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Getting Back on Your Feet After Bankruptcy

GETTING BACK ON YOUR FEET AFTER BANKRUPTCY

            Your bankruptcy case is complete.  You’ve gotten your discharge.  Hopefully the bankruptcy case has significantly helped to resolve your earlier financial problems.  So, it is time to take some post-bankruptcy steps to get you back on your feet.

Take your bankruptcy papers, petition, discharge, etc and put them with your important papers so they can be easily found if necessary.

Make a list of the debts that were not discharged in your bankruptcy case that will still need to be paid (student loans for instance).  If you are unsure, contact your bankruptcy attorney.

If you continue to receive collection letters or telephone calls regarding debts that were included in your bankruptcy case, keep the letters, get information from collectors who call on the telephone, and contact your bankruptcy attorney.

If you completed a Chapter 13 bankruptcy case and your auto finance company or your mortgage company contact you and tell you you are behind on your payments, contact your bankruptcy attorney immediately.

Recall the circumstances or problems that resulted in your having to file your bankruptcy case.  Have those circumstances or problems resolved so that you will not have to file a bankruptcy case again in the future?  If they have not, think about what steps you can take to avoid having to file a bankruptcy case in the future.

If you put yourself and your family on a budget during your bankruptcy case and you got through it, you know what you and your family can do without.  You may have to stay on that tight budget until your financial situation changes.  If your financial situation has improved, you may want to examine your family’s needs and make some changes:

Savings are important.  Savings may insulate you from further financial setbacks as they occur in the future.  If possible, try to start putting aside some savings.  Make your savings automatic!  To make your savings plan automatic, have your bank help you set up an automatic transfer from your checking account where you deposit your pay check to a savings account each month.  Do not touch the savings account money – it’s only for emergency use!

Are you contributing to a retirement plan or an IRA?  If you are not, you should be.  If you stopped your retirement plan contribution at work while in your bankruptcy case, get it re-started now.  You deserve a stable retirement.  If you have no retirement plan through your employment, speak to your Bank about setting up an IRA.  Again, and this is very important,  have your bank set up an automatic transfer from your checking account to your retirement account each month.   You MUST make the retirement savings Plan automatic!  If possible, try to maintain a monthly contribution of 10% of your take home pay – more if you can manage it.  This money is never to be touched – until you retire.  Compound interest will now work FOR you, not against you like the interest on your credit cards did.  After a while it will be fun to watch your retirement fund grow.  You will look forward to checking the statements each month.  If you start an automatic retirement plan when you are in your 20’s and continue to fund it at 10% (remember to increase your contribution as you get raises!) it is highly likely you will have a million dollars in the account when you retire – I’m not kidding!  That is the power of compound interest.  It is MOST IMPORTANT that you make the contributions to your retirement fund AUTOMATIC – if you do not, you will always find something else that you will need to spend your retirement plan money on and it WILL NOT get saved.  Your bank can help you automate the process in about 10 minutes.

If you eliminated need maintenance on your home or car while in your bankruptcy case and it’s possible to pay for that maintenance now, do it.  These postponed maintenance items are likely to be priorities now that will cost you much more money in the future if ignored.  Try to take steps to conserve and reduce the costs of your utilities – insulate, add a programmable thermostat, get new LED light bulbs that will last indefinitely and use less energy – save money, that’s the goal.

If you dropped or reduced insurance or medical coverage while you were in your bankruptcy case, try to at least restore your original coverage now.  If you had no coverage before, can you afford some coverage now – take a close look and get coverage if you can.  Shop for new insurance coverage regularly.  It is common for the cost of your insurance to creep up over the years.  Shop around periodically, chances are very good you can save money on the same or even better coverage.  This applies to car insurance as well as homeowner’s insurance coverage.

Now that your bankruptcy case is over you will start to get applications for new credit cards.  Or you may want to obtain new credit cards.  I am not a proponent of credit cards, but their careful use is one of the fastest ways to build new credit and some people require credit cards for travel with their jobs.  Be careful in taking new credit cards.  There are websites which will show you quite clearly which cards are the least expensive cards to use with regard to both interest and fees.  Take a minute and look, www.lowcards.com is a website that will help you compare credit card interest rates and expenses.

On this website I have more in depth articles about rebuilding your credit after bankruptcy so I am not going to go into detail about that there, but do read those articles and start rebuilding your credit.  Before you start trying to rebuild your credit, be sure that financial problems are really behind you.  Do not be in a big hurry to start building a new debt burden.  After a bankruptcy case you have essentially a clean financial slate, do not be in a hurry to start writing new debt obligations onto that slate.  Rebuilding credit requires ongoing evidence of your ability to repay your loans and credit on time. Do not fall into the trap of taking on too much new debt too quickly and then fall behind again.  When your income situation is stable and you start to take on new debt, keep your debt burden low and start rebuilding your credit with comfortable, timely debt payments.

Check with your cell phone provider about a new, lower cost plan.  It’s a good bet that you can find a plan that gives you more and costs you less.  The phone carriers are in strong competition and new plans with more features at lower prices become available frequently – ask!

Do not get scammed!  Scammers often target people who have recently completed bankruptcy cases or have had foreclosure problems.  These people obtain information from civil, bankruptcy or foreclosure court records.  These scammers are seeking to prey upon people who are desperate for credit and will make bad decisions as a result.  Some scams include:

– Paying for credit repair.  Your credit report is really your credit history.  You cannot change history, it is what it is.  No credit repair company can clean up your credit repair record if you have ever fallen behind on your debts.  The National Consumer Law Center (NCLC) and NOLO both have excellent books on credit repair and surviving debt.  The books are reasonably priced, comprehensive, professionally written by experts on the topics, full of helpful information tips and forms – they are an excellent resource which I recommend.  Find the National Consumer Law Center at www.consumerlaw.org and NOLO at www.nolo.com.

-Do not deal with companies that advertise that bad credit or no credit is not a problem. These companies are looking for people who think they are too risky to pass a credit examination.  These companies are looking for such people because they are an easy mark for these brokers or lenders to get them signed up for high interest rate loans.  Have a reputable lender look at your credit and you may find out your not as bad a credit risk as you thought you were.  In the same vein, do not take a high interest rate loan just to tide you over – especially if the lender wants you to pledge your home as security.  Don’t get ripped off.

Your bankruptcy case is over.  Your fresh start is starting.  Use good judgment and care to protect your financial health going forward.  If you have questions or are confused – get help from reputable sources.  Walk before you run.  Good Luck!

 

Interested in filing bankruptcy or how a bankruptcy can help you get a fresh start give us a call at 732-302-9600 or fill out our online consultation and we will call you!