You’ve successfully completed your bankruptcy and obtained your discharge. Congratulations! You (and your marvelous bankruptcy attorney) did a great job. Now what?
Maybe you filed bankruptcy because some event caused your income to decrease and/or your expenses to increase. Now that you’ve remedied that situation and eliminated the debt you incurred, you need to establish good spending habits & build up some savings to ensure that you don’t need to file bankruptcy again. Or perhaps you made some poor choices and lived beyond your means for too long. If you fall back into the same spending habits that caused your bankruptcy, you’ll be seeking bankruptcy relief again in a few years. As much as I like my clients, it would be good if they didn’t need me more than once.
Here are some tips for curbing wasteful spending habits post-discharge:
1 – Credit card use. Most of my clients receive credit card offers within six months of getting their bankruptcy discharge. Credit cards aren’t inherently bad. They’re convenient and making regular payments on time can help rebuild your credit after bankruptcy. But you need to use credit cards wisely. Pay your credit card balance in full and on time each month. This way, you don’t pay interest or late charges. And the on-time payments will show up on your credit report, showing other lenders that you’re a good credit risk. But be careful! This tip only works if you pay in full and on time every month. It’s easy to skip a month or start to carry a balance, but doing so will likely land you back in your bankruptcy attorney’s office.
2 – Payday loans. This one’s easy; don’t take them. The APR on these loans frequently exceed 500%. If you fall on hard times and need cash, you’d be better off borrowing from a friend or family member. The payday loan cycle frequently ends with a visit to a bankruptcy attorney.
3 – Keep track of your spending. Whether you use a credit card or cash, keep track of how much you spend each day. You may be surprised how much you spend in an average week on small things like coffee, candy bars, or drinks after work. The true cost of these expenditures doesn’t show up until you get your credit card bill or bank account statement showing all the ATM withdrawals. Once you know where your money is going, it’s easier to change your habits.
4 – Give yourself an allowance. All work and no play makes Jack a dull boy. When you get paid, set aside some amount for “walking around” money. Once that’s spent, don’t take more until you get paid again. This will help you budget your money and ensure that you have enough each month for your necessary expenses (rent/mortgage, car payment, utilities, groceries, etc.)
If you apply these tips to your spending post-bankruptcy, you should be well on your way to making the most of your fresh start.
Bankruptcy attorneys from around the country are taking part in this “Bankruptcy Alphabet” exercise. Please take a few minutes to check out these other blog posts on the letter “W.”
Wage Earner Bankruptcy – by Peter Behrmann, Livonia Michigan Bankruptcy Attorney
Wage Garnishment – by Cleveland Bankruptcy Attorney, Bill Balena
Wages – by Hawaii Bankruptcy Attorney, Stuart T. Ing
Wages – by Jay Fleischman New York Bankruptcy Lawyer
Wait – by Bay Area Bankruptcy Lawyer Cathy Moran
Warning – by Omaha/Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell
Wayne Industries: Batman Bankruptcy? – by Kurt O’Keefe, Detroit MI bankruptcy lawyer
When Can You File For Bankruptcy Again? – by Allen Park, Michigan Bankruptcy Attorney, Christopher McAvoy
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