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You've just filed for bankruptcy. Now what?

Jan 30, 2012, 8:25 a.m.

Filing bankruptcy is not something that many people really want to do. For many, it means admitting weakness in how they have managed their finances. But overcoming bankruptcy isn't impossible and many are able to take a bankruptcy and use the experience as the clean slate they need to turn over a new leaf and make smarter financial decisions going forward.

Having a bankruptcy on your record can be a big strike against you, and it will stay on your credit report for 7-10 years. Especially in the first months after filing bankruptcy you will likely see a significant drop in your credit score, but as you make smarter decisions, you may even start to realize that in the grand scheme of things seven years isn't as long as it seems.

Operating as much on a cash only basis may be good for a while, but once you do return to the credit game you will need to tread lightly and find some good people willing to be on your side. Whether you are purchasing a car, applying for a credit or store card, or seeking another form of credit, any offer you get will likely come with high interest. While on paper this all looks like highway robbery, but approaching the situation with intelligence and the wisdom of your experience can make even the worst offers work for you. And once you prove yourself to be a good customer you can negotiate a better rate.

Fostering good relationships with people who will be willing to be references when it comes to renting a home is also a good idea as you are overcoming bankruptcy. If you have a good track record with your landlord despite other financial issues it may be a good idea to keep letters of reference on hand. Many rental homes and apartments may hold a bankruptcy against you, but there are exceptions if you do your homework.

With bankruptcy becoming more and more prevalent, creditors will have a harder time ignoring and shunning those who have filed, are likely to look at the bigger picture.Those who file for bankruptcy only after major life-changing situations, such as the loss of long term employment, can often use their positive life experience to help forge trust between themselves and potential creditors or other references. By standing your ground and remaining patient you'll find that in time you can overcome bankruptcy and re-establish your good credit.

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