Recovering From Bankruptcy: Five Tips For A Fresh Start

If you are so mired in debt that you fear you'll never catch up with your bills, bankruptcy could be the right move for you. This is a tough decision; you want to make a fresh start, but are worried about your financial future. There is a perception that bankruptcy destroys your ability to get credit for many years, but that is not always an accurate assessment of life after filing. Many people use bankruptcy as the opportunity to get their financial objectives in order and rebuild their credit. Read on to learn about how you can make a fresh start after your bankruptcy.

1. The first order of business when rebuilding your credit should be some soul-searching about your situation. Some people arrive at a bankruptcy declaration because of overwhelming medical expenses or the financial trauma of divorce, but many more simply have poor financial skills. Make sure to take a realistic look at the causes of your difficulties, and make plans to ensure that they never occur in the future by educating yourself on how to use credit wisely and the importance of emergency savings plans.

2. Once your bankruptcy is final, examine your credit report to ensure that it is accurate. The federal bankruptcy filing will appear as a glaring negative mark on your report, but it could be even worse if discharged debts are still appearing as open (and in arrears) accounts. Correct any inaccuracies by contacting the three main credit reporting agencies.

3. You will begin receiving offers for credit cards and loans very soon after your final disposition, but you should tread very carefully when taking on more credit at this time. Many of these "bad credit" creditors prey on people who are fresh out of bankruptcy and who are eager to rebuild their credit. Read the fine print carefully for yearly fees, miscellaneous membership fees and high interest charges.

4. Keep a careful watch on your credit report and score by checking both at least monthly. There are several free sites available. Most have annoying advertisements and credit card offers, but are still a very valuable and budget-conscious way to keep up with your credit use and score. Online forums offer advice and bankruptcy recovery stories from experts and real people that can prove to be supportive and informative.

5. FHA loans offer those with dreams of home ownership a pathway to that goal, even if you have a bankruptcy on your record. As long as you are at least three years past your filing, you may qualify for a low down payment loan that is guaranteed by the federal government.

As long as you view your bankruptcy as an opportunity to improve your financial habits, you can successfully re-build your credit and achieve your dreams. Contact a bankruptcy attorney like Donald T Tesch, PS for more information.