Bankruptcy Help - 5 Things You Can Do After Bankrupcy

Summary: One of the issues that people considering bankruptcy often worry about is that they will never get credit after filing a Chapter 7 or Chapter 13. That, or the fact that the bankruptcy will stay in their credit report for 10 years from the filing, which fact would serve as warning to future creditors that you might turn out to be a bad risk. But neither is true, however. While a bankruptcy will indeed stay in your credit report for ten years, it does not necessarily mean that ...

One of the issues that people considering bankruptcy often worry about is that they will never get credit after filing a Chapter 7 or Chapter 13. That, or the fact that the bankruptcy will stay in their credit report for 10 years from the filing, which fact would serve as warning to future creditors that you might turn out to be a bad risk. But neither is true, however. While a bankruptcy will indeed stay in your credit report for ten years, it does not necessarily mean that you can no longer get new credit. Furthermore, only a Chapter 7 bankrupcy will stay in your credit report within 10 years. If you filed under Chapter 13, the period is shorter - about five to seven years. Worst case scenario: You can get a new loan but with high interest rates or fees. Now, that's not so bad, is it? Especially after considering that even people with good credit can get bad loan deals. The fact remains that no matter how bad or good your credit line, it is not a guarantee that you are going to get approved for a loan or get low interest rates. In other words, a bankruptcy may damage your credit but only to an extent. It does not necessarily mean that you will never qualify for a new credit. What damage there is, you can always rebuild. And that is what you should be focusing on, instead of wallowing in the pits of Credit Doom. #1 CAN DO: Keep a Credit Card out of the Bankruptcy When filing for bankruptcy, the rule is that you have to make a schedule. A schedule is a list of all assets and liabilities that you are required under the law to disclose before a bankruptcy case could commence. If you owe money on a credit card at the time you file for bankruptcy, you have to include that in the schedule. Otherwise, you may be sued for perjury and penalized under federal law. What's worse, if you fail to disclose unpaid credits like this, you may be denied discharge of all your debts. The rule, however, only applies to unpaid credits. So if you do not owe any money on your credit card, then you can go ahead and keep that one out of the bankruptcy. You are not obliged to inform the credit card company of the bankrupcy case. Note, however, that your credit card company may still find out about it through other means and cancel your card as a precaution. If your credit card company gives you notice of cancellation of your credit card, don't give up yet. Many credit card companies allow their credit card holders who are filing for bankruptcy to keep their credit card on condition that they agree to reaffirm the balance on the card and enter into a new agreement. Try to re-negotiate the terms with your credit card company and see if you can settle for a situation that is beneficial for both you and the company. While the decision is up to the creditors, keep in mind that what they want is to avoid the loss incurred when the debt is discharged and to have your future business. #2 Get New Credit after Bankruptcy If there is one thing you can count on in today's competitive lending environment, it is that credit is always available, even to the recently bankrupt. The catch? Credit may be more expensive than before and available with lower limits. But all that is secondary only to the fact that credit does exist and you can get it. One of the easiest credits available to the recently bankrupt is a secured credit card. As opposed to an unsecured credit card, in a secured card, you must make a deposit of a certain amount of money in exchange for a card that you can use just like a regular credit card. Your credit limit is equivalent to the cash deposit you made. Now, the good thing about a secured credit card is that it is usually available post bankruptcy at lower rates than unsecured cards. What's more, the fact that these credit cards are secured are not often indicated in your credit report so creditors have no way of knowing whether your credit card is secured or not. All they will see is that you have been approved for a credit card, which ups your credit score a bit and puts you back in the game fairly quickly. Note, however, that credit experts are not quite in agreement concerning the impact of secured credit cards on your credit rating. So if you do decide to open a secured credit card post bankruptcy, be sure to do it slow.? While your rush at rebuilding your credit is understandable, making mistakes that could significantly affect your credit score like this is not worth it. Rebuilding your credit worthiness after bankruptcy is a matter of getting a toe-hold in the world of credit. The balance is often precarious and needs delicate treatment. Use credit cautiously and pay on time. #3 Buy a House after Bankruptcy Absolutely. In fact, there are many studies that show bankruptcy debtors can qualify for a home loan on the same terms as if they had not filed bankruptcy within 18 to 24 months after a bankruptcy discharge. You see, what the creditors are concerned here is not your past financial troubles but your current financial status - e.g., your down payment, the stability of your income and the relationship between the loan payments and your monthly income. That said, take note of the following things that you might want to do in preparation for your first house purchase post bankrupcy: