Bankruptcy is one of the most financially difficult experiences a person may have during their lifetime. The financial stress that comes from filing —and the unique complications that come with recovery from bankruptcy—can be trying.
Bankruptcy can create a long, steep hill that one may be climbing up for the rest of their life. But, luckily, there are some key techniques and actions a person can take to recover faster from bankruptcy and recover in a more effective manner.
Bank of America says a good first step is to make sure all credit reports are up to date and current with the post-bankruptcy financial information.
It takes about two or three months for the financial information contained in the credit reports to be updated, so that is an important factor to keep in mind: it will not be an immediate update. It is also important to make sure that all the information relating to your bankruptcy was reported to the proper financial institutions in a timely manner.
After the information is updated, it is time to set up a reasonable budget. It is important to analyze where your finances went wrong and what the reasons first place. A budget needs to be drafted and followed strictly in order to keep spending within your means.
That is the main reason people file for bankruptcy: their spending was out of regulating.
The next important thing a person can do to recover from bankruptcy, according to Bank of America, is to keep a good post-bankruptcy credit rating. You must pay all expenses on time and slowly create a new credit identity.
A credit company or financial institution will not look past the filing, but a good credit history after a bankruptcy filing will at least give them the idea that you are attempting to change your way.
Sometimes that will impress a credit company or financial institution, especially if your new credit history is spotless. The key to maintaining credit history spotless is to use the credit properly. Use the credit only when you know you can manage it, pay it back, and pay it on time.
Take Out a Loan
Once your credit score has improved, it is sometimes helpful to take out a loan of some kind. The point of taking out a loan is to show credit providers and financial institutions that you are serious about re-establishing a good credit rating.
Most people that filed for bankruptcy are eligible for loans two years after the filing, and in some cases car loans can be obtained before then.
A bankruptcy filing will technically appear on a person’s financial history for anywhere between seven and ten years, but it does not mean a person is damned to an eternity of financial burden, read more on business financing
Rather, that seven to ten year span should be seen as an opportunity to start fresh, to start new. The possibility of recovering from bankruptcy can be a harrowing ordeal, but can prove to be a fruitful learning experience in the end.