Life After Bankruptcy
Contrary to popular belief, there is life after bankruptcy. Life after bankruptcy can mean total debt elimination and the freedom to save, invest money and use credit wisely, or yet another downward spiral into more debt. Those who are thinking of filing bankruptcy due to credit card debt, or those who have already filed, should look at the bankruptcy as a new beginning and a chance to better manage their finances.
Although your credit is usually shattered after filing bankruptcy, especially with Chapter 7, some of the first things an individual begins to receive after receiving the discharge from debt from the court are credit card offers. Because credit card companies know that individuals who have filed bankruptcy most likely already used and in some cases, abused credit cards, and that they cannot file Chapter 7 again for another eight years, they are considered a “good risk†by predatory lenders who will offer credit cards with low balances and very high interest rates.
Individuals who have recently filed bankruptcy should read the fine print on any credit card offers. If they are being offered an unsecured credit card, chances are the card has very high interest and monthly fees associated with owning the card. While many individuals may want to “rebuild†their credit history right away, they should be forewarned that the bankruptcy will stay on their credit history for ten years. Although this will adversely affect their credit score, individuals can take steps to repair their credit by getting a secured credit card. A secured credit card usually borrows against assets or money in the bank. The interest rates for a secured credit card are generally very low and the fees are much less than an unsecured credit card. Life after bankruptcy should include living within one’s means. For this reason, after bankruptcy individuals should opt for a secured credit card that can be used in emergency situations.
Some individuals will be tempted into buying new cars when they receive offers from predatory lenders for new car loans at 20 percent interest. Life after bankruptcy, again, should be about living within one’s means. Although a new car is desired by just about everyone, an individual is better off keeping an older car that is paid for than incurring more debt for yet another car, at very high interest rates. One of the most difficult things to purchase with bad credit is a car. Cars are usually very expensive and can easily be moved. For this reason, many reputable lenders will approve a car loan for someone with bad credit. Predatory lenders, however, will.
An individual can purchase a home after bankruptcy easier than they can buy a car. After two years, individuals who file Chapter 7 will be able to get a mortgage from some lenders. The rate will be higher than for other individuals with good credit, but since shelter is necessary to live and real estate is usually a good investment, purchasing a home with a mortgage and making timely payments on schedule is probably the best way you can rebuild your credit.
Although a bankruptcy stays on one’s credit for 10 years, there is life after bankruptcy. Individuals should realize what caused their debts to accumulate and avoid repeating the same errors in the future. Life after bankruptcy can be good, as long as those individuals who file bankruptcy learn from past mistakes and take steps to avoid making those same mistakes again.