Before the changes to the bankruptcy laws, the judge who presided over the discharge of debt would offer recommendations to those who filed petitions. The advice given to assist petitioners was to begin the task of repairing their credit.
The best way to repair your credit is to call a reputable credit card company and ask if they have a program wherein you can utilize their debit card to make purchases. This requires that you deposit a sufficient sum of money into their account (usually $500.00) and then the card is issued to you.
The purchase amount is deducted from your account. It is up to you to keep the account active and replenish it when you go below $125.00, for example. After one year (or depending upon the company’s terms) if you have been paying your bills on time, they may offer you a new credit card with a minimal line of credit.
Again, as long as you pay your bills on time (or better yet, pay off the balance each month), the company will increase the line of credit commensurate with your income.
This serves two purposes: (1) It establishes you as a credit card holder; and (2) it allows you to begin the process of repairing credit as it relates to the credit reporting agencies.
Remember, the credit reporting agencies will have bankruptcy listed on each report. After ten years, this statement is removed from all credit reports. But, in the mean time you are helping to establish a basis from which your credit standing will improve as well as your FICO scores.
Note: With the new Recovery Act passed this year, you may be able to apply for credit through a bank. The best advice one can offer is to call or visit banks in your area to determine if they offer a debit card that can be changed to a credit card at some later date.
You may still receive credit card applications at home. Be careful! Some of these companies may offer 0% interest rates for a year, but may go as high as 29% afterward. Resist the temptation.
