So you recently filed for bankruptcy and received your discharge, what should you do next? Whether you filed for Chapter 7 (a simple and straightforward elimination of debt bankruptcy) or a Chapter 13 (a debt repayment bankruptcy), there are certain things you should do once your case is finalized.
Collect and preserve all paperwork from your case. You should have received a full copy of your bankruptcy petition from your attorney, which is 40-50 pages of detailed financial information – including the facts about the debts and assets involved in your case. You should have also received a notice of bankruptcy filing directly from the court, which shows the deadlines that affected your case. The court should have also sent you a copy of your discharge order entered by the bankruptcy judge. It is important to have these because some lenders want to see a copy of the bankruptcy papers when considering you for new credit. This is especially true for mortgage loans.
Monitor your credit reports regularly. Credit reports from the three major credit reporting agencies can be obtained for free once a year- and it’s important to know what your creditors are saying about you. Wait approximately three to six months after your bankruptcy has been discharged to do so. It may take several billing periods for creditors to update their accounts, and many creditors and lenders will stop reporting to the credit bureaus altogether after a bankruptcy. It is important to do this because you want to make sure all of your discharged debts from the bankruptcy are being reported to the credit bureaus with a zero balance, so it does not count against you as outstanding debt, which can hurt you if you are applying for new credit.
Start a budget and review it regularly. A main focus after bankruptcy is rebuilding your credit and your budget. Create a basic budget to understand your expenses and take some time every week to see where you are at. Remember the Means Test from your bankruptcy paperwork that compared your income and expenses over a six-month period to standards set by the Census Bureau and the IRS. This test was meant to ‘filter out’ those who had the means to pay their debts, but who were living an extravagant lifestyle financed on credit cards. This is often considered an urban myth, as statistics reveal that a very small percentage fit into “the extravagant lifestyle” category. Most bankruptcies are the result of unforeseen medical expenses, a job loss, divorce or birth of a child.
Start an emergency fund. This goes hand in hand with putting together a realistic budget. When creating your budget, a small part of your income should be set aside for the unexpected. You can begin saving for an emergency fund in less than one month. If you do this every month, you will be amazed at how much it grows. You can start putting a portion of it aside for retirement or your child’s college fund. This is important to do because it will prevent you from obtaining new debt and repeating the cycle.
Consider new credit. Don’t let yourself get carried away with this one. Start with a small credit limit; monitor your charges and budget so you can pay the balance in full each month. There is a world of difference between having good credit and a heavy debt load.
If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
Related Resources: http://blog.credit.com/2014/12/5-things-to-do-after-bankruptcy-103308/