How to Recover from Bankruptcy The Right Way

The sad truth about bankruptcy is that entirely too many people view it as a way out of financial trouble, but not in the way that it should be viewed. For many, it’s a last resort. A desperate attempt to make sure their financial future isn’t completely ruined, and it’s a heartbreaking realization. For others, it’s just one more way they can clean up their mess without really suffering the kind of consequences they should suffer. It’s a double-edge sword, like so many other things. So many people take it for granted when so many others are left with no choice in the matter. But one thing remains certain for anyone and everyone that chooses or is forced to file for bankruptcy; recovering from this moment has to be done carefully and deliberately or your financial future will suffer significantly.

But how do you appropriately recover from bankruptcy? Well, you have to follow some very simple, but very important rules. They’re not fun, they’re not always easy, but they’re always effective. If you file for bankruptcy now or later, you should know what steps to take to ensure that you are able to rebuild your credit and your financial future the right way. Messing up now can have a negative effect on your financial future that might not be welcome.

Part of the process includes overcoming the emotional aspect of filing for bankruptcy in the first place. There is no doubt that this is absolutely not an easy decision, nor is it one that anyone comes to lightly. It’s difficult to digest and deal with, and it’s not something anyone wants to experience. But, life happens; and that sometimes means we have to find a way to overcome and prevail, and learning how to correctly make it through bankruptcy is going to help tremendously.

Let it go

The first thing you have to do is let go of the guilt you are feeling, and the shame that goes along with it. There is nothing you can do at this point. You’ve found yourself in a situation that requires you do this, and that means letting go of what you can no longer change. This might not be something you want to deal with or are proud of, but it’s something that you have to deal with. Now let go of the guilt, shame and upset and learn to focus on the fact that this is a fresh start for you. Embrace that, and be grateful that you still have an opportunity to rebuild your credit and save your financial future. Rather than focusing on the negatives, focus on the positives; such as the lessons learned from this financial journey. Now you are much better equipped to really take your financial future by the horns and handle it with the care it deserves.

Understand the process

You need to make sure you understand the process of bankruptcy so that you really get what’s happening to you. There are so many myths and misconceptions that it is often easy to make mistakes when assuming you know what is real and what is not regarding bankruptcy.

Ask the difficult question

How did I get here? What did I do wrong? Where could I have made more educated and informed decisions so that I could have prevented this from happening in the first place? What do I need to do to change my way of thinking and my financial viewpoint so that this does not happen again in the future?

These are the questions you have to ask yourself. It might not be comfortable, but the answers to these questions provide you with something you need, which is a chance to really make a change in your life. You need to know how you got here in the first place so that you can make sure you don’t end up making the same mistakes a second time.

Evaluate your finances

Now is the time to really sit down and evaluate your finances. It’s time to look at what you bring in, what you owe and where you can cut back. If you’re struggling financially, it’s not the time to spend hundreds of dollars on the latest and greatest smart phone and a huge plan. It’s also not the time to sit around watching mindless television on a cable package that costs too much in the first place. It’s time to regroup and see what you can cut out. Now is the time to make a budget that allows you to pay your bills on time, save money into an emergency fund, retirement and a savings account. You need all of the above if you plan on living a comfortable life.

Get a credit card

This might come across sounding a bit counterintuitive, but it’s not. You do need a credit card if you plan on rebuilding your credit. The deal, however, is that you’re not getting one in the throes of bankruptcy. What you’ll need to do is apply for a secured card. This is a card that requires a security deposit in the amount of the credit limit you prefer. The company holds onto this deposit for the time being. When you spend, you pay it off. The card company does report to the credit bureaus, so it’s a wonderful way to really make it possible for you to positively impact your credit. Additionally, it’s a great way for you to learn to use your card responsibly.

At the end of a year, your card company  might decide based on your past year’s payments and history with them to send you back your security deposit and make the card an unsecured card, which will really help you raise your credit limit if that is your choice.

Live below your means

Chances are good that living above your means is what got you here in the first place, so it’s time to stop that and move on. We recommend that you live well below your means, save and use your money wisely rather than foolishly, and you will come out of your bankruptcy a lot better than you went into it.

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