Taking a student loan after bankruptcy is a major step towards acquiring financial freedom. Federal loans are helpful to borrowers, as they don’t ask for any repayment until 6 months after completion of the course. If your parents are turned down for a loan because of bad credit, you can still ask for an increased student loan through Stafford loan. In case some extraordinary circumstances are the reasons of the bankruptcy, there are chances that your lender would try to find out other ways to sanction a loan.

The amendments made in the Bankruptcy Code in the year 2005 made most of the student loans non-dischargeable. It means if you have taken a student loan of $2,500.00 to $250,000.00, you will be bound to take some financial decision about your employment in future and your lifestyle. You are told about the interest and penalties that occur if your name appears in the defaulters list.

But how would it be possible to get access to such a loan after discharging student loan bankruptcy?

There are two types of loans: government and private. We know that the main aim of the government is to make the life of all individuals better regardless of what their background is. It is the responsibility of the government to make sure that you have access to basic amenities that includes education also. Getting a government loan is easier because these loans are not provided on the basis of your credit history.

If you are applying for a private loan, the lender will see your credit report before offering any loan. Plus the private loan providers also have a higher interest rate on all the installments. This is going to create problems for you when you will start repaying the loan, as you cannot consolidate both: private and government loans after completing your education. The result will be two loan payments and things will get complicated.

In no way can bankruptcy stop you from getting financial aid for your education. If you are in search of an opportunity to attend college again after declaring yourself bankrupt, you can find some financial aids and student loans to get you out of debts after bankruptcy.

The first step is to fill out FAFSA (Free Application for Federal Student Aid) form, which will allow your school and government, in finding out the type of financial help you are eligible for.

If you don’t have any drug or crime record, your chances of getting financial aid or loan are brighter, regardless of your bad credit history or bankruptcy declaration. Some schools also provide financial aid to students in the form of a merit scholarship or grant and you don’t have to repay any of these aids. You will get a need based grant on the basis of your household income and scholarship depending upon your academic performance, extra curricular activities & other specialties.

Drawback

One major drawback of taking a government loan is that you can get only a fixed amount. If you take a loan that is not sufficient, you are free to consider private loan options also. Nobody, other than you can decide, if you can really handle two loan payments at the same time.

Coming to private loans, they have certain limitations. The main problem you can face in the entire process is that government loans have a fixed interest rate, whereas the rates in private loan are adjustable. It means your loan payment amount will increase even if your salary remains the same.

But do remember that declaring bankruptcy does not mean that you are free from repaying the loan. If you are bankrupt, you can apply for and get a loan but you cannot avoid paying back these loans by making use of the bankruptcy situation.

How to repay the loan after bankruptcy?

There are some steps that might help you in getting refinance after bankruptcy:

• Make a budget of your daily expenses and follow it. Try to set the expenses as low as you can and focus on your basic needs.
• If you have freed up some money with bankruptcy, apply it to your loan.
• If you qualify for it, try to get a bankruptcy debt consolidation loan . It will have lower interest and monthly payments.
• You can also look out for a part time job to pay off the loan.
• You should also claim your student loan interest rates in your tax return. This will help you in saving money when you will start working.

Aspiring for a loan after filing for bankruptcy is similar to shooting a bullet in the air. Most of the times creditors do not pay heed to your applications. But to make your case heard and your presence acknowledged, you should keep in mind that your credit situation matters a lot, for the creditors. The lower the credit score, the higher will be the risk for the creditor, which in turn would mean, higher rate of interest for you. Thus, it is advisable that you start working and stick to your new job for at least 6-12 months before you apply for a loan. This will not only show your willingness to work hard but will also improve your credit score, to match up with the minimum standards set up by the creditors. At times the reasons for bankruptcy are related to some uncontrollable circumstances, like natural calamities, accidents or some medical problems. In such cases, getting a mortgage loan after bankruptcy may not be a problem. But in case your wrong decisions have led to your filing for bankruptcy then make sure you prove your worth convincingly, to the creditor.

