How to Rebuild Your Finances after Chapter 7 Bankruptcy

bankruptcy

accounting finance money spreadsheet calculator numbers business office desk work hands people computer technology woman

After filing bankruptcy, you will have a low credit score. A chapter 7 bankruptcy will be reflected in your credit report for at least ten years. However, bankruptcy does not mean that your finances have to be a mess after that. When you take the right steps, you will be able to rebuild your credit and live a financially free life. Consider the following guidelines:

Set up a savings account

If you have some income, you should open a savings account and deposit at least 5% of your monthly earnings. With a savings account, you will be able to cover your expenses in case you lose your job or circumstances change. Savings is the best way to best way to cater for emergencies considering that it might be hard to get appropriate financing.

Work on a budget

hands figure statue pot money bill coins creepy

Before you finish the bankruptcy process, you will be given some credit counseling to help you plan your finances in the future. Using the information you got, embark on healthy financial decisions, which start with proper budgeting. Make a monthly budget and stick to it. Also, avoid spending what is not within your means. Before you fully recover, you should probably stick to the basics and leave the luxuries for the better days to come.

You can seek help from a financial consultant such as agencies like Carson Firm in the management of your earnings. If care is not taken, you may find yourself filing for bankruptcy once again in years to come. So do your best to work hard and work on a budget. You can do the process yourself or ask the assistance of agencies, it is up to you. The important thing to remember is to work on a budget.

Get a secured credit card and pay on time

ecommerce shopping credit card payment money laptop computer hand

A secured credit card is where one makes a deposit in the banks and is issued with a credit card with a limit equal to the reservoir. To improve your score, use at most 30% of the available credit. If you can manage as little as 10%, then your credit will be better. Also, ensure that you pay on time. Paying on time gives you points that will help you recover from the low scoring caused by bankruptcy.

Check your credit score regularly

You should monitor your credit score regularly to see whether you are improving. Though it might take some time, you will eventually get back to where you were before your finances crumbled. You can even get to a much better place. All you need is a lot of patience, proper planning, discipline, and lots of hard work.

This post is part of our contributor series. It is written and published independently of TNW.

Read next: Confusing software, falling profits: Helping sales reps teach clients