Life after Bankruptcy

Things to do to make Bankruptcy work for you

After Bankruptcy has been successfully discharged, almost all of your pre-filling financial liabilities become a thing of past. It gives you a fresh start, so that you can think of your future progress but such relief and fresh start would become ineffective, if you don’t put it to work to your advantage and mend your habits that got you into such financial problems.

Now that you are out of financial pitfalls, start working for the health of your budget and credit report. It has been commonly seen that people in post-Bankruptcy period often turn back to their former ways, this is committing the same mistake twice. Don’t fall back instead make sure that life after Bankruptcy is free from all avoidable traps.

So, just to make sure that you only go up from here, you’ll need to keep some things in mind. These things can be broadly classified under 2 heads and those are:

  1. Smart spending
  2. Rebuilding credit

Employ both methods (as much as your resources allow) simultaneously and you’ll be up and running in no time.

SMART SPENDING
Bankruptcy relieves you of your past monetary problems but to emerge from Bankruptcy, you’ll be required to put some work in it.

Get a job – If you don’t already have a job, get it as soon as possible. A stable job goes a long way in helping creditors to believe that you are reliable.

Make a budget – Good financial planning will undoubtedly help if you are trying to get ahead in your life. For this you will have a make a budget and strictly adhere to it.

This invariably means that you are required not to show extravagancy as and when you see and a nice thing, see if you need it right now and does it fit in your budget.

Start saving money – Save money so that you won’t have to take credit if any contingency arises.

Pay your bills – Pay you bills in time to keep your credit record clean.
Late payments will harm your credit score. No matter how small a payment is, that you are required to pay and you procrastinate and it reaches any of the credit agencies knowledge, it’ll be harmful for your credit score.

The gist is ‘your expenses must never exceed your income’.

REBUILDING CREDIT
Becoming financially active will take some time. There is no quick-fix method to do it. The first step towards this would be by knowing that you can start rebuilding your credit without concerning yourself with any of the past debts the day you are discharged from Bankruptcy.
Fixing bad credit is necessary to qualify for low interest car loans, house loans etc.

Credit cards are considered to be the most easiest way towards improving credit score. If you are the kind of person who lived on credit cards or was in habit of using one source of credit to pay another, you have serious changes to make.

But no matter how eager you are to ‘start over’ financially, you’ll have to bear in mind the following things.

Common mistakes
Pre-approved offers start pouring sooner than you think and issuer of credit card will make it very enticing too but don’t accept just any card. Such cards usually have high interest rates, exorbitant penalties for late payments.

  • Choosing a card carrying a high balance in comparison to available credit will hurt the rating which would be in contravention to our goal and same would be the result with credit cards carrying substantially high interest rates.
  • Some credit cards offers that come for people trying to re-establish their financial life carry huge fees in the name of various charges which means that you have already taken a credit equivalent to the amount of fees without even using it once. Also, if you now calculate the credit that is available for you to use by subtracting these fees from the credit limit, you will see how much credit is left over and how easy it is to slip over that limit.

So, don’t go for the ones that carry very high or variable interest rates and are imposing huge fees for late payments. To get the best deal shop around and once you’ve selected one or two cards that fit your criteria make sure that you only apply for the one that is best for you. It is important because every time you apply for credit and the lender request your Credit report, your Credit score drops.

Getting a credit card helps in getting positive ratings when you know how to handle credit and how to make it work for you and not against you.

Report mistakes to agencies – Check your credit report once a year to see that you have no unpaid debt left and also for any mistakes that might be there like showing a debt to be unpaid while in reality it has been paid off. If there are any such mistakes immediately bring it to the notice of the agency from which you have taken the credit report.

Credit rating is also improved by taking car loan, house loans etc are paying them in time.

If you take care of these things your credit score will augment significantly within one or two years.

For more information, talk to a Bankruptcy Attorney today.

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