Filing for bankruptcy can clear your unsecured debt, providing the opportunity for a new financial start. While it’s hard to get into the mindset of turning things around, proper planning and monetary discipline can simplify your path to financial recovery. Below, we have outlined five tips to help you rebuild your credit and achieve true freedom from debt.
Five tips for post-bankruptcy financial recovery include:
- Set a budget: One of the first steps in any financial plan is to reevaluate your budget. If you’ve never made a detailed budget, this is the best time to learn. Compare your income against your monthly expenses. Is there any room to slim down your expenses? Do you have items that can be cut entirely? Start with the necessities you know about and see if there is room for anything extra. Don’t forget savings (see next section) Create limits and do your best to stay within them.
- Remember to save: Consider opening a dedicated savings account with your bank or credit union and deposit a set amount each month. While 10% of your monthly budget can be a great place to start, if your budget is already stretched thin, set aside what you can. In the event that an emergency occurs, having a nest egg of any size can help you to avoid borrowing from high-interest sources. Consider using www.digit.co. I’ll expand on that more in a subsequent post.
- Use automatic payments: As more organizations grow their online presence, it is easier than ever to use electronic resources. Most banks, credit unions, and bill paying services now provide an option for automatic monthly payments. After you set your account preferences, you will not have to worry about accidentally missing or forgetting about a payment. Additionally, some companies even offer discounts for using the service.
- Consider all of your options for building credit: Credit cards are far from the only option for improving your credit score. Recurring payments such as phone bills and personal loans can all help as long as you continue to make your payments on time and in full. As you continue to demonstrate your financial responsibility, your credit will grow. Remember to never take on more financial responsibility than can fit in your budget.
- Be selective with credit cards: When overuse of credit got you into trouble in the first place, you might be understandably hesitant to open a new account. However, when used selectively, rarely and responsibly, credit cards can be among the fastest ways to rebuild your credit. After you have created a budget and are confident that you can stick to it, consider applying for a new card. In fact, some cards are targeted specifically to people in your situation. You may begin to receive applications in the mail shortly after you file.
Find Relief from Overwhelming Debt
Effective debt management must continue after bankruptcy so you don’t give away all the great gains you made by filing your Chapter 7 or Chapter 13 case. If you are not careful, the path to financial freedom can be wrought with setbacks and pitfalls. At LeverLaw, we want our clients to succeed which is why we are dedicated to providing all who walk through our doors with the information they need to stay on track during and after bankruptcy. If you are seeking relief from debt, contact our Long Beach bankruptcy attorney and discover your legal options.