Personal bankruptcy is a real way to secure debt relief. If you successfully file a Chapter 7 or Chapter 13 bankruptcy petition, then you can secure more manageable debt payments and even rid yourself of overwhelming debt. That probably sounds good to you, but if you’re like most people, then you’re also worried about the long-term impact that bankruptcy can have on your life. But is the process really going to put you in a bad position moving forward?
No. As we’ve discussed previously on the blog, there are exemptions that you can utilize to ensure that you have access to resources once your bankruptcy is finalized. In other words, you’re not going to be forced to start over from scratch. But there are other steps that you can take to rebuild after bankruptcy. Let’s take a closer look.
How can you rebuild after a personal bankruptcy?
After bankruptcy, you might not know where to start when it comes to rebuilding your wealth, your access to credit, and your financial security. But here are some tips that can help you get started:
- Put money aside: A lot of people who find themselves facing bankruptcy wind up in that position because they’re hit with emergency expenses at a time when they have inadequate savings. You can try to head that situation off by tucking money aside for an emergency fund. By making saving part of your financial habits, you’ll slowly accumulate a significant amount of financial resources over time.
- Create and stick to a budget: A post-bankruptcy budget can serve as a kind of roadmap to help you navigate life while remaining financially stable. It’ll also help you identify areas where you can cut costs and increase your income. Just be realistic and honest when you create your budget, otherwise creating it will be a waste of time.
- Rebuild your credit: It’s true that your bankruptcy is going to remain on your credit report for a significant time to come. But that doesn’t entirely prevent you from rebuilding and gaining access to the credit that you want. You can start by taking out a secured credit card that’s backed by collateral, or by having someone you trust co-signing on the loans that you need. Just make sure that you don’t take on balances that are too large.
- Make all payments on time: If you have monthly payments on a loan, make your payments in full and on time. By doing so, you’ll slowly build your credit so that lenders can see that you’re a responsible and trustworthy borrower.
- Remain stable: Job hopping and constantly moving won’t look great on your credit report. Therefore, you’ll want to try to stick with your job and avoid frequent moves. This will demonstrate to creditors that you’re capable of maintaining a steady stream of income.
Don’t be scared out of seeking the bankruptcy relief you’ll need
Although there’s some work to be done to rebuild your credit and your financial health after a successful bankruptcy, the benefits of the process far outweigh any obstacles that you might have to overcome. After all, bankruptcy can shed you of debt that you’ve spent years, in some cases decades, to try to get rid of.
It’s understandable if you’re feeling nervous about the process. But by reading up on what the bankruptcy process entails and looks like, as well as what it can and can’t do for you, you’ll calm your fears and give yourself confidence to make the decision that’s right for you.