A few people have left me comments asking for information about how to recover or improve their credit after filing for bankruptcy. Although this is a situation that I encounter on a weekly basis, there is not too much one can do when faced with this difficult dilemma.
As easy as it is to say in retrospect, the best way to deal with this situation is to do everything possible to avoid bankruptcy. There are very few cases where it is the best option available and it will usually cause the most harm in the long run. That being said, if you have already declared bankruptcy, I hope you have at least one asset, such as a car, house, painting, etc., that is worth something.
When you possess a valuable asset, you can apply for a secured credit card, which means that the credit is backed by one of your assets and this item can be seized if you are unable to pay your balance. To help rejuvenate your credit, try to get a credit card like this as soon as possible and always be sure to pay it off in FULL every month.
If a secured credit card is not an option under your circumstances, you can ask a family member, girlfriend, boyfriend, etc. to piggyback on their credit. This means that they co-sign on a credit card or other small loan and are responsible for ensuring that you pay every debt according to the requirements. They must understand, however, that if you fail to pay, they will be responsible for your debts and may have their own credit score damaged as result of your actions.
After approximately 2-3 years of paying off your credit card or other small loans on time and in full, you may be able to get a loan for a larger item (like a car) at a somewhat normal interest rate. In addition, you may be able to refinance your car if you already have one to build more credit.
Declaring bankruptcy and overcoming the negative credit effects can take longer than you ever expected since the mark remains on your report for 10 years. However, with a few years of on-time payments and other positive attempts to re-build your credit and prove that you are not a significant risk, you should be able to overcome this dark period in your credit history. Since it is difficult to recover from bankruptcy and begin the uphill process of restoring your credit, consider seeking the advice of a non-profit credit counselor if you are considering bankruptcy or just declared bankruptcy.