Life After Bankruptcy
So, you file for bankruptcy--with all the paperwork, court dates, lawyers and trustees and so on. All the official, complicated stuff is done.
Now what?
Well, we’ve got good news and bad news for you.
You Pretty Much Know the Bad News
If you’re reading this because you are filing for bankruptcy, then you already know the bad news: you’re in tough financial straits and you’re desperate for some way out.
And things are going to continue to be tough for a few years. There’s not much way around that. You’re going to feel the pinch as you rebuild your financial life and restore your credit.
For the next 1 to 5 years, depending on whether you filed Chapter 7 or Chapter 13, you have basically two priorities:
1. Live Within Your Means & Build an Emergency Fund
You should expect to make some changes in your lifestyle and purchasing habits so that you can start building up a savings and live without credit for 6 months to a year. Even if your bankruptcy was brought on by catastrophic life events, you may need to develop new spending habits and learn to walk away from purchases you may once have made.
Decide which things in your life are absolute necessities and which can go. Focus on keeping you and your family healthy and safe. Pay any rents or leases on time. Build a financial safety net or emergency fund so that you’ll be better protected in the future against unexpected expenses.
2. Rebuild Your Credit
Don’t rush into this. Expect it to take 6 months to a year before anyone will be open to offering you a credit card, and do your research to make sure you don’t get scammed by someone looking to take advantage of your condition.
The most important thing here will be to pay everything on time. Think of your first credit card after bankruptcy like your learning permit. You need to demonstrate that you can handle it responsibly if you want access to the full privileges of good credit.
If you simplified your lifestyle enough, this should not be too difficult. Put those regular, necessary purchases on the card and then pay it off when the bill comes. Over time, you’ll find you’re able to get lower rates and higher limits.
Didn’t We Say There Was Good News?
Yes, there is absolutely good news.
The good news is that by filing in the first place you have taken a proactive step toward getting out of your financial hardship. You know what it is like to have mounting piles of debts that you cannot pay. Bankruptcy helps clean the slate so you can rebuild your life.
The good news is also that there is a light at the end of the tunnel. You will get out of this!
It won’t always feel easy, but when you look back on the hard choices you made, you’ll feel good about having done right by your creditors and by your family.
In one sense, the choice to file is the most difficult. It means accepting that you have lost control, that your life is in other people’s hands. It is also the first step toward taking back control.
There is life after bankruptcy--your life.
