5 Steps to Recovering from a Bankruptcy
Filing for bankruptcy isn’t the end of the road for your finances. It simply marks a new beginning. A fresh start. Yes, it does take some time to recover from bankruptcy, but as long as you practice caution and follow these five steps, you’ll find yourself well on your way to financial freedom and success.
1. Identify The Cause(s)
While taking advantage of a bankruptcy lawyer can help you navigate your way through filing for bankruptcy, you need to identify the ultimate behaviors or decisions that caused it. Did you over extend yourself on loans? Perhaps you used your credit card far too often or purchased goods you simply don’t need. In order to avoid falling down the same financial path, you need to identify what caused your bankruptcy, regardless of whether you filed for Chapter 7 or Chapter 13.
2. Prioritize Your Goals
One thing you’ll quickly learn from a bankruptcy attorney is that all your debt will not simply disappear when filing. Some debt you can’t rid yourself of at all, while other kinds of debt may shrink instead of disappearing. Because of this, you need to manage your finances wisely. Avoid old habits. Concentrate on proper budgeting and management of your income.
3. Double-Check Credit Score
After filing bankruptcy your credit score will take a hit. There’s not much you can do about that. However, you can double-check your credit score to make sure it reflects the changes you are entitled to upon filing for bankruptcy.
4. Apply For Credit
Obtaining a new credit card after filing for bankruptcy is tricky. Many companies hesitate to issue such a card, and those offers that do exist often have unfavorable terms. If you’re not careful, these credit accounts can worsen your situation. Only use these cards for small purchases for which you’ve already set aside funds, and pay it off in full every month. The goal is to build your credit score back up.
5. Understand It Takes Time
It can take years to fully repair your credit score. Don’t expect instant results. However, by following your set goals and staying on top of your new credit cards, you’ll eventually restore your credit.