Life After Bankruptcy

After filing for bankruptcy, you are given a financial fresh start. Your credit history is wiped clean, and your credit future depends on what you do now. Here are some tips to help rebuild your credit and to keep your financial footing strong.

• Realize that you will receive many offers from lenders to finance your home or vehicle(s) and to offer you new credit cards. Disregard most (if not all) offers.
• Apply for a single credit card. Use it only for charges that you can pay off each month.
• You may want to apply for a gas credit card. All gas purchases that you would have paid for in cash can go on your credit card and help reestablish your credit.
• Open a savings account, and add money to it each month. The best way to do this would be to have money from your paycheck automatically placed into savings each month.
• Pay your rent and bills for phone, utility, cable, etc. on time. Make sure to live within your means and cut out all expenses that you do not need.
• Join a credit union or search for car dealers that claim to be “bankruptcy friendly,” and buy a used car. Before the purchase, ensure that you will be able to make all payments on time.
• If there is a large purchase that you need to make, ask a friend or relative to cosign for you on a loan. Work out a budget, so that you’ll be assured to pay back the loan on time.
• Do not use paycheck advances (or “payday loans”), as they involve extremely high interest rates (usually in the range of 390 to 780 percent). These loans can easily trap the borrower in a cycle of debt.

Overall, your goal is to show lenders that you can responsibly handle money. Seek out ways to save money in a savings account, pay all debts on time, and to carefully use credit.