Kentucky residents who file for bankruptcy can begin rebuilding their credit after the bankruptcy is discharged. While a Chapter 13 bankruptcy will remain on the credit record for seven years and a Chapter 7 bankruptcy for 10 years, there are steps people can take to improve their credit long before then.

Making a budget is important because it helps a person pay bills on time and helps in creating an emergency fund. Payment history is 35 percent of a FICO score. Having an emergency fund makes it less likely that a person will begin to struggle financially and end up declaring bankruptcy a second time as roughly 10 percent of people do. People should also review the three credit reports that are available for free once a year. They should follow up on any errors these reports might include.

Another way to build credit is to use a credit card but pay it off regularly. People who are unable to obtain a regular credit card might look into a secured credit card. This allows them to deposit money into an account and then get that amount in a line of credit on the card. Getting a subprime auto loan and keeping up with payments is another way to build credit.

There are other misconceptions some people might hold about bankruptcy in addition to believing it will permanently mar their credit. Bankruptcy does not mean that a person has been financially irresponsible. Medical expenses, a divorce or a job loss may all lead to unmanageable debt, and when this happens, bankruptcy may be a responsible solution.