The light at the end of the bankruptcy tunnel is a clean (or almost clean) financial slate. But what will you do once you have it?
Even in the beginning stages of bankruptcy, it’s a good idea to start planning for what you’ll do once you’re safely on the other side. Here are three ways you can start preparing for post-bankruptcy life
1. Learn any lessons you can.
Many bankruptcies are caused by things out of your control, such as unforeseen medical expenses or job loss. But is there anything you would have done differently? Is there any advice you would give someone facing the situations you did?
Don’t beat yourself up about anything you wish you’d done differently – but also don’t let yourself make a bad decision twice. Maybe you wish you’d stuck to your savings plan before a job loss or picked a different health insurance plan. Now is the time to think about what you can do differently in the future.
2. Make – or revise – a budget that helps you prepare for the unexpected.
You’ve probably heard this advice from everyone and their mother, but it bears repeating. This is a great time to start building good financial habits, and a solid budget you can stick to will help you do just that.
Make saving a cornerstone of your budget, and as soon as you can, start building up savings to cover unexpected expenses.
It’s important to remember that some types of debt, including student loans, can be very difficult to discharge in bankruptcy. You’ll want to make sure your budget takes this into account.
3. Make a plan for rebuilding your credit.
As we’ve discussed before, you absolutely can rebuild your credit after bankruptcy, especially if you file Chapter 7. It’s harder to rebuild credit after Chapter 13 bankruptcy, but it still can be done. It won’t happen overnight, but the sooner you get started, the sooner your credit will improve.
It’s a good idea to get into the practice of reading your credit reports and checking your credit scores for changes over time. NerdWallet has some suggestions for getting started with monitoring your credit and, when you’re able, finding secured or co-signed credit cards and loans that can help you boost your score.
As you go through the bankruptucy process, ask your attorney for advice specific to your situation that can help you take full advantage of your financial fresh start.