Life After Bankruptcy: How To Begin Again

2 March 2016
 Categories: , Blog


Your financial future doesn't have to end with a bankruptcy filing, in fact, if handled well, it can be the start of a new beginning. It's true that recovering from a chapter 7 bankruptcy filing can be challenging, but if you can learn from your past financial mistakes and take positive steps forward, you can achieve your dreams, whether it be a car purchase or even a new home. If you are concerned about rebuilding your credit after a bankruptcy, read on for tips on making a fresh start.

Do some contemplation. The reasons for personal financial disasters are many, with almost as many excuses to accompany them. Many people are blindsided by large medical bills or suffer a loss of financial status due to a divorce. Not every negative impact can be avoided, but you can cushion the blow of unexpected events with a savings fund. Make sure that poor underlying habits are not contributing to your financial woes, such as overspending and not setting money aside for emergencies. You can recover and move forward from your bankruptcy, but if you don't take a realistic look at what lead to the bankruptcy situation in the first place, you may be doomed to a repeat incident. So, instead of a making excuses, ask yourself what you will do differently in the future.

Track your financial snapshot. Begin monitoring your credit immediately by using the only legitimate site for doing so. Be wary of sound-alike sites that require payments: you are entitled to one free report per year. Make sure that every creditor listed in in your bankruptcy petition shows the correct status on the report, comb through the report thoroughly and report any inaccuracies in writing to the one of the three main credit reporting agencies. You can additionally use one of the free sites that allow you to view your credit score and activity. These sites can provide you with a relatively accurate score and allow you to keep up with credit inquires and inaccuracies.

Be wary of jumping back into credit card debt. Good credit card offers with low interest rates and low or no "membership" fees will eventually be available to you if you resist the urge to apply for every offer you see. Every time you apply for a new card, the inquiry "dings" your credit score; too many dings in a certain period of time are viewed by the credit bureaus as desperation. Take a close look at the small print on any offers and know what you are getting yourself into. On the other hand, a good credit card offer with a low interest rate that requires a deposit for use is an excellent way to rebuild your credit.

A home purchase could be in your future. The Federal Housing Administration (FHA) offers people who are at least 2 years past their chapter 7 discharge date (not the filing date) with an opportunity for a low down payment, low interest rate loan. If you can show that your bankruptcy was caused by certain factors, you may be considered for an FHA loan after only 1 year, however. You must show prudent use of credit post-bankruptcy to be considered.

Take the above information to heart and begin planning for a better financial future. For help planning a bankruptcy, visit an attorney, like Flippin Thomas C.