Declaring bankruptcy can have a serious effect on your mental health and your overall future. Bankrate reports that bankruptcy remains on your credit report for up to 10 years, making it difficult to secure credit for major purchases.
No matter the total amount of discharged debt, emerging from bankruptcy does not have to disrupt your life, and you can keep a few tips in mind as you reorganize your finances and create a new budget for yourself and your family.
1. Open or reopen a savings account
If you no longer have a checking or savings account because of your bankruptcy, then opening or renewing an account can help you take the first steps to reclaim your financial independence. Add whatever you can at the start of the month, and what you save can help you avoid the use of credit cards if an emergency should occur.
2. Review credit reports annually
Once your bankruptcy discharges, monitoring your credit report annually can help you identify and deny any charges or major debts you do not recognize. You can contest any unusual charges and ensure your credit report remains accurate. You can order a report free once a year from any of the major three reporting companies: Experian, TransUnion and Equifax.
3. Prevent job hopping
As you recover from bankruptcy, try to avoid changing jobs multiple times. Agencies that lend money and credit may see you as a significant risk if you have serious gaps in your employment history.
Setting reasonable financial goals that you can meet as you recover from bankruptcy may give you the confidence you need to emerge triumphant from this period in your life.