4 Tips For Bouncing Back After Bankruptcy
There are several steps that people in Tennessee should take after they file for bankruptcy.
The truth is, bankruptcy could happen to just about anyone in Tennessee. For many people, a run of bad luck or an untimely job loss quickly devolves into financial struggles. In fact, according to NerdWallet, the leading cause of personal bankruptcy filings has been linked to medical bills.
Fortunately, there is life after bankruptcy. Many people who go through the process are able to bounce back and have strong financial futures. Here are some tips for getting your credit back in line after filing for Chapter 7 or 13.
1. Create a budget
One of the most important aspects of financial responsibility is creating a budget and sticking to it. A budget should have two aspects: revenue and expenses. All sources of income should be listed, as well as all regular expenses. Expenses should include items such as rent or mortgage, utility bills, groceries and perhaps a small amount set aside for entertainment.
2. Build a savings account
Saving money every month is not always easy, but with the right budget, it is possible. A budget should prevent people from living outside their means. It should also include setting aside money for a savings account.
CNBC released a report earlier this year giving people an idea of how much money people should have saved at every stage of their life. For example, people in their 20s should be putting 25 percent of their income in savings, whether that’s a bank account or into a 401(k) account. By age 65, the goal is to have roughly eight times your annual salary in a savings account.
Of course, this is much easier said than done. Even just setting aside $50 a month helps to build a safety net for when unexpected expenses do pop up.
3. Build credit
Filing for bankruptcy does take a toll on someone’s credit score. Fortunately, that score may be rebuilt over time. That begins by making sure that all bills are paid in full and on time. Carrying a balance or keeping credit cards close to their limit adversely affects a credit score.
Additionally, people should apply for a credit card. Getting an unsecured card may be difficult at first. Therefore, consumers who have filed for bankruptcy should apply for a secured credit card. This means that they put money into an account with the card so they may only spend what they put in. A secured credit card helps prove to creditors that someone is able to use credit responsibly.
4. Check your credit report
Lastly, people should get in the habit of checking their credit reports. Everyone is permitted to view the report for free once a year. This is a good way of making sure that everything is up to date an accurate. Any mistakes should be rectified as soon as possible, as an error could make someone’s score seem lower than it actually is.
Anyone who has questions about this topic should speak with a bankruptcy attorney in Tennessee.