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How To Overcome Bankruptcy and Bad Credit

Are you overwhelmed by debt? Are you considering filing for bankruptcy? You are not alone.

My Story

I was living in Hollywood when I made the decision to file for bankruptcy. I went to my local office supply store to buy a bankruptcy kit. The store was packed with shoppers and scattered with celebrities.

When I found the bankruptcy kit, there was no price found on it. So I stood in the long, agonizing line to get a price check. When it was my turn at the register, the teller couldn’t find the price either. So he grabbed the store microphone and yelled, “I NEED A PRICE CHECK FOR THE BANKRUPTCY KIT. AGAIN, A PRICE CHECK FOR THE BANKRUPTCY KIT PLEASE!”

So I have had the great fortune of not only being personally humiliated by my bankruptcy but also publicly humiliated as well!

Mistakes are one of the best things that can happen to you – as long as you learn from them.

When I talk about my bankruptcy from 2001 I always say, “Mismanaging my money was horribly irresponsible of me, but it was one of the best things that ever happened to me.”

People look at me strange and think How could bankruptcy be one of the best things to happen to her? Because it was the wake-up call I needed in order to turn my finances around. I am now a “freak” about my finances.

The day I filed at the courthouse I remember saying to myself I will never allow this to happen again. For the rest of my life I will be responsible with money. And I have stuck to my word.

The biggest fear I had was that I wouldn’t be able to buy a descent car, a home or take out a business loan. I thought my credit score would be 400 for the rest of my life. I was wrong.

Since I was immaculate about getting my credit and finances back on track, I brought my credit score over 700 within 3-4 years and currently it is over 800 – one of the best credit scores in the country.

Since 2001, I have bought 3-4 different cars, bought a house and secured a business loan, and not one bank or loan officer mentioned my bankruptcy. This would not have been possible if I had incurred a penny of credit card debt after filing bankruptcy and not been exceptionally responsible with my finances.

By the way, after my bankruptcy I received credit card applications daily! Credit card companies should be ashamed of themselves for sending someone who has just gone bankrupt a credit card application (this is the equivalent of a beer company delivering daily a 12-pack on the front porch of a recovering alcoholic – we would find that appalling, right?)

But credit card companies prey on people with bad credit because they can charge 25-30% interest on them. So if your finances are a mess, you are up to your eyeballs in debt or you have recently filed for bankruptcy or foreclosure, do not panic. Life does continue on after mistakes (and also after public humiliation!).

But you must learn from your mistakes and strive to never go down that path again.

5 Ways I Had to Change My Behavior About Spending

1. If I can’t pay cash for it, I simply cannot afford it. Period.

2. Living below my means. Just because the bank says on paper I can afford a $400,000 house does not mean I need (or should) buy a $400,000 house. If the bank says you can afford a $400,000, what you really can afford is a $200,000 house!

3. Never buy anything new. Discount stores, eBay and CraigsList are my new best friends.

4. When shopping, I always ask myself “I this something I need, or something I want?”. If it’s something I want (but don’t need) I put it back on the shelf.

5. Don’t use credit cards ever, ever, ever.

What are three big mistakes you have made in your life? Are you continuing to make these mistakes or have you learn from them? If you were able to get yourself out of debt, what did you do to overcome debt? Share below!


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