When I first began applying for credit after my bankruptcy I noticed a trend.

Lenders would ask me the same series of questions over and over again. They all seemed to care about a few key things. Of course, now I realize they were trying to quickly assess if I was creditworthy or not.

You see, after you file bankruptcy, lenders will be very cautious when considering if they should extend you credit (and rightfully so).

Can you blame them?

After bankruptcy your number one mission is to prove to lenders you’re now a low credit risk.

So what do they want to see from you? The right answers to the following six questions.Question 1: Are You Discharged?

The first thing a lender will need to confirm is if your bankruptcy is discharged. Or, in other words, if your bankruptcy is complete.

The reason lenders want to know that you’re discharged is because if your bankruptcy is still “open,” then you could technically still add accounts to your bankruptcy (including the lender you’re applying with). Not many lenders are going to grant you credit when you still have the ability to include them in your bankruptcy.

Make sure you don’t confuse the term “discharge” with the term “filing.”

Hopefully you’re not one of the poor saps who’ve had a bankruptcy dismissed.

Having a dismissed bankruptcy is bad, bad, bad. You basically receive all the negative effects of filing bankruptcy-but none of the benefits-since your bankruptcy was not completed.

It’s like paying off one of your collection accounts…then realizing the collection account remains on your credit reports. So your FICO credit scores don’t increase at all. They stay the same.

But there’s hope even if you’ve been dismissed. So don’t throw in the towel just yet. Life’s a garden-dig it …plant some seeds of hope…and watch as you prosper…You can still start the process of increasing your credit scores. Question 2: When was your bankruptcy discharged?

This is very simple.

The more time that has passed since your discharge-the better.

You see, each lender has different credit guidelines. A lender’s credit guidelines are essentially their minimum requirements that you have to meet in order for them to approve your application.

For instance, you won’t be able to finance a new car through a low interest lender until you’re discharged. Being discharged is a basic credit guideline when financing a car after bankruptcy.

Getting approved for a secured Visa® or MasterCard® is relatively easy. Just being discharged and sending in your deposit are the two most important criteria.

Unsecured credit card lenders’ credit guidelines vary. Some lenders won’t touch you until the bankruptcy no longer shows up on your credit reports. If you discharge debt with some lenders, you’ll never get another card with them until that debt is paid back (e.g., American Express®). There are lenders that will give you a second chance-but it won’t be soon after your discharge (so don’t hold your breath).

Mortgage lending requirements are more complicated. How much time you have after your discharge will determine what type of mortgage financing you qualify for.

Anything less than 24 months after your discharge and you’re considered a sub-prime borrower. If you have more than 24 months after discharge you may qualify for more conventional mortgage programs.

Chapter 13 filers have even more options for getting a mortgage after bankruptcy, most of which are determined by the amount of time since your filing date.

So keep track of how long it’s been since your discharge. Or if you filed Chapter 13, how much time since you filed. They are important dates to memorize.Question 3: How have you paid your bills since your discharge?

Late payments appearing on your credit reports after a discharged bankruptcy are kisses of death.

Some lenders even consider 1 day late after the due date to be enough for them to report a 30-day late payment to the credit reporting agencies. The reason is that technically, they count everything in the 1-30 day late payment range the same. So even being one day late could burn you.

Bottom line-don’t be late. Pay early, worst case on time. You simply cannot afford to be late.

Lenders will look to see how you’ve handled your credit since your discharge.

And if you think late payments hurt you…collection accounts, judgments, and other nasty things like those will haunt you much more.

You need to be able to tell a lender that you’ve paid everything early or on time since your discharge. When they review your credit reports they will see what you’re saying is true.Question 4: Have you reestablished new credit since your discharge?

Avoidance is not recovery.

Although it’s good if you reaffirm a few credit accounts through your bankruptcy, it’s even better if you can show lenders that you’ve established new credit since your discharge.

The types of new credit you need to aim for are:

- Home mortgage

- Car loan

- Car lease

- Credit union loan

- Bank loan

- Overdraft protection

- Credit card

- Retail credit card

- Gasoline credit card

- Home equity loan

- Student loan

The catch-22 is that the lenders you really want to work with don’t really want to be the first ones to grant you credit. It can be frustrating trying to open that first account-which is why you need a strategic plan of attack. In other words, don’t apply for a business loan (which can be tricky to get) if you can’t even qualify for a secured credit card yet.

But it all starts with you. I’m saving you months-even years-worth of trial and error. But you have to take the information and put it into action. So get to it!

You simply will not recover unless you jump back into the fire and prove to the world you can manage credit effectively.Question 5: How much do you have for a down payment?

