Can I Open a Business After a Bankruptcy Discharge? - YES
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Can I Open a Business After a Bankruptcy Discharge?

After filing bankruptcy, a person is free to start any business they choose. Laws do not limit filers' business opportunities after they file for bankruptcy.

Some people, though, may not be able to obtain a small business loan immediately after bankruptcy. As a result, many individuals focus on rebuilding credit before starting a new business venture.

Rebuilding Credit After a Bankruptcy Discharge

Improving one's credit score is crucial for seeking funding sources for a new business. To rebuild their credit after a bankruptcy discharge, many people:

  • Get a credit card. You may not be able to get a low interest rate on a credit card right after bankruptcy, but it can be an important step to show creditors that you can be financially responsible.
  • Make it secured. You may have more luck obtaining a secured credit card, which require credit users to put down a deposit to cover their initial credit charges.
  • Open a certificate of deposit. Taking out a small loan and putting that money into a CD allows a borrower to show they can repay a loan on time. At the same time, the CD will eventually earn some interest.

Once bankruptcy filers rebuild their credit, banks will often be more amenable to offering loans. With these loans, new business opportunities may present themselves.

Some Tips on Opening a Business After Bankruptcy

While rebuilding one's credit is one of the key steps after filing bankruptcy, there are other ways individuals can improve their odds of opening a business after bankruptcy. These include:

  • Create a business plan. Researching the demand for your product, setting a strict budget, and finding the right location are all key elements in a savvy business plan.
  • Seek government aid. The Small Business Administration or your local Chamber of Commerce may be able to extend a loan or offer helpful advice for opening a business.
  • Change your habits. If you filed for bankruptcy, you may analyze the financial habits that led you to bankruptcy, and try to adjust accordingly.

Bankruptcy is designed to help eliminate debts, which may allow hard-working individuals to seek new business opportunities.

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