SAVE FOR LATER
Getting your life back after bankruptcy can be challenging, and it isn’t always clear what you should do first. You know you have to repair your financial situation and credit reports, but how?
That’s what we look at in this post. Bankruptcy can be an ordeal, but it is also a chance for a new beginning. It takes time to process everything that happens during this event, but it is also an opportunity for you to keep moving forward with your life and, hopefully, get to the place where you want to be.
Create A Budget That Makes Sense
You’ll want to start by creating a budget that makes sense for you and your lifestyle. Ideally, it should prevent you from falling into the same situation you had before where you couldn’t keep on top of all your bills or credit cards.
The budget should represent where you are now, but you shouldn’t feel deprived. You’ll want to allocate a small portion of spending to the things you want, and the rest of it to enjoying your life. Constantly review your spending to ensure that it is on the right track.
Rebuild Your Credit
The next thing you’ll want to do is rebuild your credit. This step is arguably the most important because it is what will eventually undo the effects of bankruptcy on your credit rating.
Bankruptcy credit report errors are quite common, so you’ll want to get a lawyer or an agency to check these for you. Correcting them can lead to jumps in your credit score and enable you to get back on track with your finances faster.
If you can take out a secured credit card, that can help, too. These come with collateral, but they also allow you to prove to lenders that they can trust you again, even if you went through a bankruptcy procedure recently. Paying them off on time for a couple of years can make a massive difference.
Checking your annual credit report is useful to ensure you are making progress. Getting your report will tell you where you are now and what you need to do to improve going forward. Understanding where you stand right now is critical if you want to make progress and target the areas that are going to make the most difference.
Pay Your Bills On Time
Part of this involves paying your bills on time. Doing what you can to establish better credit and avoiding penalties is critical.
You can do this by setting up automatic payments and calendar reminders. These mean you won’t miss your payments.
You should also ensure that you always have funds that utility providers and other entities can draw on. If you don’t, payments will bounce and they could interpret them negatively.
The more you pay your bills on time, the more creditors and lenders are likely to trust you. If you can demonstrate financial responsibility, it may open you up to new opportunities that you can use in the future.
Seek Professional Guidance
Another thing you’ll want to do after bankruptcy is seek professional guidance. Experts can point you in the right direction and provide free advice.
Getting this sort of instruction after bankruptcy is useful because it is a way to minimize the effects. One of the most challenging aspects of the process is the fact that you can find it hard to rent or buy a place after going bankrupt. In these situations, you may have to speak to them about alternative arrangements and see what you can come up with. Usually, there will be options, such as continuing to pay an existing mortgage.
Avoid New Debt
Of course, as you emerge from bankruptcy, you want to avoid the temptation to fall into new debt. You don’t want to wind up in the same situation again.
The best way to do this is to focus on living within your means. You want to pay for purchases using the cash you have available, instead of dipping into credit to get closer to the life that you want. Doing things this way around will feel slow at first, but it is worth it if you can make a habit of it.
Educate Yourself In Matters Of Personal Finances
Educating yourself about personal finances is also something you’ll want to do. Understanding the basics gives you so much more control.
Most people leave school and don’t know much about finances or what they should do next. That’s where personal finance education is so critical. Once you understand budgeting and investing, you’re well on your way to a more successful future. Even if you have been declared bankrupt, that doesn’t mean you’re barred from making financial progress. Bankruptcy discharges your debts so you don’t owe them any more (usually), allowing you to rebuild your wealth from scratch.
Stay Positive
While it might be hard, there is substantial utility in staying positive and patient. Recovering from bankruptcy is something that takes a lot of time, but it is also worth it.
For example, you could do very little for a couple of years, like avoiding going on vacation or going out with friends, to build your money. The little day-to-day decisions are ultimately what will determine your success long-term.
If you can treat these hardships with positive energy, they are much more likely to feel good. While saving money is challenging psychologically, it is also rewarding once you reach your goals.
Find New Ways To Make Money
Finally, you might want to look for new ways to make money. Additional income streams mean you can bounce back to financial health faster and get on with your life. For example, suppose you are finding it hard to get a place to rent because of bankruptcy issues. You can solve this problem by earning enough money to pay for the lease term upfront, giving you somewhere nice to live and eliminating the requirement to make rental payments every month, which can feel like a chore for a lot of people.