It is obvious that people, who have filed for bankruptcy, would prefer an unsecured personal loan, in order to pay off the previous debts, also called as bankruptcy debt consolidation. An unsecured loan is one that doesn’t require any collateral or in other words, security against the loan and thus, the chances of recovering the previous debts seem possible with such a loan. But you should also consider the negative effects of taking a personal loan at high interest that you can fall back into debt. Thus, taking every step cautiously and intelligently is what is required while handling personal loans after bankruptcy.

To reduce the effects of high personal loan rates after bankruptcy, you need to work on your credit score intelligently. You should restrict your finances to a bare minimum level and use a savings bank account. Applying for a secured credit card, through which you can only borrow the money that you have previously transferred to an account, will definitely prove beneficial. This will surely be taken as a positive sign towards your efforts to improve the credit score. Once your finances start growing, you can then apply for an unsecured credit card but make sure you keep your expenses limited and pay your bills on time. Refinancing your home loan can also improve your credit score in a much better way.

Though applying for unsecured loans after bankruptcy is the best option possible but if you can offer some collateral, like an equity in your home or something else to your lender, then your chances of getting your loan application approved, increase significantly. The amount of debts you need to pay, also matters a lot, to the lender. The lower the amount of bankruptcy debt consolidation and personal loan rates after bankruptcy , the better confidence the lender will have in you. A good debt-to-income ratio also makes the loan approval procedure faster.

Although getting a mortgage loan after bankruptcy needs a lot of explanation and proving self-worth, but to prevent yourself from such a humiliating experience of being bankrupt, you should start taking some measures, right from the time when your finances start fumbling. One of the measures to prevent bankruptcy is debt consolidation loans. By piling all your debts in a single folder, a debt consolidation company negotiates with your creditors and charges you one monthly installment, that too at a lower interest rate, thus helping you clear all your debts efficiently. Debt consolidation loans have become popular among those fearing bankruptcy because of the sudden downturn in the economy. No matter what your financial condition is, always remember that it is the rule of nature that good and bad times come alternatively. Even if times after bankruptcy seem to be extremely tough, don’t forget that good times lie ahead!

Getting a Mortgage After Bankruptcy

Although, it is not easy to get a mortgage after bankruptcy but it all depends on the aspects that are taken into account while considering your application.Your guaranteed income and the amount of deposits you have will influence the process. So your very first step should be to provide both these things to the lender.The mortgages in case of bankruptcy that are offered by companies are called “alternative lending services.” They will charge sky-high interest rates and fees for acquiring risk on your behalf. They also have some specific criteria for determining your eligibility. Most of the lenders will ask you to wait for two years to get the mortgage loan but some might consider your request even before this period (may be after six months). In this case you don’t have much to prove yourself and the lender only takes your down payment & income into consideration.

If you are not able to make the down payment, various down payment assistance programs are also meant for you. There are very less chances that you will only have to make a down payment of 3-5% of the loan amount.

Getting Mortgage After Two Years

Your chances of getting a mortgage increase after two years. If you have maintained your good credit scores after bankruptcy, there would be absolutely no problem in getting mortgage at a decent rate of interest.

Tips to Get Mortgage Loan After Bankruptcy

Timely Payment:If you really want to get a mortgage in 2 years after bankruptcy, you should have a perfect payment history. It means you should not make any delay in paying off your debts like home and car loans, which are not discharged during bankruptcy.

Deposit:The amount of deposit you can put down on the house will increase your chances of getting mortgage after bankruptcy. The amount of 3-5% will be enough for the approval of your request.

Limiting Further Debt:If you don’t have other debts like total payment amount for credit cards and bank loans, it will contribute towards getting you a mortgage loan. You must know that the lender for giving mortgage evaluates your debt-to-income ratio. It means your other debts should be very limited.

Credit Report Check:Do not assume that the information on your credit report is correct. There might be some mistakes and you should check it for accuracy. If there is some inaccurate information in the credit report, it will work against you.

How Can You Rebuild Your Credit With the Help of a Mortgage?

Along with adopting credit repair tactics, one should also prove that he is credit worthy. Handling the credit properly can only do this. You should start working with your credit again but carefully.

