Armchair Millionaire Community Bulletin: Back on Your Feet After Bankruptcy

Bankruptcy promises a fresh start to the financially beleaguered. Take the right steps to make it a new beginning to a financially secure life.

New York, NY (PRWEB) May 24, 2005 -- Many people filing for bankruptcy these days have a lot in common with one another. A number of studies have shown that medical expenses, job loss, divorce or a combination of these factors are the leading reasons for personal bankruptcy.

Members of the Armchair Millionaire community have their own perspectives on what’s behind the surge in bankruptcy filings that has occurred in recent years. Here are just three opinions:

“I think that the credit card companies are at fault. They extend credit to anyone, allow customers to defer payments for a year or more, then charge 25%+ interest rates. Now those same companies wrote the law to make it tougher to declare bankruptcy. But even mortgage companies are at fault by encouraging people to buy homes they can't afford, take out home equity loans, or use interest-only loans.” --YJ

“Chronic overspending is probably the most prevalent and under-diagnosed addiction in America. It seems that people can't resist the temptation to spend, whether or not they have the money doesn't seem to matter. Even in cases where people declare bankruptcy due to medical bills, they were probably too close to the debt line and the medical bills were just the proverbial straw that broke the camel’s back.” --Chris L

“I spent five years as credit counselor. The problem in most of the cases I saw was peoples' addiction to the ‘must haves.’ For many, many people, shopping has become the national sport, and a way to entertain and fill their lives with things, not knowledge or moments. The cost, unfortunately, is way too high. --A

People who’ve gone through bankruptcy know their own reasons for doing so all to well. More important to these folks is how to get back on their feet. My guide provides the most important steps.

The Armchair Millionaire's Guide to Reclaiming Your Financial Life After Bankruptcy

Know what to expect. Surprisingly, after bankruptcy, credit will probably not be harder to get. In fact, many lenders specialize in extending credit to the recently bankrupt. However, credit will be more expensive to get (in the form of higher interest rates) and more limited in the amount you can get. The good news is that even though the bankruptcy will remain on your credit report for 10 years, it will gradually become less significant to potential creditors as each year goes by.

Check your credit report for accuracy. After your bankruptcy, your discharged debts should all show a balance of zero. Check your credit report with each credit-reporting agency to ensure that these are properly recorded. The three major credit bureaus are Equifax ( or 888-766-0008), Experian ( or 888-397-3742) and TransUnion ( or 800-680-7289).

Rebuild your credit history with a secured credit card. These cards are backed up by money that you deposit into a savings account or CD as security. Having one will allow you to have a positive record on your credit report while giving you the convenience of a regular credit card.

Join a credit union. You may find that you can get a loan more easily and with better terms through a credit union than through a bank.

Don’t go there again. Even though credit will be available to you after bankruptcy, use it conservatively. Pay off your balances in full each month. Build up an emergency fund in order to be able to cope with the unexpected. And don’t go without health insurance--even if it’s just a basic policy covering major medical expenses--so that you’re not financially derailed by an illness.

The Bottom Line: Bankruptcy promises a fresh start to the financially beleaguered. Take the right steps to make it a new beginning to a financially secure life.

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Lewis Schiff founded the Armchair Millionaire Web site in 1997. His first book, The Armchair Millionaire, was published in 2001. Schiff's newest report, "How to Know When You Are Rich," is now available at

Contact Information:
Lewis Schiff
Armchair Millionaire

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