Life After Bankruptcy

Bankruptcy is a great tool to provide a financial fresh start. After a bankruptcy your financial future can be bright or it can be dimmed by unwise financial decisions. It helps to consider bankruptcy as an opportunity to permanently secure your financial future rather than a quick way to resolve debt. To benefit in the long run from a bankruptcy you must make smart financial decisions and change your personal spending habits. Bankruptcy is a fix to your current problem but it does not shield your future decisions forever.

Do not get new high fee, high interest credit cards. Credit cards are the easiest way to incur massive debt with their high interest rates and enticing ways to spend. Credit cards are often extended to those who have filed bankruptcy causing the cycle of debt to continue. As a general rule, if you are unable to pay off the balance of your credit card every month, you should not have one.

Control your spending and live within a budget. Learn how much you spend, where you spend it, and why you spend it. For one month write down every single thing you spend money on, where, and why. You will be surprised at how much money you are spending on unnecessary things or overspending on necessary things. From this you can change your spending habits by creating a budget to maximize your money. This may mean clipping coupons, eating out less, not making impulse buys, or shutting off your cable. However you decide to tighten your budget, it saves you money and changes your spending habits, making you more aware and financially smarter.

Try to build a savings account. Saving money is hard for everyone, but having a cushion can be invaluable when life tends to happen. If you have trouble saving try signing up for a forced savings plan such as an employer 401K or 529 college savings plan. These types of plans put someone else in charge of taking the money from your check and investing it for you. You never have a chance to decide to spend the money. If none of those are available you will have to learn to save on your own. This can be done by setting aside a little bit of money from every pay check or even saving up loose change. There are no rules as to how much you should save in a given month, every little bit helps.

Rebuild your credit. While we do not recommend acquiring more debt, there are situations where a loan or credit is needed such as, obtaining a mortgage, auto loan, or student loan. Because you have filed bankruptcy anyone considering extending you credit will scrutinize you closely. Think of this as financial probation. This does not mean you will never be given credit, it only means that you have rebuild a better credit rating in order to get better interest rates and be viewed as low risk.

You need credit to get credit and correcting inaccuracies can be difficult and time consuming. In order to facilitate this, get current and pay off any remaining debts that were not discharged. Be sure to check your credit report and fix anything that is inaccurate. However, be cautious when using companies that offer credit repair and educate yourself on the proper procedures.

Bankruptcy can be a beneficial tool for changing our financial futures, however many people do not learn from their mistakes the first time. Bankruptcy will not help you in the long run if you do not change your habits and take proactive steps to become smarter about your spending, saving, and credit.