Life After Bankruptcy in Sacramento

You might feel like you have struck the bottom financially by declaring bankruptcy. Although declaring bankruptcy will eliminate your previous debts, chapter 7 bankruptcy will remain on your credit record for seven years, while chapter 13 bankruptcy will remain on your record for the length of the chapter 13 plan plus an additional two years.

You will indeed have a couple of questions in your mind. What will life look like after bankruptcy? You will face many challenges trying to establish good credit, budget your money and restore your financial status. However, it's possible to bounce back financially and turn over a new leaf. You can start by building a solid financial foundation to have a stable financial ground and avoid repeating the same mistake you made in the future. The following steps are critical as they help you recover after declaring bankruptcy:

Ensure Your Credit Profile is Accurate

After completing your bankruptcy, the first great thing you want to do is ensure you pull a free credit report. Doing this will ensure all the debts included in your bankruptcy do not remain read as unpaid debts. Note negative and incorrect information can exist by error.

Although your bankruptcy attorney will play their role in the legal process and ensure you don’t have a lawful obligation, they will not go ahead and update your profile. You are responsible for protecting yourself by ensuring you have accurate information on your credit report. By eradicating any error appearing on your credit card profile, you will improve your credit quickly.

Develop a Budget and Begin Saving Money

After you go through bankruptcy, the last thing you want to do is repeat the same process. To ensure this will never occur once again:

  1. Develop a good financial habit.
  2. Create your budget to ensure you manage your expenses and income on your daily spending.
  3. Start a savings account to ensure you have access to your finances in an emergency.

These three steps will help you control your spending and avoid the accumulation of significant debts again. Remember, prevention is the best medicine; budgeting your finances alongside saving money will create a stable financial habit in the future.

  • Budgeting

Creating a budget for your finances can sound restrictive or intimidating. However, a financial budget is a spending tool and plan, which, when you use wisely, you will be helpful to achieve your financial goals. You can use a budgeting app to maintain and establish your plan.

  • Saving Money

The most effective method to save your finances is to make the process a habit. You can achieve it by making automatic money-saving accounts. Sean Fox, the president of debt relief, said, “with every payment or check you receive, regardless of the amount, deposit a certain percentage into your savings account.” However, ensure you choose a percentage that you can consistently or comfortably keep making the deposits.

  • Reestablish a Good Credit

Another critical part of your financial recovery is reestablishing a good credit score. To achieve this, you can use a variety of ways no matter the type of financial bankruptcy you file. These ways include:

  • Make Bill Payments on Time

Your payment record will make up to 35% of your credit score. The most critical element in your credit score is making your payments on time. Therefore, do not wait for long before you pay your bills. For example, if you had a mortgage excluded in your bankruptcy, do not assume; keep paying your mortgage at the deserved time.

Ensure you also consider other bills not in your credit reports like utilities, medical bills, and mobile phone bills since when you leave them past due, they will accumulate. When you find it challenging to track your payments, you can have an automatic payment connected to your bank.

  • Ensure You Report Your Utility Bill Payments

Try to have your utility bills, including phone and electricity bills, counted towards your credit record. Check your utility companies to discover whether they carry out services linked to on-time payment reports on your credit card. In addition, you may use Experian Boost, a device that allows you to include your phone and specific utility bills to help boost your credit score.

  • Obtain a Credit Builder Loan

To obtain these types of loans, you only need to deposit money in your savings account. Your lender will maintain the money as you repay the interest and the loan principal. The payments you make will be reported to your credit agencies.

  • Obtain a Secured Credit Card

You will most likely require a credit card when you do not have pending debts or loans after declaring bankruptcy. Start by obtaining a secured credit card. The best thing with this credit card is that a savings account with your name backs them. The money you have in the savings account will act as collateral for the card and usually establishes a spending limit. You can rebuild a positive profile by making your payments on time.

Chapter 7 Bankruptcy

When you file for a chapter 7 bankruptcy, it will remain on your credit report for seven years. You can develop several tactics and ways to help you during recovery. These tactics will include opening a credit card and making bill and utility payments on time. Also, by declaring bankruptcy under chapter 7, you will be free from many debts.

Chapter 13 Bankruptcy

As you declare bankruptcy under chapter 13, the court will restrict you on how to repay your loan in a manageable way for at least more than three years. It will help if you continue paying your loan on time to avoid losing your assets during this period. After this repayment period, your remaining debt becomes discharged, meaning you will never be responsible for repaying the debt. However, the bankruptcy will remain in your credit history for the length of the case plus two years. Similar to chapter 7 bankruptcy, you can use various ways to improve your credit score.

