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Life after bankruptcy

"Generally, we say that if you get a secured card, usually within six months to a year of good payment you can qualify for an unsecured card," says Arnold. But don't apply for more than one every six months, he says. Otherwise the inquiries will zing your credit. And be prepared for sticker shock with APRs from the high teens up to the 20s, he says.

One of the biggest problems with bankruptcy is that borrowing money is going to cost more for a while. A lot more. If you pay off the cards every month, you won't feel the sting of higher interest rates. But subprime lenders are levying a host of fees, both one-time and annual, just for the privilege of carrying their cards.

"Usually they tack on application fees, processing fees and who knows what," says Arnold. "It's not uncommon to get hit with $100 to $300 that first year and $100 to $200 a year ongoing. And this is the industry standard."

But you can win your way back with smart spending habits. "If you keep your nose clean and make your payments, within 24 months you can probably qualify for a halfway decent unsecured card," says Arnold. Granted it won't be the 5 percent APR you see on TV ads, but you might get one for 10 percent, he says.

If you've been through bankruptcy, you want to keep an eye on your credit rating score. Appearing on your credit reports, your score predicts the likelihood you will be delinquent on a bill in the next two years, says Ulzheimer.

Yes, bankruptcy will zing your score. "But most people who file have delinquencies and issues already on their credit report," he says. "As such, the score has already taken a severe hit."

Side effects

Because everybody and his brother is looking at your credit reports these days, bankruptcy may touch parts of your life you hadn't even considered. It could send your insurance rates up. "Credit is one of the factors that many insurance companies use in pricing their policies," says Jeanne Salvatore, vice president of consumer affairs for the Insurance Information Institute.

If you're facing a Chapter 13 and you have kids in private school, the courts may make you put them in public schools, says Whelan.

Sometimes, religious beliefs could also be grounds to continue paying private school expenses.

One thing you can do: If there was a compelling reason for your bankruptcy, such as a divorce, business failure or sick child, list that on your credit report. Your notation has to be 100 words or less. It won't affect your credit score, but in some cases where there is a judgment call like employment or insurance, it could help you.

There is also human nature to consider. Bankruptcy records are public information. And in this the age of computerization, "It's very difficult to keep it private," says Whelan. In addition, if you are having your Chapter 13 payments taken out via payroll deduction -- a favorite of the courts, says Whelan -- then at least one person in your workplace will know about your financial situation. (Another option is to have your check directly deposited and an immediate bank withdrawal made the same day to avoid getting your office involved, says Hira.)

Your financial future

Any bankruptcy is difficult. And most people who file have been fighting financial problems for at least two to three years. "And there's a psychological unhappiness about doing it," says Seattle bankruptcy attorney Ken Weil. "It's an admission of failure. Nobody is ever happy to come see me."

In addition, those who file Chapter 13 are looking at several years on a strict money diet.

"What I tell clients before they file: 'You'll feel wonderful when you file,'" says Weil. "'You're dealing with a problem that's been beating you up for so long. This lasts up to six months. Somewhere on the back end -- 30 months out -- you can see the light at the end of the tunnel. And at the end you feel fantastic. But what I find is that somewhere in the middle there is going to just be a horrible point. [You feel] I can't do this anymore.'"

The best news: Time heals. Sure, it takes a decade for the bankruptcy to fall off your credit report. But, if you aggressively practice good credit, the farther out you get, the less it will matter. That means lower rates, lower fees and better deals on car and home loans.

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