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Life After Bankruptcy: Guided Steps to Rebuilding Your Credit & Finances

Bankruptcy is not the colossal social stigma it was 40 or 50 years ago. Today this financial process allows many people an option to renew their credit score and place their financial affairs in order. The important thing to know is that there is a way to come back and rebuild your financial plans.


After watching your carefully laid budget plans and investments amount to a bankruptcy credit card issue, it is easy to become disheartened and feel like a failure. Those in the psychological profession have equated this level of stress or anxiety to the level one would feel on getting a divorce or suffering bereavement. The following 5 stages of grief were established by Elizabeth Kubler-Ross and can apply to your initial reactions to your financial decision.

You May Experience Denial: You may tell yourself that your situation is not really that bad and things will get better. You may even cling to the possibility of a future raise or windfall that will solve your issue.

You May Experience Anger: When this falls through as these obscure notions often do, the impulse will be to lash out angrily at those you feel were responsible for your misfortune. This could be a former boss, rival, spouse or even the economic system as a whole.

Be Careful With Bargaining: Beware of making a bad decision that can potentially land you into hotter water. Taking on a part-time job or launching another cash-generating scheme like purchasing a list of lottery numbers or selling the boat and heading to Atlantic City.

You May Experience Depression: After the bargaining plans fall through as these desperate attempts often do, it is natural to feel a wave of depression and feelings of despair. When the individual believes, they have no other recourse and quits fighting, they will often consider looking for help.

Acceptance: In the end, there will be a calming feeling of acceptance when you realize that you have finally made the decision that will get you out of this present situation. While this may not be the situation you were looking for, you still have the house and car and any other assets that have been spared.

Work With an Experienced Attorney: Once you have warmed up to the notion that due process is the route out of your predicament, your experienced attorney should help guide you through the process and understand what the process involves. This will be important assistance as you will also be shouldering a considerable weight of stress and anxiety that will make clear thinking a tough call.

You May Need to Educate Yourself: It is the nature of fear that makes things we don’t fully understand seem frightening or insurmountable. You can cancel out this negative effect by studying up on all the particulars of the process and what will be required to rebuild your credit scores. This way you will be approaching the process from a knowledgeable perspective and this always gives the best results.

Consult a Professional or Clergy: For many, working through the emotional side of the situation can be especially difficult, for this reason many have chosen to speak with a professional about the feelings they are experiencing. There are many services in the community that can provide these services, and it is imperative that one take advantages of the resources available to them.

Obligations to the Court: Filing does not necessarily solve the entire issue. This is where you will need the attorney to mitigate the harshness of any repercussions. Each state has its own set of rules that decide what can be eliminated from the debt and what cannot. Some of the more important areas that should be considered might not be discharged include.

  • Income Tax
  • Real Estate Properties
  • Student loans
  • Fraud Victimization
  • Lawsuits for Liability
  • Recent Advances on Credit Cards

Reaffirming Debt and your Responsibility: After the filing you will need to discuss further responsibility with your lawyer. You will be asked to sign an agreement with your remaining debtors to pay off any remaining debts. The total debt is often negotiated down considerably. Included in this are usually new terms of payments for the debts that remain.

Final Notes: The important takeaway here is this, filing can help reset your financial responsibility and credit scoring. The thing that must be done now is to take stock of your future and plan a new approach to your spending habits. Consider gathering your information about your current financial situation, budgeting system and regular income. Consider going over this information with a qualified financial advisor for tips on better managing habits. If you have made it through the process it would be a shame to fall in it once again through poor spending habits.

Learn How To Budget

There are many different budget plans such as the 50/20/30 rule which became famous by Senator Elizabeth Warren. Basically, you divide your income after taxes allotting 50% for needs, 20% for savings and 30% for the things you want. There is also the 28/36 rule that is a standard of measure that most mortgage lenders use and you can too! Because most lenders use this rule, your budget will align with their standards when house hunting! The 28/36 rule is good for a household budget to be healthy and Rebuilding after Bankruptcy. Basically, it is a debt to income ratio. 28% of your monthly income goes to house payments or rental payments. This should be not more than 28% of your monthly income. For Bankruptcy Help, all debts should not be more than 36% of your monthly income. Decide what your total monthly income is, figure out what your total spending is, and adjust your budget accordingly. Be reasonable with your Bankruptcy Repair and give yourself time to adjust as well.

Living Below Your Means

You can get excited about living below your means because this will open the door to financial freedom and Bankruptcy Repair! The basic principle is to spend less than you make thereby having more to save. Rebuilding after Bankruptcy may seem impossible but with incorporating a few new spending and saving habits into your life, it can be done. Manage money wisely, pack lunches for work and school for the kids, spend cash only and don’t go to the mall! Eat healthy food and stay well, health problems can suck up money quickly! Always have an emergency saving’s for when things come up and they do because such is the nature of life! Don’t go out all the time as this can get expensive! Stay in and watch a movie, relax knowing part of Bankruptcy Help is helping yourself save for a rainy day!

Saving/Investing

Investing has a higher return on your money than a regular savings account. There is so much information out there nowadays it’s easy to start investing and Rebuilding after Bankruptcy. The amount on which you start investing depends on you and your budget. Educate yourself first and only use the money you can afford to lose. If you don’t have time to research on your own there are plenty of good financial advisors to help you get started in long term/short term investing goals plans. This can help the road to Bankruptcy Repair. There are also more and more internet brokerage sites where you can set up an account. They offer plenty of self-help tutorials and may have some on Bankruptcy Help. Just watching the markets for a while can help you get acquainted with its ups and downs. Some suggest saving 10,000$ before you start investing while others get started on less than 100$. The point is to start! Let your money work for you!

Re-Establishing Credit

Re-establishing your credit after bankruptcy can be done. Your credit may have been shattered but you can start over. Bankruptcy stays on your credit report but does go away over time. A good way to start rebuilding is to apply for a secured credit card or a credit builder loan. Making payments on time helps to re-establish your good credit and cancel out the negative. Check your credit report on a regular basis and quickly dispute any information that is inaccurate. There is an App for your phone that helps you track your credit score regularly. Keep a low balance on any secured credit card you get and make payments on time. Once your credit starts getting better established, apply for credit cards with a lower interest rate, still keeping the balance low, and paying on time. Re-establishing credit can be done if you stick to living below your means, managing your budget and keeping a close eye on spending versus savings. Then with the help of a good payment history and few new credit cards, you should be in good credit standing. It takes some time and effort, but it’s worth it to reap the benefits of good credit and it is something you can pass down to your children so they can understand the value of budgeting, saving, and have good credit in this world.