Tuesday, July 23, 2024

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Essential Tips For Bouncing Back After Bankruptcy

More people experience bankruptcy than you might normally think, but fewer people actually know what it entails. Becoming bankrupt isn’t something that actually just happens to you, it’s something you apply for when you can no longer afford to pay your debts. If anything, it can be a lifeline for those that are in financial trouble, however it does come with consequences.

Bankruptcy essentially ruins your credit score, making it almost impossible to get anything that requires good credit like loans and mortgages, and will stay as a note on your credit file for six years after applying for it. This isn’t the end of the world though and there are plenty of things you can do to make life easier, and to bounce back after this.

Start Budgeting

Not only will this step help you to save some money and avoid being caught off guard by unexpected payments, but it will also reduce your anxieties about money quite significantly. To start budgeting, first, you’ll need to work out how much money you’ve got coming it monthly. Make sure this is a guaranteed figure, as anything extra that pops up sporadically should be a bonus.

Identify exactly what goes out and when, so that you can assign certain amounts to different categories such as bills and rent. Then, figure out what you have left over so that you can divide that comfortably among food, discretionary purchases, and even contribute to savings and your emergency fund to combat those unexpected payments.

Use Services That Don’t Need Good Credit

Having a bad credit score comes with the extreme challenge of trying to pay for certain services that tend to require good ratings. Mobile phone contracts for example, when you are essentially taking out a loan for a new device can be extremely difficult to get.

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However, there are companies out there like Accept Phone who could offer you a phone contract, even if your credit isn’t the best. They may end up basing their decision on your income, and now that you’re earning more without having to pay off any of those debts, it may be even easier to see that you can afford to pay for a simple phone contract.

Monitor And Improve That Credit

Don’t forget to keep an eye on your credit score, but don’t check it too often as it can cause it to drop if you’re not careful. As well as this, find some ways to boost your score by using a credit card and paying bills on time. Do note though, that when you use a credit card, you should only use it if you actually have the money to pay for it. Buy your groceries for example and then pay it off as soon as possible with the money you already have. Don’t risk getting into unnecessary debt again.

Avoid Bad Money Decisions

This might seem like a broad statement, and that’s probably because it is. But it’s something that you need to be conscious of and you should be actively identifying any possible bad decisions with your money. This includes high interest pay day loans, and spending what you can’t afford, especially on a credit card. You’ll also want to make sure you don’t leave payment plans to do manually as missing these will impact your credit score even more. Set up automatic payments to handle these and make sure you don’t ruin that budget.

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