How to Recover from Bankruptcy

 

Life happens. Today you might be running the business smoothly and later find yourself struggling with debts. When you cannot repay your debts, filing for bankruptcy becomes the only option. Although it’s a difficult decision, you have to face it. Undoubtedly, your credit will get affected for years but not forever. There is life after bankruptcy, and you can rebound.

  • Go Back to The Drawing Board

Filing for bankruptcy gives you a chance to reevaluate your goals and mission. You get an opportunity to draw another financial plan. Ask yourself what made you bankrupt. Did you happen to have overestimated your potential? Did you spend time with spendthrifts? It’s crucial to identify these issues and habits that could have made you nosedive in crazy debts. 

Pinpoint things that you think might have led you to bankruptcy. So, how do you get back on track?

  • Have a Budget – Ensure you draft your weekly or monthly budget. Establish your sources of income and have a list of expenditures. Then make a comparison and know where you can adjust. You can narrow down the expenses to create more cash. Then, figure out how much you can save per month. This will help you stay within your means.  
  • Clear Bills on Time – Ensure you pay bills on time. Your budget will act as a guide to enable you clear bills effortlessly and on time. This will build your credit score dramatically. More so, you can opt for an automatic payment method.
  • Have a Clear Plan – Differentiate between your needs and wants. Food and shelter are necessary expenses, whereas clubbing or movies are unnecessary. You don’t need a new television or designer clothes.
  • Emergency Kitty – Ensure you have an emergency kitty to protect you from running up a credit card or applying for payday loans which have high interests.  

  • Find a Way of Rebuilding Your Credit

After filing for bankruptcy, you will get your credit report. Check if the report is accurate and fair. If there are discrepancies, you can dispute. After having a clear picture, then monitor the credit scores every month. After that, you will be able to have a plan of rebuilding the credit.

To build your credit, start with a credit builder loan. the loan amount is usually put in a savings account where you can only access it after paying it in full. Usually, it takes 6 – 24 months. 

Ensure you make timely payments to show you commitments. Timely payments will boost your credit score. 

  • Avoid Past Mistakes

Your bankruptcy makes you learn. It makes you wiser and helps you avoid past mistakes. Re-examine the habits that made you nosedive in debts. Check what made you fail in repaying your loan on time. 

Go ahead and consult a reliable and certified credit expert. Ensure you set realistic goals and work hard towards achieving them. 

Final Word

There is life after bankruptcy. Perhaps it gives you the best experience in money management, setting realistic goals, and cutting unnecessary expenditures. Follow these tips, and you will rebuild your credit score once again.