July 12, 2017

After my clients file for bankruptcy with me, many ask: What should I do next?

I have prepared the following to guide them to moving forward:

Filing for bankruptcy is a great first step to start with a clean slate, but so few people know what to do after their NJ bankruptcy goes through. While the common advice is to get on with your life, there are actual steps that you can take to build your financial future.

  • Establish and stick to a budget. While your bankruptcy filing most likely included a post-bankruptcy budget, it’s a good idea to review your finances and make any necessary changes.
  • Start a savings account to prevent the need to take out a loan to cover unexpected expenses.
  • Begin to rebuild your credit and begin the process of getting approved for credit. The credit cards that will be available to you may come with have higher interest rates. For this reason, it is important to take as many steps as possible to reduce the risk of needing a loan. Keep your car in good condition, save an emergency fund and keep up with home maintenance to avoid going into debt again and digging into savings.
  • Begin repairing your credit score. A great way to start is by applying for a small credit card. There are banks that specifically seek out people who have just gone through a bankruptcy because the law states that you cannot file again for at least another seven years. While these cards carry a higher interest rate, the idea behind getting a credit card is to charge just enough to keep the card open. Using a small portion of credit will go along way when attempting to rebuild your credit score.
  • Ensure that all bills are paid on time each month. Paying your bills in a timely manner makes up a significant portion of a person’s credit score. It can take only a few months to a few years to improve a credit score, but expect to see an improvement in as little as six months after filing for bankruptcy.
  • Finally, do everything you can to earn extra money. While your debts have been erased, it’s critical to build up cash reserves. One of the best ways to build your savings account is to start small but start saving for the unexpected.

With a clean slate after filing your NJ Bankruptcy, you can start fresh and begin in the path of financial success.