Recovering from Bankruptcy

Recovering from Bankruptcy

Every year more than 1.5 million Americans file for bankruptcy for a variety of reasons. While bankruptcy has many negative effects, it does offer people with devastated finances a fresh start. While most bankruptcies remain on your credit reports for 7-10 years, there are several things you can do to start re-establishing your credit after filing.

The first step in managing your credit is to clear your credit reports of errors. Check that your credit reports from TransUnion, Equifax, and Experian have accurately recorded your pre-bankruptcy debts as "Included in BK." Under the Fair Credit Reporting Act, you have the right to dispute inaccuracies.

After clearing out any errors in your credit reports it is best to keep a regular eye on your finances and use your credit conservatively. Keep your employment stable, be cautious with spending, and pay all your bills on time.

You may want to apply for a secured credit card that can be used in moderation and paid off each month. Secured credit cards use your savings account as collateral for the credit limit and are easier to be approved for than a standard credit card.

As early as 1-2 years after bankruptcy you may be able to receive a home loan. The Federal Housing Administration (FHA) and Department of Veteran Affairs (VA) have specific guidelines for accepting borrowers who have filed for bankruptcy. For example, the FHA will insure mortgages to individuals who have filed Chapter 7 liquidation bankruptcy two years after the discharge if "the borrower has reestablished good credit (or has chosen not to incur new credit obligations), and has demonstrated an ability to manage financial affairs."

You may want to contact a U.S. Department of Housing and Urban Development (HUD) approved housing counselor or local support program for advice and assistance with purchasing a home. Unfair lenders can sometimes target people recovering from bankruptcy so be sure to research your loan options, know your rights, and read the small print.

After 7 years, the accounts that were marked as "included in BK" should be removed from your credit reports. The bankruptcy record itself will be removed after 7-10 years depending on the chapter that you filed. If your records are not removed by the credit reporting agencies automatically, you can send a letter of dispute to have the records taken off your report.

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2 Contributions
254 People Helped

Helpful to 251 out of 272 people

Bankruptcy is not right for everyone.  You have to make sure that you talk to a reputable bankruptcy attorney.  If you make over a certain amount of money for your household size, you may have to file a Chapter 13.  A Chapter 7 is the quickest relief, but may not be the best option for everyone.  A good attorney will advise you of anything foreseeable, even if it's something you may not want to hear.  My boss has told people before that bankruptcy is not a good option for them.  We would never want to steer anyone in the wrong direction.  We care about the clients where I work.  Also, some people have the misconception that if you file for bankruptcy, you will lose everything which is simply not true.  There are exemptions for homes and vehicles, but they vary from state to state.  The best suggestion that I can offer regarding bankruptcy is to do your homework about what attorneys are reputable and also make sure you disclose everything.  For example, if you do not disclose that piece of property you transferred or your antique car to your attorney, he/she cannot properly advise you and you will most likely end up in a horrible situation with your case trustee.  Although filing for bankruptcy is not fun, if you work with a good attorney, you will feel much better once it's over and you can move on with your life.

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1 Contribution
225 People Helped
Helpful to 225 out of 243 people

I definately agree with you dear.. i filed for Chapter 13, as advised by my attorney - who is the best out there..  because i make decent money and had perfect credit before the filing - i compared notes with others  who had not a decent lawyer, and it makes a world of difference.  With this kind of bankruptcy, i am able to keep two houses one i live in and the other back home, my current truck (new) and already paid everything else up.  Creditors will keep harrasing you but you need to report that to your lawyer, they'll send them a cease and dissest - and then they WILL take them to court and get you money for the harraassment.  I also opened a credit card from my bank (with my money) and paying it regularly to rebuild my credit.  I think in this year i went up 100 or more points..    I was always great with my credit - but the real estate market killed me in the 3 investment condos I had..  it was painful for me to see my soaring credit in the mid 800's plummit into the 500's!!!   i had to pull the plug which was the hardest thing i ever had to do - not to a fault of mine - NEVER missed a payment my whole life..  but life happens.. and the whole country is under - so i did it - and now feeling a bet better..  no more investments for me though!  :)))

Thanks for all your stories people - and good luck to all..

