Credit Card Review Blog

6 Things You Can Do To Repair Credit After A Bankruptcy

These are the steps to take after a bankruptcy, so read the and learn them. Understand that not all is lost if you are going through this.

Many people consider bankruptcy as a “fresh start.” While you do get to eliminate a lot of your debt with a bankruptcy, it is far from starting “fresh.” Bankruptcies leave its victims in an aftermath of financial trouble. There is such a negative connotation that accompanies the word “bankrupt.” If you’ve ever filed for bankruptcy or known someone who had, you also know the misconception that people have. It seems as though you are thought to have done something wrong.

There are steps that you can take after filing for bankruptcy that can help you get back on track. You must start immediately if you want to have a healthy life after bankruptcy.

1. Reaffirm car debt. When your bankruptcy is finalized, be sure to sign a reaffirmation paper with your car lender. You’ll need to do this is you own a car and are still making payments. The reaffirmation document says that you intend to keep the vehicle and fully intend to keep making payments. If you don’t make your monthly payments, your car could be repossessed. When you sign this document, it is done in good faith and will go a long way with your lender.

2. Re-establish credit. After a bankruptcy, you need to re-establish your credit lines. You probably won’t qualify for a credit card immediately. However, some banks will let you open a savings account with a credit card linked to it. This is a secured credit card. It works out well for both you and your lender. You will be able to use a credit card as long as you have the funds to back it up. Your lender won’t have the risk of giving you an unsecured credit card, until you can mend your credit somewhat. You could also apply for a passport loan. A passport loan is one where you deposit money into a savings account, borrow that money and pay interest on it every month. Neither of these ways is ideal, but absolutely necessary and you can learn to do this with a personal budget software system. They are virtually the only ways that you can re-establish your credit.

3. Clean it up. Check with all three credit bureaus. Your credit report should show that all of your debts were “discharged in bankruptcy.” Each bureau is different so make sure they all accurately portray your credit lines.

4. No credit card balances. Don’t carry a credit card balance. Carrying a balance is an easy way to spiral downward into debt. If your credit card balance is at $0, you’ll be much better off if you loose your job, incur an illness or divorce.

5. Know your story. Make sure you know your own story about why you are filing for bankruptcy. Lenders could see “bankruptcy” on your credit report and assume you are a deadbeat or a drug addict. Be prepared to tell your story to any lender who may ask. Be honest and keep it short. Tell your story in under 20 seconds. This will add an immense amount of credibility to you and your situation.

6. Stay positive. Don’t let yourself believe that you deserve anything other than great things. If you believe that your life is going to be horrible after your bankruptcy, your life will be horrible. Remember that it only needs to take two years to start building your credit back. The more miserable and devastated you are, the longer it will take to reclaim your credit and your life. Stay positive and you’ll be back on track in no time.

These are very important steps that you must take if you want to change your life after bankruptcy. Start immediately and stay positive. You can take either fix your credit history quickly, or let this event negatively affect your life for years. Follow these steps and you’ll be back on your financial feet before you know it.