5 Actions You Can Take to Restore Your Financial Health After Bankruptcy

Bankruptcy is one of those life events that most Americans would just as soon avoid. It is no picnic to go through a bankruptcy proceeding and the effects can be felt for years to come. While bankruptcy is hard, it’s not the end of the world. Here are five actions to take some of the edge off the post-bankruptcy hit.

1) Keep your ultimate goal in mind. That goal is to get your credit score back up. Bankruptcy wreaks havoc on it because in essence, bankruptcy allows the debtor to get out of paying their debts. This is not the greatest precedent to set with future lenders and your credit score is adjusted accordingly. Without a good credit score, it will be that much harder for you to secure any kind of financing and at a good rate.

2) View bankruptcy for what it is: a fresh start. If there is anything close to a get-out-of-jail-(mostly)-free card, it is bankruptcy. Instead of viewing your position as having fallen through the basement, look at it as the beginning of climbing back up the mountain of good credit. One of the first steps on this journey can be hard but is absolutely required: find out your current credit score.

3) Clean up your credit reports. Each year, every individual is entitled to a free copy of their credit report from each of the three credit reporting agencies. FREE here, means FREE. Once you’ve gotten your credit reports, pore over them and find any information that is incorrect or for small errors. Bring them to the attention of the credit reporting agency and see about getting them fixed or removed from your report entirely. This is also a great way to monitor for fraud or identity theft.

4) Start building up your credit. The key is to start small and start wisely. For example, don’t get behind on your bills. Utility, cable, and phone companies report to credit agencies just like credit card companies and banks. If you find that you cannot maintain a particular service on time, considering cutting it entirely or scaling it back so that you can be certain you can pay it off each month. Part of this goal is to also continue to pay off those loans that were not discharged in bankruptcy—for example, your student loans.

5) To build credit, get credit. Ironically, one of the best ways to get started is to get a credit card. Credit, like fire, can be dangerous when not used properly, but when it is controlled, all it can do is help you. The best way to do this is to get a card, do not charge more than you can pay for, and then pay off the card in its entirety at the end of the month. Not only do you not incur interest charges since you are not borrowing money from the credit card company past the payment deadline, you are slowly and solidly building a reliable credit history showing that you paid your balance in full every month.

Bankruptcy can be a scary and intimidating process and even after it’s over, the survivors can have difficulty picking up the pieces. The Starosta Law Firm can help you navigate these rocky waters and come out on the other side. Contact us today to get started.

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The Starosta Law Firm LLC

The Starosta Law Firm is a small firm dedicated to providing every client with the customized representation they require, no matter what type of situation they are facing.

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