So you did it. You came to the difficult realization that you needed bankruptcy protection, you got through the process, and you received your discharge. First off: Congratulations! This is a very good thing. The mountain of bills that had been dragging you down for so long is gone -- along with all the stress and anxiety of fending off the creditors who were trying to collect on those bills. You get to start over, free and clear.
Your next step is to take advantage of this unique opportunity. Whatever the reason for your bankruptcy, your immediate focus should be doing what you can to rebuild your credit and maintain your new found financial stability. Here are some ideas on how you can make the most of things after bankruptcy:
The first thing you should do is get a copy of your credit report. Review the report to make sure the debts included in your bankruptcy are listed as discharged. Once you've done this, consider getting a secured credit card to start rebuilding your credit. This is a credit card that requires you to put down a cash deposit equivalent to the credit line on the card. Because you have to put down a deposit, there's usually no problem in qualifying. And most secured card issuers report your payment history to the credit bureaus, but do not report that the card is secured.
Remember, however, that the purpose of obtaining new credit is to rebuild your credit score, not to start carrying debt again. You should pay off any credit card balance every month. The bigger goal, though, is to live on a cash basis as much as possible. Think of adopting the general motto that if you can't afford to pay for it in cash, don't buy it. This means you need to create and commit to a realistic budget -- one that does not require the use of credit to work. Part of this budget should include a savings plan. If you can create a cash cushion for yourself, you'll be better positioned to handle unexpected expenses without having to take on debt.
The idea is simple, yet powerful: live within your means as best as possible. This will help you avoid getting drawn back into the debt cycle. And, it's liberating: when you buy something, it's yours -“ period. No doubt, it's difficult to stick to this kind of lifestyle, but it's doable. And there are things you can do to make it easier. Reduce your day-to-day spending. Cut out that fancy coffee from Starbucks. Bring your lunch instead of buying out. Eat dinner at home more often. Wait for things to go on sale, or try to find generic brands. Also, look for cheaper forms of entertainment: instead of going to the movies or the amusement part, go to the beach, a public park, or a free outdoor concert.
If you maintain this lifestyle, you'll find your credit rating will quickly improve. After just a couple of years, you should be able to take out credit for larger purchases, where it's usually necessary, like for car loans and mortgages -“ and at competitive rates.
The point of all this is: Enjoy the financial freedom of life after bankruptcy, and do what you can to hold on to that freedom.
The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) +1-919-646-2654, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.