A few days ago I posted my strategy for rebuilding credit after bankruptcy.  One of the steps I included in the plan was getting a couple of credit cards – to be used sparingly – as a way of gradually rebuilding your post-bankruptcy credit history and score.  Thus, I suggested incurring a small amount of new debt to be serviced as part of the rebuilding process.  Are there any problems to look out for with this approach?

In the September 14, 2011 edition of the Wall Street Journal’s Market watch, Elaine Scoggins provided her thoughts on incurring new debt.  However, her discussion was not in a bankruptcy context – indeed, the word bankruptcy didn’t even appear in the article.

In her article she posed:  “5 questions to ask before taking on more debt – Commentary:  Hope is not a repayment plan.”  It’s a good article that is worth reading in its entirety, so I won’t reproduce it here (I couldn’t even if I wanted to due to copyright law restrictions).  Instead, I’ll just list her five questions and urge you to read the article.

By the way, although she wasn’t talking about bankruptcy I think Elaine’s thoughts dovetail nicely with my post on rebuilding credit after bankruptcy.  I suggested incurring new debt in small doses.  Elaine poses her questions as a caution:  be sure you can repay the new debt before incurring it.  And now her five questions:

  1. Do I have to depend on positive economic trends continuing?
  2. Do I need two incomes to pay this loan back?  (This is not a multiple personality diagnostic question.)
  3. How close am I to retirement?
  4. What is at the core of my need to borrow? and
  5. Can I keep saving for retirement while paying this loan back?

Now go read her article to see how she develops her thoughts using these questions.