6 Ways to get your finances back on track after bankruptcy

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By: Good Nelly
on 13th Apr,2011

Bankruptcy filing has a severe negative affect on the overall finances for the person filing it.
6 Ways to get your finances back on track after bankruptcy

Bankruptcy filing has a severe negative affect on the overall finances for the person filing it. It not only affects the credit score of that person and reduces it but also makes him/her ineligible for any kind of new credit for a certain period of time. 

If you've gone through a bankruptcy filing, take a look at the ways given below that will help you in getting your finances back on track:

1. Plan a budget: If you want to get your finances back on track after your bankruptcy discharge, it's important to plan a budget. In order to plan a realistic budget, you should track your expenses for 2-3 months to get an idea of your income and expenditure. Once you set up your budget, take steps to stick to it. Do not overspend or else your budget will go haywire.

2. Pay your bills timely:  Paying the bills on time is a great way to improve your overall credit. This has a positive affect on your credit report and it will also increase your credit score. You can use the envelope method when you decide to plan your budget. In this method, you need to write the name and average cost per month of a bill on an envelope and put the required amount in that envelope. When the bill is due, you can take out the money from that envelope to pay that bill. Also, when you're using a credit card, you can deduct the purchase amount from your checking account balance. Thus, when the bill comes in, you already have the money to pay off the bill.

3. Go for a secured credit card: If you want to establish good credit after bankruptcy, then you should go for a credit card.  After bankruptcy unsecured credit cards won't be available for you immediately. So, it's better to go for secured ones. In case of a secured credit card, the bank will hold your money and give you a charge card which has a limit for the same amount. When you close the account, you get your deposit back. If you go for such cards, you should shop for those which are available at the best rates and least fees. Read all the fine print before you sign. However, you should not apply for too many cards. Each time your creditor checks your credit for offering you a credit card, your credit score will be lowered.

4. Postpone buying a car or house for the time being: You might find that some lenders can offer you a loan to buy a car or a house after bankruptcy. Don't try buying a house or a car immediately after a bankruptcy filing.  It'll be better if you have a few years of credit-building practice behind you and then apply for home or auto-loan. This will also help you in improving your credit score and you'll be able to get better rates and terms when you apply for a loan.

5. Beware of credit repair scams: A large number of scam credit repair companies may contact you and promise to fix your credit after bankruptcy. Though repairing and re-establishing credit is hard but it's something that you can do yourself for free.  Normally, the scam credit repair companies will charge you money upfront or put forth such an offer which is too good to be true. In order to be on the safer side, check with the credit bureau or state regulatory agency if you want to take help of a credit repair agency.

6. Educate your family members: Once you get a discharge from your bankruptcy filing, you should start educating your family members about managing money. If you let your spouse and children know what you've learned from your bankruptcy experience, it will help them manage their finances better and you and your family won't have to file bankruptcy in the future.

Hope the above mentioned ways will help you to bounce back on track after bankruptcy filing! 

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