Filing for bankruptcy is not the end of your life. On the contrary, it is the beginning. It gives you a new chance to put your life in order. If you’re in this stage and wonder how you can recover, here are some steps that can come in handy.
Start planning
It’s never too early to start planning after filing for bankruptcy. If you do not have any experience with this, contact an NY Certified Financial Planner to help you get started. You should create a long-term plan to get back on your feet. Don’t think it’s going to be a quick process. So, sit back and let everything happen naturally.
Budget
Having to file for bankruptcy means your spending habits are poor. A new start means changing how you view money and living on a budget. The plan you created earlier can be expanded to cover your monthly expenses. For a start, you may need to forgo expenses on wants and focus on needs. When you have demonstrated financial maturity, then you can consider buying a few wants.
Naturally, you should spend only 50% of your salary on needs such as transportation and food. 30% of the sum should go toward other expenses that aren’t as important as food and transportation. The last 20% should be saved.
Saving
We’ve talked about how you need to budget and save 20% of your earnings every month. This may not be easy for some people. If you lack financial discipline, you can always automate the saving process to force yourself to save. Some people opt to have 20% of their salary sent directly to a high-yield savings account. That way, they can make some money from the savings in the long run.
Credit report
Filing for bankruptcy is bad for your credit report. It could affect your chances of getting a loan for about ten years. You should monitor your credit report immediately after filing for bankruptcy. While this may seem like a hassle, it is necessary to inform them about your discharged debts. Be sure to check at least every sixty days to ensure that it stays positive for your own good.
Stay employed
After filing for bankruptcy, you’ll need a stable job to keep the ball rolling. This would be the wrong time to job-hop. So try as much as possible to keep the job. Staying in one job for a long period is also great for your credit score. Creditors will view you as a more trustworthy person who’s ready to pick up the pieces of their life. You can get a higher credit score to give you access to loans.
Pay all bills promptly
Bankruptcy doesn’t absolve you from paying what you owe. You only get more time to pay them. If you’re able to pay the bills on time, you’ll not only finish payments faster than planned, but you’ll get a higher credit score. Pay other bills, such as your rent or utilities even if they do not affect your credit ratings. They prevent you from taking out high-interest loans and falling back into debt.
