Crucial steps to take upon emerging from bankruptcy
On Behalf of developers | April 20, 2021 | Bankruptcy
Your long and, sometimes, difficult path to financial recovery is coming to an end, but, actually, it represents a new beginning. Emerging from bankruptcy is an accomplishment by itself. Now, what do you do? Bankruptcy allowed you to get rid of your debts and provide you with a chance at a fresh financial start. Now, you must make good on that.
Since you do not want to fall into the clutches of credit card debt, excessive spending and out-of-control medical bills again, you understand that it is time to focus on some good habits. Better habits. You want to put this experience behind you, but also learn from it. You are ready to get going.
Monitor your spending, save money
Thousands of people experience bankruptcy each year. The American Bankruptcy Institute reported that in 2018, close to 462,000 Americans filed for Chapter 7 bankruptcy and more than 288,000 filed for Chapter 13.
But how many within this group decided to pursue a new path and push the restart button on their spending ways and financial habits? It is hard to say, but here are some steps to consider after filing bankruptcy:
- Create a budget. Start by tracking your expenses for a few months to provide you with a better idea of where you spend your money. Make adjustments and understand that you may have to eliminate a few things, including regular restaurant trips along with purchasing impulse items.
- Limit the number of purchases made by credit cards. When you can, pay for things in cash. With credit cards, you may be tempted too often to purchase things you really do not need.
- Pay your bills on time. Get into the habit of doing this, and then this step comes easy and naturally.
- Begin rebuilding your credit through a secured credit card. With such credit cards, the refundable security deposit you make determines the spending limit. If your deposit is $400, that is your spending limit. After using this card for a couple of years, consider applying for an unsecured credit card.
- Begin saving money. Your savings goal should include an emergency fund representing six months of expenses.
- Regularly check the status of your credit report. It will display the progress you have made but look out for any mistakes. A credit rating affects many things such as loan rates as well as employment opportunities.
You understand that it will not be easy. And you also understand that you do not want to relive your past experiences with the spending choices you made. This is doable. Just focus, make some sacrifices, and rewards will come your way.