How To Handle Recovery After Bankruptcy: It's Not All About Getting A Card
After you declare bankruptcy, one of the first things you should do, according to most pieces of advice, is get a secured credit card and start rebuilding your credit. For the most part, this is sound advice; you do want to rebuild your credit as quickly as possible, especially so that your record shows a good history despite that bankruptcy. However, it's not as simple as just getting a card. You have to handle the card and recovery well, too.
Start Low
Chances are you'll have to get a secured card to start. These are cards where you pay a deposit that typically doubles as your credit limit. Start low, especially if your bankruptcy was due to overspending. You want a limit that you can't get into trouble with if you start charging a lot to the card.
Keep the initial charges low, too. Put a few dollars' worth of groceries on the card and pay it off as soon as the amount appears on your account. Do that consistently for a few months or so, and then talk to the credit card company about how to increase the limit. Also ask about the requirements for qualifying for an unsecured card, which is your typical no-deposit credit card.
Really Work on That Emergency Fund
One of the factors that allows people to get into credit trouble is not having funds to cover payments. Sometimes this is understandable, such as in the case of massive medical payments that insurance won't cover. But for smaller amounts that you had control over, an emergency fund might have saved you the trouble of declaring bankruptcy.
Take the time to start saving up for an emergency fund. Do not go overboard regarding how much you cut from your spending; a drastic reduction can work for a month or two, but you have to be realistic. However, do what you can to gain a few dollars here and there to put in that emergency fund. That will help you pay for future emergencies and bills without maxing out your credit.
Stay Calm
It is possible to survive without using a lot of credit for a while. Yes, that bankruptcy may make things tougher in terms of finding housing, for example, but time is a major factor in making life easier. Eventually your credit score will go up, your payment record will look better, and the bankruptcy won't be as debilitating. Seriously, as more years get between you and the bankruptcy, the less effect it will have on your life.
Track your progress by recording your credit scores. So many credit companies offer a version of the score that you're likely to have access to at least one score from that secured card. While your life is so much more than a number, that score can be a nice reminder of progress when you look back over several months.
Your bankruptcy attorney can help you plot out a good strategy for recovering from the bankruptcy. This is supposed to be a fresh start, so here's your chance to really make a great comeback. Check with a company like Patrick D. Riley for more bankruptcy management tips.
Share