You are not defined by your available credit

Published Sunday, May 31, 2009 @ 6:49 pm

The decision to file bankruptcy is more often than not driven by your willingness to accept the fact that you need help. Chances are, you are fully aware of the practical reasons: late bills, consistent calls by creditors, job loss, unseen medical expenses, stress, denied credit. However, getting over the psychological barriers can be the most difficult corner to turn in a person’s road to financial recovery.

Don’t worry, you are not alone.

Almost everyone has the same fear before going into bankruptcy. The idea that you will never again be able to own a home, buy a car or get reasonable credit can be overwhelming. Unfortunately, there are a lot of creditors out there who encourage customers to think that way. It creates a sense of fear that forces a person to believe that credit is everything, that you can’t have the lifestyle you want without it. That fear is what attracts people to applying for credit, the fear of a “below-average” lifestyle.

Having credit is a powerful thing. Personally and socially, it can make you feel confident, successful and financially comfortable. And clearly, having available credit is something everyone should strive for. But only to an extent. It’s not something you should ever use to define yourself.

When dealing with your credit after bankruptcy, do all you can to remind yourself of your old spending habits. Or, if it wasn’t bad spending decisions that led to bankruptcy, try to instill some lifestyle changes that are contrary to what you did prior to bankruptcy. Whether it was a health-related issue, divorce or other social misfortune, always be honest with yourself and the people around you. Don’t hide from your bankruptcy. After all, the important thing is you made the decision to improve your life, make changes and get yourself back on track. As earlier posts on this blog have stated, bankruptcy is not a scarlet letter, it’s simply a financial management tool.

Once your credit is re-established and you feel confident about your financial wherewithal, be wary of the lure of credit offers. Even your past creditors will happily place you on their direct mail list, sending you offers of low interest rates and annual reward catalogs laden with gifts and trips and discounts. All you have to do is spend. And spend some more.

However, you can outsmart the aggressive credit marketers by creating limits for yourself, playing credit card companies against each other when seeking interest rate reductions and account benefits and by paying your bills on time, in full, every month. And always remember, don’t count available credit as income or available savings. Also, don’t fall into the trap of believing you need a credit card for emergencies. Cash is always king, and once you use it to buy something, you’re paying for it only once, not every month.

Remember that one of the key reasons for filing bankruptcy is to make change in your life. It’s key that you take that change to another level and integrate that discipline into your personal, social and professional life. You made the right choice to file bankruptcy when you did, now make that change permanent.

Think you need to file. Find out for sure. In North Carolina, contact the Law Offices of John T. Orcutt. The initial consultation is FREE. Offices in: Raleigh, Durham, Fayetteville and Wilson. Call toll free to 1-800-899-1414 today.

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