Regaining financial stability after bankruptcy
When you file bankruptcy, it allows you to get rid of most of your overwhelming debt and provides a fresh financial start. However, unless you take steps to protect yourself after your bankruptcy has been completed, you may find yourself back in the same situation that caused you to file bankruptcy to begin with.
Document what debts were discharged
One of the steps you should take is to keep documents concerning all of the debts that were eliminated during your bankruptcy. Even though the debts were discharged, it is possible that you will be harassed by debt collectors that are attempting to collect debts they purchased from other companies. Having sufficient documentation of the discharge of these debts can stop these collection attempts. Additionally, it may provide the basis of a lawsuit or contempt of court proceedings against these debt collectors, if they do not immediately stop contacting you about your discharged debts.
It is also a good idea to order copies of your credit reports from the three main credit reporting bureaus. Once you have a copy of the reports, check them to ensure that they accurately report the debts that were discharged during bankruptcy. If you find any inaccuracies, having the sufficient documentation proving that the debt was discharged is important to have when contacting the reporting bureau to correct the error.
Keep to a budget
In order to manage your expenses after bankruptcy, it is important to keep to a strict budget with the goal of saving a portion of your income each month. Doing so will allow you to slowly build an emergency savings of at least six months’ worth of expenses. This will ensure that you are prepared for any unexpected financial needs.
Manage remaining debt
Although the discharge in bankruptcy is powerful, it does not eliminate all of your debts. Debts like student loans, taxes, alimony and child support remain after bankruptcy has been completed. Since these debts will not be listed in the discharge order, it is important for you to inventory the debts that remain and set your budget accordingly to ensure that they are regularly paid.
Also, it is important to note what liens remain after your bankruptcy (most often, this is a car in a car loan or house in a mortgage). Although bankruptcy discharges your obligation to repay the debt, it does not affect the lien holder’s right to take back the property if you fall behind on your payments. If you wish to keep the property, it is important to verify the remaining balance with the lien holder and keep up with the necessary payments. Doing so will prevent repossession of the property.
An attorney can help
The ability for a fresh financial start is a desirable aspect of bankruptcy. However, bankruptcy should not be filed without the assistance of an experienced bankruptcy attorney. An attorney can give you an overview of the process, determine whether it is right for you and protect your best interests-both during and after the bankruptcy.