Bankruptcy is a word that strikes fear into the hearts of many. It is a terrifying idea to be financially crippled by debt and lack of security, but it is a very real problem that people face. Even if bankruptcy seems like this scary possibility, there is still always a light at the end of the tunnel.
Recovering from bankruptcy is a long road and takes a lot of work, but it is necessary to take back control of your life and finances from a low point. Enough people have successfully come out the other end of personal bankruptcy and bounced back and here are their secrets for reclaiming their life from hardship.
Learning From Past Mistakes
One part of coming out of bankruptcy that many success stories start with is learning from your mistakes. Understanding what led you to this financial situation is an important part of figuring out how small or big problems led to this bankruptcy. This is especially important for young people as financial literacy is still lacking for youth. Credit card misuse, debt/loan repayment, and uninhibited spending can contribute to a long term problem with financial insecurity, which can then lead to bankruptcy. Looking back on the problems that lead to the situation is a good start to figuring out your bankruptcy situation.
Set Financial Goals
After learning from past mistakes, people who have bounced back from bankruptcy have focused on setting financial goals. The issues listed in the previous section have mentioned problems like spending habits or credit card use. These are small goals that add up in the long run and can result in some significant changes, but it starts with goal setting. Writing down your financial goals is important and helps you visualize the change that needs to come. Another thing that goes with the financial goal setting is organizing your records. Bookkeeping is an important part of being financially successful and coming out of personal bankruptcy, so it is good to get familiar with recordkeeping programs as well.
Filing for Bankruptcy
If you are eligible to do so, you need to file for bankruptcy as well. This process helps erase debts, but it does not mean that you are out of the woods just yet. The bankruptcy filing process, personal or otherwise, must be done to ensure that you are following the proper legal steps for various reasons like taxes. This process is done through trustees who will help walk you through the process. Making sure that you are doing everything by the books is a good way to get yourself into a better position and prevent debt collection, and allows you to educate yourself on the financial information needed. Filing for bankruptcy quickly and through a trusted source is something that success stories should start with when coming out of bankruptcy.
Paying Bills on Time
Learning how to pay on time is a skill that takes some time to learn, but it is ever so important in the quest for financial independence and growth. Bankruptcy is a result of having outstanding debts, which can amount when interest accrues because of missed or late payments. Being able to pay bills automatically online has helped make credit an easier obstacle to maneuver, but it is still worthwhile to be able to regulate your payments by yourself. Paying bills on time helps increase your credit score, ensures that lenders and credit companies know you are responsible, and helps you keep track of your expenses.
Getting a Secured Credit Card
After bankruptcy, your credit score will take a hit for obvious reasons. Debt repayment issues will damage your score and this means you need a way to help build it back up. One easy way to do this is with a secured credit card. Those who have gone through this financial issue use secured cards because they are given out to those with weak scores. They often have good limits, able to be covered by the credit company if you are not able to make payments (avoid this at all costs), and it can be seen by major credit bureaus which helps you eventually repair your financial standing.
Bankruptcy is a term that makes people feel very uneasy. It is without a doubt a scary thought to have when it comes to your financial situation, but it is more common than most think. What many do not realize is that bankruptcy is not the end of the world and these solutions for the post-bankruptcy period show that it is recoverable.