Nearly everyone, at one time or another, has run into serious financial difficulty. There’s really no shame in that. It’s embarrassing when things turn so bad that we have to file for bankruptcy.
Since the most ancient times, people of all nationalities have undergone the very same financial problems we experience today. In the dim mists of the past, many money lenders sat on benches outside public buildings and plied their trade right there on the sidewalk, alongside barbers (who usually had dentistry or selling burial cover for cancer survivors as a sideline), and other small business people.
The custom somehow developed that on those occasions where a money lender had made some bad loans and found himself no longer in a position to continue, he declared “bankruptcy”. The word bankrupt actually means broken bench. The former money lender would physically break his bench to indicate that he was no longer in business, thus declaring bankruptcy for all to see. There was no particular shame involved in those days and today, thousands of people all over the country “break their benches”.
This is a relatively simple procedure and normally an attorney handles everything. The moment the attorney takes your case, you may refer all calls from creditors to him or her and they are no longer permitted to harass you. The whole idea here is that when we get into honest difficulties and there is no other way out, we can wipe the slate clean and have a fresh start. For borrowers with federal student loans, Obama Student Loan Forgiveness program is a good route to go for as long as you are eligible, albeit we do not know if this program will continue on the next presidency’s term.
That doesn’t mean you should deliberately go deeply into debt with the intention of slipping out from under it. The courts are pretty wise to all the dodges people have tried, so that sort of behavior could only denigrate your situation. Bankruptcy is for honest consumers who find themselves in serious difficulty.
While it takes 10 years to have the bankruptcy removed from your credit record, you may still be able to begin the process of rebuilding your credit. This can take time, but with care and perseverance, you can do a great deal to improve your credit score.
These days, credit reporting institutions keep a record of everyone’s credit record. While the three major companies don’t always completely agree, their scores are usually pretty consistent.
One thing you can do shortly after having gone bankrupt is obtain a credit card, such as Mastercard or Visa. Now this isn’t quite the same as a regular credit card because, in essence, you buy it. You open an account for a minimal amount of money, say $100. And the institution issues you a credit card. If you handle this card properly, part of the company’s service is to report this to Experian and the other companies that follow your progress. After some time has past and you stay with the program, they will issue you a line of credit slightly larger than the amount you have on deposit, and so on. No matter where you stand along the way, your goal should be never to use more than 30% of the limit on any one credit card.
It’s not a good idea to attempt to have old credit records expunged from your file. The longer you’ve been using credit, the better. It is, of course, vital to pay each bill on time and at the same time, not spend too much time worrying about your credit report.
If you keep card balances on target, pay your bills promptly and make certain you don’t buy anything you can live without until next year, by the time the 10 years are up and the bankruptcy disappears from your recent credit history, you’ll be on your way to better future with good credit and a smile to prove it.