Bankruptcy - How To Recover And What To Expect

Bankruptcy is not the end of life. Yes, it does knock down your credit considerably. And, people don't seem very willing to lend you money after bankruptcy. However, bankruptcy also gives you a fresh start. You have a new opportunity to rebuild your life and your finances. Recovering from bankruptcy is not easy but it is possible if are willing to work toward it.
The first thing to do is to evaluate your situation objectively. If bankruptcy was the result of a temporary setback, such as a medical emergency, you do not need any drastic measures to recover. Just take steps to beef up your savings and investments so that if another emergency strikes, you are well-prepared.
In contrast, if the root cause of your bankruptcy was excessive spending, you would need to take tougher steps to recover from this financial blow. You might need to make drastic changes to your lifestyle-spend much less and save much more. If you used to dine out a lot, you may need to switch to home-cooked meals. If your wardrobe was earlier full of designer clothes, you may now need to settle for off-the-rack dresses. These steps may hurt initially but will ensure that your recovery to financial independence is speedier.
In addition to cutting expenditures, it is important to start saving and investing your money wisely. You can start by saving small amounts and then move on to bigger investments as your financial position gets better. Go for a mix of long-term investment options, such as retirement plans, and short-term investments that you can liquefy easily. While the long-term investments take care of your future needs, the short-term ones act as a safety net for you in case of any financial emergency.
About a year after you filed for bankruptcy, you should start thinking about rebuilding your credit score. The easiest way to do so is to apply for a credit card. You may want to do so sooner but it is wiser to wait out a year. This way, you can avoid unscrupulous lenders who charge astronomically high rates of interest because of the recent bankruptcy record.
Once you decide to go for a credit card, make sure you explore all options before settling on any credit card. These days, it is not difficult to get a credit card even if you have a bankruptcy record. If possible, opt for a secured credit card as you will get it a lower interest rate than an unsecured one. At www.bankrate.com, you can find a list of creditors who offer secured and unsecured credit cards after bankruptcy. Some examples of unsecured credit cards for those recovering from bankruptcy are Continental Finance Gold and Merchandise.
Once you get your credit card, use it cautiously. Learn from your past credit mistakes and make sure that you do not again fall into an overspending trap that led you to bankruptcy. In addition, make sure that you pay off your credit balance in full each month. After you have done this for some time, you can negotiate with the lender for a lower interest rate.
The above guidelines will help you recover from bankruptcy, slowly but steadily. In the meantime, keep your dreams alive and don't lose heart.
Learn more about credit repair, how to boost your FICO fast and tips to improve your credit rating.
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