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Recovering from Bankruptcy: Getting Back on Track

Getting Back on Track After Bankruptcy

Bankruptcy is not the end. In fact, think of it as a new beginning. It’s the beginning of creating a new credit report. In this three-part series, we’ll go over how to recover from bankruptcy, rebuild your credit to a good rating, and maintain that good rating.

Overcome Negative Emotions

Getting back on track after going through a bankruptcy can be hard not just financially but also emotionally. You’ve just had your life thoroughly examined by the courts. You’re probably feeling vulnerable. In order to begin recovering, you must first let go of any guilt or shame you may feel.

Millions of people in the US are faced with bankruptcy every year and hundreds of thousands go through with it. It is not the end of the world and you should not succumb to any negative emotions you may have after going through it. Whether your bankruptcy was the result of unfortunate or past mistakes, do not dwell on what is in the past. Learn from it and move on. Look to the future.

Give Yourself a Financial Self-Evaluation

This is where you ask yourself, “how did I get in this situation? What could I have done differently? What have I learned?” The answers to these questions will help you know what to do differently this time. Make sure you identify any type of poor behaviors such as spending or borrowing habits. It may be useful to make a list of these behaviors or other things that you think led you into bankruptcy. Commit yourself to not repeating these mistakes.

Create a Monthly Budget

While you may have been able to get away without following a monthly budget before your bankruptcy, it is imperative that you track your finances now and a monthly budget can help you do just that. Keeping track of your bills and your disposable income can all be accomplished through a monthly budget.

Creating a budget is simple. Just make a list of your monthly expenses and compare it to your monthly income. There are online tools and apps that can really make this simple as well as provide useful spending data. Remember to factor in unforeseeable expenses to avoid going over budget in case you encounter car troubles or medical expenses. If you can, put money into a savings account. This will be for future emergencies or unforeseeable expenses.

Learn to Live Within Your Means

This is important and will factor into your budget. You need to distinguish between your needs and wants. Dining out is not the same necessity as food is. It is important to make this distinction. Look at what you currently view as essential needs and evaluate whether or not they actually are essential needs or unnecessary expenses.

Ensure Your Bills are Paid on Time

After bankruptcy, it is important that you do all you can to restore others’ trust in your finances and your ability to pay them. Paying your bills on time is a perfect way of restoring that trust. Ensure you pay your bills in full and on time each month. This should be a priority. This won’t immediately improve your credit score, but missing a bill payment can reduce your score by a large amount. Use your budget to plan your finances to ensure you have the proper amount of funds to pay your bills and use other tools such as automatic payments so you never miss a bill deadline.

Monitor Your Credit Score

If your budget allows, you may want to sign up for a credit monitoring service in order to monitor your credit report to ensure proper reporting of your finances to the credit bureaus. You may have erroneous information on your report, and without a monitoring report, you may never know. Monitoring your credit can also help you understand what steps to take toward improving your score.

Remember that most credit monitoring services are not free, so make sure you can afford them before you sign up.

Come back soon for our next blog in the series that will go over rebuilding your credit.

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McVay Law LLC provides the information in this web site for informational purposes only. The information does not constitute legal advice. The use of this site does not create an attorney-client relationship. Further communication with us through the web site and e-mail may not be considered as confidential or privileged. Please contact Mr. McVay if you wish to discuss in more detail the contents of this web site. The attorneys associated with McVay Law LLC are not Certified as a Civil or Criminal Trial Specialist by The Tennessee Commission on Continuing Legal Education & Specialization. The McVay Law LLC is a federally designated debt relief agency. Our attorneys assist people filing for Bankruptcy relief under the United States Bankruptcy Code. This is an advertisement.