Recovering After Bankruptcy
If you’ve gone through filing for bankruptcy, you know how traumatic and demoralizing it can be. If you’re considering bankruptcy, prepare to be demoralized. Prepare for a lot of headaches. Prepare for that post-bankruptcy depression to set in. But whether you’ve gone bankrupt or you see filing bankruptcy as the only way out of your financial troubles, it doesn’t have to be the end of the world. In fact, going through a bankruptcy can be seen as a new beginning.
Recovering after bankruptcy involves correcting the mistakes that led you to bankruptcy. For some, they were hit with unforeseen medical or other expenses, but for others, bankruptcy was a product of taking on too much debt due to poor financial planning. If you’re in the latter case, you will need to restructure your finances from top to bottom. After you’ve gone through bankruptcy, you’ll need to make sure you have a balanced budget so you can pay your expenses and have some money to put away in savings. Identify what your necessary expenses are. These would be things like your rent/mortgage, food, travel, utilities, insurance, and loan payments. Try to minimize these payments as much as possible. While bankruptcy involves liquidating many of your assets to pay your creditors, some debts cannot be washed away, such as student loans. You’ll need to pay off the remainder of these debts and consider them in your financial plan.
Once you’ve balanced your home budget and can save money, start saving. Emergencies happen, and if you’re living paycheck to paycheck, even requiring to spend $500 for an emergency can seriously set you back on your bills. Try to save as much as you can, not just for emergencies but for retirement down the road; most Americans do not save enough for retirement.
Borrow to rebuild credit. Speak to a bankruptcy attorney Los Angeles to discuss your best options. However, you can easily rebuild credit – it just takes time. Start by borrowing money, either by taking small loans or using a credit card, and paying them back in full and on time. Missed payments will crush what little credit you have, but borrowing and paying off your loans and credit cards will gradually rebuild your credit.