If you’ve struggled with debts and had difficulty keeping your finances under control, bankruptcy is sometimes the only answer. Whether it’s personal financial difficulty or a business problem, there are plenty of benefits to having the slate wiped clean. Of course, you’ll lose your assets, potentially your business license and your reputation. However, it might be the only way to escape the awful pressures of outstanding balances. The crippling life of looming payments and financial stress is an awful way to live.
Bankruptcy can give you your life back, but – of course – there is a cost. You’ll have to start from scratch, with a big black mark against your name. Often it’s worth it to escape the terrors of debt. But, now there’s a new mountain to climb. We spoke to folks who’ve been through the process and emerged out the other side. We asked them how they dealt with the process and got their life back on track. Today’s post is a summary of advice as a result of their life after bankruptcy.
Change your lifestyle – The number one piece of advice here is to alter your lifestyle. Forget credit cards, large mortgages and expenses. Instead, live well within your means and opt for a more frugal existence. We’re not suggesting this will be any less enjoyable. Quite the opposite. The joy of having enough money without the burden of debt is freedom enough. Drive a smaller car, rent a more realistic sized house and spend your money in a more sensible manner.
Keep your credit rating on track – You’re lucky enough to have a second chance, don’t ruin it! Unfortunately, a bankruptcy notice stays on your credit record for ten years. However, all the other problems are wiped clean. That gives you a fresh slate to begin building a stronger credit rating. There may be a black mark, but pay your bills on time and lenders will soon see your changed ways. Pay every last credit card bill, phone bill and utility bill on time. Don’t let any small discrepancy tarnish your new clean record.
Manage your finances the right way – Take stock of the mistakes of old. Approach life with a renewed fiscal responsibility and make sensible decisions. Stay within your means and make careful budgets for all aspects of your life. Try to avoid operating in the red and run a surplus on your monthly lifestyle. Start saving money and build up an emergency fund. Begin to look at sensible investments and take out a retirement fund.
Take out a loan – It might sound counter-intuitive to a bankrupt individual, but sometimes it’s the only way to get things back on track. Despite your black mark, it’s not impossible to secure a loan. FHA loans and bankruptcy are not mutually exclusive, and borrowing is possible. Just be sure to take only what you can afford and pay it back in full.
It has a fierce stigma attached to it, but bankruptcy is often the only way to emerge from the dark. If it happens to you, follow this advice and make the most of your second chance.