Michael D. Hart, P.C.

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How to prepare for life after bankruptcy

| Oct 21, 2020 | Bankruptcy |

There may come a point when you realize that you need to file for Chapter 7 or Chapter 13 bankruptcy to get your financial life back on track. While it’s a big decision, it could be the one that propels you to bigger and better things in the years to come.

It’s important that you prepare for life after bankruptcy as you’re moving through the process. Doing so will allow you to hit the ground running when the time comes.

Here are three steps to take:

  • Create a post-bankruptcy budget: You know what got you into trouble in the first place, so you should create a budget that allows you to avoid more of the same in the future. Your budget should outline both your expenses and income in great detail.
  • Don’t go down the same path: Did you have to file for bankruptcy because you were buried in credit card debt? Did you go down this path because you spent all your expendable income on luxury items? Knowing where you went wrong in the past allows you to avoid the same situation in the future. If you don’t make note of your mistakes, you’re doomed to repeat them.
  • Have a plan for rebuilding your credit: A Chapter 7 bankruptcy filing remains on your credit report for 10 years. A Chapter 13 bankruptcy filing remains on your credit report for seven years. Along with this, if you’re filing for bankruptcy, there’s a good chance your credit is already damaged. Devise a plan for rebuilding your credit score, such as through responsible use of a secured credit card. It will take time, but it’s well worth it in the end.

These are the types of steps you can take to prepare for life after bankruptcy. With the right strategy guiding you, it’s easier to stay the course.

Before you move through the bankruptcy process it’s easy to talk yourself out of it. Not only are you worried about the process itself, but you have concerns about the impact on your long-term future. Don’t let these thoughts get in your way. Push forward with the idea of creating a better life for yourself.