7 Surprising Ways Your Life is Not Over After Bankruptcy
by Rachel Fogletto
I’m only an expert of my own journey, but when I tell people I’ve gone bankrupt I get a lot of questions.
Whether you’re thinking about bankruptcy, or you’ve already done it and don’t know how to start rebuilding your credit, the most important thing to do is talk to a lawyer… not me.
After you do that, check out the list of things you can still have, even after going bankrupt:
You Can Still Have Good Credit
When you declare bankruptcy, your score is going to take a dive, but it will go back up again. I paid off 2 credit cards with smaller balances before I filed, so they never closed. I think one was like a Best Buy store card or something.
Also, payments on my student loans helped bring it up as well (you can’t get rid of those during bankruptcy yet, unfortunately). Once you get adjusted to life post-bankruptcy, you can apply for small lines of credit to use and pay off right away, rising from the ashes like a monetary phoenix.
You Can Still Get Auto Loans
I kid you not, the week I filed for bankruptcy I started receiving promos in the mail for auto loans. They were specifically directed at people who have a history of bankruptcy. I don’t have a car, so I never applied for these, personally. Still, I would get these promos constantly for months and months, so I’m guessing it’s a common target, since even people without money need transportation.
You Can Still Have Savings
Anytime someone would mention savings I used to just laugh and laugh… After I paid all my credit card minimums I’d have to turn around and use the same damn credit card to buy groceries so I could eat.
Once you go bankrupt, your debt goes away, so you just have that money you’ve been throwing into your endless black hole of debt. Don’t go crazy.
Save most of it, but use a little for small luxuries like a bottle of wine, or a movie …some minimal unnecessary shit that you would normally feel guilty about. Get used to saving and living a little more comfortably, but be mindful not to repeat the same cycle. When unexpected finances come up, you’ll be able to pay for them with actual money that is yours, and not a corporate loan from Satan.
You Can Still Get Credit Cards
After you’ve gotten good at saving, you’re ready for a credit card. However, I would never get a credit card that does not have some kind of rewards program.
This will heavily depend on a number of factors, but in my experience and Reddit deep-diving, there are some credit card companies that are known for being more forgiving of a bankruptcy history. I have 3 cards through Synchrony. One is a PayPal Mastercard that gives me 2% back on all purchases, an Amazon store card with 5% back on all purchases, and a Care Credit card.
Care Credit can be used to pay for medical-related expenses with a 0% interest payment plan. For instance, I got it to fund a large and unexpected veterinary expense for my cat that I would have been unable to pay right at that moment.
He doesn’t have insurance.
I opened a Macy’s card just to get a discount on a dress I was buying for a wedding, and got approved right away. I’ve also done it at Target and JC Penney. Most store cards are pretty lenient and will approve you for a smaller credit line. If all else fails, get one of these so you can start rebuilding credit again, and get those discounts!
You Can Still Get Travel Miles
I’m new to the miles game, but since I recently have needed to travel more, I started looking into cards with miles rewards. This is a little harder, and I found that I was getting rejected by the more prestigious cards. Discover, Chase and Citi were all no-goes. I had already heard that Amex won’t accept you until 5 years after Chapter 7 bankruptcy.
At this point, I did some googling to get a sense of what cards were most likely to accept me. I recommend doing this periodically because it can change from time to time. Try to find a thread in a recent forum. You don’t want to keep applying for cards that are likely to reject you because it will lower your credit score every time they do an inquiry.
After doing some research, I was finally got accepted for a Capital One Venture Card that has a miles bonus if you spend a certain amount in the first 3 months, plus miles per dollar. Woo!
Also, every airline has a low-tier miles plan if all else fails, but if you can get a card too, do it. Expedia also has a points program that can be used for travel and hotels if you book through their site. Join any points program you can- there’s no reason not to, and every little bit helps.
The trick with the cards is to always always always put stuff on it you would normally put on your regular debit card, and pay it off immediately. I make credit card payments like ten times a month, just throwing money at balances where I can. Always check the billing cycle so you know how much you need to pay by when to avoid gaining interest. I’ve had credit cards post-bankruptcy for over 3 years and haven’t paid interest yet, and have gotten hundreds of dollars in cash back rewards.
If you can do this, you should. Even a small percentage cash back is still money that you’re collecting… and if you were screwed enough to go bankrupt, you know the value of a few extra dollars.
You Can Still Afford to Pay Your Student Loans
…Sort of. You can’t discharge your student loans, but you can make them more manageable. Consolidate the ones that are eligible, and get on an income-driven payment plan. Research or speak with a rep to find out if you’re eligible for any forgiveness plans that will discharge the loans after so many years of on-time payments.
You Can Still Live Instead of Just Survive
I’m not trying to glamorize bankruptcy, but if you’re drowning in debt, it can save your life. I’ve done a 180 in how I think about money, and it’s because I’m not still losing my entire paycheck to an endless cycle of debt with an insane amount of interest. I was basically funding my own prison. Not to be dramatic, but no matter how I did the math there was no way out other than doubling my income. So I made the call, and you can too.
Not only is there life after bankruptcy, but usually a life with a much higher quality with some strategy and minimal patience. Think you can handle that?
