Many file bankruptcy as a last resort to free themselves from their debt. This means starting over financially and after you file you have to rebuild your credit from nothing. Filing under chapter 7 bankruptcy allows you a fresh start. Although bankruptcy usually carries a black mark, there is no shame in recognizing you have a problem and doing what you can to get on the right path.
When you have completed the bankruptcy process and are ready to start over, the first thing you should do is obtain a copy of your credit report. You can get this for free online. Make sure that all of your previous accounts have been marked “discharged.” You will need to start reestablishing your credit as soon as possible, but after two years you can start receiving going interest rates; before then they will be sky high.
It will probably be near impossible to be approved for an unsecured credit card, which is typically the credit card that people with good credit are offered. Apply for a secured credit card, which a bank will usually allow you to do. A secured credit card is tied to a savings account and the balance on the card is the balance of the account. Make sure that your payments are being reported to the credit agencies.
If you own a vehicle that you are making payments on, you will need to sign reaffirmation agreement. This agreement will reassure the lender since you are letting them know that you are planning on keeping the vehicle and paying it off. It is recommended that you never co-sign a loan with anyone or carry balances on your credit cards in case of emergencies. If you find you can’t pay your balances, get rid of the credit card.
In the end, re-building your credit will come down to learning from your mistakes and not allowing yourself to fall into the same behavior that led you to bankruptcy in the first place.
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