When you file for bankruptcy, a lot of people will tell you that re-establishing credit will take years. They'll also warn you that you'll be unable to buy anything on credit for a long time, and that your credit history will be permanently damaged.

These are all lies.

While filing for bankruptcy definitely hurts your credit, you can overcome most of the harmful effects in as little as one year. If you know how to work the credit system, you can have good credit again soon.

1. Put you house in order.

It's important to have a budget and a savings plan before you start re-establishing. You have to have savings to get re-established quickly, and you'll need discipline to follow a budget and save. When you come up with a plan make sure you follow it. Also, creditors will probably send you bills for debt that was included in your bankruptcy. Make sure you take the time to inform these creditors their debt was included and provide them proof. If these creditors accidentally file a collection against you it can really slow you down.

2. Start hoarding cash and saving paperwork.

This is the hardest part -- you need to save up a few thousand dollars. Mostly, this money will be your emergency fund that you can use to make payments if you have a problem. But some of this money will be used to get a secured credit card and for a vehicle down payment. You also need to keep all of your important financial documents like pay stubs, bank statements, bills, etc., because a creditor may ask for copies in the future.

3. Get a secured credit card.

A secured credit card is an excellent tool for re-establishing bad credit. First of all, as long as you have enough cash for a deposit, you can get a card. Secondly, they're considered credit and they'll help you build some positive credit history. But whatever you do, don't carry a balance on your new secured credit card and don't use it more than once. In fact, you want to use the card one time and then cut it up. That way, you'll still be getting credit and your credit report will show that you're a disciplined credit user.

4. Buy a car.

I know that the idea of buying a cheap used car (2-4 years old, less than $10k) may not get your motor running, but remember the goal here is to re-establish quickly. You want to make a few payments on this car (6 to 12) and then trade it in for something nicer. Just make sure you have a down payment before you go shopping.

5. Get more credit.

Now that you’ve bought a car and you have a secured credit card, it’s time to get some unsecured credit cards and to start working with a local credit union. Apply for the Discover card, any Visa or MasterCard (as long as there isn't an annual fee), or any credit card offered by your credit union. Most importantly, if your application for a credit card is denied, call and ask WHY. Because most applications are denied by computer, you can often call and get a denial overturned.

6. You can now get the car you want.

The end is here. You've done everything right, a year has passed since your bankruptcy discharged, and your credit is now re-established. You can get the car you want.

With all of these steps, it’s important to remember a couple of things. First, save money every month. Saving money is a life skill that everyone should have. Second, remember what caused your bankruptcy and don’t let it happen again. Use a budget, avoid impulse purchases, and make sure that you can pay all of your bills even if a major catastrophe occurs.

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About the author: Jason Lancaster has nearly 10 years of experience in the auto industry. He's helped hundreds get a car loan after bankruptcy and knows how the credit system works for bankruptcy car loans. Get a unique version of this article from our bankruptcy car loans article directory