It will be necessary in most cases to be able to come up with a down payment or deposit. So start saving! Lenders don’t take food stamps, or post-dated checks.

As a general rule of thumb, if you made all your payments as agreed on your last car, you should plan on no more than $500 to finance a new car at a normal interest rate…that is IF you follow what I teach in the free Credit After Bankruptcy seminar.

On the other hand, if you missed or made late payments on your last auto loan, your only option will most likely be 20% down at a high interest rate through a finance company.

If a car dealer is telling you to come up with more money, you’re either at the wrong dealer…or you need to wait until you’ve reestablished your credit a little more.

If you want a good secured credit card-plan on depositing around $250 to $500. There are some secured credit cards that you can get that have lower deposits, but I don’t recommend them. Most of the lower-deposit cards have hidden fees…don’t report to the credit reporting agencies properly…and usually have higher interest rates to boot.

A down payment on a home will obviously depend on the amount of the mortgage. Although 3% to 10% of the purchase price is considered the norm-it’s more than possible to get a mortgage for no money down. And I’m not talking about some crazy television infomercial that’s promising you the world. I’m talking about real, bona fide mortgage programs.

So be prepared. Have a little money down to show you’re a playa.Question 6: What are your credit scores?

Of course you knew this was coming, right?

Back when I was recovering from bankruptcy, credit scoring was just starting to become popular. You couldn’t even purchase all 3 of your credit scores before 2003.

Today credit scores are used by nearly every lender in the United States and Canada.

If you don’t know your FICO credit scores-you should.

Most important, you need to know which credit reporting agency has your…

…HIGHEST credit score

…your MIDDLE credit score

…and your LOWEST credit score

To gain the most leverage over any lender you should choose to work with the lender that uses the credit reporting agency that has your HIGHEST FICO score. This way you receive the lowest interest rate and best terms.A Final Note

So there you have it. The six questions lenders will ask you after bankruptcy. Like my scoutmaster taught me many years ago…be prepared.

Chance favors a prepared mind.

