Credit Options After Bankruptcy Discharge Part 2

Why companies give credit where credit isn’t due

You’re right.  It doesn’t make much sense.  To past generations, filing for bankruptcy essentially meant the debtor lost borrowing privileges forever.  They couldn’t pay their bills, the government bailed them out, and poor reprobates, nobody would ever trust them again.  The notion of declaring bankruptcy would scandalize our grandparents ethically, socially, and, in the end, practically – within actual communities, admitting an inability to pay debts ruins lives. 

Of course, these days, industry depends upon consumer credit – the global economy would crash should people start spending within their means.  Fifty years ago, the notion of purchasing household goods on credit indicated risk; nowadays, paying cash for anything equals limited means.  Credit card companies weren’t entirely responsible for the seismic shift of public opinion, but they’ve certainly taken advantage.  FICO scores and credit reports now determine the average citizen’s housing, employment, even relationships – lenders do want their funds to be repaid.   At the same time, they don’t want to lose clients, even clients that have been proven to bad risks.  As credit goes, no man shall ever again be left behind. 

Once a personal bankruptcy has been discharged, borrowers should expect credit card companies to shower them daily with applications boasting minimal (if any) initial interest rates solely because those debtors cannot again file bankruptcy for several years.  Mercenary, predatory, but these companies do still serve a purpose for hapless borrowers.  To a frighteningly large degree, FICO credit scores generally do govern modern American lives, and the only way to improve these scores is by borrowing money and, slowly, paying it back.

Seems sort of cruel, offering credit to the newly bankrupt – like a liquor stand set up in front of alcoholics anonymous meetings – but, honestly, there’s always going to be temptations, and credit ratings are so ridiculously important to everyday existence that improving FICO scores must be a priority.  After bankruptcy, borrowers can’t expect the best rates or terms, of course, but it’s still a small miracle these loans are even granted.  Chapter 7 debt elimination leaves a deep credit hole, but, thanks to the bankruptcy guidelines, there’s now always a ladder.