Print This Page

If I declare Chapter 7 bankruptcy, how long will it take me to get my finances back in order?

Posted on Apr 27, 2012 in Bankruptcy, Bankruptcy Information, Chapter 7, Illinois, Life After Bankruptcy, Uncategorized, Wisconsin


While each situation is different, it is possible for you to get back on your feet very quickly after a bankruptcy – maybe even as fast as a few months.  There are certain steps you should take while also being careful not to get yourself right back into financial trouble.

The first way to build your credit back up is by reaffirming debts within the bankruptcy. A reaffirmation is simply an agreement to keep paying a debt even though you declared bankruptcy. You shouldn’t take this idea lightly and should discuss all of the pros and cons with your attorney. But if you do reaffirm a debt, your credit report will reflect the positive payments you make on the debt.  This is why we say it’s possible to file bankruptcy and still keep a car or home.

Another way to improve credit is to take out a credit card and pay off the balance every month. This way you will show potential creditors that you borrow money but are a good risk because you always pay it back. These payments will show up on your credit report and make a positive impression. However, this is something that should be done with caution. You will not be able to declare bankruptcy again for several years so it is important to pay off the balance every month. This is another important discussion to have with your bankruptcy attorney.

Finally, a good way to rebuild your credit is to take out a small secured debt. A secured debt is a debt where you and the creditor agree that if you don’t pay the creditor can have the property back (like a car loan). While it might be hard to take out a large loan for a car you can probably take out a small loan for a television, washer or dryer or have a debt tied to a bank account or credit union account so long as you show the creditor that you have some money in the bank.

Taking on debt after a bankruptcy is a big decision.  Many people are afraid to borrow again because they are afraid they will be back in the bankruptcy court again. Other people need to take on debt or want to take on debt to establish credit and possibly make a big ticket purchase in the future, for instance a home. Any decision to take on debt after bankruptcy should be made after consulting with your bankruptcy attorney.  The only way to earn credit is to borrow and successfully pay off debts, whether the debts are for utilities, gas credit cards, or car loans.

This post was authored by Lakelaw associate Nicholas D. Strom.


Leave a Reply

Your email address will not be published. Required fields are marked *