Debts and credits are part and parcel of life. At some point in life, we all need to borrow money for one reason or the other. However, situations get tough, things go sideways, and we find ourselves struggling to pay our creditors. The situation may get tough to the point that it becomes difficult to keep up with your regular bills such as rent, utilities, and basic supplies in your home or business.
When financial hardships strike, bankruptcy is often the best way out. This is especially in situations where you’re almost hopeless and doubtful of your capability to meet your financial obligations. It helps you get a significant amount of amnesty and relief from debt so you can rebuild your financial health. But filing for bankruptcy also comes with its fair share of demerits. For instance, it affects your credit report, lowers your credit score, and may even tarnish your reputation as an individual or business entity. But worry not, because filing bankruptcy doesn’t necessarily mean that your financial reputation is all ruined.
On this note, here are some tips on how to get back on your feet after filing for bankruptcy.
1. Work with A Bankruptcy Trustee
How well you cope with an insolvency will largely depend on the professional help and legal advice you receive when filing for bankruptcy. This is especially because depending on the chapter you chose when filing for bankruptcy, it can stay in on your credit report for as long as 8 years. This makes it important to carefully consider the different options available before making a choice. Here, a good insolvency trustee can help you weigh your options and pick the most realistic option for you. Apart from helping you through the filing process, they’ll also advise you on ways you can reestablish yourself financially and eventually gain the trust of creditors.
Once you have filed for bankruptcy, that is not the end of life. Wake up, dust yourself, focus, and start the journey of rebuilding your financial stability again. After identifying your loose ends, you will need to tread carefully not to fall back into the same trap of debts. Start by creating a budget that will aid you in tracking down your expenses for the next few months. You may also want to create a downsized budget, avoiding further loans and credit card debt. Try as much as possible to live on cash so you can avoid spending what you’ve not earned. You can trim your budget by cutting down on all the wants, sticking to the basic needs, and avoiding impulse spending. Having and sticking to a budget will also help you to avoid bad spending habits, which are the main cause of financial ruin for most people.
3. Start Saving
As you start adopting wise spending habits, you will also need to develop a saving habit. It may not be easy at first, but whatever little you might be having, work with that, and try to increase your income streams. You can open a small business or get a second job if you already have one, then start putting little by little into a savings account. Success is a gift of learning from your failures.
4. Avoid Negative Talk
Man is to error. There is always room for mistakes in everything. Once you have been declared bankrupt, don’t let your mind be carried away by negative thoughts or bad talk from people. Negative talk can easily make you feel like a failure and possibly sink you into chronic depression. Brush away such thoughts, and it will help rebuild your life back with positive energy.
5. Get a Secured Credit Card
After filing for bankruptcy, one of your main concerns should be to reestablish trust with creditors. On this note, a secured credit card can be a great way to get creditors to trust you again with their money. To get a secured credit card, you simply have to deposit a certain sum of money in an account and apply for a credit card with this amount as your security. The good thing about secured credit is that your information will be sent to credit bureaus, which means that each payment you make towards offsetting your card balance will benefit your credit score.
Getting back in shape after a bankruptcy filing can be a rather challenging affair. You may have to change your money management tactics and employ stricter measures to avoid sinking deeper into financial turmoil. It also calls for seeking expert advice to help get your creditworthiness back. The above are just a few tips to help you get back on your feet post-bankruptcy filing.