If you are deep in debt, filing for Chapter 7 bankruptcy can be the best solution to get above water and find some relief. However, after the bankruptcy is final, your concerns might switch to how to reestablish your credit and rebuild your finances after Chapter 7 bankruptcy.
Our experienced bankruptcy attorneys are here to help. They offer suggestions on steps you should follow to rebuild your finances after Chapter 7 bankruptcy.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is also called a liquidation bankruptcy. Unlike Chapter 13 bankruptcy, this form of bankruptcy doesn’t involve filing a repayment plan. Instead, a court-appointed trustee will sell off your non-exempt assets and use the money towards your debts.
Steps to Rebuild Your Finances After Bankruptcy
Our experienced bankruptcy attorneys offer guidance on how to rebuild your finances after finalizing your Chapter 7 bankruptcy.
Some key tips include:
Set a Budget
Create a complete budget that outlines all of your monthly income and expenses. Writing this down and accounting for all bills, financial obligations, and incoming money will help you avoid falling back into debt.
Establish a Savings Account
To avoid relying on credit cards and loans for unexpected expenses, our attorneys recommend setting up a savings account. This will offer an emergency fund for when you cash quickly and create a safety net to keep you out of debt.
Apply for Secured Credit Cards
We realize it might seem odd to suggest that you apply for a credit card after filing for bankruptcy, but these can help you rebuild your credit. A secured credit card is backed by a cash deposit. This will teach you to use it responsibly and will force you to limit your spending so you can pay off the balance in full each month.
Check Your Credit Score
You should check your credit reports often to ensure they are correct. Keeping tabs on your report and your score will help you catch errors quickly so you can address them. You can get a free yearly credit report from each of the major bureaus. This will also alert you to when your bankruptcy eventually falls off of your credit report.
Set a Financial Goal
Establish a realistic financial goal for yourself. This should take into account any remaining debt you need to pay off, how much you want to include in your savings account or other financial goals you want to set for yourself.
Increase Your Income
To achieve your financial goals and stay out of debt, you may need to explore additional streams of income. This can include taking on a part-time job, finding a side gig, or trying to get a promotion to increase your salary.
Avoid going into debt by being responsible with your money, and even living below your mean. Instead of stretching your finances and living beyond your means, you should avoid unnecessary expenses and focus on financial security.
Avoid New Debt
After bankruptcy, it’s essential to avoid taking on new debt. Don’t make large expenses and don’t fall back into credit card debt. Being frugal and making wise financial decisions can help you avoid taking on new debt.
Let Us Help You
After filing for Chapter 7 bankruptcy, the next step is to rebuild your finances. This can be confusing if you’re trying to figure it out on your own. Instead, let our lawyers at The Law Offices of Alexzander C.J. Adams, P.C. help. We work for you, the people, and not institutions. Contact us for a free case evaluation, or no-obligation consultation. We are dedicated to helping you overcome this small bump in the road and assisting you to get on with your life.