Nobody wants to file bankruptcy. However, many people find themselves in the situation where it is the best (and often only) option to get them back on the right financial road.

While the bankruptcy legally may stay on your credit report for up to ten years, you can start rebuilding your credit immediately after discharge. One of the most important things you can do to rebuild is pay the creditors on time that report to the credit bureaus. Secured debts such as houses and cars as well as utilities typically report your payment history to the three major credit bureaus. 

On-time payments to two types of creditors will quickly rebuild your credit score:

• Installment loans such as auto loans, mortgages or student loans
• revolving loans such as credit cards or home equity lines of credit
  

It's crucial to come up with a financial plan going forward after discharge. This financial plan would require you to stick to a budget that ensures you spend less than you earn each month. Although it's common to have situations beyond your control that led you to bankruptcy, a solid budget that allows for suitable living expenses and an emergency fund for those unforseen circumstances will greatly reduce the chances of having to file bankruptcy again in the future.

It's common to receive credit card applications in the mail the day after you receive your discharge papers from the court. It can be beneficial to get a credit card with a low limit such as $300 for example. Charging a low balance on the card each month, say $100, and paying the balance off each month can increase your credit score quickly. However, don't max out the credit cards. This can have a negative effect on your credit score.

Credit Report Cleanup

A common mistake people make after emerging from bankruptcy is not checking the accuracy of their credit report post-discharge. Many times the credit bureaus will report accounts as open and past due when in fact they were discharged and wiped away in bankruptcy. If you encounter this problem, you must contact the credit bureaus to ensure these accounts are corrected to show they were "discharged in bankruptcy." This is the only way your credit can recover.  Because your credit score is based on information contained in your credit report, errors on the report can seriously hinder your credit score.