Life After Bankruptcy: Checklist for a Fresh Start
One purpose of bankruptcy is to provide debtors with a fresh start. If you’ve just gotten a Chapter 7 bankruptcy discharge, make the most of your fresh start. Here’s a checklist to help you get and keep your finances under control, so you can avoid debt trouble in the future.
1. Get better about money. Figure out what has derailed your finances in the past, and take steps to fix the problems. Take a long hard look at your spending habits, and determine if you need to change some of them.
2. Create a budget. Take the time to create a budget, and the work hard to stick to it. Pay for things with cash, not credit. Only use small amounts of credit to rebuild your credit history.
3. Learn what factors affect your credit score. By learning what will boost or drag down your score, you can make better financial decisions.
4. Pay your bills on time.
5. Get and use a small amount of credit. Get a small amount of credit and use it responsibly. This will help improve your credit score. (To learn how to get a credit card after bankruptcy, see How to Get a Credit Card After Bankruptcy.)
6. Variety of credit is good. If you can responsibly handle more than one account, consider getting an installment contract in addition to a credit card. You can apply for a small car loan or personal loan. If you do so, make sure the lender is reputable and borrow only an amount you are sure you can easily pay off.
7. Shop around for credit. When you are ready to get credit, shop around for the best terms and rates. Don’t just go with whatever offer arrives in the mail.
8. Limit your credit accounts. Stick with one credit card, and perhaps one or two other small loans. If you have trouble with credit, try to have no accounts.
9. Monitor your credit report. This is important for anyone, but especially if you are trying to improve your credit. If you see errors or outdated information, take steps to get them removed. You can do this yourself.
10. Avoid credit repair scams. Don’t get sucked into paying for credit repair. You can fix inaccurate information yourself. And you cannot legally remove accurate information. (To learn more about this topic, see 4 Common Credit Card Scams After Bankruptcy.)