9 Essential Tips for Recovering from Bankruptcy
The insecurity you feel when you file for bankruptcy can be paralyzing. Yet, once you have successfully completed the case, it’s important that you move on to the next chapter in your life.
Completing a bankruptcy case is already a big accomplishment, now it’s time to build a more stable financial future. Lay the foundation for it through these key steps.
- Call on Your Support Network
- Take Advantage of Your Credit Counseling
- Make a Financial Plan
- Start a Savings Fund
- Stick to a Budget
- Stay Up to Date with Payments
- Keep an Eye on Your Credit
- Build Good Credit
- Learn from Your Mistakes
1. Call on Your Support Network
Family and friends can provide a great deal of comfort and support in times of need. In addition to a trustworthy attorney, it can also be helpful to talk with someone close to you who has also been through bankruptcy. Seek out and invest in relationships that are positive and empowering for you. A strong support network can help you keep things in perspective and face your challenges.
2. Take Advantage of Your Credit Counseling
To successfully complete the bankruptcy process, you must take credit counseling courses. They are designed to give you realistic, helpful advice and information on how to plan and manage your finances. Take advantage of these mandatory sessions. Credit counsellors can help you make a budget, set a strategy for rebuilding your credit and avoid common financial mistakes. Be sure to ask all the money questions that you have and discuss the topics that are keeping you up at night.
3. Make a Financial Plan
Once you have gotten a fresh start through bankruptcy, it’s time to create a plan for a brighter financial future. Start with your long-term goals; think about what you want 10 to 20 years down the road. You may want to buy a house, start a college fund for your children, or save for retirement. Working backwards from these goals, you can make a budget and plan that will help you reach them.
4. Start a Savings Fund
Not saving for the future or emergencies is one of the main problems which contributes to filing for bankruptcy. Going forward, be sure to save money for both unexpected expenses and your long-term financial goals. Rainy day funds can help in moments when money is tight or emergencies happen. Plus, your debt payments should be lower after bankruptcy meaning that more income can be set aside for the future. Having money saved can help you avoid using credit to cover medical bills or car repairs.
5. Stick to a Budget
Based on your financial plan, set a budget that will help you reach your goals and set aside money in savings. Make a budget for your monthly living expenses and payments. You will need to limit spending in order to stick to the budget. There are some handy mobile apps available which can help you budget and plan for expenses.
6. Stay Up to Date with Payments
Payment history is the biggest factor, accounting for 35% of your credit score. By making payments on time, you will work to improve your relationship with creditors and show them that you are responsible with money. Keep up with mortgage, loan and credit card payments if you have them, but don’t fall behind on utilities or medical bills either. If these go into collections, they can all negatively effect your credit. Setting up automatic payments through online banking can be a fool-proof way to stay up to date.
7. Keep an Eye on Your Credit
One of the most important steps to rebuilding your life after bankruptcy is improving your credit score. Make a habit of checking your credit report each month. You will want to verify that your hard work – like paying bills and making mortgage payments on time – is being reported to the credit bureaus.
8. Build Good Credit
You can work to further build credit by showing that you are a responsible borrower. Secured credit cards can help accomplish this usually without an annual fee. Secured credit cards require you to make a small deposit as collateral and this sets your credit limit. If you make low, regular charges and pay the balance in full when you receive the statement, you can demonstrate that you are no longer a credit risk. With time, you will be able to upgrade to unsecured credit.
Any credit that you have after bankruptcy should only be used to rebuild credit. Be sure to keep your balances low and pay it off each month. The goal is to avoid accumulating debt and paying credit card interest.
9. Learn from Your Mistakes
You have survived bankruptcy, now it’s time to move on. Avoid the mistakes that contributed to the unstable financial situation by anticipating challenges. Plan for emergency medical expenses, make a backup strategy in case you lose your job, or set strict limits for spending and using credit. Your support network can be vitally helpful in following through with these plans to avoid bankruptcy in the future.
Within just a few years, your responsible actions will pay off. As you rebuild your credit score and work towards your financial goals, you will quickly find yourself on more stable ground.
Your Partner for a Better Future
Reach out to an experienced bankruptcy lawyer for assistance. The attorneys at Amourgis & Associates can guide you through every step of the process. Contact us today to see if bankruptcy could help you construct a brighter financial future at 800-444-1967.