Keep a Close Eye On Your Report

The best thing you can do post-bankruptcy is actively monitor your credit score. This is a crucial step towards you rebuilding good credit. After you declare, the judge will work with you to settle or close all of your existing debts. All of your creditors, one by one, will be asked to terminate all communications with you. They will report your defaults to the credit scoring agencies but they will not be able to negatively impact your score any further by making repeated attempts to collect the debt. By being vigilant about your credit report, you see to it that lenders do indeed stop making entries to your credit report. In this way you can make sure that your credit score does not dip needlessly lower in the months following your bankruptcy.

Do You Best To Amass Some Assets

Immediately following your bankruptcy, you will find it very difficult to secure a loan. You should focus on saving your cash a keeping an eye out for any assets you can gather. If you can manage to save up a few thousand dollars, you might want to consider buying a car in order to build up your capital base. Don’t blow through all your cash buying stuff, but make strategic, key purchases in the interest of replacing the assets that were liquidated during the course of your bankruptcy. Keep in mind that assets with actual cash value such as stocks or vehicles add more to your asset base as opposed to items like antiques which have only hypothetical value.

Take Out A New Loan

Once you have enough assets equaling a high enough value, you should be able to secure yourself a loan even burdened by bad credit. In most cases, a lender will want to secure your loan with collateral, which you can do with the assets you have gathered. However, do not take unnecessary risks with your hard-earned assets. Instead you should concentrate on taking out a series of small loans that you know you can repay easily. Due to your credit history, the loans you qualify for will likely come with low limits and high interest rates. In different circumstances, this would not be the kind of loan you want but given your recent bankruptcy taking a loan with unfavorable terms can potentially do you good. A good approach is to make sure you have enough money in your savings to cover three months-worth of loan payments just in case you suffer from unforeseen circumstances such as a financial emergency or job loss.

Slowly Build Up Your Available Credit

As you take out more loans, your opportunity to borrow will continue to increase. It is always in your best interest to make sure that your allotted credit limit is much higher than your amount of debt. In fact, you should keep your debts 30% or below your limit. It also behooves you to have assets worth much more than your credit limit. Keeps all of this in mind and attempt to balance your credit, debt and assets against each other favorably so that your credit score will improve. Be absolutely certain that you make all of your debt payments on time every month. As long as you do so, you will notice your score inch up little by little.

Many people filed bankruptcy in recent years who never imagined they would ever be forced to make such a seriously consequential financial decision. This is a result of the recent recession and country-wide economic downturn that has had an effect upon millions of households throughout America.

There’s no doubt about it: declaring bankruptcy will definitely have a negative impact upon your credit score. It can, in fact, be quite substantial. A FICO score can tumble as much as 200 points upon a bankruptcy filing. The bankruptcy blemish will stay upon your report for as long as seven to ten years, but you can begin taking measures to improve your credit situation as soon as 12 months after you file.

Here is what you can do to slowly begin to reverse the damage:

Be diligent about meeting your remaining financial obligations.

Bankruptcy does not wipe your debt slate completely clean. Student loans, child support and often time mortgages will likely not be affected by your filing. If you make a concerted effort to pay these and whatever other outstanding bills you have on time, your credit will eventually receive a little boost from your good behavior.

Also, one of the three big credit scoring agencies, Experian, announced recently that it will begin including an individual’s rental history in their credit profile, which means that if you are a reliable renter you can soon look forward to receiving the perk of a bump in your credit score as a reward for paying your landlord on time every month. However, until all leasing companies, management companies and individual landlords are equipped to report payments only people who rent from a midsized or large rental company can currently take advantage of this change.

Opt to carry a secured credit card.

Secured credit cards are offered to consumers with a poor credit rating and are designed to offset a lender’s risk by requiring a deposit from the applicant which, in turn, functions as the credit line on the account. The best way to go about obtaining a secured credit card is to apply for one through a local credit union or bank. It’s important that the card issuer reports your payments to the credit bureaus in order to get some positive activity added to your credit report. One thing to watch out for with secured credit cards is high fees – shop around until you find one without them.

Look into what unsecured cards are available for you to carry.

