Hundreds of thousands of Americans have to file for bankruptcy every year. In 2016 alone, around 483,000 individuals filed for Chapter 7 bankruptcy while approximately 296,000 filed for Chapter 13.
Although many people view filing for bankruptcy as the end, it is really just the beginning. Once you better maintain your debts, there are various steps you can take to get your finances back on track.
Create a monthly budget
You need to evaluate what caused the bankruptcy in the first place and take steps to avoid those practices in the future. Once you have done that, you need to create a budget you can stick with. Focus on the necessities. Part of this budget should include unforeseeable expenses, such as your car breaking down. Set aside some money each month for a rainy day.
Pay bills on time
To get your credit score back up, you want to pay off all bills on time each month. This includes items such as utilities and a cellphone bill. You should set up automatic payments so you do not forget to pay something. Monitor your credit score regularly to see your rating steadily increase.
Get a secured credit card
Another way to rebuild your credit is to use a secured credit card. As opposed to traditional cards, this type only allows you to spend money you actually have. These cards are for individuals with poor credit, so you can more easily live within your means.
Watch out for predatory lenders
People who have filed for bankruptcy often make for easy targets for predatory lenders. These are retailers and car title lenders that offer to sell to anyone, even those with bad credit. People often find the seemingly good deals tempting, but it is important to read the fine print and walk away when necessary. Some predatory lenders will have interest rates as high as 625 percent.