Bankruptcy can feel like hitting rock bottom, but it’s important to remember that it doesn’t have to be the end of the road. Whether you’ve recently gone through bankruptcy or are considering it as an option, it’s essential to understand the steps involved in the recovery process. Here are some tips to recovering from bankruptcy and rebuilding success.
Step 1: Save all your papers from your bankruptcy case. In the future you may be asked for copies of the bankruptcy files and in general keeping your records allows you to ensure you’ve repaid or have been discharged of your debts. In addition, if you begin to seek help from lenders or financial institutions, they will want proof of your bankruptcy filing and discharge.
Step 2: Make A Solid Plan. After filing for bankruptcy, it’s important to assess your current financial situation. Create a list of all your debts, assets, and income sources. This will help you understand where you stand financially and create a realistically plan to move forward.
Step 3: Rebuild Your Credit. The harsh reality is that your credit is going to take a hit when you file bankruptcy. Make sure to monitor your credit and pay bills on time as well as keeping your balances low. If you still find yourself unable to build your credit or don’t know where to start, consider credit counseling.
Step 4: Create a budget. Allow yourself to pay off your debts while in recovery and look for ways to cut back on unnecessary spending. It will also help if you identify your financial priorities and track your spending. Budgeting apps can also be used to maintain your spending or to keep track of upcoming expenses.
Step 5: Build an emergency fund. One of the best ways to protect yourself from future financial setbacks is to have an emergency fund. This means setting aside money when you can for unexpected expenses. Your emergency fund should have enough money to cover 3 to 6 months’ worth of your necessary living expenses. Make building an emergency fund a priority, so if something happens you have a cushion to fall back on.
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