Recovering about rebuilding credit after Bankruptcy.

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Q. Looking for advice -- currently in bankruptcy. We both have good solid long term jobs, just had way too much debt to manage. What I am wondering -- has anyone out there post-bankruptcy recovered and rebuilt their credit? How? I'm despairing that we'll never again own a home or buy a car. Is it possible?

A. To the author, as far as rebuilding a credit rating goes, first of all I would say you have to put in place whatever controls are needed to ensure you don't spiral into debt again. Analyze what happened. Was it credit cards? Get rid of your cards. Was it car payments? Buy an older used car if you even need one, etc. Change your lifestyle and habits to keep your finances under control. You probably have thought this through many times already. I believe the best way to establish a good rating is to incur debt and then to pay it off. The problem with this approach, of course, is that it includes the concept of incurring debt. That's what caused your problems in the first place. You should talk to whoever it was that handled your bankruptcy, or talk to an advisor about it. My inclination, in your position, with solid long term jobs, would be to avoid any and all borrowing; to throw away the credit cards and live on cash alone. I save as much money as possible. The budget would be extremely strict. For entertainment I would go walking or go to the library. Only once I had a lump sum of money stashed away would I consider spending it on a car, etc. -You may want to consider a Secured Credit Card. You give a financial intstitute a lump sum of cash... they give you a credit card and the cash you gave them is your balance. You have to maintain that balance. etc... I'm not sure who or where these are offered, but they have been recommended to me. -The way to establish credit after bankruptcy is to deposit $1500 in an account and get a loan for $1000. Have the payments taken directly from the account and absolutely leave the money alone. Regular payment of a debt is the only way to re establish your credit. You won't establish anything if you don't have a loan. On the other hand, living without credit is much better financially. People who manage their money well, will save until they can afford to buy a new TV. With the cash in hand they get a slightly better deal and incur no credit charges. People who are not good with their money buy the TV on credit and pay a bit more and then pay credit charges too. After a longer period of time, the bank will look at your credit picture with a little more favour. Hopefully by that time you won't need to use credit anyway. One more thing. Mkae absolutely sure that you pay your utility bills on time! These are regulkar things that will show your ability to remember your finances. -If you ask for a Credit Card, you will have to put up front the amount of the limit of the Card. And use the card as much a possible and make more then just the mimiun payments. This will rebuild your credit. But, that bankruptcy will contunie be on your record, even after 7 years. As for a Mortage, probably not the first few years, but if you keep getting your credit card limit increase and prove you are building your credit, a bank will more then likely accept you. Just don't get back in dept again that you have to declare again, a second bankruptcy is a definit no -If you have a source of solid income then you shouldn't have delcared bankruptcy....you should have gone o a credit counsellor who could have worked with you and your creditors and put a plan together...you would still have 'bad' credit but it would have cleared much more quickly. There is NO way to 'rebuild' credit !! You will simply have to wait until the bankruptcy comes off of your credit report in 7 years. Until then, if you happen to get any credit (which is doubtful) don't screw it up... These credit rebuilder schemes are bogus....they usually charge exorbitant rates trying to con you into thinking that you are in fact rebuilding something. You are NOT. What you are doing is not adding negative reports to your file if you pay on time... -I know more than a few happy homeowners, who drive leased cars, with mainstream credit cards who are a mere 3 years after their discharge date. And what makes you equate a poor credit history with not having a lot of cash sitting around? That's the whole idea of bankruptcy - getting rid of an exhorbitant amount of debt to make a clean start - with no debt. You'd be amazed at one's cash flow after their bankruptcy discharge.

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