In 2015, there will be an estimated 800,000 bankruptcy filings in the United States, but this relatively common process still leaves many families feeling confused, guilty and isolated. The social stigma surrounding bankruptcy has led many people to believe that their lives will be ruined after filing. Although the road to recovery can be long and difficult, there are steps you can take to get your finances back on track.
Choose the Right Type of Bankruptcy
Your first step in declaring bankruptcy should be to consult with a bankruptcy lawyer (such as Michael Hart D PC). Not only can a lawyer begin compiling the necessary paperwork, but he or she can also advise you on the best form of bankruptcy for your situation. Chapter 7 bankruptcies are faster and can help you shed debts like credit card and medical bills, but they also require you to have very little income. Chapter 13 bankruptcy is a more involved process, but it can let you keep your house, car and other valuable possessions on a repayment plan.
Assess Your Mistakes
There are many reasons why people get behind on their bills, but in most cases, poor financial planning contributes at least in part to most bankruptcies. As you assemble a list of your creditors, take note of how your debt was allocated and where you can cut back on unnecessary spending. Having a solid plan for the future is the most important part of making a full recovery from bankruptcy.
Begin Rebuilding Your Credit
There is an old myth that anyone who has filed for bankruptcy will be unable to qualify for a credit card or loans for years afterward. The truth, however, is that plenty of institutions are willing to trust the recently bankrupt, albeit at slightly higher interest rates. Only take on what you can afford on a monthly basis, but moving forward with your finances is the best way to bury a bankruptcy. Start with a low-limit, retail or gas credit card to begin establishing your new financial history.
Track Your Credit Score
You are entitled to three free credit reports per year, one each from the three major credit bureaus. Take advantage of this by tracking your credit score's progress throughout the year. This will also allow you to catch mistakes on your credit report before they impact a loan decision, improving your chances of a successful loan or a better interest rate.
Focus on the Future
Creditors tend to focus on your recent history over past mistakes. Even though your bankruptcy will appear on your credit report for up to 10 years, it will quickly diminish into obscurity if you establish better spending habits and prove that you are now a reliable consumer. Talk to your bankruptcy lawyer for more personal tips to help get you back on your feet and financially stable after a bankruptcy.Share