Bankruptcy laws and procedures were designed to help people recover from overwhelming debt and start fresh. But even after your debt is discharged, your credit score still bears the mark of your former debt. Creditors still see you as a risk and want proof that you can make monthly payments on a loan or make credit card payments on time.

However, filing for bankruptcy may be the best thing you ever did for your credit. Your credit rating may actually come out ahead as you emerge better off financially than before you filed. In as little as a year, you could see your credit score recover significantly.

It does take some vigilance, though, and checking your credit report once a month is essential. Look for mistakes and dispute them. Learn your credit score now, so you have a baseline for comparison. You can also take advantage of the following options to build credit while continuing to pay your bills on time:

• Secured loans — Check with your local credit union or community bank about applying for one of two types of loans. One type of secured loan uses funds you already have on deposit as collateral. The other type holds the funds lent to you in a savings account, which are only released once you make the required payments. The benefit to you is that the bank or credit union sends a payment history report to the credit bureaus.
• Secured credit cards — These cards require you to make a deposit, typically equal to your credit limit. For creditors, it establishes that you can reliably pay your bills, which gets you a step closer to obtaining a card with a real line of credit.
• Authorized user accounts — If you have a parent or friend who will authorize you to use their credit card, you can build your credit by charging items to the card. With the ubiquity of online banking apps, you can easily reimburse friends and family from your phone or laptop. Just be sure that you choose someone who has good credit and pays their credit card on time.
• Co-sign a loan or credit card — Even a bigger ask then being an authorized user on a credit card, this option puts your co-signer on the hook in the event you don’t pay. But if you only spend what you can pay back and make on-time payments, this is a good option for boosting your score.

Whatever credit or lending options you choose, remember to read the fine print. Many secured loans and cards come with high interest rates and/or annual fees.

If you are facing insurmountable debt, bankruptcy may be your best path back to good credit.  Discuss your circumstances with an experienced New Jersey bankruptcy attorney who can explain all of your options, guide you through the bankruptcy process and protect you from administrative mistakes.

For more than 25 years, the Law Offices of James C. Zimmermann has successfully advised New Jersey clients in bankruptcy matters and helped them to restore their credit ratings. Call us at 973-764-1633 or contact us online. We have offices conveniently located in Vernon, Wayne, Pompton Lakes, Hackensack and Nutley, New Jersey.