Bankruptcy is a legal proceeding that can absolve individuals, sole proprietors, businesses, and in rare cases, even cities from debt. It provides a legal "fresh start" for a person or business entity’s financial life and can help those drowning in debt.
Of course, while bankruptcy is supposed to be a fresh start, it can be stressful, nerve-wracking, and scary when reviewing options and trying to determine if it’s the right step. In this post, we'll share some tips on how you can rebound from your negative financial situation after finding help by filing for bankruptcy.
Change Your Habits
Going into debt is often a lot easier than it is to try to get out of debt due to fees, interest, and penalties. Once you’ve decided to make a change, you likely have to reflect upon and likely change your spending habits so that your financial picture can change. Additionally, after bankruptcy most if not all your debts are gone, so what is a better time to manage your money better? This “Fresh Start” begins by you managing your expenses, without credit, and learning to alter and reduce spending to match your income. By managing your expenses to align with income, you may find places to reduce your expenses and maybe even be left with a monthly surplus of cash for short & long-term goals.
2. Find the Right Financial Advisor
While you may not be a great financial planner in your own right, you still need one. When you are starting again, you will want someone to advise you on how to oversee your finances and how to save and invest your money, if you choose to invest. Your financial advisor should be able to help you with establishing a budget, handling your debts, and guiding your investments.
3. Save Your Money
It is much harder to get out of debt these days and some may even be doomed to be in debt for the rest of their lives; and for this reason, you need to change your previous habits.
The first thing to do should be to save money and try to pay yourself first. Now that may sound easier said than done, but it starts by you taking an honest, full recording of expenses and income for a given period and then comparing that to income in the same period of time. If you spend more than you make in income, look at expenses that can be reduced; and then consciously reduce them. Many people who do this come to realize that watching where they spend and what they spend money for can be reduced and before they know it, they have money left over. It is much easier than we think and you'll be surprised how much you can save over time. It’s all about taking that first step!
4. Make a Plan
When you are starting again, you need to be reasonable and realistic and make a plan that you can and will follow. Make sure that you have a plan of action to take when you are trying to get out of debt.
Remember to account for your savings, spend within your means, and remember that using credit today does not always mean you will have money to repay down that credit later. These practices can help you move on from your current financial predicament sooner and help you stay out of debt and always have a cash surplus.
5. Monitor Credit Reports
One thing that you should do once you get out of debt is to keep an eye on your credit reports. This will help you ensure that your credit rating stays up and that it continues to improve. You will also want to ensure that all of your credit is being reported accurately.
6 Maintain Your Job & Living Expenses
If you are just starting, you need to make sure that you maintain your job and rent or mortgage payments. Making a significant change can be damaging to your finances and your credit rating/score. For this reason, you must monitor your payments and stay up to date with making the required monthly payments at the bare minimum; and make sure that you try to stay employed with one or more employers for as long as you can to establish stability and the consistency of income to help you reach your goals.
7. Avoid All Debts
Once you are out of debt, try your best to avoid incurring any large debt or high-interest debt that you are unable to manage in the future. This may include credit card debt, car loans, student loans, and any other loan you might be considering that could negatively impact your life. If you can avoid any new debts for the time being and focus on managing your expenses & income, you will help reduce the likelihood of getting into trouble and needing to file for bankruptcy again.
A Fresh Start
Some people say that bankruptcy is a last resort, and others argue that it is one of the best ways to start over and get a fresh start. Although it would be great to have a one-option fits all approach, it really does depend on every person’s unique specific situation. If you decide to file for bankruptcy, use these tips to help you recover from it and start fresh.
Get bankruptcy help in London today. If you think that you have too much debt or struggle to pay your bills, contact Paul J. Pickering and Associates a Licensed Insolvency Trustee for a free, no-charge consultation. Eliminating overwhelming debt is the starting point for solving your financial struggles, and we can provide you with options and information to manage existing debt and avoid it in the future.
If you’re looking for help with debt and your ongoing payments or if you want to review your options and learn about consolidation loans, debt management programs, credit counselling, financial counselling, proposals, consumer proposals, and bankruptcies, we at Paul J. Pickering and Associates Limited are here to help you.
We have over 30 years of experience in helping our clients resolve their financial problems. We specialize in debt management, and proposals. consumer proposals, debt counselling, and bankruptcy in London, Ontario. Whether you’re starting to get overwhelmed and you don’t know how to handle your debts and minimum payments, contact our office today for your free initial consultation, and we’ll put together a plan that will work for you.