You've filed for Chapter 7 bankruptcy, survived the court's scrutiny of your finances, and have emerged on the other side of this life-changing event, ready for a fresh start and a new approach to your finances. The lifting of that heavy burden of debt may feel incredible, but do you know what you'll need to do to get back on track?
The United States Federal Court quotes a 1934 decision by the Supreme Court where the Court defined bankruptcy as something that…
…gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.
(Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934).)
It's important that you don't waste a second chance at financial stability granted to you through bankruptcy. Your final court appearance is just the beginning of your new financial life.
Keeping Track of Credit
Fiscal responsibility is one of the most important concepts for post-bankruptcy families, but concerns of credit worthiness also tend to enter conversations frequently. Although creating a workable budget is most important, there are also some sensible options that may help improve a credit score despite recent bankruptcy.
An article on MSN Money offers a few simple suggestions for tackling a credit score ravaged by Chapter 7 bankruptcy, which include:
- Keep track of what's happening on a credit report: Get your free credit report once a year and take note of how your credit score has changed.
- Never pay any bills late: Late payments stay on your credit report for years and are one of the easiest ways to lower your score, whether you've been through bankruptcy or not.
- Consider a loan after a year: On-time payments on a personal loan help boost your credit score and pave the way for larger purchases down the road, such as cars and homes.
- Only apply for credit if absolutely necessary: Consider a secured credit card about 6 months after completing bankruptcy. Always make on-time payments.
Tip: Always ignore the credit card offers you get in the mail right after bankruptcy. They're usually terrible offers with low limits, huge interest rates, and giant yearly fees. You don't need to get saddled with a useless credit card.
Make a Weekly Date With Your Budget
Before filing for bankruptcy, the government requires debtors to meet with a credit counseling company. Hopefully, you remember the lessons given to you by your approved credit counselor or debtor educator.
You'll need to employ the lessons you learned on smart budgeting techniques and good use of credit. Never allow your budget to fester or remain unchecked for more than a few weeks. Think of your budget as a fluid, ever-changing document. You must keep it updated and make changes as needed to cope with financial changes and payments.
Don't Ignore Your Feelings
Negative emotions often take over before and during bankruptcy and the legal stress may feel overwhelming. After your final court appearance or discharge hearing, you might feel emotionally drained and mentally exhausted. "U.S. News & World Report" suggests that anyone with a recent history of bankruptcy could benefit from a visit with a therapist specializing in financial therapy.
Interestingly, the number of bankruptcies that occurred during and after the Great Recession influenced the rise of an entire industry of psychologists specializing in financial therapy. It's a new field, but speaking with a therapist could prove beneficial while you start to rebuild your life after bankruptcy.
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