Myths about bankruptcy abound in tough economic times. You’ll lose your home, car, and other valuable assets. The bankruptcy will stay on your credit forever. And filing means you’ll never be able to get a credit card or a loan with an affordable interest rate. Actually, there are some truths to these myths, but with some key differences.
You may lose your home through foreclosure, unless you act fast, hire a lawyer, and file bankruptcy.
You may lose your car, but in both Chapter 7 and Chapter 13 bankruptcy, you rarely lose anything.
Bankruptcy does not stay on your credit forever; it stays for 10 years via Chapter 7, and 7-10 years on Chapter 13.
You will in fact be able to get a credit card, thereby giving you the opportunity to rebuild your credit so you can get a loan.
Rebuilding Credit – What Got You Here
It’s important to realize before you even file bankruptcy why you’re filing. It can seem like a win-win situation, but be mindful of what happened to get you here. Sometimes you are not at fault, but more often than not there were some mistakes. Maybe you lacked insurance and were hurt. Or you charged up some credit cards. Or you bought beyond your means, investing in a home and later losing your job. Whatever the case, don’t dwell, but be aware.
Opening a Checking or Savings Account
One key step in proving to lenders and credit card companies your financial means is to open a checking and/or savings account. This is a small but important step in showing you can handle money, you can save money, and you can keep an account open.
Getting a Credit Card and More
One myth of bankruptcy was is that it will be impossible to immediately get a credit card. In fact, you can, namely by getting a secured credit card. A secured credit card is one of the best ways of rebuilding your credit. You pay a set amount, the value of the card is what you pay, you make payments on time, and you can get the money back. You might also consider getting store credit cards, perhaps at a major store you frequent. These cards are another way to improve your credit scores with limited risk – if you pay on time.
Staying On Budget and On Time
Rebuilding your credit after bankruptcy does take some time. It may not all go as planned. You may lose your job, get another medical bill, or find out you owe back taxes. There are many cases where it takes time and patience, sometimes even a second bankruptcy, to truly start over and rebuild. However, if you can open a checking account, get a secured credit card along with store credit cards, and pay bills on time, you will soon be able to get loans and regular credit cards.
