How to Come up from Bankruptcy?

Updated on January 06, 2011
L.C. asks from San Lorenzo, CA
10 answers

Hi Moms.

So, I finally made the decision to file for Chapter 7 a year and half ago. I was trying to recover my credit after my first marriage ended in 2003. Had my bankruptcy finalized in April 2010. Now, I would like to start all over again...anyone know how to go about this?

Thanks to all in advance. I really appreciate it.

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answers from Columbus on

Dave Ramsey! I ordered one of his books, it is being delivered today but just some of the stuff I read on his site has already helped me start getting my finances in order. I've heard nothing but good about him and everyone I talk to says he changed their life.

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answers from San Francisco on

I agree with most advice given to you already. Get ONE (and only one) secured credit card for now. Do not apply for credit any place else because each time your credit history is checked it puts a ding on your credit report. Keep the secured credit card at 50% of the available balance.
Get a low balance on it (like $250) and then go out and buy something for $125. Make your regular monthly, minimum payments on that $125 for 12 months. Yes, in any other situation you would want to pay more than the minimum payment... but what you're after isn't to pay off the balance. What you want is to show 12 months of continuous payments. Do not be late, not even once, on a payment. Do this consistently for 12 months. At the end of a year, apply for one or two credit cards, strategically. One year after my bankruptcy I applied for and received credit from Target and Mervyns. I chose Target because you could buy anything from grocery to household to toiletries to clothing there, so the credit card was my "safety net" just in case I needed it. Mervyns I chose so that I could use it once a year, and only once a year, to buy my son's back to school clothes. Because my credit was not very good, each card only allowed me a $250 balance. I don't believe I ever had to use the target card, but I did continue to use the Mervyn's card (now Kohl's?) each year for back to school, and then would pay it off within about 6 months, before school let out. Within 3 years my credit score was back up to the high 600's. I also remarried, and in combination with my husband's 750 FICA score, my 600 FICA score was sufficient enough to help us qualify for a home loan. Yes, this was within 3 years of a bankruptcy! We are now 7 years into our house and my credit score is up to 770. We do not use credit for anything though. We have one Visa card that we use to rent cars and reserve hotels and air fare when we travel, but as soon as we return back home we transfer money from our savings to pay it all off. Every pay day I add my direct deposit amount to my checkbook register, and then I minus 20% out of it. 10% for my church tithing, and 10% for my savings. Our only monthly credit or loan-based bill is our mortgage. No car payments, no credit cards, etc. It is truly freeing to live debt free. You have more money to do more things with. We are rarely in a position where we "can't afford" things. We simply make choices as to whether we really want those things or not, whether it's worth it or not to purchase them, or whether we can live without them. We only buy our children toys at birthdays, Christmas and Easter. We only buy our children clothes in spring/summer, and then at back to school in fall. But you know... I think the biggest difference in savings and living on a budget is that we simply don't "go shopping" for recreation anymore. It was an eye opener when we realized that shopping was a form of entertainment for us. Now... if we could only get the grocery and the PG&E bills down!!!! Darn those smart meters!!!! :-)
Good luck!

4 moms found this helpful


answers from Chicago on

It's actually very common for women to have to do this after a divorce. The women who get the giant alimony payouts and take their husbands to the cleaners are much more rare than the ones left nearly destitute with kids to take care of!

I had to finally declare bankruptcy about 6 years ago after my ex-husband lied to me for several years, ruined our credit - and managed to stick ME with all the debts! (yes, it DOES happen- I never thought it could happen to me, but it did!)

There was a court order that my ex was supposed to continue to make regular payments on credit accounts that HE had run up with online gaming and accrued debt on. I tried to also make it court-appointed that he had to use a payment agency to manage his finances for him, KNOWING he could not follow through- but the court deemed that it would be 'too invasive' for him and so it was solely on the 'honor system'.

He occasionally sent in a minimum payment, or sent the payment so it arrived a week late and then accrued another late fee... even though in the divorce the judge said HE was responsible for these payments- the credit card companies do NOT have to comply with that and came after ME as the other name on the accounts. (After assuring me accounts were closed, he had kept the numbers and info in his desk and used them to finance his online gaming. I had no knowledge that the accounts were even open or in some cases, existed. He also did not pay our taxes for two years...)

After two years of trying to monitor this and make him pay, I finally swallowed my pride and consulted an attorney. Now- I had worked with a credit counselor, and done everything I could to make this work. MY issue was that my feckless ex-husband was still financially tied to me through these debts. He had taken out cards with ME as the primary cardholder because I had excellent credit. So even though I had never used them- I was stuck.

