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5 Ways to Put Your Life Back on Track after Bankruptcy

5 Ways to Put Your Life Back on Track after Bankruptcy

Filing for bankruptcy can be stressful. It is a pretty common thing but that does not make it easy. Bankruptcy can often lead to feelings of anxiety, shame and often hopelessness. But it is not difficult to recover from bankruptcy.

It does not have to be a disaster for your financial situation. Bankruptcy can be an excellent opportunity to start a new life.

Recovering from bankruptcy is a gradual process. It has a negative effect on the credit score and to improve it, time and patience are required as many people just become impatient with the lengthy recovery process.

Here are some of the tips that can help in successful recovery after bankruptcy:

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1. Highlighting and addressing the causes

The first step to recovering from bankruptcy is to understand where things went wrong in the first place. Finding out the problem and addressing it is the key to recovery. You cannot come up with a recovery plan unless you know what went wrong in the first place.

When knowing the problem, you can come up with a new strategy. You can set a different budget or look for a new employment to make sure you do not end up in a same financial mess as before.

You can also take useful advice from a bankruptcy advisor so that you can handle the situation in a better way.

2. Know your goals

The recovery process can be successful only if you have a proper plan and for a plan, you need to know what you are aiming for. You must decide whether you need to have a healthy credit score or you need to clear all the debts.

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Having goals is helpful in focusing on the right area of success. It will also make it easier to focus on one thing at a time as you can pick a few goals and work towards them.

3. Do not ignore credit score

Knowing the credit score after bankruptcy can be painful because it is not going to be good. People often try to put it off for as long as possible.

But knowing the credit score is important. It will help in knowing about the debts and any inaccuracies.

4. Benefits of a new bank account

If you want to show financial stability then opening a new bank account is a good idea. Opening a new account is useful in practicing good financial habits which can result in saving money.

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While opening the account, you should talk to the banker and make sure that you sign up for an automatic online bill payment. For recovering from the financial situation, you need to pay the bills on time.

Not delaying the bills is an excellent way of improving the credit.

5. Getting a new secured credit card

Credit card bills can be among the things that lead you to bankruptcy so you may be hesitant to get a new one when you are planning to recover from your financial situation. You may feel like getting a credit card is not the best decision.

But getting a secured credit card is an effective way of improving your credit score. Find the right credit card and check the rates.

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Compare rates so that you can choose the card that offers the best rates. It is also important to be careful because bankruptcy filers can be a target of predatory lenders. Do not fall prey to high-interest rates.

You can easily survive a bankruptcy if you stay vigilant and patient. You should always regularly check your credit score to remain aware of your true financial situation.

Getting out of the bankruptcy slump takes time, but playing an active role will help in getting you on the right track and bounce back from bankruptcy.

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Adnan Manzoor

Data Analyst & Life Coach

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Last Updated on April 3, 2019

How to Nix Your Credit Card Debt in Less Than 3 Years

How to Nix Your Credit Card Debt in Less Than 3 Years

Debt is never a fun thing to be in. But, there are many actions that you can take that will help you rid yourself of the burden of debt once and for all.

By coming up with a set plan, eliminating your debt can feel much easier than constantly thinking about it.

This post will provide some tips on how you can do this to help you nix your credit card debt in less than 3 years.

Hint: there are ways that are easier than you think.

1. Consider Consolidating Multiple Credit Cards If Possible

This may not be applicable to you, but if you have multiple cards – it is something to consider. Keeping up with multiple bills is time consuming.

It will depend on the balance you have on each. Consolidate ones you can but do not do it to the point that you get too close to the maximum limit. Also, it is ideal to pick the card with the lower interest rate.

Consider if there are any fees or alternatively, rewards, with transferring a balance to another card. Watch out for fees. Note that some cards offer rewards for transferring a balance to them. This is extra cash that can help go towards paying off your debt.

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Having one or two cards can make nixing your debt much simpler than keeping up with the balance of a bunch of cards. Keeping track of paying the minimum towards a bunch of cards is time consuming. Spend the time to consolidate instead to make the overall process simpler going forward.

