Five Steps to Help You Get Your Life Back After a Bankruptcy 

Filing for bankruptcy allows thousands of Americans to start fresh financially and turn over a new leaf. If you have filed for bankruptcy, you may feel like you have hit rock bottom financially. Even though bankruptcy does wipe out your past, the bankruptcy can stay on your credit report for seven to 10 years. Having a bankruptcy on your credit report can hurt your long-term ability to qualify for the credit, including a mortgage. After filing for bankruptcy, there are steps you can take to establish good credit and begin rebuilding your financial profile. It is possible to recover from bankruptcy and enjoy a bright financial future. Here are some steps to help you get your life back after filing for bankruptcy. 

• Do Not Forget to Pay Yourself

Paying yourself may seem like an ironic place to start, especially after filing for bankruptcy. However, it is important stuff you can take to begin building your savings. When unexpected events happen, as they always do, having savings can help you protect yourself. Try to set aside 5% of your net income every month. Some banks even give you the option to set up an automatic withdrawal into your savings account.

• Take Time to Reflect on Past Mistakes

Going through bankruptcy and cells can be stressful. For many people, finishing the bankruptcy is their main goal. Once the bankruptcy is over, you can take some time to consider the mistakes that led up to filing for bankruptcy. Some cases involve unavoidable medical debt, but many bankruptcy cases involve discretionary spending. Most of us are prone to repeating the same mistakes unless we intentionally make better habits. Were you lured in by high-interest loans or credit cards? It is essential that you avoid credit cards now. Were you lax on cash flow management or budgeting? Take the time to create a realistic budget within your means. Stick to your budget.

• Rely on Cash

Many people have had success using a cash-based budget system. If you were lured into relying on credit cards before you filed for bankruptcy, using cash can help you visualize how much money you have left in each category. Try only to purchase necessities. If you have a small amount of fun money, take the cash out when you get paid and do not spend a penny over. This spending habit will eventually become normal for you.

• Set a Realistic Budget

Budgeting is one of the best ways to save money and prepare for the future. Many people budget, but few stick to their budget and utilize this financial tool to the full extent. Your budget needs to be realistic, or you may become defeated every month due to not following it. You can use many different budgeting apps to accurately budget every month. Make sure to include all sources of income in your budget and use realistic numbers for your expenses. Refer to your budget daily or weekly to make sure you are sticking to it. When you make spending decisions, your budget should be at the forefront of your mind.

• Keep Track of Your Credit Report

You are entitled to a free yearly credit report through freecreditreport.com. After you finalize your bankruptcy, it is essential that your credit report reflects the bankruptcy accurately. You do not want to be held liable for debt discharged through your bankruptcy. If you find errors on your credit report and cannot resolve them yourself, it is wise to reach out to a bankruptcy attorney. Keep track of any questionable charges on your credit report. Doing so can help you improve your credit history.

• Stay Away From Credit Repair Scams

People who filed for bankruptcy often find themselves bombarded with credit repair offers. Look out for the classic signs of a scam, such as not telling you your legal rights, telling you not to contact the credit reporting agencies, or asking you for payment upfront. It can be tempting to try to repair your credit quickly to obtain a car loan and mortgage and move on with your financial life more quickly. However, if you get involved with a predatory company or a scammer, you will cause yourself and your credit score even more damage. If you have any doubt regarding a credit repair offer, you can consult with the Federal Trade Commission or California’s State Attorney General’s office. It is better to err on the side of caution. 

• Avoid Large Purchases

Generally, making a large purchase after trying to get back on your feet is not advisable. Some lenders may give you a loan after you file for bankruptcy. However, you will probably receive expensive rates and fees. Financing a new car can add to your overall monthly expenses, especially when you take out a loan with a high-interest rate. If possible, you should try to continue driving our current car. Save the money you would have otherwise spent on a car payment for a new vehicle. Eventually, you will be able to purchase a new car.

• Do Not Forget to Enjoy Your Fresh Start

Filing for bankruptcy is a significant life change. It can take some time to adjust to the new normal you are experiencing after your bankruptcy has been finalized. Do not expect yourself to budget and spend money perfectly. It takes time to build habits, but it is worth investing in healthy financial habits. Using credit will help you build up your credit score faster, but it needs to be responsible. If you are unsure that you can handle the debt, do not take on any new credit. Otherwise, you may end up back where you started. Use bankruptcy as a chance to make a fresh start, wipe the slate clean, and make a more prosperous and stronger future for yourself. Try to look at bankruptcy positively as an opportunity to learn and grow from your past experiences by making wise financial decisions every day.