Going through bankruptcy is hard. After years of struggling with debt, you might wonder how you are ever going to get back on your feet again.
Don’t despair — recovering from bankruptcy isn’t as difficult as it seems. In fact, you’re probably already in much better financial shape than you would have been had you not filed for bankruptcy.
Your bankruptcy lawyer will work with you to make sure you get the best possible outcome from your bankruptcy case, but after your case is done, you can start rebuilding your finances by focusing on the following tips:
Take time to make a plan: Decide what your short- and long-term goals are. Do you want to rebuild your savings? Buy a home? Relocate? Further your education? Whatever you want, write it down and make a plan to achieve that goal.
A good place to start is by reflecting on the things that led you to bankruptcy in the first place, and then figuring out ways to avoid those pitfalls. If job loss was the cause, then maybe switching to a different career would be helpful.
Next, prepare a realistic budget and stick to it. Set aside a little each month to build up an emergency savings account to give yourself a financial cushion when you need it.
Review your credit report: Make sure your credit report accurately reflects the results of your bankruptcy. If things don’t look right — for example, if it shows that debts weren’t discharged or if it lists credit accounts you don’t own (which could indicate identity theft) — notify the credit bureau. They are required to respond to you in writing within 30 days.
Pay your bills on time: Paying all your bills on time will help rebuild your credit and will minimize the financial difficulties that can come with compounding late fees and interest charges. It’s especially important to pay your rent on time, since one of the three major credit bureaus — Experian — includes rent payments on its credit reports.
Consider credit: Using a secured credit card is the easiest way of rebuilding your credit after a bankruptcy. They work just like a regular credit card, except you give the credit card company a cash deposit that serves as your credit limit. Use your secured card to cover purchases that you otherwise would have paid for in cash, and then pay off your bill every month. This helps prove your financial trustworthiness, and, eventually, the company may raise your limit or transition you to a regular credit card.
By following these tips, you can get your finances back on track. Recovering from bankruptcy won’t happen overnight, but by sticking to your budget and being careful with your credit, you will see a benefit sooner than you might think.
If you’re struggling with your finances, know that you have options. Talk to an Illinois bankruptcy attorney who can help you figure out a plan.