The Simple Ways To Recover From Bankruptcy

May 16, 2012 by  Filed under: Bankruptcy 

Filing for bankruptcy usually becomes the only option for most people when they are no longer able to handle their medical bills, credit card bills or other unanticipated expenses. If you just filed bankruptcy, don’t be so discouraged because you are not alone. The latest data from the American Bankruptcy Institute shows that there were more than 1.4 million of Americans who filed bankruptcy in 2011.

Even though the negative mark of bankruptcy will remain on your credit history for 7-10 years, you can take recovery steps immediately after filing for bankruptcy. If you take good financial moves, you can recover your credit score immediately. The followings are several ways to recover from bankruptcy safely and quickly.

1. Ensure that your credit report is updated

Check your credit report one or two months after your bankruptcy process is completed. You have to ensure that every closed account or discharged debt is reported correctly. It is advisable that you check your credit report from three reporting agencies: TransUnion, Experian and Equifax, at least once per year.

2. Find the causes of your bankruptcy

You have to find the causes of your bankruptcy to determine the recovery steps that you need to take. For an example, if you used to be overspending then you have to start creating budget and stick to your budget. You also have to make an emergency fund to ensure that you are safe when you experience financial hardship in the future. You might need to consider taking a part-time job to boost your emergency fund.

3. Stay away from unfair deals

Today’s lenders are very aggressive and they often offer payday loans and other high-interest loans for recent bankruptcy filers. You must avoid such high-interest loans or instant approval credit cards because they will only lead you to another financial problem.

4. Pay your bills on time

Paying bills on time contributes up to 30 percent of your credit score improvement, which is one of the biggest factors in your credit score. Therefore, you have to pay all your bills on time regardless of the amount of the bills.

5. Get a new credit card and use it wisely

Contact your banks for services and products that can help you to repair your credit score. A secured credit card is a good option to help you recover from bankruptcy. Before you send an application, you need to ensure that the secured card sends your payment history to the credit bureaus. You need to use your card each month but it is highly recommended to use less than 50 percent of your credit limit. In this way, creditors will notice that you have a good spending habit.

6. Enrich your knowledge about money

The majority of people who filed bankruptcy do not have good knowledge on how to use money properly. Meet an experienced financial adviser and get practical tips about healthy financial habits. Implement all the tips and suggestions from your financial adviser so you can have good finances and you do not have to deal with bankruptcy in the future.

As final words, bankruptcy is the reflection of your past and the actions you take after filing bankruptcy will determine your future. If you follow the steps to recover from bankruptcy as mentioned above, your credit score will increase over time and you can have a better financial condition.

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