Tips to Get Back on your Feet after Bankruptcy

Bankruptcy can be one of the most difficult events to recover from financially after the credit becomes destroyed and the bankruptcy is recorded for the next seven to 10 years. Although it can be difficult to regain your financial standing, there are several ways to get back on your feet with the right resources and tools. Although it can take up to a decade to have a clear record, there are important steps to take to regain your standing.

Consult with Credit Counseling

Several non-profit credit counseling services are available, making it easy to become educated on improving the future of your credit score. A counselor will be able to provide you with a plan and steps to take to regain a foothold on your score. If you are still in the bankruptcy process, you'll also want to talk to a bankruptcy attorney to find out ways to minimize the effects of bankruptcy on your financial future. Some bankruptcies are due to lack of financial education or bad financial planning. Take the time to educate yourself on money management by taking a free online class

Monitor Your Credit Score

It's important to check your credit score periodically and look for possible errors in your history. Credit repair services can assist with removing the errors should they prove to be illegitimate. Avoid closing credit cards, which can reduce the age of your credit history. It's important to keep an eye on your credit to not only keep track of the progress of your score but to ensure that no one is using your identity or opening fraudulent account in your name.

Apply for a Secured Credit Card

You may find it difficult to be approved for a credit card after going through bankruptcy, but a secured credit card from a major bank will gradually increase your limits when you prove to make payments on time. Although the cards come with high interest rates and upfront fees, they will be worth the investment with proper use. A normal credit card can then be opened after your credit score is above 600. It's a good idea to use credit to start rebuilding your credit score, however you need to use credit wisely. Use it to buy the things you need and then pay the balance in full each month.

Avoid Unfair Lenders or Deals

Many lenders specifically target those recovering from bankruptcy in an effort to rip off those who may be uneducated and desperate for a loan. Look at the fine print and avoid rent-to-own offers or loans that have astronomical interest rates. If it sounds to good to be true, it probably is. So avoid potential ripoffs after filing for bankruptcy. Bankruptcy is tough, but it can give you a fresh start. Don't get off on the wrong foot by taking more loans and getting buried in debt again.

Create an Emergency Fund

Create a plan and prepare for the unexpected by creating an emergency fund to ensure that you have the financial means for paying medical bills or unexpected car repairs. This will prevent using a credit card and going back into debt. In order to start saving money, you will need to create a well planned budget. Make sure you are living within or even below your means so that you will avoid a situation where you get back into a cycle of debt.

With an estimated 1.6 million people who file for bankruptcy annually, many people may feel helpless and out of control with their financial future. Take advantage of a few important tips, which will work in your favor and with a bit of responsibility. Although bankruptcy can be devastating, there are several ways to recover and learn from past mistakes.