Filing for bankruptcy can give you a chance for a fresh start. It erases all your debts and provides you with an opportunity to correct any mistakes you made with your finances.
However, given that a bankruptcy claim stays in your record for a long period of time, recovering from it can be challenging. In order to turn things around, you will need to learn how to manage your finances correctly, which some people find very hard to do. If you are one of them, the tips in this article can help you deal with the aftermath of your bankruptcy claim more easily.
Keep a Tight Budget
This is something many people struggle with, especially if they haven’t done it before. However, sticking to a budget is a crucial step in recovering from any financial hardship. You can create one yourself or use an app to do it, but you will definitely benefit from limiting your spending. Plus, this will allow you to see how much money you are actually spending on necessities alone. Calculate your monthly bills, add the necessaries in them, leaving a little room for emergencies. If you find that you don’t have enough money for everything, you will need to cut back on the unnecessary expenses.
Use Cash Only
Using cash only for payments will benefit you in multiple ways. For one, if you only keep a small amount of cash with you, it will make you reconsider every purchase you make. This alone can change your spending habits so drastically that you can avoid getting into the same situation ever again. Plus, anything you purchase without a credit card will stay off your credit report. Since this is something you will really need to work on, it’s an idea worth considering. After all, you can recover your credit score much faster and be able to rely on it in the future.
Sell Your Claim
Depending on the type of bankruptcy you have filed, you might be able to sell your claim to professional traders who capitalize on these claims. For example, buyers often buy bankruptcy claims for businesses that have the potential to become valuable again in the future. Selling your claim can be an acceptable way to obtain money if you require financial assistance shortly after filing for bankruptcy; however, it’s not an entirely risk-free action. If you are interested in selling your bankruptcy claim, you should research your potential buyers. Getting an evaluation of the value of your claim can also be helpful in this situation, as this can ensure you get the best deal possible.
Never Miss Payments
As your monthly payments make up a third of your credit history, it’s recommended that you always stay on top of them. Making on-time payments is particularly important to do after a bankruptcy. This can make your credit recover much faster and ensure you don’t end up even more indebted. You can set up a detailed schedule on your calendar or auto payment options with your bank to make sure you never miss paying your bills on time.
Get a Secured Credit Card
Because these credit cards have a limit set at the amount you have deposited for them, they are safe to use within your budget. This way, you won’t have to use cash for every purchase, but you won’t be tempted to overspend either, as you are only spending the money you do have. And the best thing about these credit cards is that they are available for people with low credit scores, which you will definitely have after going through bankruptcy.
Watch Out For Scammers
Unfortunately, they are many companies that might offer you suspiciously good solutions for credit repair. With just a little bit of payment upfront, they will promise you to turn your finances around in a record amount of time. They will provide absolutely no legal help and probably try to prevent you from contacting credit report agencies or legal advisors. Keep an eye out for these scammers and avoid them at all costs, as they could only make your situation worse.
If you manage to follow these simple tips, you may have a new beginning. Even if things don’t look too bright right after you have filed bankruptcy, eventually, you will be able to breathe again. And if you are vigilant with your money, you will not only recover but will even grow financially. Let this be a lesson learned, so you can avoid making the same mistakes you did in the past and look forward to a better life.