A lot of people are seemingly blinded by the "fresh-start promise" usually associated with bankruptcy. When they feel that they can no longer keep up with their credit card, medical, and personal debts, they often resort to the bankruptcy option. They rush into filing for bankruptcy thinking that they can immediately escape all their credit troubles. But rushing into bankruptcy can be disastrous especially to your credit history.

So if you are also considering bankruptcy, allow us to clarify some things regarding this debt option.

Basic Insights About Bankruptcy

1. Bankruptcy does not completely discharge your credit accounts. Filing for bankruptcy does not mean that you are free from all your existing debts. You must remember that student loans and other secured types of credit normally survive bankruptcy proceedings. Not only that. You will also need to pay off your taxes, child support and alimony payments as these accounts cannot be discharged under bankruptcy.

2. Not all consumers are eligible to file for bankruptcy. The new bankruptcy laws impose more stringent qualifications for those who would like to file for bankruptcy. To be allowed to discharge your credit accounts, you need to prove and convince a judge that you are currently experiencing undue hardship that prevents you from settling your financial obligations. You also need to pass a means test which evaluates whether or not you can pay off your credit accounts. Such strict eligibility assessment procedures help bankruptcy courts identify those who are truly qualified to file for Chapter 7 or 13 bankruptcy.

3. Bankruptcy can inflict damage to your credit records. Bankruptcy is considered a negative mark on your credit profile. Why? It is because of two reasons. First, bankruptcy can pull down your credit rating. It can cause you to lose 100 points or more from your credit score. Second, a bankruptcy mark will be retained on your credit file for as long as seven to ten years. Such mark will certainly hurt your chances of getting approved for the credit accounts you will be applying for.

Now, what if you already filed for bankruptcy and you have been allowed to discharge your credit accounts? Will it still be possible for you to attain bad credit repair? The answer for these is a resounding yes. But how can you do so? By simply employing the tips we have listed below.

Ways to Repair Bad Credit History due to Bankruptcy

1. Get a new credit or card account. It will only be possible for you to thoroughly repair bad credit by opening new credit or card accounts. This is the reason why credit counselors normally advise their clients to take bad credit-credit cards like secured credit cards or prepaid debit cards as well as other secured loan programs.

By managing these credit or card accounts wisely, people with less-than-perfect-credit ratings can have the opportunity to prove to lenders that they can once again be entrusted with credit lines. Through bad credit-credit cards and bad credit loans, you can actually work on regaining your credit reputation and your financial health. And should you continue employing good credit habits, for sure you will be able to achieve thorough bad credit repair.

2. Manage your new credit account responsibly. As soon as you get approved for a bad credit account, the next thing you need to do is to handle your card or credit account responsibly. How can you do this? By simply paying your credit charges and bills on time and in full each month. You also need to discretely use your card or loan. In so doing, you will see a gradual improvement of your credit standing until such time that you are able to fully restore your credit worthiness.

3. Pay off your other existing credit balances. Bankruptcy will not cover all your outstanding credit accounts. You may still need to pay off some of the debts that survive bankruptcy proceedings. So, it will be wise to devise a debt management plan to completely retire all your existing financial liabilities. Try paying more than your minimum credit charge. This way, you can completely settle all your credit accounts in the soonest possible time and you can soon attain thorough bad credit repair.