Bankruptcy is an unfortunate end to what may have been many long months or years of financial turmoil for you. It can provide a significant amount of financial relief, but it also can wreak havoc on your credit rating and your financial status in general. You may find it difficult to obtain credit and are more likely to be targeted by scams and lenders with bad lending practices.

More than a million people file for bankruptcy each year, so you can rest assured that you are not alone with your current challenges. Some people bounce back from bankruptcy rather quickly, and by exploring 10 ways to bounce back from bankruptcy, you can more easily navigate through the next few months of your life. 


1. Create a Realistic Budget
Budgeting is something that most people do, but they often do not use their budget as the strong financial tool that it should be. Your budget should have all of your income sources as well as realistic numbers for all expenses. Then, you should go a step further by referring back to your budget on a daily basis to monitor how well you are sticking to your it. Ideally, your budget will guide your spending decisions.

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2. Rely on Cash
Credit may be hard to come by after bankruptcy, and this is not necessarily a bad thing. When you are forced to use cash, you are also forced to stick to a solid budget. Make an effort to only buy the necessities. Eventually, this new spending habit will become the norm for you. 


3. Pay Your Bills Promptly
It is easy to overlook a bill from time to time, and this is particularly true if a small bill is sitting on your counter for a few weeks and gets buried under a pile of other bills. Keep in mind that late payments, bounced checks and more can appear on your credit report. When you are trying to re-establish a good credit rating, this is the last thing that you want.


4. Monitor Your Credit Report Regularly
Your goal after bankruptcy is to re-build your credit. Errors can show up on your credit report that can drag your scores down. When you monitor your credit report regularly, you can identify and fix errors quickly. Get comfortable reading this report as you will likely refer back to it regularly over the course of the next few years.


5. Apply for a Credit Card
After bankruptcy, the last thing you may think you need to do is get more credit. After all, that likely was a major contributing factor to your previous financial issues. However, you do need to use credit responsibly to build a better credit rating. One option is to apply for a secured credit card. With a secured card, you will make an initial cash deposit of a few hundred dollars with the creditor, and this deposit will essentially become your credit limit. An unsecured credit card may be another option, but you can expect a high rate and a low credit limit with this type of account. Make an effort to make only one or two small charges to the account each month, and pay the balance off in full monthly. When you follow this strategy, you will notice an improvement in your credit rating. 


6. Apply for a Line of Credit
Another credit-building option to consider is to apply for a line of credit. You can get a very small line of credit and use it in the same fashion as you use your credit card. Typically, a line of credit is secured by your savings account balance.


7. Avoid Buying a New Car
When you are trying to get back on your feet financially, making large purchases is not advisable. There are some lenders who will give you a car loan after bankruptcy, but the rate and fees can be expensive. Furthermore, you will add to your monthly expenses when you take out a car loan. It is better to keep driving your current car for a few more years and to save money that you otherwise would have spent on a car loan payment.


8. Focus on Your Current Financial Relationships
One factor that is tied to your credit rating is the length of time that your accounts have been open. You could apply for a new credit card with a different credit card company, but it may be better to use an existing account if any remain after the bankruptcy. 


9. Consider a Written Letter of Explanation
If you have been turned down for credit, a written letter of explanation may benefit you. Some people have unfortunate circumstances that occurred beyond their control and that resulted in the bankruptcy. When you explain the details of the situation, you may generate a positive response.


10. Be Alert for Scams
After you file for bankruptcy, you may be more likely to be targeted by instant-fix credit scams and by unscrupulous lenders who charge high rates and fees. Remember that repairing your credit requires long, hard work, and there is not a quick solution to deal with it. 

Now that you know the top 10 ways to bounce back from bankruptcy, you can make intelligent and strategic decisions to improve your financial situation. 









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