You’ve filed for bankruptcy and completed the process. Your major debts are gone, and you are ready to recover from bankruptcy. When you find yourself in this position, know that you turned your finances around, and this is your chance to get ahead. Here are a few strategies for getting your finances back on track after bankruptcy.
Live Within Your Means
Once your debts have been handled by the bankruptcy, establish a budget so that you can live within your means. Make your budget so that you limit your spending to 80% of your total earnings. That way, you have a buffer so that you can save money or pay for unexpected expenses in cash. This will help you avoid getting back into debt for a while. If you do it for long enough, you can build up a buffer to handle bigger expenses without needing credit cards and avoid debt altogether.
Rebuild Your Credit Score Without Credit Cards
Your credit score will need some work after bankruptcy. However, you can start to rebuild it without using a credit card. Many people recommend building credit using credit, but you want to avoid it until you have a sizable savings account.
Instead, focus on making payments for other things on time. Utilities and recurring expenses are a great way of improving your credit score. Just make sure that you make the monthly payments on time.
Set Yourself Up To Avoid Big Purchases
Big purchases are usually what get people into debt. If you can set yourself up to avoid those big purchases, you can stay out of debt. Start by building your savings to a substantial amount. Normally, having a few months of living expenses is recommended. You want to get at least a year’s worth of living expenses saved so that you have enough to cover an unexpected big purchase as well as survive for six months without credit cards.
Reduce your liabilities as much as possible and replace them with reliable options. For example, get rid of a large vehicle that is expensive to maintain and buy a certified pre-owned used vehicle that is not expensive to maintain. That way, your car breaking down doesn’t require you to spend all of your savings to fix it. Taking steps like this can position you to avoid unnecessary or emergency big purchases unless you have to.
Discuss How to Recover From Bankruptcy With a Bankruptcy Lawyer
To recover from bankruptcy, begin with filing for bankruptcy. Go over your finances with your bankruptcy lawyer to see if there are any options to set yourself up for success as you go through the process. They may be able to help you make bankruptcy decisions that put you in a better position in the long run. Contact Kain + Henehan by calling (612) 438-8006 or filling out the online form.
