As a continuation of Financial Recovery after Bankruptcy (Part 1), here are some additional tips that can help those who have recently filed for bankruptcy rebuild their financial standing and, ideally, put themselves in a position that would minimize the chances that they would have to file for bankruptcy again in the future.
- Live within your means – Debtors who have recently filed for bankruptcy should be extremely care about the money they spend and should evaluate all of their purchases as to whether or not they are, in fact, essential. Effective ways for debtors to force themselves to live within their means include setting a monthly budget and paying for items (other than rent/mortgages, car loans, etc.) with cash.
- Focus on rebuilding your credit – Rebuilding one’s credit after bankruptcy will require a debtor to take out a new credit card that will typically require upfront deposits and will have high interest rates. Debtors need to be careful when taking out a new credit card and should only do so if they are sure that they will be able to pay off the entire balance on the card each month. An effective way to limit purchases on these credit cards to guarantee that their balances can be fully paid off each month is to only use them for a single type of small purchase (e.g., only using them to pay for gas).
- Regularly review your credit report – Once every six months to a year, debtors should request a copy of their credit report and review it thoroughly to check for any errors or inconsistencies. When looking at credit reports, debtors should be especially careful to monitor whether any fraudulent purchase have been made under their accounts and whether any debt that should have been discharged in their bankruptcy still remains on their credit report.
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