The bankruptcy process allows people to start over. While many are eager to embrace this concept, some may not take the time to consider what their finances may look like once the bankruptcy process is complete.
Those who begin with a proper plan in place may set themselves up for financial success moving forward. To accomplish this after a Chapter 7 bankruptcy, there are a few things to consider.
Creating a realistic budget can be helpful in maintaining a positive financial standing. There are a number of budgeting tools available, from simple ledgers to detailed apps that account for every dollar and where it goes. It may be necessary to experiment with a few types to determine the best option for a particular individual.
A separate savings account is critical to protecting against unexpected expenses, such as large medical bills, which are common reasons people fall into debt. Many financial experts suggest creating a savings of at least three times the monthly expenses. Someone should only access this savings account for emergencies and should replace any withdrawals as soon as possible.
Credit is an important factor in large purchases, such as homes and vehicles. Therefore, it can be beneficial to rebuild credit after bankruptcy. Some people may be nervous about collecting new credit, and that is understandable. However, there are smart credit moves that they can make. Secure loans are generally a safe bet, along with certain credit cards. Those who choose to receive a new credit card should do what they can to pay off any charges within the same payment cycle, so they may end each cycle with a zero balance on the card.
Though these are universally beneficial concepts that anyone may implement, every individual's situation is unique and may require additional steps.