The attorney and I figured out that even if my husband made double payments regularly on ALL of the accounts on time every month (which was obviously never going to happen) we would be financially shackled for the next 25 years.

So I declared bankruptcy. My only regret is that it also got my ex off the hook for his lying and spending. But- it saved my life at the time. My little boy and I were living in a one-bedroom apartment and I was driving a used car- the same one I own now. I used my debit card for any purchases requiring a 'credit card' number. I paid all my bills regularly. My credit is still recovering, but it has improved faster than I expected.

my parents also put me down on THEIR credit card accounts. I don't have those cards and never use them- but adding me to their accounts which are paid off regularly did help MY credit improve more quickly. I lived within my means and also made sure to pay my utility bills, etc. ON TIME every month- timing is everything!

Don't feel guilty- that won't do you any good and plenty of people on here who have never been in this situation will rag on you. Next to deciding to leave my husband, it was the most humiliating, depressing thing I ever did. But- afterwards, it was like a 50 pound weight was off my shoulders and I was able to get on with my life and take good care of my son financially. I did not deserve to be punished because my ex husband was an irresponsible liar.

I am not saying it is the perfect solution for everyone. But- sometimes you just need to do what you have to do to get on with your life. Good luck!

3 moms found this helpful


answers from Pittsburgh on

Credit is largely an American myth.
Dave Ramsay offers a simple concept: if you don't have the cash--you don't need it.
Get O. of Dave's books and banish credit from your life forever!
It's really quite simple. Live on less than you make. No need for credit. You can use your debit card for purchases requiring a "credit card" type of payment.

3 moms found this helpful


answers from Phoenix on

My husband is in the mortgage industry and here are a couple of tips I can give you from a bank perspective and how they look at your credit.

They usually do not want to see any collections within the past twelve months. Credit cards if you have them typically you do not want to go over 50 percent of the total credit limit because then it starts to hurt your credit. Some good prepaid credit cards are capital one, orchard, and etc. Try not to get any inquiries on your credit during this time because your credit score will take a hit.

Hope this helps. It's not much but it will help your credit ; just a few pointers I have heard my husband tell his clients that are trying to bounce back.

If you have any more questions give me a ping and I will give you his phone number and he can explain it to you more clearly.

3 moms found this helpful


answers from San Francisco on

Check your credit on, its the real deal, no buying anything, only once a year can you check it. You can also sign up for an identidy place to check it all the time. If you belong to costco, they have a good one. If/when you get a credit card, you only have to charge a little , then pay it off...$5.00. Charge and pay, charge and pay. I too had to file about 12 yrs ago, believe it or not the time goes by fast. My score is now about 810-820. Never skip a payment!! And don't let any collections get on your report. If you are having a problem, call the company, they will work with you. And keep notes of every conversation. Good Luck ~

2 moms found this helpful


answers from Chicago on

I too filed Chapter 7 to recover from my first marriage. I was advised to get JUST ONE credit card and charge a tiny bit every month on it and pay it off. A good idea is to charge gas on the card. The trick is to pay it off every month and don't start carrying over a balance. This will help rebuild your credit. I get tons of credit card offers a day. Funny how they pestered me to to collect money and they raised my rates so high I could never pay it all off--and now they want me BACK?? So we can do it all over again? LOL! I'm never carrying a balance AGAIN! But you do need to get a card to establish credit.

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answers from New York on

You can get a secured credit card. Use it wisely. Only make a few purchases each month and pay it off in full each month. I will take some time, but you will be able to recover.

1 mom found this helpful


answers from Denver on

One thing I would mention here is to 'OPT OUT' of future credit card offers. Every time you're pre-approved means a hard hit on your credit report - which reduces your credit rating.

Get a secured Visa from your bank and manage it wisely.

I would also recommend checking your credit report monthly and make sure it's cleaned up - if you haven't done so already.

I would imagine your rating is 500 or below now. (from the been there, filed bankruptcy too, department).

Being diligent you should be able to get back up to 700 within about 15-18 months if you keep your credit clean, use and pay off your visa monthly and pay your other bills on time.

1 mom found this helpful


answers from San Francisco on

You need to get your credit back on track by paying your bills on time. I don't think anyone will give you credit for a few years but once you can get credit again, pay all your bills on time and your credit score will slowly come up.

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