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Improving Credit After Filing For Bankruptcy

Apr 15, 2008
So you had to file for bankruptcy. Unforeseen circumstances can cause this to be the only option. However, just because you were once bankrupt does not mean that your future is grim.

Bankruptcy is a hard choice to make. Millions of people have experienced it and come out on the other side. It won't be easy, but you can recover from this type of financial disaster. Bankruptcy is not the end.

Even though you've declared bankruptcy, you can still rebuild your credit. The first thing to do is make sure your bills are paid on time. Your debt would be wiped out along with some of your assets if you file for Chapter 7 bankruptcy.

Appreciate what you still have left. You have your home. Build a record of paying bills when due and that will help with fixing your credit.

You can apply for a secured credit card after a few months. A secured card means that you will have to put down a deposit and this is what you will use in the beginning. Eventually you may be able to get an unsecured card.

Have just one credit card and try not to put too many purchases on it. Keep it just for emergencies if possible. You can regain your credit by having a credit card.

Train yourself to pay for everything in cash. Unless you have cash to back up a purchase, don't buy anything; this could be one reason bankruptcy was filed in the first place. Going back to using cash is a healthy way to build up a bank account and savings account balance.

Create a plan for success. You have been bankrupt once so you don't want to go there again. Divide discretionary money between savings and a fund for emergencies. Since your debt was wiped out, there should be no credit card payments to consider at this time.

Once you get that first credit card, companies will start hounding you. Don't give in to them. Be flattered, but resist the urge to get started with the credit card debt cycle again.

Teach yourself to live with what you can afford. Save for a rainy day. Go to credit counseling or talk to a financial advisor. Credit counselors are experienced in money management and spending tips.

A financial advisor can take the money that you save and invest it for your future. Someday you'll probably retire and that could last for up to thirty years. It's crucial that you have enough money to take you through your retirement. You can focus on that part of your finances while you're waiting to re-establish your credit.

Bankruptcy doesn't have to be the end. With a little time and patience you will recover and control your finances again.
About the Author
If you're thinking about using debt consolidation to pay off your credit card debt, there are some things you should know first. Visit the Debtopedia website to learn more about debt consolidation. Get a free copy of my special report at http://www.debtopedia.com
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