Life after bankruptcy: The facts

After declaring bankruptcy in the UK, you're normally discharged after a year. Following bankruptcy discharge, you need to take steps to restore your creditworthiness so that you can qualify for car finance, credit cards and mortgage loans after bankruptcy. Perhaps more importantly, once you've restored your credit status, you need to avoid debt and credit problems in the future.

Rebuilding your bankruptcy credit rating

Order a statutory copy of your credit report
You can get a copy of your credit report from Experian, Equifax and Callcredit for £2 each. Check your credit report for mistakes
Despite what you might think, a surprising number of reports contain inaccurate data, and the onus is on you to get these errors corrected. If you don't do this, your credit rating won't get much better. Personal information
Make sure that your name, address, current employer and national insurance number are all correct. Debt that has been eliminated
If you've included a credit card or unsecured loan in your bankruptcy agreement, it should not still be showing as active. Send the credit reference agency proof and they'll change the credit status. Pay your debts punctually
If you have a mortgage or car finance, you need to pay all of your debts on time. The longer the period of time that has elapsed since you last defaulted on credit, the better your credit score will be. Prepaid credit card with credit builder
Most people eliminate credit card debt when they declare personal bankruptcy. Part of life after bankruptcy involves managing debt and credit more effectively. If you don't have a card, it's worth signing-up to a credit-builder credit card. It's a prepaid card so you can't get into debt, but you will be able to improve your credit rating.

Avoid credit mistakes and remain free from debt

Work to a budget each month
You've already discovered that living on credit doesn't work in the long run. Don't repeat the mistakes of the past. Unless your life after bankruptcy is radically different, you need to document your income and expenditure in a spreadsheet. If you are spending too much money, it's easier to identify and correct any excesses. Managing debt and credit
In order to avoid credit card bankruptcy, you need to manage your credit obligations properly. A bankruptcy credit card will help you to rebuild your credit rating, but it's important to choose cards that don't tempt you to spend money that you cannot afford to repay. Never carry a balance forward to the next month because that's how financial difficulties start.