If you are thinking about filing for bankruptcy soon to get out of debt, you may have concerns about what your finances will look like after the fact. You may worry that bankruptcy will damage your credit for life and you will never truly recover.
However, this is not true. While bankruptcy will certainly impact your financial life, it can actually be a blessing in disguise and give you a fresh start. Here is a guide to recovering financially from bankruptcy to give you peace of mind that things can get better.
1. Self-evaluate
After declaring bankruptcy, you will probably feel a sense of hopelessness. Instead of dwelling on these negative emotions, ask yourself what led you to this point. Was it something beyond your control, such as a divorce or medical emergency? Was it irresponsible spending habits with your credit card that caused insurmountable debt? Whatever the reason was, take a hard look at it, vow to never make the same mistakes and prepare for unforeseen circumstances.
2. Make a sensible budget
Budgeting will help you control your spending. You can use a spreadsheet or budgeting software to track your expenses and set goals. This will help you cut down on unnecessary expenses and make your monthly payments on time. Making on-time payments is crucial to rebuilding your credit.
3. Look into new lines of credit
You may feel like it is counterproductive to get more credit, but one of your main goals after bankruptcy should be re-establishing your credit, according to Bankrate. Try to get a secured credit card and pay the bill on time each month. After a few months or a year of doing this, you should be able to get a traditional credit card.
Now that you know about these three tips, you should not be as afraid about the consequences of declaring bankruptcy. You can recover!