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4 Rebounding Tips After Bankruptcy
TIP #2: Work on Rebuilding Your Credit
Ah yes, the 800-pound gorilla that you would have to take on – rebuilding your credit. Fortunately for you, filing for bankruptcy does not have quite the same social and financial stigma it once did ten, maybe twenty years ago.
"The purpose of filing is a safety valve," says Roger M. Whelan, resident scholar of the American Bankruptcy Institute, a nonprofit professional organization. "Thank God, the day in which it was like wearing a blazing star on your forehead is over."
But rebuilding your credit is the double-edged sword of post-bankruptcy life. You have gotten to where you are now because you mismanaged your credit. However, this does not mean that you would have to steer clear from credit from now on. At first, you may have to, because you are given little choice on the matter. But sooner or later, you find that you have to get credit to rebuild your financial life.
So what are the rules? There are no rules; that’s the best part about it. It does not matter how you do it or how fast. The factors can vary widely from the kind of resources you have and the type of bankruptcy you filed for.
For instance, if you filed under a Chapter 13 bankruptcy, the bankruptcy will stay in your credit for five to seven years. Whereas, if you filed under Chapter 7, the bankruptcy could stay longer in your credit report – say, up to ten years. During that period, it is going to be very, very difficult for you to get credit, let alone work on rebuilding yours from bad to good. And yet, rebuild you must, if you want to get back in the financial game.
Now, if you have a high dollar income, then obviously you are going to have a slightly better edge over the rest. But just slightly. If you managed to hang onto your house, paying your mortgage on time will improve your credit report.
But remember that "many apartments don’t report to credit bureaus, so those payments will keep a roof over your head but won’t help you rebuild your credit," warns John Ulzheimer, business development manager for MyFico.com, a division of Fair Isaac Corp., the company that developed credit scoring.
Ironically enough, while Chapter 7 filers usually have a hard time getting approved for new credit, they are also usually the ones that have a better chance at rebuilding their credit.
Henry Sommer, an attorney and author of "Consumer Bankruptcy: The Complete Guide to Chapter 7 and Chapter 13 Personal Bankruptcy" says that "while you’re in a Chapter 13 (reorganization), your options are somewhat limited in terms of credit." That’s because you cannot really apply for new credit without getting the court’s permission first.
On the other hand, under a Chapter 7, you are given more freedom in that area since all your debts are discharged. The sooner your debts are discharged, the sooner you can get to working on repairing your credit. | 
