Three tips to rebuild financial health after bankruptcy
A successful petition for relief through bankruptcy can offer a fresh financial start. Once an individual completes the bankruptcy process, they can start the journey towards rebuilding their financial health. There are many steps that can help to expedite this process. Some of the most beneficial include the three discussed below.
#1: Put together a budget.
The bankruptcy process provided an opportunity to review all assets and debts. Although the process likely resolved most debts, it is still helpful to use the knowledge gained during the bankruptcy process to put together a budget to apply to expenses moving forward. Track all income and expenses and identify areas to reduce spending.
This budget can provide a clear picture of financial standing. There are many different options to help put together a budget. Find the one that works best for your situation. Adherence to this budget is an important step towards avoiding the same pitfalls that may have led to bankruptcy and better ensure you move forward with a healthy financial future.
#2: Pay off bills on time.
Paying bills can help to build your credit score. More specifically, regularly paying off mortgage, home equity lines of credit, student loans, and car loans build your credit score while a failure to pay rent, phone and utility bills on time can hurt your credit score. A failure to pay could mean the bill gets sent to collections. Collection actions are reported to the credit bureaus and will have a negative impact on your score. Avoid this by paying off bills on time.
#3: Use a credit card.
It may seem counterintuitive, but regular use of a credit card can help to build your credit and overall financial health. The key to success: paying off the credit card balance on time every month.
There are many different types of credit cards. Research all available options to better ensure you choose one that works for your financial situation. For those who need more motivation to stay on budget, a secured credit card is a good option. These generally require a cash deposit that serves as the credit limit — meaning you basically prepay the card. This option can help provide the benefit of building your credit score without the risk of going overbudget.
Using the credit card to pay off bills that are otherwise not reported to a credit agency, such as utilities and phone bills, can further help to build your credit score.
Financial recovery from bankruptcy is a journey that involves careful planning, regular monitoring of credit activity, and responsible credit use. By taking these steps, consumers can work towards regaining financial health and peace of mind. Remember, the path to rebuilding your financial health after bankruptcy is a marathon, not a sprint. With diligence and the right strategies, you can create a positive financial outlook for the future.
If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow.
