Bankruptcy Options: 4 Ways to Get Back on Your Financial Feet

Declaring bankruptcy is always a last resort when you find yourself in a financial hole. No one likes having to start over. Here are some tips to help get you back on your feet.

Know Your Options

You need to know what options are available to you. Set up a meeting with a bankruptcy lawyer so that you can re-establish your financial future. They can walk you through what your next steps need to be to recover. 

If you are just starting the bankruptcy process, they can help you through it. This way you will be able to make informed decisions. They might be able to help you settle any debt that you have in order to avoid any pitfalls.

Address the Cause

Bankruptcy was not something that happened overnight. It involved a series of poor decisions that lead you down this road. Before you can start the process of recovery, you need to first understand how it occurred. 

Frequent overspending and not watching your bottom line is the likely culprit. You need to create a budget that you can live within. Living paycheck to paycheck leaves you vulnerable. You should have an emergency fund for any unexpected expenses.

Establish New Credit Lines

After a set amount of time has passed, you will be able to apply for a secured line of credit. This means that you have the money to pay off the line of credit set aside in a savings account. 

If you fail to pay it off, the bank can take the funds that you used to secure the card. Once you have established this line of credit and reliably paid it off, you can apply for an unsecured credit card. Since you are still considered high risk, the interest rate will be higher than a normal card.

Set Budget Goals

It will take seven to ten years for the bankruptcy to fall off of your record. During this time, any financial troubles will set you back further. You need to stick to your budget and create a buffer. 

Opening a savings account and putting money aside each month will alleviate any unexpected costs. Make sure to check your credit report often. Having financial goals will allow you to better prepare for the future. You don’t want to find yourself back in bankruptcy because you overextended yourself again.

Millions of Americans declare bankruptcy each year. Having a budget and a safety net are the best ways to avoid financial hardships. Use these tips to recover from your bankruptcy.