My tip: Have one main credit card. Have a second one that you use for necessities – such as groceries or gas – that offers rewards for those purchases (a lot of cards do) and set the second one on auto-pay. You should be able to pay off a smaller amount on auto-pay if it is a necessity. If you think you cannot, then you may need to cut down a lot on expenses.

Why do I suggest doing this? Having one thing set to auto-pay is one less thing to think about. One less thing to waste time on. Same idea with consolidating to one main card. Tracking down too many is a hassle.

2. Try to Pay the Full Balance You Spent Each Month at the Very Least

You need to pay off the amount you are spending each month when that bill comes in. This is the amount you spent THAT month.

Do not let the debt keep accruing while you work on paying any unpaid debt that has accrued. It will become a never-ending battle. Try as best as you can to be current on paying for each month’s expenses when that month’s bill comes out.

If this is a strain, consider why. You may need to cut expenses. Or you may need to consider other cards. Or look at where this money is going.

3. Pay Extra When You Can – Every Small Amount Counts

This cannot be emphasized enough. If you are looking at a lot of credit card debt, it can look daunting, but each extra amount that you can put towards the debt will really add up – no matter how small it is.

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It does not just reduce the principal amount that you have left to pay off, but it reduces the amount that is collecting interest. You will always save money with that reduced interest.

4. Create a Plan on How to Pay Extra

Back to the main point, having this plan is giving you one less thing to think about.

This plan should be a plan that works for you. If it does not work for you, your spending habits, and your views on debt, then it will not be an effective plan.

For instance, if a set plan of an extra $50 (or another amount that you know you can afford) works for you, then do that. Set that aside every month and pay that extra amount. Treat it like a bill. Choose an amount that works for you and pay it like clockwork as though it was a bill you had to pay each month.

Little amounts will not nix it entirely, but they will help tackle it and having a set plan can make it less of a chore. Creating a new plan of how much to put towards it each month is an unnecessary added stress.

5. Cut out Costs for Services You Do Not Use

If you are signed up for subscriptions that you do not use because of some free trial or for some other reason, cut it out. Your overall financial position will look better.

In turn, that will make cutting your credit card debt easier. Look at your statements to find these expenses. If you do not use them, you may forget you are paying some unnecessary amount each month. Cutting it out can really add up in savings that you can put towards other needed expenses.

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6. Get Aggressive About It

Consider these points:

Depending on the interest and the level of debt, you may need to give up a few indulgences. For example, instead of ordering delivery or going out to eat, cook at home. Everything adds up.

Other things may be more of a sacrifice. It may be a trip you wanted to go on, or a daily latte habit you’ve picked up. In these instances, consider how important it is to you and if it’s worth the sacrifice. And if it is a costly expense, think whether you can wait to indulge.

Cutting an extravagant expense can really help make a dent in your overall debt. Try not to add to debt when you are trying to pay it off. It will be a never-ending battle. Make it less of a battle with these tips and it will feel easier.

Bottom line: Do what you can to make this process easier for you. Implement steps that do this. It takes time now, but will help overall. Also, keep track of your spending and paying down of your debts. Which is the next point.

7. Reevaluate Your Progress at Set Intervals

Doing a regular check-in can help you see your efforts pay off or maybe indicate that you need to give this a bit more effort. If you check every 3-6 months, it will not feel so much like a chore or feel so daunting.

By doing this, you will be able to better understand your progress and perhaps readjust your plan. Bonus: if you see it pay off, it will feel great to do this check-in. You will get there.

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Finally (and most importantly)…

8. Keep Trying

Do not get discouraged. Pushing it off will make it worse. Just keep trying.

Once your debt becomes lower, each monthly payment will reduce the balance more. Why? You are paying less towards interest. It will be a snowball effect eventually and it will become much easier to manage. Just get to that point. And know once you do, it will feel easier and motivating.

Start Knocking out Your Debt Today

The best way to eliminate debt is to get started right away. Begin by implementing the above steps and watch your debt just melt away. Try out some of the above strategies and see what works best for you. Soon you’ll be on your way to a debt free life.

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Featured photo credit: Pexels via pexels.com

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