YES, There Is Life After Bankruptcy

Living After Bankruptcy: Establishing Credit Is An Unsteady Step

After you have filed bankruptcy, you will find a wide range of things happening to you.

First, you'll need to go through the process of filing bankruptcy, which will include working with an attorney to determine eligibility, working through Chapter 13, in some situations and even working with a debt counseling company.

These laws are in place to help make it more difficult to file bankruptcy, and they should teach you something about personal finance as well. Yet, you could make some costly mistakes right after your bankruptcy has been filed.

The Offers Come Rolling In

Some credit card lenders prey on those people who do not have access to good credit card lines. Since you have just had your debts discharged, they know it will be years before you can possibly file bankruptcy again.

Therefore, they are willing to extend some credit to you. Just months after you file, you could start seeing these offers; should you use them or not?

If you have set your mind against using any credit in the future, be sure to shred those offers and forget about it. If you realize the importance of having good credit, though, you do want to consider some aspects.

For some people, using one of these credit cards can be helpful at restarting your credit future. You do need to be careful about doing this though.

Check out the credit card offer carefully, read the terms

Many of these lines of credit have high membership fees, annual fees and transaction fees

Many have a very small credit limits.

It is not uncommon to have to pay all of these fees upfront on the line of credit before being able to access the credit line for your needs. This may mean an out of pocket cost of several hundred dollars just for agreeing to the credit card.

For those unable to get any other type of credit, this is a good start. Six months after you have filed bankruptcy, start using these credit cards, very minimally. If the credit limit has a line of credit of just $300, use it for gas purchases and pay it off in full every month.

If you carry a balance make it very low. Make all your payments on time. This will help you reestablish your credit history.

What's Next?

To keep building your credit after filing bankruptcy, you'll need to make wise decisions going forward. Here are some tips.

After a year or so, you'll get better credit card offers. Look for those that offer no annual fee or other fees. When these start coming to you, that means your credit is doing better.

Use secured credit cards which report to the credit agency. These are backed by a deposit you make on the line of credit and therefore you can't overspend. Because they report to the credit bureaus, you can establish a repayment history.

Do consider asset based loans, such as a car loan or even a home loan. Some lenders will allow you to borrow for these needs as soon as 18 months to two years after filing bankruptcy.

Don't get behind on any payments. Make them on time every month. Keep the amount of debt you have low.

Check your credit history every year. Even better, get one free credit report every four months from one of the credit bureaus. Since you are entitled to one free report from each of the three bureaus each year, you can check your credit every four months.

Work hard to reestablish your credit after bankruptcy and it will pay off. In a few years, you'll be able to qualify for many loans and you'll work your way at improving the long term effects of your bankruptcy.