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Debunking the myths of bankruptcy

There are many myths that can set Colorado residents off course if they do not have personal knowledge about a particular situation. Perhaps nowhere is this truer than with bankruptcy, as individuals have a number of preconceived notions that may not actually be correct, as they often find out once they begin looking at whether to file for bankruptcy.

One preconceived notion many individuals have is that after the process of debt relief is through in the bankruptcy process, the individual will not be able to use their credit cards again for months or even years. Under bankruptcy law, such as the law of Chapter 7 bankruptcy, individuals are not prohibited from using their credit cards.

There may be some practical setbacks of course, due to credit issues after bankruptcy. However, while a bankruptcy is listed on a person's credit report for 10 years, individuals can begin to reestablish credit after bankruptcy, which is encouraged in order for the person to show lenders that he or she can pay the bills. Bankruptcy is, after all, a way for individuals to obtain a fresh start. Therefore it makes sense that individuals should be able to reestablish their credit after getting a debt discharge.

Individuals can build their credit back up by taking several steps, such as applying for a secured credit card and starting to use that card with smaller expenses each month. By building up a good payment history, individuals can then raise their credit scores, which will, in turn, enable them to qualify for better credit cards and loans. Accordingly, at the end of this process, individuals will not only have cleared off their bad debt, but put themselves in a position to succeed with their finances in the future.

Source: Fox Business, "Can I use my credit card after bankruptcy," Erica Sandberg, April 2, 2014

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