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Many people that file for Chapter 7 bankruptcy are under the impression that they are starting over 'fresh'. In some sense, it is a fresh start -- a great deal of your debt will be wiped out. However, declaring bankruptcy has very impacting negative results.

In order to develop a positive life after bankruptcy, you will need to being taking initiative immediately. Following the advice below will allow you to gain control of your financial well-being.

Reaffirm your car debt
If you have an auto loan for which you are still making payments on, be sure that you sign a reaffirmation agreement with the auto lender. This means that you have every intention of continuing to make payments so that you can keep your vehicle.  If you neglect to make your payments, you vehicle is going to be repossessed. Committing to this agreement is a sign of confidence and will likely result in you receiving more flexibility with your loan provider. If you intend on surrendering your car, do not sign a reaffirmation agreement. You will be financially responsible for the remainder balance, but will have no vehicle to show for it.

Develop new lines of credit
After your bankruptcy, one of the first things you should do is re-establish credit. it is going to be difficult for you to get approved by traditional credit card companies and banks. There are secured credit card offers that are specifically designed for bankruptcy people. These cards will require you to deposit a small amount of money in a savings account. This money will act as your credit line. We suggest checking out the Orchard Bank Secured MasterCard and the Imagine Unsecured Gold Card. These are two credit cards for people with bad credit that are designed to help re-establish good credit.

Utilizing a secured card will result in an improved credit rating, ultimately qualifying you for traditional credit cards.

Clean up your credit report
It is very important that your debts are being reported as 'Discharged in Bankruptcy' by all three major credit reporting agencies. It is important that all of your accounts are accurately being reflected as terminated. If they are not, take initiative to eliminate credit report errors. Check out the sample dispute letter as well as the follow-up dispute letter.


Never be a co-signer for anyone!
Once you file for bankruptcy, you will not be able to file again for another eight years. Therefore, any co-signed loan that goes into default, will more likely result in a judgment against you. The benefits are not worth the risks of co-signing a loan.

Avoid credit card debt
Many Americans live paycheck to paycheck. Any extra money is used for paying and eliminating credit card balances. Having a credit card balance is likely going to cause you big problems if you ever have to incur the costs of a financial crisis, i.e. loss of job, death in the family, divorce.  Not having a credit card balance will allow you to have the financial cushion needed to deal with an emergency that is unexpected. If you do have a balance, stop using the credit card and pay the balance off as fast as you can.

Be ready to explain why you filed bankruptcy
People that file bankruptcy are often looked down upon by creditors. However, if you may be able to gain some sympathy if you can thoroughly detail your reasoning for filing. Your explanation should be no more than 30 seconds.

Keep a good attitude
When recovering from bankruptcy, it is very important that you realize that the light is brighter at the end of the tunnel. Some people may be so down and depressed after filing that it takes them ten years or more to regain control of finances; when in reality it should only take two years.


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