I Filed Bankruptcy. How Do I Legally Rebuild My Credit? – Janet

“Dear Steve,

I finally filed for bankruptcy. I am anxiously waiting for my hearing. But I am now trying to look forward to the next phase in the process of getting back on my feet. I filed Chapter 7. I have a house that I am current on with very little equity, so I will be able to keep the house. I want to do everything right from this point on and I am determined to follow your advice since you have been so wonderful to all people that write to you.

A few questions. The fact that I have always paid my mortgage on time will it help with my credit score? When should I begin pulling my credit reports? When can I begin to apply and use secured credit cards? Do I have to wait for my discharge or can I begin this process now? You have been an inspiration to me at a very difficult time in my life. Thank you for all you do for everyone.


Dear Janet,

Can you see, I’m blushing from your kind words. Thank you.

It will take a few months to get your final discharge from your Chapter 7 bankruptcy. In the meantime you should save up cash to use for your secured cards.

You might also want to read Chris Has Bad Credit. I Show Him How to Easily Get Good Credit Using a Bad Credit Secured Card.

I wouldn’t apply for the secured card till you get your final bankruptcy discharge notice. I’d much rather see you spend that time between now and then to actually build an emergency fund and save up at least $1,000 in cold hard cash sitting in a boring old savings account.

As a homeowner you know how those unexpected things around the house can happen. In fact I think a bird just built a nest in the exhaust fan in on of our bathrooms. It never seems to end. But since you won’t have credit to fall back on, you’ll need cash on hand to pay for those surprises.

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Having the mortgage reported on the credit report doesn’t really help you that much. It’s a secured debt and gives you less points than a credit card paid on time. That’s why when you are looking for a secured card, or two, to get you need to make sure they report to the credit bureaus. On a credit report you can’t tell the difference between a secured account and an unsecured account. That part is not reported by the banks.

Once you get your cards you do not need to carry a balance month-to-month. Use it in place of your debit card and send in the payment when you spend the money or once a week. Just don’t let the balance build to more than 35% of your limit on your secured cards. I sent my payments in weekly just because I did not want the balance to build and face it at the end of the month.

Your credit limit will be equal to the deposit you place with the bank to get the card. The bank will pay you interest while they have your money and it will be held in an FDIC insured savings account. When the day comes you close the account, you’ll get all your deposit back.

As far as the credit report goes, I would wait at least 60 days after the discharge of your bankruptcy and then use this link to get a consolidated credit report. What you’ll be looking for are any items that were included in the bankruptcy but still showing as open. Collection accounts are notorious for not updating their status. Correcting it is simple, just write a letter to the individual credit bureau that is reporting the incorrect information. You can include a copy of the list of creditors in your bankruptcy and your final discharge notice. That will be enough for the credit bureau to see the information is wrong and needs to be removed.

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And Janet, that’s it. It’s just that easy to legally repair your credit. Your credit score will continue to improve as time goes by after the bankruptcy. In fact, when you pull your consolidated credit report after your bankruptcy you might want to order your credit scores at the same time. And then a year latter get your credit scores again. You will be pleasantly surprised at the increase in your credit score.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
Damon Day - Pro Debt Coach

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