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Rebuilding financial stability after bankruptcy


With a solid plan and prudent responsibility, debtors can successfully rebuild their financial lives after Chapter 7 or Chapter 13 bankruptcies.

For many people in Florida, making the decision to file for bankruptcy is a very personal and emotional experience. Whether a debtor completes a relatively expedient Chapter 7 bankruptcy or a three- to five-year Chapter 13 plan, knowing what to do next can be confusing.

One goal of filing for bankruptcy is to achieve a fresh start to a better financial future. But, just how should someone go about doing that? Understanding the answer to that question is integral to making the most out of the bankruptcy experience.

Should I avoid credit for a while after my bankruptcy?

The Huffington Post indicates that consciously avoiding all credit and living on a cash-only basis is not what a person should do after bankruptcy. In fact, after completing a Chapter 7 or a Chapter 13 plan, a consumer should seek out new credit opportunities as a way of showing newfound responsibility with credit to creditors.

NerdWallet agrees and indicates that obtaining new credit should happen immediately after bankruptcy to get the credit repair process started as soon as possible. This is because it can take time to fully restore one’s credit to good standing.

Will creditors really give me credit after a bankruptcy?

As explained by Bankrate, a consumer may appear relatively attractive to a creditor after bankruptcy in part because the consumer’s debt to income ratio will be much better than it was before the bankruptcy. This is one of the factors considered in making a lending decision.

In addition, creditors will feel a bit safer knowing that the consumer is not eligible for another bankruptcy for several years.

What types of credit should I look for after my bankruptcy?

Many people find that a secured credit card is a good vehicle to start rebuilding credit with. It works by the consumer depositing money into the credit card account and then essentially borrowing against that.

Once a credit card is obtained, consumers should use it a little bit each month and pay the balance in full each month. This will avoid paying large amounts of money in interest as the interest rates on these cards are often high. It will also demonstrate fiscal responsibility to credit card companies.

What else should I do after a bankruptcy?

Florida residents should make budgets and stick to them, including developing a savings reserve fund. Keeping an eye on credit scores is also recommended.

More advice should be obtained by talking with a bankruptcy attorney before, during or after the bankruptcy process.

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