If you’re thinking about using Chapter 7 bankruptcy, you want to look at the big picture. What assets will be liquidated? What do you get to keep? What does the bankruptcy filing mean for your future?
One of the key things to consider is what you’re going to do after you file to rebuild your credit. After all, your credit score is likely far lower than it’s ever been. Even though you retained exempt assets, you may have lost a lot. You want to start over, avoiding the mistakes you made before, and get everything in order. What should you do?
First of all, it’s important to have a budget. Make sure you don’t spend more than you earn. It sounds simple, but it’s the key to the rebuilding process.
Additionally, look for ways to show lenders the new and improved you, building up your credit score and demonstrating that you’re not a bad risk. While it may be hard to get traditional loans, you may be able to get secured credit cards. If you then use these cards within your budget, making your payments on time, you show the lenders that they can trust you with those traditional loans again.
Remember that you may have to take small steps. It might start with one secured credit card and nothing else. The rebuilding process can take years. However, it’s not impossible. If you stick to your budget and slowly work on proving your creditworthiness, you can make the most of your bankruptcy filing.
When you do decide to file, be very sure that you know what steps have to be followed. Bankruptcy can be complex, and you don’t want a simple mistake to derail the process.
Source: Nerd Wallet, “Bankruptcy Basics: How to File for Chapter 7 or Chapter 13,” Sean Pyles, accessed Jan. 06, 2017
