Going through a bankruptcy is stressful, and it often causes financial difficulties to those who experience it. However, there are important steps you can take to rebuild your financial health while maintaining your daily life and your monthly budget.
Bankruptcy can be stressful for the entire family. The budget may be tightened, discretionary expenditure may be reduced, and financial constraints may be imposed. Following are some things you can do as a family following a bankruptcy.
Check Your Credit Report
Get a copy of your updated credit report from one of the main credit reporting agencies, including TransUnion, Experian, or Equifax. Review it carefully for accuracy. If you find mistakes, report them immediately to the agency to avoid being penalized for debt that has dropped off your credit history or that has been recently paid down or eliminated. Make sure your name, address, and social security number are correct to keep your record from being accidentally confused with that of another person who has a similar address or last name. As your finances improve, so will your credit report.
Adjust Your Budget
Clear any spontaneous purchases from your spending habits. Stick with the monthly budget and allow yourself a certain amount of discretionary spending. Eat more at home, as studies suggest eating out is one of the most common ways we overspend. Look for online discounts for groceries, clothing, and household items like pet supplies.
Eliminate Credit Balances
Pay down outstanding credit accounts with as little as $10 extra per month. The balance will dwindle faster, and you will save money on interest charges. You might want to sell unnecessary furnishings or tools and apply the income to debt balances. When one account is paid in full, apply that monthly payment to another debt balance to more quickly pay it off as well. Reduced debt can strengthen your credit score and give you more spending money before long.
Pay Bills on Time
Always pay your bills on time, including your mortgage or rent, utilities, insurance premiums, and credit card payments. If you must be late, let the creditor know when to expect the payment. Often, a note will be posted in your record to explain the delay, and your credit score will not be affected.
Get Legal Assistance
To get back on track financially as soon as possible, contact a law firm that specializes in bankruptcies. A competent firm like Knollmeyer Law Office in PA can answer your questions and offer advice to help you work through bankruptcy while rebuilding your credit reputation.
Bankruptcy can be the turning point toward a brighter financial future. Take steps like these to make the most of your circumstances and rebuild your credit standing.
How To Recover
Call a family gathering to discuss ideas to improve the monthly budget. Including everyone will ensure that everyone’s interests and concerns are taken into account. The financial adjustments that follow a bankruptcy might be made easier with creative approaches. Larger expenses, such as a house payment and a car, might be more difficult to adjust unless they are refinanced. If you choose this route, make sure you get a low-interest rate and manageable payments to stay on budget.
How it Can Help
Bankruptcy is a powerful tool for getting out of debt, but it comes with major repercussions. When you’re drowning in debt, there are a variety of reasons to file for bankruptcy. Filing for bankruptcy has several advantages, including discouraging creditors from taking aggressive collection action, eliminating dischargeable debts, and keeping your assets. Here are several scenarios where bankruptcy may be beneficial.
Medical
Medical concerns are one of the most common reasons for filing for bankruptcy in the United States. This is because of a variety of factors, including job loss, co-pays, and high deductibles. You could end up paying a lot of money on medical costs if you have a serious illness or injury. This could deplete your retirement and savings accounts, leaving you cash-strapped. Even if you have health insurance, you might not be able to pay all of your medical expenditures. In this circumstance, declaring bankruptcy may be your only option.
Divorce
A divorce or separation can put both parties under a lot of stress in a variety of ways. You will have to pay legal fees during your divorce, which can be rather expensive. Following the settlement, marital assets will be divided, and the top earner will be responsible for alimony and child support, depending on who wins the lawsuit. You may even have to leave the house and continue to pay for the two homes’ expenses. All of these payments may render you unable to pay your expenses and force you to file for bankruptcy. You can also file for bankruptcy if your partner is unable to pay alimony or child support.
Loss of Employment
Losing a primary source of income, such as a job or a business, can be heartbreaking. If you don’t have an emergency fund to fall back on during a financial crisis, you may find yourself drowning in debt. If you are unable to find a steady source of income for an extended period of time, you may be forced to file for bankruptcy in order to avoid creditors.
It’s important to remember that bankruptcy has a number of effects, including damage to your credit score and the loss of financial control. If you find yourself in any of these scenarios, bankruptcy may be your only alternative.