Now What? -- Dealing with the Aftermath of a Bankruptcy

For many people, bankruptcy is a wise and strategic option to repair financial health and avoid certain unwanted consequences. Nonetheless, bankruptcy does have serious consequences of its own, no matter how you approach it. Once you have filed your petition, or even if you are still considering whether to file, it is important to understand how to deal with the impact a bankruptcy will have on your life. Understanding the impact of bankruptcy and taking the appropriate steps to mitigate the negative aspects will lead to a quicker recovery and healthier financial status over time.

How will the bankruptcy affect my credit?

Unfortunately, bankruptcy will always have a negative effect on your credit, even if your record wasn’t terrible before you filed bankruptcy. For one, your credit report will start to reveal your bankruptcy as an entry. This entry will remain on your report for seven to ten years after your bankruptcy. In addition, your credit score will suffer a substantial amount of damage. Fortunately, you will eventually be able to repair your credit score and clean up your credit report – but it will take time.

Can I get credit and other financial products?

In the years immediately after a bankruptcy, you will find it very difficult to get credit, loans, mortgages, and other financial products. Since your credit score has dropped and your credit report reveals that you received a bankruptcy discharge, financial companies will generally consider you too great a risk to undertake. There are certain types of credit you will be able to obtain, and it will be much easier if you have a stable and significant source of income. For example, you may be able to get a secured credit card or small loan. A secured credit card is backed by a deposit you give to the bank, giving you the opportunity to regain the faith of creditors without being a great risk to the bank.

Steps to take to improve financial health

If you ever want to recover properly from your bankruptcy, you will need to consistently take steps to improve your financial health. It is completely possible to restore your credit in time, as long as you make smart decisions and be responsible. Recovering from bankruptcy is an everyday uphill journey, but if you’re willing to commit yourself, you can make your bankruptcy worth the long and overwhelming process. The following are some of the important steps you should take along your way to financial recovery after bankruptcy:

• -Live within your means. Making the move to live a debt-free lifestyle within your means is an important step to financial recovery. As soon as you begin accumulating debts, you run the risk of going overboard and falling back into financial ruins. Learn to budget for your expenses and spend within your means on a monthly basis.
• -Get a credit card and rebuild your credit. If you want to rebuild your credit, you are going to have to take it one day at a time. As soon as you can, get a credit card that you can use to rebuild your credit. Use the credit card to make purchases regularly and pay it off in full at the end of the month. Your regular use and payment of a credit card will improve your credit score and increase your credibility with potential creditors.
• -Pay your bills. Your bills also factor significantly into your credit records. Make sure you pay your bills on time each month. If you don’t, you run the risk of being reported for collection and damaging all the hard work you have put forth thus far.
• -Save, save, save. It’s a great idea to open up a savings account as soon as you can. Saving your extra money will prepare you for the future, in the event you run into an unforeseen financial obstacle. Without savings, you can potentially get caught by surprise and find yourself unable to pay your bills and expenses.
• -Stay gainfully employed. To complete all the other steps, having a job is critical. Without a constant source of income, you will find it overwhelmingly difficult to pay your bills, manage a credit card, and save for the future. As a result, make sure you value your employment and keep it as long as possible.