There is Life After Bankruptcy
As I discussed in Part I, filing bankruptcy is not the end of the world as far as your credit is concerned. In this article, I discuss some specific actions that you can take in order to help get your credit back on track.
1. After filing bankruptcy you should stay on top of your credit report. You can get one free report per year from annualcreditreport.com. Once your bankruptcy is over, you should get a copy of your report from each of the three agencies and make sure that all of the reporting is accurate. Namely, all accounts included in your bankruptcy filing should show up as having been included in the bankruptcy and show a zero balance. This will ensure that creditors cannot continue to report you as being late on your payments or send you to collection. This alone will stop your credit score from dropping any further and will improve at least one aspect of your credit score, which is the amount of your outstanding debt.
2. After your bankruptcy is complete you may receive one or more offers of credit from credit card issuers. These offers are generally for small lines of credit with high interest rates. You should accept one or two of those offers and beginning using the credit cards. Make sure, however, that you only charge amounts that you can afford to pay off in full the following month. If you pay those balance off in full then no interest will be charged. This will establish a trade line of payments on your credit report which will help raise your score.
3. Consider beginning a relationship with a credit union either before, during or immediately after your bankruptcy filing. Credit unions do not operate the same as banks. They are run by a board which makes individual decisions on each credit application. They tend to base credit decisions more on individual relationships with their customers than on the person’s credit history as a whole. Once you have established a relationship with a credit union, they will generally not hold it against you if you file bankruptcy, so long as that bankruptcy filing did not result in a loss to them.
4. Just because you have had to file bankruptcy does not mean that you will never be able to own a home. Many people who file bankruptcy are able to purchase a home within as soon as a year or two following the conclusion of the bankruptcy. Many mortgage lenders would much rather make a loan to someone coming out of bankruptcy with no debt than someone with an overwhelming amount of debt that they can’t possibly pay.
Although having to file bankruptcy is not something to be happy about, one should look at it as not the end of the world, but the opportunity for a new beginning.