In 1996 I declared bankruptcy. That was the culmination of a series of bad financial moves. I was only about $20,000 in debt which doesn’t seem like that much to me now but at the time seemed like an insurmountable amount. My credit card companies kept hitting me with late fees,over the limit fees and punitive interest rates so even though I was making monthly payments my debt just kept getting larger. I don’t blame the credit card companies for my getting into debt but they did help push me into bankruptcy. I tried to work with them but they wouldn’t cut me any slack. With the credit card companies offering no flexibility on the repayment terms the situation seemed hopeless. I gave up and declared bankruptcy.
The bankruptcy law has changed since I declared bankruptcy so someone filing today would probably have a different experience. The lawyer fees and court fees together were about $500. I’m sure it would cost more now but it was a lot to me at the time and it was a struggle to come up with the amount. The bankruptcy hearing itself was pretty simple. None of my creditors showed up. The judge asked me if I had any assets. I replied that I did not and that was pretty much the extent of it.
The aftermath wasn’t too bad either. I’m sure my credit was very poor after that but I wasn’t applying for any loans so it didn’t really matter. I was able to rent an apartment while the bankruptcy was pending. The apartment management didn’t really care about the bankruptcy. I was told as long as my rental history was ok then there wouldn’t be a problem. My rental history was fine because I always considered my rent payments more important than credit card payments.
My credit today is great. My credit score is 731 and has been in the high 600s/low 700s for several years. I receive credit offers all the time but right now I have all the credit cards I need. Even before the bankruptcy came off my credit record my credit was better than average. I didn’t do anything specifically to try to improve my credit but just paying my bills on time seemed to do the trick.
After the bankruptcy I got a secured credit card which I was eventually able to convert to an unsecured card. I received a lot of offers for secured credit cards after I went bankrupt and most of them offered terrible terms. If you’re going to get a secured credit card make sure you look carefully at all of the potential fees. I’m not sure if having the secured card helped rebuild my credit sooner or not. Not having a credit card at all is also a reasonable strategy to consider if you’ve just declared bankruptcy.
All in all my bankruptcy experience wasn’t that bad. I wouldn’t do it again in the same circumstances though. Hopefully I’ve learned enough since then I won’t be faced with that situation ever again.