Although filing for bankruptcy has become increasingly common nowadays, it is still a devastating event that can hurt both financially and emotionally for some time. The good news is that it isn?t a permanent setback. Although the path to recovery may be a tough one to travel, by taking certain actions, you to can rebuild your finances to get back to, and even surpass, the place where you were before the bankruptcy occurred.
The thing to remember from the outset is that getting back on your feet after a bankruptcy is a long term process. Just as it probably wasn?t a single event that got you into this predicament, but rather a series of bad choices over a span of time, so will recovery consist of making smart decisions for years to come. Below are some useful tips.
1. Know The Difference Between Good And Bad Debt
Hopefully going through this difficult financial crisis has taught you to appreciate the value of money a little better. The reason that people get to a point where they have to totally write off all of their debt is not because they were unintelligent, but instead it was because they didn?t respect money enough. Not all debt is the same. Good debt is when you invest in something that will increase in worth and/or generate profits, as in the case of real estate or businesses. Bad debt involves purchasing items that are consumable and lose value over time. Food, boats, electronics, and clothes are examples. Stay clear of bad debt at all costs, and decide on to get loans for things that are assets.
2. Track Your Financial Life
Most people do not keep an active eye on their finances and credit standings. The more trouble they get themselves into, the more they bury their heads in the sand, not seeing how bad things really are. In order to recover from bankruptcy, you have to be keenly aware of exact how much money you have and what your credit history looks like all the time. Knowing specifically where you stand can prevent things from getting worse than they should, and can also help motivate you to re-direct yourself if you start to go off track.
3. Make Timely Payments Top Priority
Aim to be perfect at making your payments on time. Better yet, be sure to pay your financial obligations and bills early, or even overpay them whenever you have a extra funds on hand. Your bankruptcy can stay on your credit report for up to ten years. Be sure not to add any further blemishes on your credit history from this point moving forward.
4. Have An Emergency Fund
Those that have great credit scores typically have an emergency fund set up in order to tackle any of a myriad of financial crises that can happen quite unexpectedly. By having an amount equal to about 3-6 months of your monthly expenses saved up, you will be prepared to handle any setback that can hit you.
Bankruptcy doesn?t have to be a deathblow. Millions of people have had to choose filing for bankruptcy as a last resort. Fortunately for those that have, by having the discipline and determination to make smart financial decisions afterward will result in making a full recovery for their financial outlook.
Written by Victor Daily, who regularly writes debt help articles.
Source: http://www.ericfinance.com/recovering-from-bankruptcy/
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