After Bankruptcy

After Bankruptcy

After you are discharged with a bankruptcy, you’ll have to spend time rebuilding your credit and setting up a plan to handle your finances.

Handling Your Finances

Budgeting has three main goals, which include:

  • ensuring you are not spending more than you earn
  • ensuring you will have the money available when a bill is due
  • developing a savings plan

You should have a checking account. If you do not, shop around for a bank with the lowest minimum balance for free checking or the lowest checking charges. There are dozens of different checking account arrangements, so compare.

Ideally, experts say, you should save approximately 10% of each paycheck. For many people, this seems impossible, but that is no excuse for not trying to save something. If you have never saved, try it for awhile. You may be surprised to find out that the feeling you get from looking at a bank account balance with an emergency cushion is as good as the feeling you would get from spending that money.

Obtaining Credit

One of the problems of going through a bankruptcy is that it will be difficult to obtain credit. During the bankruptcy you found out what life is like without the use of credit, and it is a good idea to do without credit until you are sure that you can keep your finances under control. However, in our society, credit is almost essential.

Buying a home is frequently a better deal than renting one. Also, some essential items, such as cars, are very difficult to pay for in cash. It is a good idea to begin establishing some credit once you have things (including your spending habits) under control.