Dear Opening Credits,

Is it true that you have to wait three months after bankruptcy to charge on a credit card again?  

-Duane 

Dear Duane,

Three months? Nah. Assuming it's a Chapter 7 bankruptcy, you're free to use a credit card the same day you file and beyond. A Chapter 13 bankruptcy is a different story, though. If that's what you've filed, there is no specific waiting period, but rather a borrowing rule. While using a court arranged repayment plan (that can also include a debt discharge element), entering into any new debt arrangements -- from getting a credit card to financing a car -- must first be approved by the trustee overseeing your case.

However, since Chapter 7 is by far the more popular type of bankruptcy, that's what you're probably referring to so I'll focus on that.

Although you can legally start to swipe again without delay, you may have a hard time acquiring a decent credit card with which to shop. The bankruptcy notation will be listed on your credit reports for 10 years, and will negatively impact your credit scores for at least the first two years (check them now!). That means you're viewed as a risky customer, so the account you'll be eligible for will be bottom of the barrel: high interest rates, very low charging limits and expensive fees.

Still, in many cases it's a smart idea to get back in the credit game, as long as you genuinely feel ready to win. Here's how you can charge ahead the right way:

  • Apply for a secured credit card. If you had an account with no (or little) debt, you could have left it off the bankruptcy, so it may still be active and ready to go. If not, you'll need to apply for a new one. An account that's collateralized with cash is the best way to reboot. The lender can claim your deposit if your bill goes delinquent, so they are more apt to take a chance on someone who has already had a history of not paying.
  • Start tiny. Choose a single small expense to charge every month. A fixed bill such as a gym membership is ideal, as it's always the same amount. Arrange to have the total fee deducted from your checking account automatically. This way you'll guarantee a perfect payment history, causing your scores to rise and ensuring that you stay out of debt. After six months, try charging a couple of other things occasionally, but continue to pay on time and in full.
  • Review your budget daily. Make a review of your cash flow an everyday task. Always know what you have in your accounts and the sum in your wallet, then project for upcoming bills. Give your finances the attention they deserve.
  • Save aggressively. The general rule of thumb is to save 10% of a paycheck. So if you bring in $2,500 every month, sock $250 away. That's on top of retirement savings, by the way. When you've accumulated a few months' worth of necessary expenses that you can tap into in case of emergencies, loosen up and save for the fun things in life.
  • Check your scores in one year. Mark your calendar for one year from the date you started to charge again post-bankruptcy. Then get your credit scores to see how much your good behavior plus the passing of time has helped it rise. You'll be motivated to stay the course!

If you get on this plan right away, your credit should be repaired enough to qualify for better cards and loans in just a couple of years. Even more wonderful, you'll be financially secure and much less likely to ever go through a bankruptcy again.

See related: 5 bankruptcy myths busted, 3 reasons you can't get credit after bankruptcy