Life After Bankruptcy

Debunking the Scarlet Letter of Bankruptcy

It’s a myth that a scarlet “B” on your credit report will follow you everywhere, preventing you from ever getting credit again. This myth is perpetuated by credit card companies, the same companies that helped lure you into credit card debt. The lie is that bankruptcy means that you won’t get credit again.

The truth is just the opposite. We live in a capitalist society. There’s too many companies in business to make a profit—and you can help them make that profit. This win-win situation is how you re-establish credit after bankruptcy.

With no debt, you’re now in a position to repay the next debt you get. After a bankruptcy, you’re a lower risk since you can’t file bankruptcy for at least five or six years. Lenders know this and are ready to make a profit from you in the form of higher interest rates and fees.

A Clean Slate

The good news is that your slate is wiped clean. With a fresh start you can begin to re-establish your credit as well as your finances. Rebuilding your credit after your discharge is one of the most important things you can do.Here are a few things you should do after bankruptcy.

• Adopt a no-frills lifestyle
• Start a Budget & Review Regularly
• Pay all bills on time
• Get a secured credit card
• Build up a savings account

You may be surprised to get credit card offers soon after your bankruptcy discharge. Higher interest rates or a secured credit card may be part of the bargain, but this is how the process starts. You’re a blank slate on paper. All they know about you is that you just wiped the slate clean.

Using Your New Credit Card to Rebuild Your Credit

There’s a way to spend and pay with a new credit card that’s beneficial to your credit card company and you.

• Use your new credit card, but in moderation. They are a credit-rebuilding tool.
• Keep your spending under control, do not get anywhere near your credit limit.
• Make your monthly payments on time.
• Don’t pay them off completely. Pay your credit cards off in full every two months. One month of interest charges to carry over, and the next month back down to a zero balance.