You’ve been through the bankruptcy process – either through a Chapter 7 or a Chapter 13 – and have received your discharge. Now what?
After Bankruptcy
Here are some things you’ll want to consider once the bankruptcy is finalized:
- Make sure you’ve received all of your paperwork. this includes: bankruptcy petition from attorney, notice of bankruptcy filing from the court, and a copy of the court’s discharge. Doing this will make sure you are prepared going forward in cases where you ask for new credit, or seek a mortgage loan. While this information will appear on your credit report and is part of the public record, some lenders want to see what was discharged. Most importantly, you should have these papers if any creditor attempts to collect that discharged debt (it happens!)
- Check in with your Credit Report. You can get three free credit reports from each major credit reporting agency per year. There will be a little dust following the bankruptcy, so start this “checking” three to six months after you receive the discharge. Also, it can take several billing periods for creditors to update their accounts for credit reporting agencies. In some cases, a creditor or lender might stop reporting to credit bureaus after a bankruptcy. Checking your credit score on a regular basis will ensure the discharged debt from a bankruptcy has been reported to the credit bureaus as a zero balance, not as an outstanding balance that can count against you if you apply for new credit. You’ll also want to see how your bankruptcy affected your credit report and your credit score.
- Create new budgeting habits. The main focus of the bankruptcy process is your budget. So understanding your expenses is crucial. Check your budget weekly to stay out of the financial hole as well as project a positive financial future. From there, you might want to consider a five-year plan, while including things like retirement and future goals.
- Create an Emergency Fund. Once you have your budget laid out, you should start putting money towards an emergency fund that can cover costs such as a flat tire or small emergency. This will help prevent you from going into debt in case something happens. Having money to pay for these things will help you from incurring unplanned debt that can snowball out of control.
Consider New Credit
Once you have successfully emerged from a bankruptcy, you might want to consider getting new credit. While debt is dangerous, it’s important that you have credit and good credit, at that. Start with a small limit, monitor any charges you make, and budget to pay over the minimum each month if you can’t pay it back in full.
Facing Bankruptcy?
If you find yourself in a position where you are facing bankruptcy or large amounts of credit card debt, you’ll want to work with a financial advisor or debt consolidator that can help you get a handle on your payments. If that does not work and you must enter the bankruptcy process, you might want to consider working with a bankruptcy attorney that can lead you through the steps to once again regain your financial footing.