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How to Come Back From Bankruptcy

Penn Credit Corporation shares their professional opinion on coming back from bankruptcy.

By Penn Credit CorporationPublished 2 years ago 3 min read
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There are plenty of reasons why you may need to file for bankruptcy. This huge decision may make you feel doomed, but it is often the right choice. If you make the right decisions following your bankruptcy, then you can easily find yourself in a solid financial situation again. Just be prepared to put in the hard work over the next few years. These are the four things you need to do in order to come back from your bankruptcy.

Keep Bankruptcy Paperwork

The paperwork associated with your bankruptcy filing may not seem very important, but you will likely need this information in the near future. Most creditors will want to view this paperwork before offering you a loan. Struggling to find the paperwork will just make it harder for you to get a mortgage or auto loan. Save everything until the bankruptcy falls off your credit report.

Save Money Monthly

Poor financial skills are one of the biggest causes of bankruptcy. You do not want everything to repeat itself again down the line. The best way to prevent this from happening is by finding ways to save money every month. This may require you to cut some of your expenses, but it is well worth it in the end. If you need help figuring out the best ways to save money, then you may want to create a monthly budget.

Work On Your Credit

Your credit score will take a big hit after a bankruptcy. It may take some time, but it is vitally important to steadily increase your credit score. This is the only way creditors will trust you with their money. The most important aspect of credit building is paying your bills on time. It is also a good idea to get a secured credit card. These low-limit cards are a great way to build up a low credit score.

Maintain Job Stability

Recovering from bankruptcy is all about finding stability in your life. It is hard to show creditors that you are reliable if you are constantly changing jobs or moving every few months. Keeping a long-term residence shows an ability to pay rent on time. A steady employment history shows a consistent source of income, which looks great on credit applications.

Track your spending

Eventually, you will want to create a budget, but before creating a realistic budget, you have to understand where all of your money is going. People are often surprised to find out that their biggest expenses each month are actually a series of small purchases that add up over time. It may not seem like a big deal to spend $6 on a latte until you realize that a $6 latte five days a week over the course of a month is $150.

Create a budget

Unless you get a second job or create an additional revenue stream, your income will not change from month to month. If you want to do things like travel, pay off debt or buy large things like a home or a car, you’re going to have to reallocate how you spend your money. For instance, it might make it worth it to give up those $6 lattes if you understand that by doing that, it frees up $150 a month you can then put towards paying down debt or saving for a big vacation. The best way to make sure you are using your money to your best advantage is to prioritize your spending.

Use a money tracking app like Mint or Quickbooks

Although it is important to track your money before setting a budget, it’s even more important to keep tracking it afterward. Your expenses each month will always be in flux to some degree, and small purchases can really add up, particularly when they are subscriptions. It doesn’t help to save $100 a month cutting the cable only to end up spending even more on streaming services. Tracking your money throughout the year will also make tax time a breeze.

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About the Creator

Penn Credit Corporation

Penn Credit Corporation is a Pennsylvania-based financial firm providing exemplary debt-collection services. Penn Credit offers consistent deliverables for clients by improving their bottom line through accelerated cash flow.

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