Start Saving Emergency Funds

Emergency funds will help you skip the potential risk of landing in unexpected debts when you lose your daily job or face financial difficulties. So, start by creating a savings account right away, even when you do not have huge amounts of money. The deposits you make on your savings account will accumulate regardless of how small they are and assist you in developing the habit of saving. You have several options on where you can save the emergency funds. The following are the standard options:

  • A savings account that comes with high interest: the best option for these banks is online banks, as they offer high yields. They also have easy access to your funds.
  • A saving account with high yields

Having access to this money will be essential after you have declared bankruptcy since you will have restricted access to credit. However, when you find it challenging to have emergency funds, you can try obtaining a side gig or another job to ensure more fund generation. In addition, you can consider working a part-time job as an extra job.

Avoid Credit Repair Scams

Sometimes you can come across a repair company claiming to remove your negative credit record or develop a new credit card; although they may have tempting offers, stay vigilant. These scammers can land you into further debts instead of helping you recover from the previous debts. The following are the common signs of a scam credit repair company:

  • It doesn’t inform you of your lawful rights.
  • They want you to pay upfront for services before doing anything.
  • Tell you to provide the wrong information as you apply for a credit or loan.
  • Ask you to avoid making contact with credit agencies.
  • Lie that they can develop a fresh identity card for free.

When you fall into the traps of these scams, you will be putting yourself at risk of having to pay hectic fines. It is a criminal offense to lie during your application for a credit card. When your credit card is damaged, you should not have pressure to fix it; you can do all the repair work by yourself by following the legal steps. Also, seek legal help from your attorney on what to do next.

Skip High-Interest Products

When you file bankruptcy, it is high time the subprime lenders, payday lenders, and pawnshops will place high interest on you. So, you want to ensure you are in a good position where you can afford to pay all your bills. Before you borrow the money, first ensure you have sources to repay the loan, including family funds. Please avoid loans with higher interests than your income sources.

Monitor Your Credit Report Regularly

After you declare bankruptcy, the idea of following your credit history can be anxiety-inducing or intimidating. However, there are several reasons you want to keep doing so. Ensure you monitor your credit report consistently and diligently to ensure the information on your report is correct and accurate. Remember, inaccurate information may lead to a lower score than required.

When the discharged debt is not showing correctly on your report, it will still count as an outstanding debt. The bad news is that the outstanding debt might erroneously be carried over to a new debt agency, making it difficult to resolve.

Once you detect any error on the credit report, contact the business which reported the information or the credit bureaus. Explain everything to the institution and document evidence of your claim. Keep a copy of the claim you are sending. Also, forward all the evidence to the business responsible for reporting the information. When the business admits they inaccurately reported the information, they are responsible for following up on your profile and ensuring the credit agencies and bureaus put accurate information. You must also receive the results from the bureaus in the form of writing and an extra copy. Remember, you can monitor the reports online for free. You should download a copy of your credit report at least once per year.

Pay Your Balances Close to Your Due Dates

Although paying your debts on time is good, you might find it challenging to pay them too far ahead. Instead, you can pay the bills a few days before your due date. Remember, you do not know when your creditor will report your debt to the bureaus. Again, the creditor may not produce a balance statement when you pay your bills too fast.

Stay Prepared and Determined for Difficulties

Sanchez said a few people might never recover after declaring bankruptcy because bills and debts had supplemented their lives. To recover from these debts, you want to be determined and focused on moving to a fresh leaf. Total recovery from bankruptcy requires you to become hardworking, disciplined, and patient. You might need to trim most of your expenses greatly or change your diet, which might be painful. However, when your main goal is to avoid repeating the financial setback and achieve financial freedom, you must stay determined and focused on your goals.

Think About Your Financial Future

It is more likely you want to purchase a car or home or resume your schooling career after declaring bankruptcy. Do not let the past financial life hold your future life. Stay focused on making a better financial future. Set financial goals and do what is right to achieve those goals. Remain motivated and stick to your budget, as discussed above. Make good decisions on how to manage your money and finances.

Find a Sacramento Bankruptcy Lawyer Near Me

Are you thinking about how to proceed after your bankruptcy discharge? You are not alone. As mentioned above, you will have a significant hit on your credit score after you declare bankruptcy. However, you can recover and bounce back to your normal life with hard work, discipline, and patience. However, you must budget, develop a savings habit, and focus on building a good credit score. It is good you have legal advice from bankruptcy experts.

At Sacramento Bankruptcy Lawyer, we are here to help you. So, if you’re facing financial difficulties in Sacramento or the surrounding areas, and you are looking for bankruptcy solutions, you can contact us at 916-800-7690 and we will help you find the best option for your situation.

Free Consultation

Here at Sacramento Bankruptcy Lawyer, we set ourselves apart from other firms because we provide direct client to attorney contact from the initial consultation all the way through the discharge in your particular case. We will not pawn your case off to a staff member at any point through the process. When you call Sacramento Bankruptcy Lawyer, you WILL speak with local Sacramento Bankruptcy Lawyer Pauldeep Bains. Please call Sacramento Bankruptcy Lawyer ASAP at 916-800-7690 to schedule your FREE in-person or phone consultation with Pauldeep Bains and let Sacramento Bankruptcy Lawyer begin getting you the fresh start that you deserve.