Filing bankruptcy can have a devastating impact on your finances, but it can also be the first step to a fresh financial start. Bankruptcy can also affect you emotionally, generating feelings of failure or shame and creating unnecessary stress. Although it takes time to recover from a bankruptcy filing, you can bounce back more quickly if you're willing to be proactive and take charge of your financial future.
Track your spending. The first step in taking control of your finances is to know where your money's going. You can track your spending using a pen and paper or computer software, whatever is more comfortable. Keep track of how and where you spend your money for at least a month. Seeing where your cash is going in black and white can help you pinpoint potential trouble areas and look for ways to save.
Create a budget. Start by making a list of your monthly bills. Using your spending tracker, create a list of recurring expenses and how much you plan to spend in these areas each month. Add your bills to your expenses and then compare it with your expected income. If you have more money than bills, you're already on the right track. If your expenses exceed what you're taking in, look for ways to cut your spending.
Check your credit reports. You can obtain a free copy of your credit report from each of the three credit reporting bureaus. Check each of the credit reports carefully for errors or accounts that are being reported incorrectly following the bankruptcy. If you find information that you believe is inaccurate, initiate a dispute with the agency reporting the error immediately.
Apply for a secured credit card. A secured credit card requires you to deposit cash collateral with the card issuer, which then serves as your credit line. In the months immediately following a bankruptcy, a secured credit card may be the only type of credit you can get approved for. When you use the card, only charge those purchases you can pay off in full each month and always pay your bill on time. As you build a solid payment history, you should see this reflected by an increase in your credit score. Over time, your creditor may agree to convert your account to an unsecured card.
Don't dwell on the downside of filing bankruptcy. Whether your bankruptcy filing was due to an unexpected job loss or plain old overspending, the best way to bounce back mentally and emotionally following a bankruptcy is to focus on what you can do to avoid repeating past financial mistakes.
- Continue to monitor your credit regularly for errors, and dispute inaccurate or incorrect information whenever possible.
- Avoid companies that offer credit repair services that seem too good to be true. Many of these companies exist to defraud consumers and may end up making your credit worse.
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