While it may seem tempting post-bankruptcy to give up on using credit cards altogether, you need to build up your credit again and an unsecured credit card is one of the best, quickest ways to do so. Also consider applying for a gas card or a store credit card because they tend to be among the easiest line of credit to qualify for. And although they tend to carry high APR’s, as long as you only use it for occasional charges and pay off your balances immediately you won’t get into any debt trouble. As soon as you have demonstrated to the lender that you are capable of using credit responsibly and making all of your payments on time, you can request a lower interest rate or apply for a different card altogether.

Keep an eye on your credit report for mistakes.

You should vigilantly monitor your credit report after you declare bankruptcy so you can keep an eye out for errors and correct them. After a severe credit–bruising ordeal such as bankruptcy you can’t afford to have any unnecessary hits to your score, so it is even more important than ever to review your report on a regular basis.

Here are a few tips on how to approach a conversation about debt with someone close to you:

1) Curb the urge to be judgmental.

Not everything is always as it appears. A problem that may seem obvious to you may not be as simple to the person who is mired in it. The most important part of approaching a loved one to discuss their debt situation is to not make any assumptions, accusations or harsh judgments, or you will be stopping the conversation before it gets started. The debt itself could very well be a symptom of a bigger problem, such as overspending or poor money management. The goal should be to figure out a way for the person you care about to better manage their debts so that they aren’t overburdened by them and can ultimately lead a happier life.

Also be mindful of the debtor’s age – a person in their early 20’s saddled by student loan debt is in a very different situation than an elderly relative who has over charged their credit cards. Approach the matter by asking them what their financial goals are for the short and long term. How they answer will guide you to the next step.

2) Provide assistance in investigating debt payoff options.

There are multiple ways to refinance debt that may prove beneficial to your loved one’s situation. A balance transfer can help relieve the burden of high interest payments on outstanding credit card balances. Some card companies offer promotional periods of very low or no interest for transferred balances. If this option will help your loved one, put your heads together and outline a debt repayment plan so that the balance will be paid down by the time the promotional interest period expires.

It may be worthwhile for homeowners to look into refinancing their mortgage or using their home equity towards paying off credit card balances. In the worst cases, bankruptcy may be a viable solution.

3) Suggest consulting a professional.

If your loved one has an addiction to spending, professional help may be the best course of action. Financial addictions can run the gamut from non-stop shopping to a problem with gambling. Experts have said that people attempting to break free of overspending addictions need guidance and support to facilitate a lifestyle change, so the best bet is to seek the assistance of an empathetic professional who has training and experience in dealing with those specific issues. Tell your friend or relative that you will be behind them 100%.

The director of the market research firm Synovate, Anuj Shahani, even said that 200 million credit card offers that went out to the public back between the years of 2005 and 2007, for people with what would be considered “bad” credit.

Not All Hope Is Lost

Throughout the past few years, credit card issuers have become far less lenient to those with bad credit and even those who have declared bankruptcy. That being said, there’s no reason to give up on ever having a credit card again. It will just take time.

First of all, the primary fact to understand after you’ve filed for bankruptcy is that you may not file again for another seven years. In that time, you can rebuild your credit profile to a healthy place, where you will qualify for more normal credit cards.

Start Looking Again

Next, be sure to examine the credit card offers that will start heading your way, as the credit card offers to those with bad credit tend to be drastically different than an average credit card offer. The fees can be considerably higher than compared with those of their counterparts.

Which makes sense, as it is a bigger risk for the credit card issue to distribute cards to those with poor credit. As Synovate reported and as reflected in an article from the site NASDAQ, 42% of these tend to come coupled with an annual fee.

The much-contested CARD Act of 2009 does protect consumers from being lured in an unsavory set-up, if the card issuer deems them desperate enough (a common conception among issuers targeting those with bad credit). It helps out the consumer by limiting things such as penalty fees as well as upfront fees.

So once you find a card offer you feel comfortable with, go ahead and sign up. Start spending carefully though, or as much as your finances can allow you for that time

From that point, you are given a new beginning of sorts. Your slate has been wiped clean by your bankruptcy. Simply remember to practice smart credit card spending. Build up your credit back to a normal and acceptable level.

Take Your Time

“It will be hard,” said Arnold Taubman, an economist affiliated with Credit-Land. “And it will take a lot of time, but much of the challenge can be averted by practicing what I would call are common sense credit card habits.”

