How to Restore Credit After Chapter 13 Bankruptcy

Having an excessive amount of debt can create a huge financial burden. And oftentimes, it's difficult to make payments to your creditors. A Chapter 13 bankruptcy, wherein a court agrees to reorganize your debt and create a three- to five-year payment plan, can provide a fresh start. Unlike a Chapter 7 bankruptcy, Chapter 13 doesn't erase your debts. Rather, you repay a portion of your debts to creditors, and repayment is based on your current income. Unfortunately, a Chapter 13 lowers your credit rating. But there are ways to restore your score after a filing.

Instructions

1

Check your credit report after the bankruptcy proceeding. Debts included in your bankruptcy should feature a notice on your credit report that says, "included in bankruptcy." If not, these accounts may show a delinquent status. Order your credit report from Annual Credit Report to check your accounts for accuracy.

2

Keep up with your payment plans. A good payment history helps restore your credit after a bankruptcy. Repay debts included in the bankruptcy and those excluded from the bankruptcy, such as an auto loan, mortgage or student loan. Set up automatic payments.

3

Apply for a credit card. Having a credit account in good standing helps raise a low FICO score after a bankruptcy. Get a high-interest or bad credit credit card, or talk to your bank about secured credit cards, which entail a security deposit of about $500.

4

Think before buying expensive items with a credit card. New credit card charges can trigger future problems. Use credit to help restore your credit score, but pay off new charges at the end of every month.