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If you file for bankruptcy you may be shocked at how fast you’ll start getting offers for credit cards in the mail again. However, those that start arriving within a month after your debts have been discharged will be offers for secured credit cards. These cards require you to make a deposit with the bank and will have a very low limit. It’s actually a good idea to get one of these cards and then start making your payments regularly and on time. This would help you rebuild your credit.
Assuming you use that card sensibly then after 6 to 12 months you should be able to get new credit in the form of a regular credit card and drop the secured card. Of course, if you make late payments this will do nothing to improve your credit score.
Once all of your debts have been discharged it’s a good idea to check your credit reports to make sure that everything that was discharged in your bankruptcy was marked as discharged. In addition, author Lita Epstein who wrote The Complete Idiot’s Guide to Personal Bankruptcy has said that she’s seen people who were able to qualify for a mortgage within just two or three years after their bankruptcies – depending on their circumstances.
It’s a cure-all
There are two types of a personal bankruptcy. They are a chapter 7 and a chapter 13. As you have read, chapter 7 will discharge certain of your unsecured debts while a chapter 13 is to reorganize and reduce your debts. However, neither one of these offers an easy solution.
Don't know whether you should file for a chapter 7 or a chapter 13 bankruptcy? Watch this video to learn the differences between the two.
A mistake many people make is believing that bankruptcy will solve all of their problems. If you file for a chapter 7 bankruptcy you could actually lose some of your property. The reason for this is because the bankruptcy referee is required to sell off whatever of your property he or she can to repay your unsecured creditors. This includes things such as a second car; a recreational vehicle; coin, stamp and any other valuable collection; and even stocks and bond certificates.
You can only file for bankruptcy once
You can actually file for a second bankruptcy but when you can do it will depend on whether you filed for a chapter 7 or a chapter 13 and the amount of time that has passed since your first bankruptcy.
If you filed for a chapter 13 bankruptcy and got a discharge, you would actually be eligible to file another chapter 13 bankruptcy in just two years. If you filed for a chapter 7 bankruptcy and got a discharge you would be eligible to file for another one in eight years.
Of course, we hope that you never have to file for another bankruptcy as going through one can be emotionally trying. Joseph Goetz, who is president of the Financial Therapy Association, has noted that going through a bankruptcy can be psychologically difficult, cause a lot of stress on relationships and even be traumatic for the entire family.