For this you are required to concentrate on both: revolving and installment credit that will rebuild your profile. A revolving credit includes open and ended lines of credit you continuously draw from a credit card or any other source. Installment credit is one time amount that you repay through monthly or periodic payments.

A mortgage is a kind of installment credit. You might think that it is near to impossible to get such a huge loan after declaring bankruptcy but in actual terms it is one of the best choice you could make. You can get a mortgage loan because the loan is secured against your home, which makes it easy for the lender to disburse the amount.

Selecting a Good Mortgage Lender

Your credit rating determines if you are eligible to get a prime or a sub prime loan. Prime mortgage is given to those with excellent credit. Sub prime mortgage on the other hand is given to individuals with lower credit scores. Before you apply for a loan it is better to ask for a quote from your mortgage broker. After seeing your credit information, the broker will send you multiple quotes. Study them carefully and find out which one is best for you.

Getting a mortgage lender after bankruptcy is not a difficult thing but you should work hard to prove that you are worth it. Even after getting the loan do not go off the track. Save money, spend carefully and ensure that you have a good credit rating. If you will follow all this, a mortgage would surely prove to be beneficial for you.

Life after bankruptcy maybe becomes a little harder since getting creditors becomes difficult and even after convincing one, it means borrowing money at a higher interest rate than what others pay. With the sudden downturn in the economy, many companies have filed for bankruptcy, after confronting with there deteriorating financial conditions. Realizing the need of the time, many lending institutions have come up, which offer loans to those who want to rebuild their finances.

It is obvious that once you have filed for bankruptcy, the urgent need is to improve your bank balance. Controlling your finances thus becomes utmost important in your plan. To help you get out of the trauma of your past credit history, you can apply for an unsecured personal loan after bankruptcy. An unsecured loan is preferred because it doesn’t require any collateral or security to the lender. Though convincing a lender to give you an unsecured personal loan is extremely difficult but with little efforts and intelligence, it can be possible.

The other thing that matters a lot, while considering your loan application, is your credit history; the heavier the debts, the lower your chances of getting your application approved . It is thus advisable that you take up a job and work for at least 6-12 months before applying for a loan. This will serve two purposes. One, it will show your optimism to re-establish your credit and secondly, it will increase your credits to match up with the lending company’s set standards, which in turn would mean an easy path to getting a mortgage loan after bankruptcy.

Some things that will help you in rebuilding your credits and regaining control over the situation after bankruptcy are:

• Maintain a Job:Bankruptcy may bring down your confidence level to an extent you never imagined. But taking up a job becomes the need of the time. Without a good credit score, applying for a loan may mean airing words on a deaf ear. Thus taking up a job is the wisest thing to do in such a situation.
• Secured Credit Card:A secured credit card lets you borrow only the amount that you have previously transferred to your account.
• Timely Payment of Bills:Once your finances start growing, you can apply for an unsecured credit card but make sure that you don’t end up spending more than your earnings. By paying all the bills on time, you are in a way improving your credit score, thus proceeding closer to the final loan approval stage.
•  Credit Report Tracking:You should keep a track of your credit score by checking reports at Equifax, Experian and TransUnion. In case of any discrepancy, you must get it corrected as soon as possible since it affects your loan application validity in a big way.
• Refinancing of Loans:Refinancing of loans is one of the wise steps you can take, to reduce the financial burden. Refinancing your secured loans like home loans can bring relief to your bank balance.
• Paying by Cash:Try to pay most bills through cash and not by credit cards. Giving up your credit card for sometime, however convenient it may seem to be is one of the things you should follow.

Thus, proper planning and careful spending can lead you to the level you aim to reach. Though taking a loan is synonymous to falling into a debt trap but it sounds feasible for those who have huge debts to repay. Applying for a personal loan is what people prefer after filing bankruptcy. There is no doubt that you’ll have to face higher personal loan rates after bankruptcy but by remaining patient and diligently working hard you can prove that there is a life after bankruptcy! For those who are on the verge of filing for bankruptcy, should consider debt consolidation loans, which handle all your debts and your role is restricted to paying a single monthly installment, that too at a much lower rate. It is one of the efficient ways to avoid bankruptcy and lead a peaceful and tension free life.

