4 Things to Do After Your Debts Have Been Discharged from Bankruptcy

If you've recently had your debts discharged from bankruptcy, you're probably ready for a fresh start. Bankruptcy offers a clean slate in many ways. You may want to focus your energy on reestablishing your finances, redefining your spending and saving habits, and rebuilding your credit. Here are a few key tips to get you started.

1. Adjust your financial habits—and your attitude.

First off, you'll need to do a mental check-in to make sure you're prepared for the road ahead. It may take a long time to build financial stability, good credit, and confidence in your ability to manage money again. Bankruptcy may seem like a failure, but if you treat it as a lesson learned, you'll be in a better state of mind to make positive, meaningful changes in your financial behavior. That means paying your bills on time, staying debt-free, and sticking to your budget for a better financial future. You should also start setting aside money for a contingency fund ASAP to help you deal with emergencies like unexpected car repairs and healthcare costs. If that fund grows, it can always be saved up or invested so that it continues to do so.

2. Streamline your budget.

A strict, all-encompassing budget is key to cutting down unnecessary expenses and moving forward financially. First take a look at the key components of your budget, like your income and recurring costs, to get an idea of where you stand. Then start making changes to your lifestyle, trimming down on luxuries and sticking to the necessities. Whether that means cutting back on takeout meals, shopping at budget stores, or moving to a cheaper neighborhood depends on your situation.

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3. Keep an eye on the important details.

Your situation will undoubtedly change over time, so it's important to review your budget every few weeks to make sure it addresses your needs. You should also check your credit report at least once a year to make sure they're accurate. According to the law, you're entitled to one free credit report per year from each of the major reporting bureaus. If you find any errors, like debts you've already paid, incorrect balances due, or debts that don't belong to you, you can file a dispute with the reporting agency to make the appropriate corrections. You should also preserve the documentation from your bankruptcy records, just in case you ever need to show them to new potential lenders.

4. Start building your credit back up.

While this is easier said than done, you can start building your credit back up to a respectable score once you've made the right adjustments in your financial life. Of course, you should avoid overburdening yourself with debt right after your bankruptcy. Because the point is building credit and not spending money, you'll need to focus on using your credit strictly on what you can afford to pay with your budget. As a general rule, it’s best to buy only things that you actually have the money for after your debts have been discharged. You may qualify for a secured credit card, which requires an initial security deposit, or a credit card with a high interest rate, but both of these should be used with extreme caution and care.

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If you're facing bankruptcy or considering the next steps of your post-bankruptcy life, you should have access to an experienced bankruptcy attorney. The Law Offices of B. David Sisson can help you get the most out of your bankruptcy petition, protect your rights from debt collectors, defend you against wrongful foreclosure, and more. Get in touch with us to discuss your financial future.

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