There are a lot of myths and misconceptions about Bankruptcy, and I’d like you to address a common one today. Many people believe they will never be able to get a car loan or a credit card again if they file for Bankruptcy. Why is that a myth?

I pull a credit report for each of my clients before filing their bankruptcy.  The credit report has a before and after bankruptcy score and most of the after bankruptcy, scores are higher.   Why is that?  Because the after bankruptcy score assumes you will be free from the unsecured debt.

You will be able to get a credit card after you file bankruptcy. If credit card offers aren’t pouring into your mailbox, then look for a ‘secured’ credit card.  Use it carefully to purchase items you have money to buy in your monthly budget then pay off the balance by the due date.  You are building your credit at no cost to you.

You will be able to purchase a car.  In fact, there is a Honda dealer in our area that specializes in working with people that have filed bankruptcy.  I applaud them because they created a special loan program, with lower than usual interest rates for someone who has filed bankruptcy.

If you go to another dealer, yes it may be more difficult to get a great low-interest loan for the purchase of a vehicle; please feel free to call me for a referral to the Honda dealer.  Bottom line is that you may have to look a little longer and at more dealerships to find a car but it is not impossible.  It is also a great time to explore the purchase of a used vehicle that fits your basic needs and allows you save so you can fulfill other financial goals.

It may take about two years to build a great credit score, if you can use those two years to save, budget, pay your installment loans and your one credit card on time, your credit score will increase and you will be able to buy that new car or home.

I have clients who purchase a home within a few years of their bankruptcy discharge.  The bankruptcy gave them a fresh start, they made a budget and stuck to it, rebuilt their credit by paying their pre-bankruptcy car loans on time after their discharge and obtained the dream they had for quite a few years.  If they hadn’t filed bankruptcy they would still be renting, heavily in debt, and wondering if they would ever own a home.

Another client lets me know that filing the bankruptcy changed his life, from living in a trailer on his ex-wives fathers’ property to renting his own place and saving for retirement.  Bankruptcy allows you a fresh start.  It is up to you how you use it.

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