Individuals will generally file for Chapter 7 or Chapter 13 bankruptcy. Before filing for bankruptcy, make sure there are no other options. Chapter 7 is the most common kind of bankruptcy filing and is often referred to as “personal” bankruptcy. It is generally used by individuals, but some businesses may qualify to file under Chapter 7 as well. Under current United States law, any person filing must receive credit counseling from a person or group approved by the court-appointed bankruptcy trustee to ensure that all other available avenues are reviewed. The law also provides a “means test” to review what capability you may have to repay you debts. If this legal test concludes it is feasible for you to repay, you may be forced to file under Chapter 13, instead of Chapter 7.

Chapter 7 can usually be done without a lawyer’s assistance, though legal assistance is highly recommended. Under Chapter 7, most of your assets are sold to make partial payment on your debts and the rest are written off, with the creditors being prohibited from seek any further repayment. It can stay on a credit report for up to ten years, though seven is typical. This negative impact can be reduced with some sensible financial practices. Making all bill payments on time can be a large help, as most lenders look to the last year or two as an indicator of creditworthiness. A secured credit card, which is credit backed by a bank account, can also be a large help in restoring credit after bankruptcy.  Chapter 13 requires that you follow a court-mandated payment plan to reimburse your creditors for money owed, but does not require the sale of your property and assets.

Chapter 11 is mainly for businesses undergoing restructuring and cut backs. It is a very complicated kind of bankruptcy, involving an intricate reorganization of finances and partial forgiveness of debt. The assistance of a licensed attorney who can help with understanding the types of bankruptcy and their legal complications is absolutely necessary for Chapter 11. Chapter 12 is solely meant for family farmers, and it allows them to address debt with a schedule of repayments.

Not all legal assistance is created equal. You should retain a lawyer who clearly understands how to file for bankruptcy and how it will affect your credit. Just like you would want a specialist physician to perform a major surgery, you should find specialist help that understands the process and ramifications of your decision. Once assistance is retained, refer all of your creditors to your lawyer. After your case is filed, they may not contact your directly, under threat of financial and legal penalties. If you are considering filing for bankruptcy, do not use your existing credit lines or seek to expand them, or else the court may exempt that “system gaming” from the bankruptcy write-offs.  After filing a petition with the court, you will be required to hold a creditors meeting and a trustee will review your assets to determine what is eligible to be sold (Chapter 7) and if you are able to work with a payment plan (Chapter 13). After these steps are finished and the results returned to the court, a decision will be made about what debt should discharge. After that, your creditors have sixty days to challenge the decision regarding any particular account.

Before filing, be sure that you have done solid research or acquired the assistance of an attorney. Knowing how to file for bankruptcy and how it will affect your credit before deciding to file can save you a lot of trouble and confusion.

Finding the best credit card deal after filing bankruptcy is going to take some research but it is not impossible. A consumer needs to take their time and look through what is being offered out there and weigh the odds and do some comparison-shopping.

The first thing a person should know when applying for credit cards after bankruptcy is the difference between secured and unsecured credit cards. There is no doubt that you will get applications for secured credit cards soon after bankruptcy. What a secured credit card is a credit card, which is backed up by a savings loan. The amount you have in the savings account is the amount of the limit on the credit card. This is like insurance on the debt owed. A great example is if you have $100.00 in the account then this is the spending limit on the card. While the money is in the savings account in most cases it is earning interest.

An unsecured credit card is a credit card with no savings account attached to it. Of course it will have a spending limit but will not be backed up by the money in the savings account. In order to obtain this type of card a consumer must fill out a credit card application and then the lender will get the credit report through the credit agency and decide if the applicant is approved and at what interest rate. If you bankruptcy is still fairly new and you have not yet begun to rebuild your credit you may be declined.

