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Avoiding Another BK

Valued Member

Avoiding Another BK

I plan to learn from this experience and never get in such a situation again.


One thing I did right so far: while paying the lawyer, since I quit paying my creditors, I saved the surplus and now have about $1,000 cushion so I'm not dependent on the ability to go back into debt as soon as possible. I know some of you consider $1,000 small change but that is about 3/4 of a month's income for me.


I now understand that "the more, the merrier" doesn't apply to credit. Getting more and more subprime CCs just to expand my credit horizons won't be my style next time. I know I'll only get subprimes for a while, but once I qualify for prime cards, I will be trimming back my subprime "empire". Besides, I think that realistically there's a limit of about a year's income on how much total credit one can get. It's probably better to have about six good credit cards than 15 high-fee, high-APR monstrosities.


I will definitely never accept two subprime CCs from the same bank or company. I now see it's a scam to double your fees and double your minimum monthly payment. Having two First Premiers and three cards from the First National/First Savings group was a terrible mistake IMHO.


Basically, I figured out that having less cards will probably eventually be made up for with higher CLs on each one, even if it takes a little longer to get there.


How much credit is too much? After seriously thinking about it, I came up with a formula: If you max out on every CC you have, would your minimum monthly payments exceed your income minus rent? If yes, you have too much credit. Of course, you shouldn't max out anyway, but you shouldn't even be able to run up that much debt. Best to not even gain the capacity in the first place.


I've always had a personal policy of not asking for CLIs but waiting for them to be offered. I still think this is wise. I know many on the forum will disagree but I don't like to look "credit hungry"....


I used to charge everything. The idea was to build up a profile and earn more CCs and CLIs. I'm not so sure I'll do this anymore. I'll probably use cash or debit except when there's actually an advantage to using credit, like a cash back reward. Maybe I'll put subscriptions or some low-priced recurring item on CCs just to maintain some usage but that should be it.


Obviously, I will PIF monthly when possible, and if it's not possible I'll pay as much as possible.


I probably sound like someone who just had an accident while drunk and is now swearing I'll stay sober from now on....

Message 1 of 3
Community Leader
Super Contributor

Re: Avoiding Another BK



It is a very good idea to have a plan and know what to do and not what to do. I think it is great that you are being cautious and making a plan to succeed after a BK.


So many people unfortunately fall into the same trap and let history repeat it self, kudos to you for putting a plan in place. 


While many take this route there are others that are in a rush to rebuild get as many cards as they can, not change their habits and end up back in the same situation filing BK number 2 and yet again can't wait to get back in the credit game😕, happens here .


But I commend you for taking the steps, rebuilding cautiously and knowing it will take time and discipline .


Good luck to you

EXP 771TU 786 EQ 756
Message 2 of 3
Super Contributor

Re: Avoiding Another BK

Congrats on your strategy. Let yourself run your credit not it run you. Your in charge. Not the CC's. Good Luck!

Homeowner since Sept 2020. My posts are JMHO. My siggy is not to brag. Just sharing my experiences after BK from learning here from rebuild to recovery from the @ 540's.
Message 3 of 3
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