After filing for bankruptcy, you will likely have questions about how it will affect your credit and what steps you can take to move forward.
What can I expect the first year after filing bankruptcy?
A bankruptcy discharge releases you from personal liability for qualifying debts. In Chapter 7, you can be free and clear of your debts within a few months after filing; in Chapter 13, it generally comes after you complete the repayment plan.
Prioritizing your financial stability should be a top priority one year after filing. Avoid taking on any new debt. Many people receive credit card offers in the mail soon after filing bankruptcy. And while it can be tempting, it’s best to avoid these offers. Instead, focus on managing your monthly expenses, building an emergency fund, and reducing any major expenses.
A reason people hold off on filing bankruptcy is the fear of what it will do to their credit and financial future. While filing for bankruptcy will impact a person’s credit score, this damage is not irreparable.
After bankruptcy, you can begin taking steps right away to improve your credit history.
- Pull a copy of your credit reports for free by visiting https://www.annualcreditreport.com/.
- Make sure your credit reports are accurate. The accounts that were discharged in bankruptcy should be closed. If any discrepancies are found, these errors should be reported right away to the credit bureaus via a formal dispute.
- Prioritize making future payments on time. It sounds simple, but on-time payments and responsible credit card use can significantly help you recover from bankruptcy.
- Open a new line of credit. After some time has passed and you feel financially stable, consider opening a new line of credit with a reputable lender to reestablish healthy credit habits.
- Creating a budget is important after completing a bankruptcy case. Write down all necessary living expenses and track how much of the consumer’s income can be used to go towards paying these costs. A good rule of thumb when budgeting is to follow the 50/30/20 rule. What this entails is 50 percent of the consumer’s income goes towards meeting his or her needs. Another 30 percent would be set aside for items that are considered not necessary or are wanted, while 20 percent of the monthly income goes towards savings.
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Facing financial hardship and considering bankruptcy? An experienced Miami bankruptcy attorney can guide you through the process. Timothy Kingcade combines his experience as a CPA and bankruptcy lawyer to help clients protect their assets and achieve successful results under bankruptcy law. Since 1996, Kingcade Garcia McMaken, P.A., has helped people from all walks of life build a brighter future. Each year, our firm helps thousands of people use bankruptcy protection to restart, rebuild, and recover. We contact your creditors the day you hire us to stop the harassment. Find more consumer information at www.miamibankruptcy.com.