According to a report from Lending Tree, 43 percent of Americans who filed for bankruptcy had a credit score of 640 or higher a year after their filing. That number increased to 65 percent for those who were two years removed from a bankruptcy. One of the most effective ways to rebound after a bankruptcy is to pay bills on time. It shows lenders that a person has learned from his or her mistakes.

It is also a good idea to recognize why the bankruptcy occurred in the first place. This may make it easier to avoid making the same financial mistakes in the future. For instance, those who spent more than they earned will benefit from making changes to their budget. While it can be difficult to open credit accounts after bankruptcy, it may be possible to get a gas station or other retail credit card to build good credit.

Creating an emergency fund can be another smart tactic to help avoid going bankrupt again. The fund should be able to cover at least three months of expenses, and ideally, the fund will grow to cover at least nine months of expenses. As a general rule, it is better to use cash instead of credit as a means of controlling spending and the amount of debt a person has.

Filing for Chapter 7 bankruptcy may be an effective way to obtain debt relief. In such a filing, a person’s eligible assets are liquidated with the funds raised used to pay off credit card or other debts. In some cases, a person can have debts discharged without paying anything to creditors. An attorney may be able to further explain the benefits of filing for bankruptcy such as a stay of creditor contact or collection activities such as a lawsuit.