With the tough economic climate these days, there are over 1.5 million people expected to file for bankruptcy this year alone. For many people the decision to file for bankruptcy is a hard one. However, it may be the best course of action for individuals given their financial situation. Unfortunately creditors often reinforce the many negative perceptions about bankruptcy. People associate the term bankruptcy with failure or just giving up. This is far from the truth. Bankruptcy allows individuals that are financially burdened to take control of their debts and legally deal with their creditors. Many will emerge from bankruptcy with a fresh start and a second chance to live debt free.
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Creditors want people to think that bankruptcy will ruin their life and destroy their chances of ever receiving credit again. This is a myth perpetuated by the debt collectors. Just because someone filed for bankruptcy does not mean that they will never be approved for credit again. There are many lenders that are willing to take a chance on a debtor as long as they are employed. Creditors understand that the individual will not be able to file again for eight years, and if the person filed Chapter 7 bankruptcy, they are most likely debt free. Many creditors view this as an opportunity.
The quickest way to rebuild credit after filing bankruptcy is to reestablish a good payment history as soon as possible. It is always a good idea to consult with your bankruptcy attorney to get post bankruptcy advice. There are many other resources available online or at the local bookstore that can be a valuable asset for the debtor that is interested in learning ways to manage their money better. One important lesson to learn is to be able to distinguish between wants and needs. Set a budget and stick with it. A good way to get credit quickly after bankruptcy is to get a secured credit card from a major bank. Many people start receiving these offers from banks within months after their bankruptcy discharge. These cards will require a security deposit in a bank account that will allow the individual to charge up to that amount. Having a monthly payment that is always paid on time is a quick way to build a solid payment history. Another loan that is easy to get is an auto loan. The debtor may have a higher interest rate along with a larger down payment, but this will help to build their credit history along with repair their credit scores.
Debtors must be careful not to be tempted into going out and spending recklessly just because their credit scores are improving and they are receiving more offers for credit in the mail. The same irresponsible financial mismanagement practices that caused the debtor to file bankruptcy previously might ensnare them again if they are not diligent. The debtor can maintain a decent standard of living while honoring their financial responsibilities. They must be frugal and watchful about incurring more debt than their budget can handle. Also, they should be careful not to apply for credit too frequently. A large number of inquiries on a credit report can actually lower credit scores and undermine all of the hard work of trying to rebuild them.
Life always teaches us lessons. Learn from your mistakes and do not repeat them. Living debt free is the reward.
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