Bankruptcy is a great way to get a fresh start and get yourself back on track financially. It’s a tool that allows you to wipe away debt, or at least reorganize it so it’s more manageable. Whether you are already in the midst of filing for bankruptcy or you’re wondering whether it might be right for you, here are a few things you should know about the lifestyle changes needed to ensure your bankruptcy is a success.
Understand “Living within Your Means”
It’s tough to set a budget and stick to it, but you’ll have no choice once you file for bankruptcy – assuming you don’t want to have to file again in the future. If you are filing for Chapter 13, your budget will be determined by the bankruptcy trustee.
Chapter 7 filers will have a bit more leeway once their debts are discharged, but this shouldn’t be viewed as permission to return to your old ways of living. If you truly intend to use bankruptcy as a tool to get a fresh start, you need to make that fresh start and begin living within your means.
For a closer look at budgeting and creating a plan for living within your means, check out this article from CNN.
Consider a Cash-Only Lifestyle
One of the toughest challenges of tightening the financial belt is committing to paying cash for anything you buy. But as tough as it is, financial experts recommend it as one of the most important things you can do to gain control of your financial situation.
Of course, you won’t want to close yourself completely off to credit in the future because that can actually damage your credit score. What you can do is keep only a small balance on a credit card that can be paid in full each month. Some people choose to only use credit to pay for one purchase, such as gas or groceries, and keep the cash set aside to make the credit card payment at the end of each month. This keeps finances tidy and on-track for improvement, while also keeping a steady and reliable credit history.
Make Bill Paying a Priority
Speaking of bill paying, it’s important to make it a priority on your schedule. All too often, people facing a financial crisis reached the tipping point by putting off the payment of monthly bills. They might have lost track of the due dates or been unsure what minimum amount to pay or shuffled money around to put toward another “more important” bill, only to find themselves several months behind and facing exorbitant late fees and over-limit fees.
An important part of your life after bankruptcy is keeping bills on track. Schedule a time at least once a month to sit down and sort through your bills. Put due dates on your calendar and set up as many reminders as necessary. It’s also a good idea to consider if a bill can be better managed or even reduced, such as by requesting a lower interest rate or speaking to a utility about a different payment plan.
If you think bankruptcy might be the answer to your financial concerns, we can help. We understand how difficult it can be to move beyond financial struggles, but it is possible. For more information or to schedule a consultation, contact the Law Offices of Robert M. Geller at 813.254.5696.