If you’ve declared bankruptcy or are thinking of doing so, there are both good and bad factors involved. Bankruptcy allows you to discharge your debts and stop creditors from pursuing actions against you, but you pay penalties in the form of negative credit and a risky reputation with lenders in the future.
The bankruptcy lawyers at Utah Bankruptcy are here to help walk you through all these details. Here are a few tips for operating in a smart way with your finances after you’ve declared bankruptcy.
Many of the details of bankruptcy require that you live frugal lifestyle in the immediate aftermath of declaring, especially for Chapter 13 declarations. You’ll typically be given between three and five years to pay off certain remaining debts in these situations, and doing so is vital for rebuilding your credit profile.
This means simplifying things and potentially changing basic expenses. Some people are forced to move or heavily adjust their lifestyle, where others can get by with smaller tweaks. Make a well-planned budget to keep you in line, and follow it precisely.
Bankruptcy badly damages your credit, and it’s up to you to rebuild it. Luckily, this is a process you have a lot of control over. There will be situations where your options for further credit are limited, depending on which assets or income sources you lost during the process. You may have to get a court’s permission in some cases.
If at all possible, try to get a new credit card soon after declaring. For certain cases, you may only be eligible for a secured credit card, which is debatable in terms of its benefits to rebuilding credit. Many others will still be eligible for unsecured cards, which are much easier to build credit through.
Show You’ve Learned
This tip is useful both from an attitude standpoint and from a practical one. Learning from your own mistakes is vital after bankruptcy, and so is showing lenders and other relevant parties that you’ve learned. Make sure you pay all bills on time and are proactive about any remaining debts you may have, and this will paint you in a much better light moving forward.
For more information on post-bankruptcy tips, or to speak with a bankruptcy attorney about your situation, call us at Utah Bankruptcy today.