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1 Contribution
95 People Helped
Helpful to 95 out of 116 people

I myself had to file chapter 13 in 2007, To me, I was ashame, But what happen to me was horrifying someone stole my identiy and none of my credit card people would work with me and trust me I appealed all of them and they told me I was still responsible for paying half of it instead of 30 thousand. Yes, thanks to this person that stole my ideanty and I had awesome credit at a young age. It tore my world upside down. You hear of people that had this done to them and never think it will happen to u, well it happen to me. NOw, I'm just trying to build up my credit but to be honest with u I never want another credit card again; Bc if i can't pay for it with the money I have then I don't need it. I'm not a shopping person, I only get what i can afford and what i need and that it. what is another way I can build up my credit without getting credit cards

1 Contribution
135 People Helped

Helpful to 135 out of 141 people

I filed bankruptcy last year and have already witnessed my credit score go up quite a bit. I know that I have a lot of work to do to ensure that my credit score continuously goes up and to keep it that way. The hard lesson I learned will remain with me forever and I will never allow myself to get into the financial trouble I was in when I filed.

One thing that I would like to comment on for people who are filing or plan on filing soon, be careful like the article states to watch your reports and to make sure that everything that was supposed to be included in your filing is actually taken care of. I received a couple of phone calls from various companies that should have gotten the notice that I filed Chapter 7 and that these accounts were now closed and dissolved but they somehow did not get the notice and called to "work out repayment arrangements", one company of which I talked to on several occasions and finally kindly reminded them that I was legally protected from them calling and harassing me about this debt that was now legally resolved through bankruptcy. I wasn't trying to be rude or anything, but I think they were just trying to manipulate the situation and get some sort of money from me. Luckily after the third time or so they stopped calling after I stopped being so polite :)

Be careful and make sure everything is sorted out. The months after my bankruptcy was completed and I had my Chapter 7 filing in front of me, I kept it right by the phone. If any debt collector called, I would give them my case number and my lawyer's information and that was enough for them (usually) to close the account on their side. 

3 Contributions
438 People Helped

Helpful to 217 out of 240 people

This article is simply and basic I would go to several websites such as and others to truly get an opinion of what should be done. Getting a secured card along with verfiying the accuracy of your credit report is just a start. You should also monitor your credit and make arrangements with any creditor that GOOD payment history will encourage them to remove all negative information they have recorded. Also making sure you are aware of who will accept you before you APPLY for Credit Cards and Loans. Making sure you modify the behavior which brought you to bankruptcy also read RICH DAD POOR DAD. Make sure you SAVE ADDITIONAL FUNDS and make sure your debt ratio is below 30% to Gross Income for at least 18 months so as to control your DEBT and increase your savings as the larger your savings account becomes the less likely you are to need your credit which in the long run the less you use it the hirgher it gets. Paying off your secured card every 60 days and not submitting any applications for 12 months will raise your score 100 points as long as nothing is over the limit and you have no other late payments in that time frame.

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1 Contribution
81 People Helped
Helpful to 81 out of 95 people

The website you recommended "bad2greatcredit" has been suspended to to non payment. Now there's irony!

1 Contribution
57 People Helped

Helpful to 57 out of 59 people

Filed for BK in 2010 was discharged in 2011 then came offers for credit cards. I noticed some offered 36% interest and a $75 first year $99 each year after annual fee oh and a $99 processing fee. Oh yeah these are secured cards btw, THESE ARE RIP OFF ARTISTS taking advantage of people who came upon hard times weather it was thier fault or not... I was semi fortunate to come accross a Cap One offer $300 limit no fee card unsecured, catch 22% interest better than nothing. I do realize i have a BK that will be in reports till 2020. limit raised to $500 6 months later (on time payments) Just approved for 2nd card last night $1000 limit cap one and they were included in my BK. Lets not kid BK is a very serious decision and dont ever want that kind of stress again, but for those of us who have filed or will file please don't be cheated by annual fees or rediculous intesrest! You can start to rebuild your credit with a secured card from a better source, if you dont get an offer for an unsecured card with no fees. BK means you ran into trouble not need to get riped off!

1 Contribution
129 People Helped

Helpful to 129 out of 143 people

I filled lat year. I had lost my job in 2010 like a lot of people. It was determined that at the time of my BK  that I could repay 100% of my debts. I now pay 500.00 a month. Thats more than my payments on my debt. I don't mind paying the money but I feel I should be put in a diferent catigorey when it comes to my credit rating. I could have filed a chapter 7 and had no payments and still had the same results. My credit report just shows a BK and has no notation that I am paying my debts in full.

Anyone else agree with me?

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