If you are in debt, then bankruptcy is probably the only way to recover financially.
Yes, the bankruptcy declaration will hurt your credit in the short term. You will not be able to get a loan or a credit card as before. However, you will still be able to borrow money if you know what kind of loan you can ask for.
Bankruptcy will give you the opportunity to change your money management and planning your budget. These changes once accomplished, you will enjoy personal finances in better health. Here are some steps that will help you get your finances back up faster.
Immediately plan a “budget for the essentials”.
Now you have the opportunity to organize your budget to fit your needs and lifestyle. To do this, you must first make sure that you cover all your basic needs such as food, shelter, clothing, transportation and utilities. Once you have paid them all with your income, you should have a small surplus at the end of the month. Successful changes are likely to require some modifications. For example, you may need to sell your car to buy a cheaper one or use public transportation. You may need to adopt a different way of shopping for food, clothes, etc.
Create a “cushion” for bills
Ideally, you will plan your budget a month in advance. This means that your April income will cover all the bills and necessities of May. In this way, if a situation arises and causes a decrease in income or even unforeseen events during the month, this safety margin will save you financial stress. This strategy will require you to save for the first few months after the bankruptcy to create a necessary reserve.
Anticipate unexpected expenses
After a bankruptcy, you will find it difficult to obtain a loan or a credit card, unless it is guaranteed. You can however apply for a personal loan online. It only requires a bank statement and a check stub, but it does not require a full credit check. Your recent credit history will not prevent you from getting an approved loan. If you have planned a month in advance of your budget, you will repay the loan easily and quickly return to your post-bankruptcy budget.
Restore your credit
Restoring credit after a bankruptcy takes time, but you can start immediately by asking for a secured credit card. It requires a deposit which, once made, allows you to use the card. Buy in small quantities and pay immediately. This will improve your credit score.
Plan a budget for your hobbies
You have planned your budget to pay for all the essentials and you have even managed to keep a cushion enough for you to avoid financial stress. Now you must also provide an amount for your entertainment. The best way to do this is to integrate them into your budget. Do not spend a crazy amount of money on entertainment. Be sure to save a little money so you can have fun while improving your finances.