A bankruptcy is no one's idea of a good time, but it can sometimes be a necessary way to resolve a financial crisis that can't be fixed any other way. Don't waste time beating yourself up for having to file for bankruptcy. After a bankruptcy, the most important thing you can do is get your finances under control so that you can avoid making the same mistakes in the future. Take a look at some post-bankruptcy tips that will help you get your finances back in gear.
Keep an Eye on Your Credit Report
You should have looked at your credit report during your bankruptcy to make sure that all relevant debts were included in your bankruptcy filing, but don't make that the last time that you look at your credit report.
It's important to pull your free credit report after the bankruptcy is complete to make sure that all of the debts that were discharged during the bankruptcy are accurately reflected on your credit report. If discharged debts aren't removed, you will need to follow the dispute procedures with the credit reporting agencies to have the debts removed.
Make sure that you retain copies of your bankruptcy-related paperwork for your personal records. Occasionally, creditors mistakenly attempt to collect on a debt that's been discharged in a bankruptcy. You'll need to be able to prove that the debt was discharged. If you're having difficulty disputing an inaccuracy on your credit report, or if a creditor continues to contact you after you provide proof that the debt was discharged, contact your bankruptcy lawyer for help.
Track Your Spending to Create a Financial Plan
Bankruptcies often happen because spending gets out of control. Sticking to a sensible budget can help you keep your spending within reasonable limits. In order to create a budget that works for your household, you'll need to start by tracking your spending for a couple of months. This will give you a clear picture of how much you're spending on bills and other necessities and will reveal patterns of spending that you may be able to change to save yourself money.
Get a ledger and write down everything you spend, when you spend it. You may be used to reviewing your expenses on a credit card or bank statements, but writing each expenditure down yourself might help them seem more concrete and real to you in the moment. If you're looking at your ledger daily, rather than monthly like you would with a bank statement, you may find yourself course correcting in real time when it seems like you're spending too much money.
Keep in mind that if you filed a Chapter 13 bankruptcy, you'll need to follow the debt repayment plan that you created with your bankruptcy lawyer. There are rules that dictate which debts must be paid in full, which debts take priority, and what happens if you can't meet your payment obligations on time. Work with your lawyer to make sure that the financial plan you create takes these rules into account and fulfills your repayment obligations.
Pay In Cash For Awhile
You probably won't be able to get a new credit card for at least a little while following a bankruptcy. Take the opportunity to get in the habit of paying for things in cash whenever possible.
Paying in cash naturally prevents you from racking up any new debt—if you don't have the cash, you can't spend the money. It will also help you avoid overdraft fees that will go on your credit report and make your path to a better credit score even more difficult. Put your checkbook and debit card in a desk drawer and don't take them out unless you absolutely can't pay for something that you need in cash.
Focus on Creating a Savings Cushion
Many people rely on credit cards or lines of credit to carry them through if they run into an emergency. However, that option won't be available to you in the immediate aftermath of a bankruptcy. That means that it's vital for you to have a financial cushion in the form of cash savings.
As you track your expenses and create a budget, look for opportunities to cut back and put the money you save away for a rainy day. Be aggressive about it. Clip coupons, buy generic brands, look for unnecessary luxuries that you can cut out. Make building a cash cushion one of your top priorities.
Remember that even once your debt has been discharged, your bankruptcy isn't over until the court enters a final decree that closes your case. Keep in touch with your bankruptcy lawyer in the meantime to be sure that you're complying with all bankruptcy court requirements. Your lawyer can help you avoid mistakes that could delay the closing of your case and your return to financial stability.
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