• 11
  • August
    2011

Working through bankruptcy can be a stressful process for folks and can raise many questions not only about how one will get through it, but also how one will recover afterward.

The following are eight tips provided in a recent article out of U.S. News and World report.

Address the factors that caused the bankruptcy where possible. This is important for obvious reasons. Whether it means setting up a tighter budget, securing better employment, or limiting credit card use, it is important to address the underlying issues, where possible. That said, there are often very understandable reasons why people go bankrupt. Particularly in cases of job loss and chronic unemployment, divorce or separation, other unexpected expenses, or the most frequent cause-medical expenses, it is not always possible to fully address the causes of bankruptcy to ensure it never happens again. Do what you can.

Identify your goals. There are a number of possible goals you can work toward after a bankruptcy. A couple of the bigger ones are rehabilitating one's credit score, paying off debts, and building wiser spending habits. Defining your goals will give you the vision to steer through the process better.

Check your credit score. It is important to ensure that information in your credit reports is accurate, since credit reports affect many aspects of your life. See to it that any incorrect information is removed.

Gradually reestablish credit. This is a big one, since credit is an important aspect of financial health and freedom. One tip is to secure two credit cards and ensure that the balance is timely paid each month. Doing so will slowly improve your score, though this process will take time. Slow and steady wise use of credit is the key. Don't run away from credit, but use it wisely.

In our next post, we'll continue this topic.

Source: U.S. News and World Report, "How to Recover from Bankruptcy," Kimberly Palmer, August 9, 2011.