Rebuilding Credit After Filing for Bankruptcy
Filing for bankruptcy can help you get a fresh start, but recovery can be a challenge. With some careful planning and caution, you can certainly reestablish good credit after bankruptcy. Following are some suggestions for a successful financial recovery after filing for bankruptcy.
Reevaluate your personal household budget
Together with your spouse, revisit your entire budget, from income to expenses, to determine if there are any areas where you can increase your earnings and/or decrease expenses. While you probably already went through this step when filing for bankruptcy, you should continue to analyze your budget to look for any additional opportunities.
Develop personal financial goals
Now that you are trying to reestablish a good financial foundation, it’s important that you look at your financial situation and create long-term goals, including goals for college savings and retirement. While your goals may seem unattainable at this point, having a goal in place helps make your financial plans more tangible.
Build a household emergency fund
Developing an emergency fund of three to six months’ income is an important goal to help you prevent any further financial emergencies. Make saving for your emergency fund your top financial priority and save as much as possible each month. Keep your emergency fund in a low-risk, easily accessible account.
Maintain or obtain appropriate insurance
In addition to required insurances, such as auto coverage and homeowners insurance, health insurance is a must. In fact, research has shown that many bankruptcy filers state medical expenses as the problem. Having adequate coverage is the best way to prevent such issues.
Improve your credit
One safe way for consumers to reestablish good credit is to get a secured credit card. With a secured card, consumers make a deposit into a savings account with a bank to secure a line of credit. The credit card company then issues a card and a line of credit for at least the amount of the deposit.