Life After Bankruptcy

We’ve all heard about bankruptcy. We’ve heard about how bad it is for your credit; and how “it’s on your record for the next 10 years” – whatever that means. But no matter what you may have heard about bankruptcy, the one thing you’ll never hear is what happens to your life after bankruptcy.

First and foremost, there is life after bankruptcy. In fact, for many it’s a much, much better life than the one they had before filing for bankruptcy protection. After all, if it weren’t no one would file for bankruptcy protection.

What are the consequences of filing Bankruptcy?

While bankruptcy is a blemish on your credit profile, many times, depending upon a person’s particular facts and circumstances, the filing of a bankruptcy may be the first, most important step toward rebuilding one's finances.

In the end, if you have incurred a lot of debt and don’t have enough disposable income to pay down that debt in a meaningful way, many times you are left with two choices:

• continue to be a slave to your creditors or address the problem head on a take the steps necessary to rebuilding your financial future, or 
  
• manage your debt through the filing of a bankruptcy.

The day after discharging debt in a bankruptcy most people find themselves in a position they haven’t been in since they were 18 years old. They don’t have good credit, they don’t have bad credit, they simply have no credit. And much like an 18 year old, they have to establish (or, re-establish) their credit.

What is the best way to establish and rebuild credit after filing Bankruptcy?

First, continue to make timely payments on secured assets, such as your home or your car. Make sure you timely pay your utility bills too. This will demonstrate your ability to make responsible payments to your creditors.

Second, apply for a secured credit card. After you have obtained the card, make purchases on the card up to the pre-set limit. After your purchases, re-deposit an amount of money equal to the amount of your purchases. After you have done this for a few months, you will have established a responsible payment pattern, and your credit card limit will likely be increased. Soon thereafter, provided you continue to show responsible use of the card, you will likely be give an unsecured card. Continue to use it responsibly and you are well on your way to re-establishing your credit.

It’s also important to make sure your credit report no longer lists those debts tat were discharged in the bankruptcy as “still owing.” There are companies and law firms that will help you monitor your credit report to ensure all debt discharged in the bankruptcy is accurately reflected on your credit report.