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After Bankruptcy

Written By: Guest Author

For anyone who’s filed bankruptcy, life afterward can feel like a harsh awakening. A bankruptcy is like a tattoo on your credit report, one that you can’t remove with lasers.

Filing bankruptcy isn’t to be taken lightly, but it doesn’t have to ruin the rest of your financial legacy. Read below to see what you can do after you’ve filed bankruptcy and why it’s not the end.

What to Do Now

If you had some debts cleared because of bankruptcy, you’re probably breathing easier now. Bankruptcy can feel shameful, but there’s nothing wrong with having more room in your budget now.

So what to do with any extra money you might have? First, make a list of your remaining debts in order from highest interest rate to lowest. Make a plan to pay them off using any extra money you have in your budget. As soon as one debt’s paid off, add that payment to the next debt you have. This is called the snowball method.

By having some of your debts erased by bankruptcy, you can take advantage of this opportunity to restructure your finances.

You should also save for an emergency fund. A major reason that people find themselves in debt is that an unplanned event comes up and they solve it by using a credit card. If you have an emergency fund, you can use cash to pay for whatever comes up without getting into further debt.

An emergency fund of $1,000 can be sufficient to start, but three- to six-month’s worth of expenses is better.

Take Care of Your Credit

Bankruptcies can cause a huge hit to your credit score and make it hard or impossible to qualify for new forms of credit. Most kinds of bankruptcy will fall off your credit report after seven years, but in the meantime, you can continue to try to increase your credit score.

Make all your payments on time, pay off all balances in full, only use 30% or less of your credit limit and avoid opening new accounts.

There are a number of sites that allow you to check your credit for free. Those reports will show any late or missed payments as well as other issues.

Forgive Yourself

Bankruptcy can be a harrowing event and not just for your finances. A bankruptcy can feel like a moral failing.

Feeling ashamed of your bankruptcy might lead to more destructive ways of thinking. Instead of wallowing in guilt, think about what you can do to be more on top of your finances. Create a budget, use financial apps and websites, and find an accountability partner who will help you stay on track.

Consider Other Options

If you have not filed for bankruptcy yet or you are thinking about filing again, consider other options. Bankruptcy is a major life decision – one that can affect your future financial goals and your personal life. A reverse mortgage may be an option for you. The right reverse mortgage product for you – lump sum, line of credit, or monthly distribution – can help you consolidate debt, supplement your income, or create an emergency fund for unexpected expenses.

As with any financial decision, you should consult your financial advisor, who can give you the best advice based on your individual situation. This article is for informational purposes only.

Zina Kumok is a freelance writer and owner of

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Why Bankruptcy Isn’t the End