Is There Life After a Bankruptcy?

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Getting your life back together after a bankruptcy can seem overwhelming and extremely intimidating. By the time you file for bankruptcy, you are probably stressed out because your credit is in shambles, you can’t make your mortgage payments or pay bills and you are in danger of losing your possessions you worked so hard to acquire. If you recently filed for Chapter 7 or Chapter 13 bankruptcy protection, it is important you realize that there is life after bankruptcy. Often times, those who file for bankruptcy treat themselves like financial outcasts, believing myths they hear about not being able to get credit or buy property for years after a bankruptcy.

Well, it might come as a surprise to many, but life after bankruptcy can actually be quite rewarding. But in order to reap those rewards you need to adopt the right strategies and commit yourself to not cast away your precious second chance that a bankruptcy can offer. Eventually, how well you rebound from a bankruptcy filing depends on the steps you take to safeguard yourself against actions that can damage your financial future.

Here are a few steps you can take to hasten your recovery in the aftermath of a bankruptcy.

  1. Don’t allow guilt or shame to affect you. Understand that if you filed for bankruptcy in Arizona, you’re certainly not alone. According to the U.S. Bankruptcy Court in Phoenix, 14,657 consumers and small businesses statewide filed for bankruptcy in 2016. That number was even higher in 2015 when there were 16,313 filings and at its highest in 2010 when 41,579 individuals and small businesses filed for bankruptcy protection.
    So, there is absolutely no need to feel disappointed in yourself or feel like you have failed. Beating yourself up isn’t going to make things any better. In fact, when you continue experiencing negative emotions, it can prevent you from moving onward and upward. So, your biggest challenge after a bankruptcy, more than anything else, might just be to adopt a positive, can-do attitude. At the Pew Law Center, we advise our clients to become more disciplined and better educated so they can learn from their experience and avoid making the same mistakes in the future.
  2. The next step is to take a good, hard look at what you did that got you to this place. Ask yourself how you could’ve done things differently and what you have learned from your experience. This will help you create a better plan and strategy in the wake of a bankruptcy. Enlist the support of family members and friends whom you trust have your best interests at heart. It is important to have the right kind of people around you who offer words of support and encouragement.
  3. Create a budget that is practical and be sure you continue to pay all your bills on time. Especially after a bankruptcy, you need to be hyper-vigilant about your money matters. If you’ve never done a budget or stuck to one, now is the time to get serious about it. Your budget will be your roadmap each month helping you to live within your means so you don’t accumulate any more debt. You should also allocate some of your earnings toward savings and building up an emergency fund so you don’t have to borrow money when you need it, as you’re digging yourself out of this hole. Emergencies have the potential to derail even the most efficient and well-thought-out budgets. So, please don’t let that happen to you. Make building your emergency fund a top priority soon after your bankruptcy.
    Pay your bills in a timely manner. Set up automatic bill payments through your bank. What you do will affect your credit score. Paying your bills on time will help restore your finances and your credit. If money is tight, prioritize your expenses by paying expenses such as food, housing and utilities first.
  4. Get a secured credit card. This is a type of credit card where you deposit a fixed amount of money into a bank account. And that becomes your credit limit. When you charge small amounts to your credit card each month and make payments on time, you can gradually rebuild your credit. A number of these secured credit cards will reward borrowers who are responsible by increasing the limit without any additional deposit. You may even be able to convert it into a traditional credit card. Be very careful not to slip back into your old ways. Stay away from secured credit cards that charge high fees or ones that don’t report your payment history to the credit bureaus.
  5. Understand what you’re in for. Don’t be misled by myths about bankruptcy. Don’t buy into misinformation such as you can’t get a credit card or a mortgage for many years after a bankruptcy filing. This is simply not true. It is also incorrect to believe that you will be charged exorbitant interest rates if you’ve just been through a bankruptcy. If you follow the right path, your credit can be restored in a year or two.

It is true that a bankruptcy will remain on your credit report for up to a decade. But, it’s not going to take that amount of time to rebuild your credit. Not if you take the steps above and are responsible about your finances. Also, you are entitled to one free credit report from any of the reporting bureaus every year. You can request the reports online and go over them to make sure they are accurate. What you need to look out for are balances due that are inaccurate or debts that have been discharged and you no longer owe. If you find something incorrect on your credit report, you can dispute it with the agency. They will investigate and make any necessary corrections. You may need to give them the needed documentation to substantiate your dispute.

So, as you can see, there is life after a bankruptcy, particularly if you keep a firm head on your shoulders, display a positive attitude and take complete responsibility to fix your financial situation. The experienced Arizona bankruptcy attorneys at the Pew Law Center can help you through the process and give you the fresh start you need. Call us at (480) 745-1770 for more information.