When applying for a secured credit card be careful and be sure to do the research as all credit cards are not made equal. A consumer at this point may be getting secured credit card applications in the mail left and right as a lot of banks are pushing these.

For those who are still searching for credit cards after bankruptcy there are some quick tips that will help. When searching for a credit card make a list of certain things or criteria that you will need to have met before applying for the card. One of the criteria may be the interest rate. When searching for the right credit cards after bankruptcy be sure to scout out those low interest rates. One card may have an interest rate of 9.9% while the next card has an interest rate of 23.95%. This is a major difference in rates and it does happen.

Another thing to be aware of is the application fee. Many consumers without even realize it see the great interest fee and then get hit with a huge application fee. Some are as high as $125.00. Not realizing this and getting a bill for this much without spending a penny can send anyone reeling much less the consumer trying to rebuild credit. Once the card is accepted by the consumer it is much harder to cancel and the account and gets the fee to go away. Double-check those fees before accepting the credit card.

When applying for credit cards after bankruptcy be sure the credit card reports to all three credit bureaus or agencies. The agencies are Equifax, TransUnion and Experian. If they do not report to the three companies then do not accept the card. You are trying to rebuild your credit and this is one of the most vital steps in the rebuilding process. It is also important to keep abreast of your credit score and what the credit card agency is reporting.  An easy way to do this is by receiving all 3 in 1 credit reports.  According to creditreport.com you can receive a free report and score.

Another important factor is to remember not to apply for too many cards all at the same time. This will look as if you are not being financially responsible. And you really do not want to get too many cards all at the same time anyway. There is no need for it. And this in turn can hurt your credit score.

Rebuilding your credit using credit cards after bankruptcy is really not hard to accomplish. It will take time and will not happen overnight. Many times it takes a few months to a year. Do your research and double-check the figures and choose wisely.

When you do receive the credit card be very vigilant about the spending and make sure you have the money to pay the bill as soon as it comes in. We all know how easy it is to miss a bill and fall behind. Nobody wants to be on that never ending treadmill and have to start back at square one.

There is no doubt that after a bankruptcy your credit score takes a big hit as does your credit. Those three digits that the credit bureaus give you are out there for the world to see and trying to buy anything at this point is just not going to be possible. In due time you will have established your credit back. It will take time but do not give up hope. It is possible.

It is proven that before your bankruptcy is taken off the records you can still be applying for credit and receiving good ratings and interest rates.

According to MSN Money.com, one way to begin is to apply for a secured credit card (this is the type of credit card for those with not so great credit). Although this is not the best credit card in the world to own it is a beginning. A secured credit is a credit card where the limit is tied to a savings account. This will be the consumer spending “limit”. This is not the only type of card you will ever be able to own. This is a great way to begin. By starting out this way there is less chance of getting yourself back in debt while working on your credit score.

The next way to establish credit after bankruptcy is the day that a credit card company offers you an unsecured credit card. After owning a secured credit card and being vigilant it usually doe not take long before you start getting offers for the unsecured type of cards. When accepting these cards pay close attentions to the interest rates and spend wisely. As much as this can help rebuild your credit do not let it hurt you in the end. As soon as the bill comes in pay it right away. This will help build your credit after bankruptcy.

A bankruptcy can stay on your credit report for up to ten years. Many think this is a terrible thing but the thing to remember is that you can begin changing your credit the day your bankruptcy is finalized. Being responsible is the best way to handle rebuilding your credit after bankruptcy.

Many cannot handle the task of having credit cards on hand. This becomes too much of a temptation so many just shy away from getting. Although it is advisable for those who really are afraid to overspend to stay away it is wise to have at least one to start rebuilding. Yes, it will take discipline but it can be done.

For those file bankruptcy to just turn around and build up bills and file bankruptcy again this looks like they are getting something. In the end they are not actually. New laws being put into place are increasing the time in between being able to file a repeat bankruptcy. There were too many loopholes in the law, which allowed some consumers to come out of a bankruptcy and spend away just to file again. This is not the way anyone wants to build credit after bankruptcy…it just will not work.

