Image source: VintageLawrence.com
According to Debt.org, personal bankruptcies made up 97 percent of all bankruptcies in 2011. Because filing bankruptcy is such a serious undertaking, it is often used as a last resort for those struggling with debt. The road to financial recovery after bankruptcy can be a long one, but is better than continuing to drown in debt with little hope for an improvement. And yes bankruptcy will be a blemish on your credit report, but continuing to miss bill payments and letting your financial situation deteriorate can be even worse. If your debts are significant and you don’t think you can recover without intervention, filing bankruptcy and starting the process of recovery is a good plan. Here are some tips to get you started…
Put Pen to Paper
You know how much you bring in every month, but if your debts are unmanageable, likely what you're spending exceeds that. The question is, by how much? To answer that, you need to put pen to paper and itemize your monthly expenses and cash outlays - including your spur-of-the-moment spends. Once you see the numbers in black and white, it becomes real. Prioritize your necessities and trim the rest.
Image source: Flickr.com
Robert Kiyosaki, multi-millionaire business owner and best-selling author, tells his audience to "pay yourself first." If your paycheck is sent via direct deposit (and if it’s not, make that change now), you should you automatically send a portion of your pay to your savings account. This way it's painless because you won't even see it. Even if it’s just a small percent or dollar amount, it’s a good habit.
Another great automation tool that can help you keep on track is to set up auto debit of your critical recurring bills. Most utility bills, car notes and mortgage can be set up for auto payment that you can coordinate with your paydays. This small move will put you in good standing with your creditors, can help you reestablish your credit and make sure that you don’t spend what should go to your bills.
Image source: MVHomeless.wordpress.com
Read Your Credit Report
Your credit report is your financial report card to creditors and employers. You must ensure it's accurate and updated and that requires vigilance on your part. Everyone is entitled to one free copy of their credit report a year. Get it, read it and make sure everything is accurate across all agencies. If you find any inaccuracies, credit agencies are obligated to correct or remove them within 30 days.
Secured Credit Cards
Getting a credit card may seem counterintuitive after bankruptcy, but the fact is that you need credit to rebuild credit. Most of the offers you'll be bombarded with after filing will be high risk, high interest cards that only benefit the issuer. Those should be tossed immediately. Instead, start with a secured credit card that extends “credit” based on an amount you deposit with the card holder. The benefit is that the issuer updates the credit agencies of your good standing and that helps your credit score.
If bankruptcy is unavoidable, it's good to develop a recovery plan as soon as possible so that you can hit the ground running and make sure you lessen your chances of repeating your financial missteps that led you to bankruptcy in the first place. Contact North Carolina attorney John T Orcutt for a free consultation about your debt dilemma today!