Friday, October 18, 2013

5 Steps To Recovering From A Bankruptcy

Image courtesy of  Stuart Miles / freedigitalphotos.net
Once your bankruptcy is completed, you have a unique opportunity that not many people get—the opportunity for a fresh financial start.  The best way to use this opportunity to your advantage is to make the right financial choices from this point forward.

1. Create a budget and stick with it.
Making a livable budget is the first (and most important step) to getting back on track financially after a Chapter 7 or Chapter 13 bankruptcy.  Showing your potential lenders that you have learned your lesson and are able to make smart financial choices is best done through living within your means and knowing where your money is going at all times.

2. Learn to live on cash (or your debit card) again.
After a bankruptcy, cash is your friend.  Not only does cash allow you to stick to your budget better (since it’s a tangible reminder of how much you have to spend each month), it also helps you get out of the credit habit.  This doesn’t mean that you should avoid credit entirely, though—in fact, you’ll need to re-establish some credit in order to get your credit score back on track after the hit it takes from bankruptcy. 

3. Pay your bills on time, every month.
Keep in mind that even the small bills will show up on your credit report and affect your score. 

4. Keep a close eye on your credit report.
The only way to ensure that your credit is getting back on track is to watch it closely.  A good way to do this is to sign up for a credit monitoring service. 

5. Get a credit card and use it wisely. 

The only way to re-establish your credit is to obtain credit and use it wisely.  While it might be difficult to obtain credit initially after your bankruptcy has been discharged, many cards offer low credit lines to people with poor credit with the opportunity to raise those credit lines after demonstrating over a period of a few months that it will be used wisely.  

No comments:

Post a Comment