Instead the best thing a consumer can do is learning from their mistakes and move forward.If you were an over spender than there are ways to keep the spending in control. First coming up with a budget will help. Make a list of your income and then a list of your expenses. Then compare the two. If you expenses are more than what you are bringing home then it is time to take action. You can begin by cutting back on some of the expenses. Many consumers have little extras that they buy such as that coffee on the way to work in the morning. For many it will have to be the coffee pot that is turned on at home and the coffee put into a travel cup. All the little extras do add up more than people think.

For many a part time side job may be the answer. For those who intend to do this many choose a job that is like a hobby to them. For people who love to craft maybe a job in a craft store. This really helps defeat the feeling of yet another job.

There are many reasons why people have to file bankruptcy. One of the main reasons is a consumer became ill and did not have health insurance. Once the bankruptcy is over and the consumer is back on their feet and ready to work one of the best ideas is to find employment that offers medical insurance. For many people getting sick without insurance can be devastating leading to bankruptcy very fast.

Sticking to your guns and being “money wise” will build credit after bankruptcy faster than you ever thought.

Many consumers who file bankruptcy have already owned a home and probably lost their home. If a consumer intends to repurchase a home the main objective at this point is to work on getting the credit score back up. For many a great point to remember is if you were in that much debt to lose your home this is a whole new beginning. All you have to worry about now if your future. The stress will be much less and you can be more focused.

According to Newsweek it can take up to three years to purchase a home after a bankruptcy. This is not bad at all if you are one of the consumers thinking it would be at least ten years.

Right after your bankruptcy is filed it is wise to obtain all credit reports from the three major reporting agencies and make sure al debt has been wiped off of your account. Also double check and make sure there are no other mistakes on the report.

The thing to remember is if you wait the minimal time to look to buy a home you will need to have a larger down payment so the time to begin saving is now. Even if you budget a small amount for each week and put it into an account. It will add up faster than you think as long as you do not keep borrowing from it and not paying back.

There are some lenders that will make loans as early as six months after a bankruptcy is filed. But the problem with these hard-money lenders is they will require a higher down payment in the field of 20-35%. The interest rate is also be very high. The loan conditions will also not be great at all. They will incorporate prepayment penalties and such. If you as a consumer do not have to deal with this type of loan you are better off not to. The money that will be saved by working on your credit score and getting a better loan will pay off double if not more in the future.

When a consumer is looking into buying a house after bankruptcy the one thing that much be done is the credit score must be improved. One of the best ways to accomplish this is to get a credit card. In the beginning right after the bankruptcy you may have to apply for a secured credit card rather than an unsecured. This is so that there is some type of guarantee that the account will be paid. The way a secured credit card will work is it will be linked to a savings account that the borrower or applicant must put money into. The money that is in there is the spending limit on the card. After some time of using a secured credit card and paying the balance when it is due you will be able to obtain an unsecured card. Always remember to pay the credit card bill as soon as it comes due.

In trying to rebuild your credit for buying a house after bankruptcy is to always pay your bills on time. All of the utility companies as well as many other companies report to the three major reporting agencies. The three agencies are Equifax, Experian and TransUnion. What want these on-time payments to show up on the report, as this is the way to bring up the credit score.

When making decisions about buying a house after bankruptcy one must show steady employment for at least a year or two. A consumer has to earn what the business calls a regular salary.

When buying a house after bankruptcy make sure to have at least 10 percent saved as a down payment. The more you can save for the down payment the better off you will be and the mortgage payments will be that much lower.

Avoid any type of late payments at all costs. This will show up on your credit report and it will hurt you. If you fear having a late payment do whatever is humanly possible to avoid it. For example if you have a payment due on a bill and you forgot to mail the check can it be paid online? Can the payment be sent via Western Union. Do whatever you can to get that payment there on time.

Buying a house after bankruptcy is not impossible actually it is very doable. All a consumer has to do is concentrate on a few steps and the goals are obtainable and not out of reach.

