Bankruptcy is one of the scariest and devastating things that can happen to you and your credit standing with banking institutions. People often think that there is no recovering from bankruptcy; this isn’t the case. You can take advantage of many opportunities during bankruptcy to recover your credit score and, in some cases, make it better than it was before.
Bankruptcy, however, is, unfortunately, a common occurrence within the USA. Big names such as Walt Disney, Elton John, Will Smith, Lady Gaga, and Mike Tyson all have filed for bankruptcy at some point in their lives. So how do you recover from as they did? How do you bring back your finances to what they once were?
Review Your Credit Reports
The first step to successfully recover from bankruptcy is to understand where you went wrong and to gain a clear understanding of where your credit currently stands with the banks. Hence, you must check your credit reports and review them for inaccuracies. Incorrect entries must be disputed to correct them in the future.
This step’s importance cannot be exaggerated as this will ensure that your next steps towards recovering from bankruptcy are planned and calculated. However, keep in mind that this process is different depending on which type of bankruptcy you’ve filed.
Keep Tabs Of Your Finances
It’s essential to take into consideration past financial mistakes that you have made. While it’s good that you’re making some changes to your financial model, it’s still important to keep tabs on how you’re budgeting and spending your money.
If you’re not quite sure about how you should be handling your finances, you can always have your records kept with payroll services. Not only will professional accountants provide full-service bookkeeping, but they’ll also be able to give on-the-fly financial planning and consultation when needed.
Ensure that your Payments are Always on Time
On-time payments account for 35% of your credit score. This step is undoubtedly one of the most important tasks to accomplish as consistent payments on time play an important factor in credit score calculation.
Some banks even offer automatic payments, or this can also be done through your mobile phone if your bank has it on offer.
Get a Secured Credit Card
A select number of banking institutions offer secured credit cards; however, credit unions also provide this. This credit card can easily be obtained by someone who has filed for bankruptcy, as this does not require traditional credit checks.
To take full advantage of a secured credit card, you must use this card sparingly and only use it every month to pay for monthly fees such as phone bills, electricity bills, or gym membership bills. This payment method will enable you to establish a different on-time payment pattern and improve your credit score at a minimal cost. ;
Strictly Follow a Budget
Most case of bankruptcy is because of inadequate budgeting methods. Ensure that the amount that you are spending is less than you make. Review your financial status daily, weekly, and monthly to ensure that you formulate a robust budgeting plan for the next few years of bankruptcy.
Budgeting will enable you to prioritize the necessities from the disposables. This budget plan will allow you to make monthly payments on time without the fear of overspending and underspending.
Maintain a Job
It would be best if you found employment as soon as possible. Stable employment plays a role in showing creditors that you will make your monthly payments on time. Maintaining a job also ensures that you can make ends meet even with bankruptcy looming over your head. In the early stages of your bankruptcy, it doesn’t matter what job it is as long as you have one. But eventually, once you recover a bit, you must find a higher paying job if you don’t have one already.
Another critical factor in recovering from bankruptcy is to learn from your mistakes and to ensure that it doesn’t happen to you again in the future. Bankruptcy is not an easy ordeal to go through, and unfortunately, you must prepare yourself for the coming hardships ahead.
To be financially rehabilitated yourself, you must start from within and consider all the variables that possibly put you in your current situation and do everything to recover financially and mentally, emotionally, and spiritually. The road to financial rehabilitation is a long and arduous one, so don’t give up because eventually, your efforts will pay-off in the end.