Bankruptcy offers debtors the chance at a fresh financial start. But what does a debtor do once their debt has been discharged and their bankruptcy case closed? Below are four tips every post bankruptcy debtor should follow if they want to start their fresh start out on the right foot.
- Live within your means. Debtors exiting bankruptcy must learn to rely less on debt and more on the real income they earn. Avoid overextending yourself, create a budget and stick to it.
- Save at least 10 percent of your income. For debtors emerging from bankruptcy, savings will be the key to handling those unexpected emergencies. When a debtor doesn't have savings, they often rely on debt to help them when they need extra cash fast. Your goal should be at least 3 months expenses in a bank account.
- Get adequate health insurance. We can't talk about this enough because many debtors without health insurance incur medical debt that few can pay. Medical debt is one of the leading causes of bankruptcy; but avoiding it will take some due diligence on your part and the willingness to pay a little extra for quality health insurance.
- Rebuild your credit. Despite the myths you hear about bankruptcy ruining your chances at ever getting credit again, getting access to credit and rebuilding your credit rating is possible and necessary after bankruptcy. Many credit card companies are willing to issue secured credit cards to debtors who have filed bankruptcy and after a year of two bankruptcy debtors are often able to get unsecured credit cards.