For those looking to buy a home after bankruptcy, this ultimate form of credit is possible.  Most lenders will require that you have worked on improving your credit n the time since your bankruptcy.  You will need to wait at least two years to secure an FHA loan, which can help you get into a home faster and with a lower interest rate.  Other lenders are available as well; each offering you a range of opportunities about 18 months to 2 years after your bankruptcy has been discharged.

The same is true for car loans.  Most people will quality for a car loan about 18 months to 2 years after their bankruptcy was discharged.  You will have to pay a much higher interest rate if you get a car loan at this time.  Yet, you can use these loans to help you to rebuild your credit report, which can help you to get better credit cards and loans down the road.

3 Tips For Rebuilding Credit After Bankruptcy

Be sure that you know what is on your credit report.  All collections and discharged debts should be marked as discharged through bankruptcy.  Keep an eye on your report every six months to yearly to make sure no mistakes are found there.  This will help you build up a new history.

Use credit wisely.  Do not carry a balance on any credit cards you have from one month to the next.  Be sure to make all of your credit card payments on time each month.  Never go over the limit and pay all fees according to the terms of service. Do not avoid using credit.  The only way to rebuild your credit is with credit.  Make wise decisions and over time, you will see a significant improvement.It may take some time to see credit interest rates improve for you after you file bankruptcy, but through good credit usage, it will happen sooner rather than later.

Credit after bankruptcy is possible and being proactive about repairing your credit can help you to change your financial life moving forward.  The fact is bankruptcy is a way to improve your financial state by having all of your debts wiped clean.  Yet, it is also an admission of failure in being able to manage your expenses.

Therefore, it is essential to find a way to repair your credit that helps you reestablish your ability to use credit wisely.  When lenders and further credit providers look at your report, they want to see that since you have had your bankruptcy that you have used credit wisely.

Bankruptcy will stay on your record for the next ten years.  It is often a misunderstanding for some individuals that bankruptcy will in fact keep you from getting any credit at all.  This is not true.  The amount and type of credit you get will depend on many things, including your ability to pay, the type of credit you are getting and the amount of time that you have had since you filed bankruptcy.  Keep in mind that making smart decisions at this point is a very personal decision.  Ask yourself if you can be trusted with any type of credit card before you jump into these cards and find yourself with a sizable amount of debt and no way to repay it.

Right After Bankruptcy

Once your bankruptcy is discharged, the debts included on your bankruptcy are no longer a requirement of you to repay.  Some people determine that they still want to repay those debts and therefore go about doing so.  It is also common that people will continue to pay on mortgages and car loans, assuming this is acceptable in their state (and usually these types of loans aren’t included in the bankruptcy if you plan to keep repaying them.)  If you have a car loan, a house loan, or even a student loan, these are your building blocks for credit repair.  Use them to help you establish your ability to pay your bills on time, and regularly.

Within 6 to 12 months after you have a bankruptcy discharge, you are likely to see credit cards come in.  Remember that these lenders know that you cannot file bankruptcy again for at least 7 year (in some cases longer) which means that you will have to pay them throughout the next 7 years.  These initial credit cards after bankruptcy often have very high interest rates.  They also have a number of fees associated with them including one-time application fees, membership feels, annual fees and even account set up fees.  For example, a credit card offer may come in to you offering you a credit limit of $300 but $250 of that is already all the fees you need to pay.

Should you use these credit cards?  If you want to establish your credit, you can, but do so cautiously.  Select one with the best fee schedule and use it only one or two times per month.  Put it away and don’t ever carry a balance on it. Pay it off in full at the end of the month.  Doing this will help you build a credit history. What’s more, you will see that over time, your credit card offers will improve with lower fees and interest rates.  This process is slow, but over time you’ll have plenty of additional offers to choose from.

You may also want to consider a secured credit card. This type of credit card is designed to provide you with a line of credit that you secure with a deposit.  You make a deposit of $500 and then you can borrow against that $500 as you need to.  The benefit here is that you can use it like a credit card whenever you want and repay it each month.  Perhaps the most beneficial reason to use this type of account is when the company holding the card actually reports to credit bureaus.  If they do, this will allow you to have more opportunity to build a good credit record.