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Life After Bankruptcy

So you did it.  All of your debt was discharged – banquished — banished.  If you have a home or a car, negotiations were made through to court for you to keep those things.  Without the weight of additional debt, you are in a better position to pay for those items and to save money for the future.

So, now what?  How do you rebuild your credit all over again?


Create  A Budget

You need to be very clear on what your income is and what your expenses are.  Your living expenses include rent/mortgage, utilities – heat, electricity, water and insurance – car, home, personal.   Make sure you include savings – emergency savings and 401k or retirement savings.

There is absolutely nothing wrong with seeing a financial counselor to help you move forward in an organized and collected way.  They can assist you in setting up a budget to help you set up a plan to achieve your financial goals.


Reestablishing Credit

Credit card offers usually start pouring in.  Your information is available through the bankruptcy process and credit card companies take advantage of it.  Evaluate the offers carefully as some will charge high annual fees and interest rates upwards of 36% or more.  Secured credit cards require that you deposit your own money to be used to secure the allotted amount of credit.  For example, you can get a $500 credit card if you deposit $500 with the company.  Usually, there is an annual fee and a high interest rate that comes along with it.

Also, if you apply for credit on-line and are approved, examine the offer carefully checking the interest rate and any other fees that may be charged.

Watch out for predatory-lending scams and payday loans. Predatory lenders seek credit-impaired consumers and charge them exorbitant fees for borrowing money. Payday loans let consumers postdate a check for the amount of the loan and the fees for taking out the loan. Those fees are the killer. Credit counselors say you could end up paying as much as 400 percent interest with a payday loan.

As you are rebuilding keep a close eye on your credit reports and credit scores. Get get a copy of your report from all three major credit reporting institutions: Equifax, Experian and TransUnion. The reports should be examined for errors, missing and/or inaccurate information regarding current residence, employment and personal contact information.


Know Your True Worth

When it comes right down to it, a lot of us are very emotional about money — what we can and can’t buy or can and can’t afford could affect the way we feel and how we handle what money we do have.  The old saying goes, “money can’t buy you love.”  Recognize that some of the best things in life are free and choose not to measure yourself by what you have and what you don’t have.

If money is an emotional trigger for you, consider getting some counseling/therapy to help you to look at yourself and your emotional connection with money.   By understanding why we do what we do helps us to make conscious changes about our behavior.  So, if you are emerging from bankruptcy, relax and take your time as you rebuild your creditworthiness.  In this case, time is your friend.