Monday, December 2, 2013

How to Recover from Bankruptcy

Some people fear bankruptcy, others embrace it, and many people think it is an easy way out. It is really none of those. Bankruptcy must be viewed as the last resort and for many people it is. It is scary, but it should not be feared any more than the impending lawsuits and wage garnishments that are certainly in your future. It is also not an easy way out. Bankruptcy is a scarlet letter, something that will haunt you for years to come, but you can recover from bankruptcy if you truly want to change your life for the better.


  1. Look at bankruptcy as a new beginning, not the end of the world. It is a relief from the prison of debt that you have been under. As long as you have learned how to be a good steward of your finances, bankruptcy can be a real life saver for you, your marriage and your family.
  2. Avoid immediately opening up lines of credit. During the process and soon after discharge, you will probably start receiving offers for more credit cards and lines of credit. Do not take the bait. It is well known that you are no longer able to declare bankruptcy again for so many years, so these companies know they have you for at least that long.
  3. Take a financial management seminar or classes. Bankruptcy might have been completely out of your control, perhaps from a major medical crisis and your insurance just did not cover it. Otherwise, perhaps you feel that you are a good manager of your finances, outside of that medical situation. Regardless of the situation that got you here, you will do much for your future by taking such a course.
  4. Accept an offer for a department store credit card if you must. Unfortunately, after bankruptcy knocks your credit down to next to nothing, the catch-22 becomes that you need credit to build credit. If credit cards were your weakness or perceived means of survival, get a department store credit card rather than a regular credit card. In this respect, your purchases will be limited to just what the store sells.
  5. Get a new car loan only if you need a new car and if you can afford the payment. If you must, get a cheaper used car loan. A car loan is a quick way to rebuild your credit.
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