Legal Guide

How to Get Your Life Back on Track after Bankruptcy

For many people, filing for bankruptcy is the same as admitting defeat, while in reality, it’s more like turning a new page and starting a new chapter in your life. Still, many of those filing for bankruptcy are unsure of their future and how this step will affect them. One particular myth is notoriously persistent, and that is that bankruptcy stays with you for the rest of the life.

However, that is only partially true. How soon you recover from bankruptcy depends only on your habits and behavior after filing. With an experienced bankruptcy attorney, you can devise a bankruptcy plan that can only benefit you. In this article, we’ll give you some general advice on what you should and shouldn’t do after filing for bankruptcy.

Plan a Budget (And Follow It)

One crucial step in getting back to normal after a bankruptcy is to start budgeting smarter. You need to have a good understanding of how budgeting works and perhaps more importantly, have to follow the budget you plan. Once you learn how to analyze your earnings and spending, you’ll be closer to getting your life back on track.

Pay with Cash

Now that you’re struggling with debts, perhaps the wisest move you can make is using cold, hard cash. Of course, you can still pay for things like a mortgage or car leasing directly through your bank but switch to cash for grocery shopping, gas, and other similar expenses. You won’t believe how your spending habits will improve once you’re forced to work with paper instead of plastic.

Pay Your Bills on Time

Companies that charge for your utilities won’t report you unless you’re too late with your payments. Don’t risk harming your credit score even more by being late on these mandatory payments.

Secured Credit Cards

One of the best ways to improve your credit score after filing for bankruptcy is getting a secured credit card and putting some deposit down on it. These cards can help you strengthen and rebuild your credit score as banks sometimes reward heftier deposits and good spending habits.

Don’t Finance a Car

It’s easy to get hooked on a seemingly great deal lenders offer. But if an application sounds too good to be true, it probably is. Just because you can get the financing despite your credit score affected by bankruptcy, that doesn’t make it a good idea as the interest rates are usually sky-high. In fact, most people filing for a second bankruptcy are usually in that situation because of high car loan interest rates. Instead, consider saving up cash and buying the car. It might take longer, but at least your credit score will come out unharmed.

Watch Out for Scams

Some companies, especially online, will offer to repair your credit. While it might be tempting to try the easy way out, the fact is that only you can determine how fast and how effectively you can repair your credit. Paying someone to do it for you will do nothing other than waste your money in most cases.

Modify Your Borrowing Habits

If you find yourself in a position where you have to borrow money, there’s a rule that can help you improve your borrowing habits: Never borrow more than you earn each month. So if your monthly earnings are $3000, never borrow more than that from one or more sources.

Keep Learning

Bankruptcy is a scary process, but it can also be a valuable learning experience. Don’t forget to use what you’ve learned from your bankruptcy to prevent ever getting into that position again. If you follow expert advice, your credit score is bound to improve sooner rather than later.


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