That being said:  make your payments on time. Try to make more than the minimum when you can. Recognize whatever unhealthy spending habits you might have and work to reprimand them.

One option you might want to consider, should you not feel comfortable with going with traditional unsecured credit cards, is the secured credit card itself. By using that frugally, you will work yourself into the place where you will look attractive to unsecured credit cards once again.

According to the latest report by the National Bankruptcy Research Center, approximately every one in 50 people have filed for bankruptcy at some point in their life.  Last year 1.5 million bankruptcies were filed, which was about 9 percent more than was filed in 2009, according to the report. Most of these bankruptcies were cited as a Chapter 7, or a liquidation type bankruptcy, rather than Chapter 13, which is a rehabilitation bankruptcy.

This data shows that consumers are choosing to file for bankruptcy in order to trade in cash for their assets as a way to pay off other bills. From the data, it seems that consumers are not filing bankruptcy solely with the mindset of getting back on their financial feet. Either way, if you have to make the decision to file for bankruptcy it’s important to learn from your previous mistakes. Banks will not want the company of habitual “bankrupters”. After the first bankruptcy, banks may shun your credit card applications and you may find it hard to get a loan. Don’t let your bankruptcy ruin you, there a few ways to bounce back after a bankruptcy, and can help you on the road of getting your credit card history on the right track.

So here are some simple tips for a bankruptcy recovery:

1. Understand What’s Going On: It’s important to keep in mind that many banks will refuse your applications if you apply for credit or for a loan immediately after filing bankruptcy. A bankruptcy can haunt your credit history and score for seven to ten years. It is up to you to prove to the banks that you are worthy of borrowing money. Analyze your previous financial habits, and see what landed you in the bankruptcy hole to begin with. Once you find the problem, it’s easier to find the solution.

2. Start Small: Start borrowing small amounts from friends. Whether it is $5 or $.50 cents–make a habit of paying your friends back. This will subconsciously help to re-establish the concept of credit and reinforce the benefit of a prompt payment system. Once you begin getting re-accustomed to paying credit, begin applying for credit cards with small limits (under $1,000). Beware that you will sift through many rejection letters, but refer to step one and understand why, and make changes to better your financial health.

3. Find Help: There are credit card issuers and lenders that work with bankruptcy victims. You are not alone. While many banks are wary of giving auto, bank and mortgage loans to people who have filled bankruptcy, some will do it through the recommendation of another lender or a middle man. Think about it, you are much less of a financial risk then you were before you filed for bankruptcy, because you don’t have the debt weighing you down. There are lenders that specialize in this type of lending and will be happy to help you.

Always be aware that there are several other options that you can consider before thinking of bankruptcy. It is almost always the last option that one might have to consider. And it is also the worst option that one can go for. If you are sure that there is absolutely no other way to solve the problem, only then must you think of filing for bankruptcy. There are several consequences of declaring bankruptcy; we shall discuss some of the major probabilities.

The first and most common consequence is that it would be a permanent black mark on your record. Banks will black list people who have filed for bankruptcy. This is because they have suffered a huge loss due to your actions. Your act of declaring bankruptcy will stay on your credit record for a period of 8 years after you file for bankruptcy. While you have such a record, you find that getting loans approved will be an uphill task. Banks will reject candidates outright when they find out that the person has a history of declaring bankruptcy.

The second consequence would be that you would lose credibility. Any and every financial institution will not be ready to fund your ventures if you are planning anything. This is a big blow for budding entrepreneurs given the fact that venture capitalists are the only way that one can start off on a large capital investment venture. When the financial institutions are not willing to trust you, there would be no other way to seek capital for your venture. Even buying land or a home would become a challenging issue. Educational loans are another big thing that you must keep in mind if you have kids who are on the verge of going to college. You do not want to be in a position where you might have to end up sending them to community colleges just because you messed up with your finances although they have done exceptionally well in school.

The government might be willing to help you out in such situations but do be aware that there are a lot of strings attached with public help. You will lose total control over your assets or venture due to the fact that there is an external public body which is funding it. Hence it is very important that you find out all the implications of going with a particular move before making it. Particularly for business men it is very important to make good decision which will not haunt them in the future.