How to Handle Bankruptcy

Rebuild your finances post bankruptcy – Every cloud has a silver lining

The present economic crisis has caused thousands of Americans to lose their homes and declare bankruptcy. Though there is no shame in filing bankruptcy and a debtor gets a fresh new start by filing the same, yet it is a tiring and a cumbersome process that leaves most debtors in a state of shock and a distressed financial state. If you’ve already filed bankruptcy instead of getting help from the professional companies that can help you become debt free, you need to rejuvenate your financial house and bring it back in order so as to start off a new healthy life. Instead of dwelling on the after-effects of bankruptcy, you can take positive steps to rebuild your finances by changing the habits that led to bankruptcy. Here are some steps that you may take in order to recover from bankruptcy.

•    Establish a frugal budget: One who has already filed bankruptcy has most likely been avoiding a budget. Now that you’ve done it and spoil your credit score, you should think of the budget as the road-map that can guide you throughout your financial journey. Constraints on your spending can be brought through a budget and you should stick to it throughout the month. Know where your pennies are going so that your income is always more than your expenses.
•    Repay all your outstanding debts: The most common belief among debtors is that bankruptcy will discharge all your debts making you debt free in the future. But this is a wrong notion and just because you’ve filed bankruptcy will never mean that all your debts have been discharged. Though the bankruptcy court will discharge most of your unsecured debts, they will hold you responsible for most of your secured debts and student loans. Therefore, you should take the necessary steps to repay your student loans and secured loans as soon as possible.
•    Start building an emergency cushion: There may arise any financial emergency anytime and in order to handle such emergencies smartly, you need cash reserves. Unexpected events like medical emergencies or job loss may arise anytime in this sluggish economic state. You should always save enough money in order create an emergency cushion. The larger is your financial cushion, the safer you can feel.
•    Rejuvenate your credit rating: Bankruptcy stays as a blotch on your credit report for the next 7-10 years and if you want to mollify this effect, you have to be serious about rejuvenating your credit rating. You may feel is necessary to take on debt but don’t go beyond your means. Always calculate your affordability and then take the plunge. Repay your debts on time.

Bankruptcy is almost like a cloud that has a silver lining. Apparently it may seem to trash your credit score but with the right approach, you can make bankruptcy motivate you and stay positive. Get help from a financial advisor if you find it impossible to restore your financial house post bankruptcy.

Tags:

Posted in Article


Leave a Reply

Your email address will not be published. Required fields are marked *