Life After Bankruptcy: Get back on your feet after filing Chapter 7

Life After Bankruptcy: Get back on your feet after filing Chapter 7

by Tynisha C. Lewis, October 2009

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You just filed bankruptcy. You're experiencing the sense of relief that comes from having your debts discharged. The slate is wiped clean. But wait. You have a big red flag on your credit report that says "Chapter 7 bankruptcy." So, now what do you do? These tips for "life after bankruptcy" should help you avoid future debt problems and regain your credit rating.


Rest assured, there are lots of reasons people file Chapter 7, and none of them have to mean the end of the world for your future credit. Medical bills from a serious illness or surgery often financially overwhelm people and lead to bankruptcy. For some, credit card use becomes a first solution instead of a last resort. Simply put, bankruptcy results when you can't pay your bills because your debts so greatly outweigh your income.

Budget . Creating, and sticking to, a budget is one key to staying on financial track. A budget is a great way to view your income and expenses. This will allow you to actually see where your hard-earned money is going. Also, monitoring your financial output can help you find places to cut spending or at least trim it down. For instance, maybe you can bring down the weekly grocery bill by clipping coupons or purchasing fewer brand-name items. Creating a budget is simple, and thankfully, there are several websites out there to assist you. Type "creating a budget" into any search engine to pull up a variety of results. There are also resources at your local library to guide you in budgeting your money from this point forward. Or you could just ask that family member or friend who is just a whiz at handling money to show you how to be a better manager of your own finances.

Save Money . While it might sound obvious, beginning to save money is a great way to stave off future bankruptcy. Why? Because, if you have your own money, you are less likely to spend on credit. Saving also helps you discipline yourself when it comes to spending. If you haven't saved the money for a certain item now, wait until you have. Impulse buying is one of the main reasons people find themselves filing Chapter 7, so a little restraint can go a long way. In other words, always keep the larger picture in mind.

Obtain a secured credit card . Another way to rebuild your credit is by obtaining a secured credit card. You can open a secured credit card by depositing money into an account as security. Your limit for the card will equal the amount in the account. This allows you to rebuild your credit by paying on time. Like unsecured credit card companies, secured creditors also report to the credit bureaus. The moral of the story is that using this card will allow you to show you can be trusted with money again.

Ask your bank to take out a small loan with a co-signor. The payments you make will be reported to the credit bureaus and will gradually rebuild your credit score. Just stay on track with making payments in full and on time. Early overpayments certainly don't hurt either.

If money is a tool, then credit is the tool belt. Letting your finances get out of control is a sure-fire way to find yourself re-filing for bankruptcy. Responsible spending begins with the way we think and what we know. Educate yourself on money and credit. Save your money and watch how you spend it. You may even want to find someone to hold you accountable for your spending habits. Your future financial performance belongs to you, so why not make it a happy ending?