The decision to file for bankruptcy is often not an easy one. Rebuilding after bankruptcy can be even more difficult. Not only are you having to deal with several emotions but you're also having to start from scratch with your finances. Here are some tips to help you get started down the right path toward a new financial life.
CHECK CREDIT REPORT
It’s important that you are aware of what is going on with your finances at all times. This means obtaining a copy of your credit report. The three credit bureaus are responsible for supplying your credit report and they will provide you with a free copy every 12 months. Ideally, you should be requesting a copy, from one of the bureaus, every four months. This will allow you to receive three free copies during a 12 month period.
CREATE A BUDGET
It's important that you know where all of your money is going, especially after declaring bankruptcy. When you know exactly what all of your debt is and have a plan to pay those off, you are less likely to fall back into debt in the future. Make sure that you are paying all of your bills on time. If you need help remembering, it may help to create a calendar with all of your payment dates or set up automatic payments.
START AN EMERGENCY FUND
Nothing can derail your finances like an unanticipated expense. To help prevent too much reliance on credit cards, and potentially falling into the same debt patterns, create a savings account that is specifically for emergencies. This could be losing your job, a medical expense, a flat tire, etc. Make sure this money is kept away from your regular savings and checking accounts. It may even help to keep it at a separate financial institution so you’re not tempted to dip into it for a non-emergency.
EASE BACK INTO CREDIT
After filing for bankruptcy, you will slowly need to start building your credit again. However, it’s important to not go crazy and start applying for cards left and right. First, you risk falling right back into debt. Second, every time you apply for a card, a hard inquiry takes place on your credit which results in your credit score dropping a couple of points. It’s incredibly easy to let your score drop and equally as difficult to bring it back up again. Start with one card and ONLY use it if you have a plan for paying off the debt.