hasn’t filed because you can’t file again for several years! Hopefully one of our readers will weigh in with how they managed to overcome this kind of problem.

Find out where you stand.
Get your FREE personalized credit report card.

Sign Up Now

Stay connected to our experts

Please submit your email address to get credit & money tips & advice
from our team of 30+ experts, delivered weekly to your inbox.