Unanswered Questions

I’ve Been Through Bankruptcy, Divorce, and Foreclosure. How Can I Rebuild My Credit? – Susan

“Dear Steve,

My bankruptcy was discharged 10/07. I lost my home. It was the result of a past divorce, and the sudden loss of my job of 18 years.

I’ve now been with my new employer for 2 years and finding it very difficult to rebuild my credit, i’ve managed to get a credit card with a low limit and have paid that timely.

When my car broke down, I had to utilize payday loans to cover the cost. I’m still paying those, I hate them. I want to buy another house, I do not like renting, but what are my chances? I am 55 years old.


About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


  • I filed bankruptcy.  I had already been divorced for 12 years and really hadn’t recovered from the divorce itself as far as finances.  I have been a single mother of three since my divorce in 1997.  I struggled continuously, moving, bouts with credit and late payments, etc.  Then, I moved into a house and the mortgage was killing me and I mean killing me where I couldn’t keep up with other bills primarily due to the mortgage.  For the first time in my life I had a car repossessed.  My outlook on my life and finances looked more bleak than ever.  The bank remodified the mortgage and the mortgage dropped 220.00 per month but I was so deep in I didn’t notice the difference.  I had been thinking of doing it and had avoided it in the past.  I spoke with an attorney after reading constantly about it.  Now, I am glad I did it.  This is the best I have felt in  years.  My situation is getting better.  I am now renting from a former real estate agent who let me move into a house he had on the market that had been sitting for quite some time.  I was offered a credit card with a $500 limit just a month ago which is almost exactly 2 years since I was discharged.  I have also purchased a car.  Because of how bad things were for me in the past I am begining to see clear what to do and what not to do to ENSURE that I don’t get as far in as I was before.  I think I did the right thing and I am recovering and I can see now that I will experience a full recovery in a shorter period than I would have if I had not filed.  God Bless.  Dont’ let anyone tell you what is best for you.  Do what you know you have to do and what is best for you.

  • Susan,

    It sounds to me like you are trying to focus on a couple of goals at one time. Rebuilding your credit appears to be your main goal. But creating an income you can live on, and save some money is the larger one. The truth is, if your income were sufficient to pay your bills and save money you wouldn’t need a lot of credit – other than, perhaps to buy a home and that’s a second topic.

    The other experts have shared some good advice on how to rebuild your credit, and I don’t feel that I need to add to that.

    My guess is that you’re feeling very insecure about your future at this point. Your job of 18 years disappeared and your marriage ended as well. I’d encourage you to think about what kind of business you could build on the side so help give you some security. While you still have a job, you can start this side venture and use it as an opportunity to try something new or something you are passionate about, to bring in some additional income so you can build your savings and start avoiding payday loans and crisis situations, and perhaps even transition into being self-employed during your retirement.

    I can’t tell you what that new business will be…but I can give you some resources to start that journey. I love the book Wishcraft by Barbara Sher. Overcoming Underearning by Barbara Stanney is a great book for women. My colleague Mikelann Valterra at the Women’s Underearning Institute has some great podcasts and free downloads on her website. And I’d like to send you a complimentary copy of my book Invest In Yourself: Six Secrets to a Rich Life. It’s a few years old, but now that times have changed it’s suddenly very relevant again. I hope it will help you. Just contact me through my website at ultimatecredit.com

    All the best to you!
    .-= Gerri´s last blog ..Should You Tap Your Retirement Money to Pay Debts? =-.

  • Even after bankruptcy, credit report errors are common. You need to be diligent and dispute any errors in your creditor report. Some bankruptcy attorneys even make a living make suing creditors for reporting false information on a credit report for a debt that was discharged in bankruptcy.

    I’ve written and article on my own about improving your credit after bankruptcy that might be of interest to you as well: http://www.chs-law.com/2005/05/rebuilding-credit-after-bankruptcy.html

    I have one final suggestions. I recently found out that AAA offers a free credit monitoring service through Experian as a member benefit. If you already have a AAA membership for roadside service, you should take advantage of this free service.

    Carl H. Starrett IIs last blog post..A Creditor Objected to My Discharge…Now What?

  • I am not an expert, just someone who has been through what you’ve been through and survived. Luckily, I managed to hold onto my home, but did declare bankruptcy in 1998. Jeff is correct, you need to be patient. It takes time (several years) to rebuild credit. It’s great you’ve been able to get a small credit card line. Use a little bit of it every month but pay it back promptly in full without incurring interest charges. Renting is not the worst thing in the world, at least you have a roof over your head. It’s been 10 years and my credit score is now in the 700’s. You can and will recover from your financial setback.

  • Susan,

    You can repair your credit. It may take time. There are many strategies. You need to educate yourself on what it takes to rebuild your credit. There are many ways. Your Credit Score by Liz Pulliam Weston is a great resource. I watch expenses, get it at the library (its free).

    Biggest thing not to do. Do not take a loan at a rate you can not afford, even if you need to wait longer until your credit rating is higher. Be patient.

    Pay the Payday loans off quick. They are sucking you dry.

    Before you buy that next house or car, make sure you have at least six months of living expenses in the bank and some extra for any downpayments. This will do two things: first it will help when you have an unexpected crisis such as job loss or illness, and secondly, the lender will probably give you a better rate because you have been able to save money and can make a down payment.


    Jeff Jacksons last blog post..Debt Consolidation Stories

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