Managing Life After Bankruptcy

February 2017

If you recently declared bankruptcy, you've likely already been through an emotionally stressful time. Figuring out the next steps to take can seem daunting, or even impossible. Many filers of bankruptcy incorrectly assume that it will be years before they can obtain a mortgage, take out a loan or even just rebuild their credit score.

Fortunately, the reality isn't so grim. Even though it can stay on your credit report for anywhere from seven to ten years, a bankruptcy gives you a fresh start. If you diligently manage your finances, your credit can improve significantly in as little as a year.

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Cut Back

If you filed a Chapter 13 bankruptcy, you'll be required to pay off some of your debts for the next few years. Any income above what the court has allowed you spend on living expenses will be split among your creditors. This means you'll have to reconsider your monthly lifestyle. Even if you filed a Chapter 7 bankruptcy and are able to walk away from most of your debt, now is the best time to reevaluate your spending habits and make changes for the better. Consider the factors that lead to your bankruptcy in the first place. Were you spending well above your means? Did you have to pay excessive bills after an unexpected emergency? Understanding how you got to this point can help you better prepare for the future while you work to get your finances back in order.

Build a Savings Account

It's important to start putting at least a percentage of your disposable income into a savings account, especially if your bankruptcy was the result of an unplanned expense such as an accident or medical emergency. Having money put away for dire circumstances will help prevent you from making the same mistakes in the future. Even if you never have to face a similar situation, the money can be used for large future purchases or other expenses.

Rebuild Credit

The only way to repair your credit score is by rebuilding it from the ground up. While you probably won't be signing up for another credit card any time soon, there are other things you can do to improve your score. If you were lucky enough to keep your current home, be sure to pay all rent or mortgage bills on time. Of course, do the same for any utilities or other regular monthly expenses. When you can, consider opening a new line of credit and be very diligent about paying it off on time.

Legal Representation and Bankruptcy Services

With more than 25 years of experience, the Havner Law Firm strives to provide clients with professional and compassionate legal representation. We provide quality bankruptcy services to individuals throughout Arkansas. Contact us today to discuss your options.

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