Celebrity bankruptcy has become so common that many now hire financial advisors to keep an eye on their bank accounts and stop them from overindulging on wild extravagances and unworkable business ventures. Nobody, no matter how famous or rich, is immune to the perils of debt. In that way the celebs are just like the rest of us, but they’re playing with much higher stakes.
Donald Trump: billionaire entrepreneur
Trump, currently worth approximately $3 billion, has certainly had his fair share of financial disasters. In 1992 the three casinos he then owned – the Taj Mahal, Castle and Plaza – went bankrupt, burdened by more than $1 billion in debt following the 1990-91 recession. But he climbed back from the brink of personal bankruptcy and chronicled his return to billionaire status in the 1997 book ‘Trump: The Art of the Comeback.’ Trump’s casino empire went bankrupt again in 2004.
Meat Loaf: rock star
Meat Loaf spawned some of the largest selling albums of all time, but things turned nasty for him when, in 1981, he changed managers after discovering that his were stealing his money. They had all of Meat Loaf’s assets frozen and sued him for breach of contract. They also spread rumours that he was violent and had threatened people with guns, and a battle-worn Meat Loaf ended up declaring bankruptcy. In 1986, Meat Loaf found a new writer, John Parr, and started recording a new album. Unfortunately, the producer put a dance beat underneath every song, which proved to be a huge mistake, and Meat Loaf ended up going bankrupt for a second time.
Anna Nicole Smith: Model/Actress and 1993 Playboy magazine ‘Playmate of the Year’
Tragic Anna Nicole Smith entered the limelight in 1994 when, at the age of 26, she married 89-year-old oil business executive and billionaire J Howard Marshall. In 1996, Smith filed for bankruptcy in California as a result of a $850,000 judgment against her for sexual harassment of an employee. The former model died from a drug overdose in February 2007, five months after the death of her son Daniel, aged 20, who had also overdosed on drugs.
M.C. Hammer rock star
M.C. Hammer of parachute pants and ‘Hammertime’ fame filed for personal bankruptcy in April 1996 as a result of dwindling album sales and a lavish lifestyle. He was $13 million in debt. After this rapid fall from grace, MC Hammer spent most of the late 1990s as a punch line in the music business. Nelly, in his year 2000 breakthrough hit ‘Country Grammar’, announced his intention to ‘blow 30 mill like I’m Hammer’
George Best: Manchester United Footballer
Manchester United football legend George Best will always be remembered for his dazzling skill on the pitch, but it was the accompanying champagne and playboy lifestyle which ultimately led him to an early grave. Best’s partying and decadence degenerated tragically into alcoholism, bankruptcy, a prison sentence and, eventually, a liver transplant. Following his death in November 2005 the News of the World published a picture of Best at his own request, showing him in his hospital bed, along with what was reported to be his final message: ‘Don’t die like me’.
Walt Disney: Oscar – winning film producer, animation & theme park pioneer
Disney did not lose his riches once he had found them, but it was a major struggle to get there in the first place. As a young entrepreneur Walt Disney formed his first animation company in Kansas City in 1921 and made a deal with a distribution company in New York. Flushed with success, Disney began to experiment with new storytelling techniques, but his costs went up and then the distributor went bankrupt. He was also forced to declare bankruptcy in 1923 and at one point could not pay his rent and was surviving on dog food.
Gary Glitter: Glam Rock star
Gary Glitter, the King of Glam Rock, has had an unusual life. After excessive drinking and drug taking in his earlier musical career, he was declared bankrupt in1980. However, Glitter, aka Paul Francis Gadd, says he was only declared bankrupt because ‘somebody didn’t fill in the right forms.’ Just as he had begun to turn his life around, Glitter was confronted with allegations of paedophilia, and in 1999 he was convicted for downloading 4,000 child pornography pictures and was listed as a sex offender. Glitter’s reputation was further tarnished when he was permanently evicted from Cambodia in 2002 for suspected child sexual abuse offences.
Oskar Schindler: activist who saved over 1000 Jews from the Nazis
In the 1930s, a young Oskar Schindler changed jobs several times. He also tried various business ventures, but soon went bankrupt because of the Great Depression.
By the end of the war, Schindler had spent his entire fortune on bribes and black-market supplies for his Jewish workers. Virtually destitute, Schindler did not prosper in post-war Germany, and eventually he emigrated to Argentina in 1948, where he went bankrupt again. Returning to Germany in 1958, Schindler had a series of unsuccessful business ventures. He then settled down in West Germany and tried again – with help from a Jewish organisation – to establish a cement factory. This, too, went bankrupt in 1961.
TLC: R&B/Hip-Hop/Pop group
In 1994, not long before the release of the trio’s second album ‘CrazySexyCool’ (which was to sell over 11 million copies) band member Lisa Lopes was arrested on arson charges. In an alcohol-fuelled fit of rage, Lopes vented all the frustrations from her often-stormy relationship with Andre Rison, burning his Atlanta mansion to the ground and vandalizing several of his cars. In 1995, TLC filed for bankruptcy, claiming debts of over 3.5 million dollars, in part stemming from Lopes’ insurance payments over the arson incident.
Kim Basinger: Oscar – winning actress
Extravagant Basinger found herself into trouble when she bought the town of Braselton, Georgia for $20 million. It was around the same time that she dropped out of the movie ‘Boxing Helena’ after expressing concern over nude scenes. Main Line Pictures sued the star of Batman and 9 1/2 Weeks for breach of contract, and the ensuing court case was of Hollywood proportions. The producers’ lawyers even tried to stop Basinger having children – as this would diminish the sum they might reclaim. Basinger filed for personal bankruptcy in 1993 and was forced to sell the town of Braselton.

What sort of things will you encounter when finding information on bankruptcy?

• You will first learn about the process. The process begins with filing a petition with your local bankruptcy court in which you will provide your bankruptcy attorney with all of your financial information.

• You will find that the non-business owner has two bankruptcy options. The first is Chapter 7 in which you will have a court appointed trustee who will attend a “meeting of the creditors” with you to answer questions regarding your financial status. It is after this meeting that the trustee liquidates some of your property to satisfy the debt of your creditors. In some cases you are allowed to retain some of your property. The second form of bankruptcy is Chapter 13 in which you file a plan for repaying your debts through your court appointed trustee. Your trustee then takes the money to pay your debts.

• When finding information on bankruptcy you will find that some of the advantages are that your unpaid balances become paid, property you acquire after the bankruptcy is yours and not required to be reported, there is no minimum amount of debt (chapter 7). Yet the disadvantages are that bankruptcy is hard to overcome, some debts can survive and be collected upon, co-signers can be responsible for your debt and in the case of chapter 13, certain people such as stockbrokers and commodity brokers cannot file for chapter 13 bankruptcy.

• You will also learn about involuntary bankruptcy, which is when the creditor files the bankruptcy petition (very unusual).

Finding bankruptcy information isn’t very hard at all since there are many sources on the Internet and there are a few that provide you with very useful amounts of information that you can learn and keep in mind in case anyone tries to tell you something incorrectly that can damage your case. Just be educated and you’ll be fine.

If you are looking for a lot of information about filing bankruptcy, check out www.getlawyeradvice.com where there is a plethora of information that can help you in your bankruptcy inquiry.