Going through bankruptcy doesn’t just hurt you financially or damage your credit rating; it can also have a pretty big effect on your emotional stability. While you might feel embarrassed after becoming bankrupt you should not feel it is the end of the world. Most people have gone on to become extremely successful and happy after declaring bankruptcy.
So, how do you pick up the pieces after filing bankruptcy?
Take Advantage of Your Credit Counselling Sessions
As part of the bankruptcy process, you are required to take two mandatory credit counselling sessions with a credit counsellor. These sessions provide you with useful information and tools about how to prepare a budget, how to manage your money and use credit wisely so you can avoid making the same mistakes in the future.
Prepare a Financial Plan
Now that you have a fresh start, it’s time to chart your future. Begin by building a set of goals. If you want to purchase a house after bankruptcy it is possible, but you will need a plan to get there. That means building a budget to help you live within your means and save for a down payment.
Build An Emergency Fund
One of the best goals you can work towards after claiming bankruptcy is to begin to build a small emergency fund. It’s likely that what caused your bankruptcy in the first place was the need to rely on credit because you did not have enough savings to get your through a cash flow crisis. Now that your debts have been eliminated and your monthly payments are lower than they were before you filed for bankruptcy, begin to put some money aside in a rainy day fund. This way, if a car repair or similar unexpected event happens you will not need to use credit to recover.
Repair Your Credit
While declaring bankruptcy will affect your credit report, you can work to rebuild your credit soon after filing. This will take time but it is possible to borrow again after bankruptcy. You will need to begin with small loans, like a secured credit card, gradually increasing your debt as you prove you are credit worthy. Just remember not to let your debts get out of control a second time around.
We know it is possible to rebuild your life after filing for bankruptcy. In fact, with your debts eliminated you will be in a stronger financial position that before filing.