Four Mistakes to Avoid When Managing Your Finances after Bankruptcy

Avoid These Common Financial Mistakes After Filing for Bankruptcy

Managing your finances after bankruptcy can be a challenge, especially if you struggled before you filed.

Credit and financial counseling are part of the bankruptcy process, but with everything else going on it can be difficult to remember and apply everything you learn. For many people, the weeks and months after their bankruptcy are the most important for avoiding a second filing.

If your goal is to stay on track after you complete bankruptcy and you want a better financial future, these four tips can help.

Create a Budget to Help You Manage Your Expenses

The best thing you can do at any point in your financial life, but especially after bankruptcy, is to calculate your expenses and know what you spend each month. Once you know how much you have to spend, you can create a budget. This allows you to prioritize your expenses and take care of those priorities before spending any other money.

Understanding your monthly expenses also helps you determine if you’re earning enough or if you need to cut back on spending.

The great thing about doing this after bankruptcy is you’re beginning with a fresh slate. If the majority of your debt was discharged in bankruptcy, you’ll be starting fresh and can assess your financial situation before taking on a new expense.

You can find budgeting tips here provided by the Federal Trade Commission for consumers.

Make Savings a Priority to Build Credit after Bankruptcy

Putting money away to save when you’re considering bankruptcy is a challenge. If your day-to-day financial situation involves holding creditors off and scraping together enough to pay your bills, chances are you aren’t thinking of the future when it comes to money. Unfortunately, failing to save can get you into a serious financial problem again.

Once you emerge from bankruptcy, you need to make saving a priority. Include savings as one of your priority expenses when creating a budget. If possible, aim to save at least three months of expenses to give you a safety net in the future. Even if you’re only able to put away a few dollars each week, saving should be an important part of your post-bankruptcy financial plan.

Dipping Your Toes Back into Credit, Rebuilding Credit

As much as you might be tempted to avoid credit cards after finishing bankruptcy – or the opposite, you’re tempted to overdo it with credit cards – you’ll want to ease your way back into the world of credit.

Most people receive a wave of credit card offers once they complete bankruptcy, but most of these offers aren’t great choices. Many unscrupulous creditors prey on people who have experienced financial problems and offer credit cards with high interest rates and other penalties.

Your best bet is to take your time, explore your credit card options, and choose just one credit card to help you rebuild your credit. Use it only for small purchases so you can avoid to pay off the balance each money. The last thing you need after completing bankruptcy is to accumulate a large credit card balance that puts you in a precarious financial situation.

For more information on emerging from bankruptcy successfully, or to speak to someone about filing, contact the Law Office of Robert M. Geller at (813) 254-5696.