People in Kentucky who are struggling with debt might hesitate to file for bankruptcy because of fears about being unable to rebuild their credit. However, according to one study by Lending Tree, nearly two-thirds of people who filed for bankruptcy had achieved a credit score of 640 or more after two years.
The first step in improving credit after a bankruptcy is to apply for a secured credit card. This involves putting down a deposit, and initially, the person's line of credit will probably not be much more than the deposit. The person should put a low amount on the card each month, ideally less than 20 percent of the total available. This shows that the person does not intend to max out the credit. It could be a charge that recurs monthly, and it should also be paid off each month. This indicates that the person is responsibly paying bills.
Signing up with a free credit monitoring agency can help a person keep an eye on any identity theft as well as monitor the progress of the credit score. People should also take a look at their budgeting and spending. While many bankruptcies happen for reasons that are outside a person's control, such as job loss or medical debt, others may struggle with their spending habits. Creating a written budget may help with this.
Depending on a person's income and other factors, a person might file for a Chapter 7 or a Chapter 13 bankruptcy. With a Chapter 7 bankruptcy, a person may declare some assets exempt and discharge most debts. A Chapter 13 bankruptcy may allow a person to keep assets such as a home and enter a payment plan that lasts three or five years. Some debts either cannot be discharged in bankruptcy, such as child or spousal support, or are difficult to discharge, such as student loans and some taxes.