No one dreams about or looks forward to the day where they have to file for bankruptcy. However, life is filled with unpredictable events which may harm your financial stability and consequently cause bankruptcy.
Although going through this stressful and demanding process may seem like you’ve hit rock-bottom, don’t forget that it’s more than possible to recover even from the worst case of bankruptcy. While bouncing back from it will require some time and additional management until your credit is sorted, you’ll have a fresh start with your finances once you complete it.
So, if you’re ready to transform your current financial state and ensure it flourishes in several years, make sure to follow the steps mentioned in this article.
Make a Detailed Financial Plan
Bankruptcy makes drastic changes to your financial plans, assets, payments, and much more. For that reason, the best thing to do is make a completely new financial plan that will be more appropriate with your current budget. You’ll need to include your business, property, income, fixed payments, and several other things to make a realistic financial plan for the fastest recovery.
Starting a post-bankruptcy plan might seem overwhelming since you’ll need to go back to the roots of business planning and budget management, so hiring a local bankruptcy attorney can be a great deal of help to you.
Also, bankruptcy paperwork contains pages and pages of unfamiliar concepts and phrases, so dealing with it on your own can be pretty challenging. An attorney specializing in bankruptcy will carefully examine your situation, and together you can create a detailed plan which you won’t have trouble following.
Carefully Follow Your Credit Scores
Your credit scores will change as your bankruptcy process starts evolving. Once you file for bankruptcy, you’ll immediately notice some changes related to your credit scores. However, that doesn’t mean your credits are balanced out. Namely, depending on your bankruptcy type, the credit scores can change even up to several months.
For example, filing for Chapter 7 bankruptcy will initially take a more significant amount, but you’ll also notice minor dips once your case is discharged. On the other hand, Chapter 13 bankruptcy isn’t discharged until the end of the repayment period.
Some people even witness small credit score increases after filing for Chapter 13 because their score fell as far as it can go before filing for bankruptcy.
So, to take advantage of your credit scores in the best possible way, the best thing to do is track your status several months after filing or after your case has been discharged.
Keeping track of your payment deadlines is always essential, but it’s even more emphasized if you went through bankruptcy. After that rough patch, you’ll most likely have difficulties finding lenders, vendors, or banks willing to lend you money and help you stay on your feet. However, even when you do find them, they’ll keep a close eye on each payment.
Missing deadlines and being late with your payments won’t set a good example for you and your business, so it’s unlikely anyone will prolong to offer their services to you. Instead, make sure to pay on time. Not only will this show you’re serious about your business, but also that you respect your lenders.
Make Smart Financial Decisions
It’s essential to look at bankruptcy from a positive side too. This process enables you to erase all your previous debts and start from scratch. Although you may think this is the end of your business ventures, you’ll quickly realize bankruptcy is a chance for you to rebuild your entire life and make smarter financial decisions than in the past.
Some people feel overconfident after going through bankruptcy because their debts are paid off. Hence, they take advantage of their financial situation and get more credits to cover their current expenses. However, as the credit limit rises over time, it’s harder to maintain the balance.
When you go through bankruptcy, you should pay close attention to every decision regarding money to ensure you’re doing everything in your power to get back on track.
Learn From Previous Mistakes
Bankruptcy will teach you a valuable lesson about finances and their management. The best way to avoid the repetition of the same mistake is to go back and see what caused the bankruptcy in the first place.
Work hard on resolving the issue, no matter what it was. If you don’t get to the core of the problem, you’ll just make the same mistake, leading you to the same ending.
The presence of an optimistic attitude and willingness to change is the main reason why some people flourish after bankruptcy, so make sure you learn from your past mistakes.
All in all, going through bankruptcy demotivates many people. However, how you deal with it and what you do to correct your mistakes is a crucial step. By following these five ways, you’ll make a remarkable recovery from bankruptcy. These steps will allow you to carefully assess your previous mistakes and current affairs for a brighter and more prosperous future.