Throughout our lives, we deal with many financial challenges. In the situation where filing bankruptcy is the only option, the future may look bleak, but keeping a positive outlook and following some simple recovery steps can help to get you back on track.
Be aware that you are not alone. In 2013, close to 1.1 million people filed for bankruptcy, although this figure was slightly lower than 1.2 million for the previous year (Ezinearticles.com/Lisa Michelle Jones).
However, the fact that bankruptcy is common does not reduce the feelings of shame, hopelessness, and despair.
Follow these simple tips for a quick recovery:
- Stay positive. The formal record of bankruptcy remains on your credit report from 7-10 years, but its impact reduces over time. Most people’s credit will improve after filing bankruptcy and there are creditors who are willing to take a chance if you show good financial responsibility after the fact. Depending on your track record and situation, you may be eligible for some loans after 1-2 years, even though it may be at a high interest rate.
- Set goals. Having something to aim for provides motivation and aids focus. Break 5-year goals down to annual goals, monthly goals, and so on. Reward yourself with small incentives for reaching goals, but remember to make the goals realistic.
- Seek advice. There are credit counseling bureaus and bankruptcy attorneys who can provide support and advice. Friends and family can be supportive and help with the emotional aspects of the situation.
- Check your credit score and history. You can draw one credit report from each of the 3 credit bureaus per year without any cost at annualcreditreport.com. A report can be printed off/mailed from Experian, Transunion, or Equifax at this site. This does not include an actual credit score, but this is available at CreditKarma.com free of charge. Check your credit report a few months after finalizing bankruptcy for recording accuracy for all discharged debt. Continue to check your credit history on a regular basis to identify incorrect/discharged records.
- Develop good financial habits. Address the cause of the need for filing bankruptcy in the first place. Implement a sustainable budget and pay all bills on time—setting up bill pay alerts can help. Create an Emergency Savings Fund with funds for 3-6 months’ bills.
- Use credit cards responsibly. Get 2 new credit cards and make small charges on them, then pay the balance in full every month. A secured credit card may be an easier alternative, but make sure the activity is reported to the credit bureaus.
- Seek credit rebuilding programs. Many financial institutions (including pmfcu.org) offer credit rebuilding programs free of charge.
Finally, hold your head up high—be a fighter! The value of financial literacy has only recently been acknowledged—meaning the majority of adults have never been taught financial skills—so there is no reason why you should be an automatic financial expert.
Finally, hold your head up high—be a fighter!