“Healing is a matter of time, but it is sometimes also a matter of opportunity.” –Hippocrates

Just over ten days ago, just as I was getting ready for my vacation, I got a very surprising letter from my credit card company.  It read:

Congratulations.

We’ve increased your credit line to $17,840.

It’s our way of saying thank you for maintaining such great credit.

You pay your bill on time every month.  You don’t exceed your limit.  You pay more than the minimum due whenever possible.  You’ve done everything right and we’re rewarding you for it.  After all, that’s what being responsible with credit is all about.  So we’ve raised your credit line on your [credit card] to $17,840.

The letter went on to inform me that my new limit was already in effect, suggested several ways I might want to utilize the card, and thanked me for being a loyal customer.

It took several minutes for the content of the letter to sink in.  When it did, I needed both hands to lift my jaw off the floor.  I had difficulty comprehending that a lender would see fit to trust me with an unsecured loan for so much money.  I had, after all, lost a home to foreclosure and filed for bankruptcy.  Didn’t that make a difference?  Were they nuts?

The truth is, time heals all wounds and bad marks on your credit report, if you pay your bills on time.  A recent check of my credit report and FICO scores revealed that I now have excellent credit.  My scores are high enough that I can get the best rates if I wish to incur more debt.

The thought scares me to death.

My journey through financial implosion taught me a number of memorable lessons, the strongest of which is that I never want to repeat the experience again.  I see debt as a threat, a sworn enemy to be avoided whenever possible, not as a friend or a tool to achieve financial comfort.

But the letter from my credit card company did one thing: it drove home the point that full recovery is possible after a financial disaster.  Sure, I was able to get credit after my bankruptcy, and I was able to finance a truck almost immediately.  Granted, the terms were lousy and the interest rates were high, but it was indeed possible.  Somehow I never thought that I’d ever find myself back in the world of having good credit.

Now that more than eleven years have past since my bankruptcy was discharged, I can look back on the experience and know that I did the right thing.  Although I would have liked to have dug my way out without filing bankruptcy, I don’t think I would have been successful.  I would have continued to slide deeper into debt because of the late fees, penalties and excessive interest charges, and I would have become more and more stressed and frustrated by the collection calls.  Filing bankruptcy put a stop to all of it, and it gave me the opportunity for a fresh start.

Although filing bankruptcy gave me the fresh start, it was my behavior from that point on that kept me out of trouble.  Over time, I’ve come to live by several principals that have served me well:

  1. Save for emergencies.
  2. Spend less than I earn.
  3. Avoid debt when possible.
  4. Pay my bills on time.

I realize that these principals won’t necessarily prevent a financial implosion caused by long-term job loss or health problems.  What they can do is prevent short-term problems from spiraling out of control, and help with the recovery process.

It took time, but I recovered.  You can too.

Next in series: Back to School in a Bad Economy

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