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Rebuilding your financial health and credit after bankruptcy

You’ve made the decision to file for bankruptcy, or maybe you’ve already begun the process. While the bankruptcy will impact your credit and your life for a while, it will also give you a fresh start.

It’s essential to make the most of that fresh start. Let’s look at some steps you can take moving forward that will help you avoid the kind of problems that led to the bankruptcy — regardless of whether it was caused by credit card or other loan debt, medical expenses or unemployment.

Create a strict budget and stick to it

A wise goal is to put at least 20% of your income into savings. It’s essential to have some money set aside for unexpected expenses. If you don’t have a high enough income to do that and pay necessary expenses every month, you may want to consider ways to increase your income. If you have a Chapter 13 bankruptcy, be sure to include the monthly payments worked out in your repayment plan.

Don’t miss payment deadlines

You need to rebuild your credit. That means paying all of your bills on time and in full. If you have problems remembering due dates, set reminders on your calendar. Whether you pay online or by mail, allow plenty of time for your payments to arrive and be processed.

Don’t create new debt

You can begin to rebuild your credit with things like a secured credit card, where you use your own money but are responsible for making payments.

Watch your credit reports

It will take some time, but you’ll start to see your credit score improve if you follow the steps noted above. You also want to ensure that your credit reports don’t contain errors. You can get a free report once a year from the three credit reporting agencies. You may be able to get additional free reports through your bank or another source.

This can all seem overwhelming. However, a lot of people have rebuilt their finances, and so can you. There are a lot of credit counseling and financial education services out there. Your bankruptcy attorney can help you find some good resources to help you.

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