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Many people mistakenly believe that they will never be able to borrow money again after filing for personal bankruptcy.  On the contrary, lenders are more than eager to lend money to those who have just discharged a bankruptcy—at an inflated interest rate!  The situation is a win-win for lenders typically, as they will require some collateral upfront, charge a higher than market rate, and they also are secure in the knowledge that the debtor cannot file bankruptcy again for at least seven years.

Most often, people file for bankruptcy due to reasons beyond their control: loss of a job or significant portion of their income, or extremely high medical bills due to a serious illness or accident.  Rebuilding and getting back on track as soon as possible will save untold thousands of dollars in interest over their lifetime.

First Things First
The first step should be to establish a budget, in order to avoid potential future financial problems.  A new credit card or car loan can go a long way toward boosting credit scores back to respectable levels, but only if they are always paid on time.  People who file bankruptcy are given a clean slate and should use new credit cautiously!

Knowing what is affordable is key to staying out of trouble. A budget that figures in the exact amounts spent on bills and expenses and compares them to monthly income is essential to figuring out what is left over at the end of each month.  If it’s within the budget to take out a new loan, while still leaving a little cushion for emergencies, it makes perfectly good sense to move forward.

Credit Cards
Some credit cards can be kept through a bankruptcy.  If anything is owed on a credit card, it needs to be on the bankruptcy schedules as a debt, but most companies will allow a person to keep the card if they reaffirm the balance on the card and sign a new agreement, post bankruptcy.   If the balance is zero at the time of filing, it does not have to be listed, but some companies might cancel the card just because a bankruptcy was filed.

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