Life After Bankruptcy: 6 Tips to Help You Achieve a Positive Fresh Start
The bankruptcy system is designed to give the honest but unfortunate debtor a fresh start after their discharge. This fresh start can be viewed from both a financial and emotional standpoint. You may need to rebuild a bit after filing for bankruptcy, but the overall effect is generally positive, especially if you use the following tips.
- Understand that bankruptcy does not mean that you are a failure.
Beating yourself up about a bankruptcy filing will not make your situation any better. Many wealthy people and successful businesses have overcome bankruptcy, and you can too. Sometimes financial difficulties occur because of things beyond your control. Bankruptcy is a way to reorganize and restart; it means that you had difficulties, not that you are a financial failure. Perhaps what you are doing did not quite work as intended, but that does not mean that you cannot lift yourself back up and try again.
- Take responsibility for your financial mistakes.
Blaming someone else for your difficulties with your finances is easy. However, thinking like a victim will not help you make wise financial decisions in the future. You must first take responsibility for your role in your bankruptcy before you can make significant economic changes.
- Consider where you went wrong and learn your lessons.
Perhaps your bankruptcy was the result of failure to plan or budget. Can you address this problem in the future? You may have jumped too soon on business opportunities or generally took out too much debt. Regardless of the reason for your bankruptcy, there is likely a lesson to learn. That lesson may simply be to have more money set aside for emergency situations. Every bankruptcy has something to teach, but you need to realistically evaluate what went wrong so you can avoid it in the future.
- Take steps to rebuild your credit score.
If you are an individual who is filed for bankruptcy, you will need to work hard to rebuild your credit. Even small businesses need to take steps to show lenders that they are still a sound investment after bankruptcy. It is especially important after a bankruptcy to ensure that all of your financial obligations are paid on time and in full. You may need to work on a cash basis for some time before you can get credit again. For individuals, opening one secured credit card may be a good start to rebuilding your credit.
- Consider taking a budgeting course or hiring an expert.
Dealing with financial matters is just not something everyone can do. You may need some outside help in the form of financial counseling or budgeting classes. Some small businesses may also require the use of an expert to help them plan for the future. You do not have to face your financial difficulties alone. There is no shame in getting help.
- Get new tax ID numbers.
If your business filed for bankruptcy, it is important to get new employer identification numbers for your company moving forward. Limited liability companies and corporations do not technically receive a discharge in Chapter 7 bankruptcy, so you will need to get a new tax ID number to avoid forced collections from past creditors.
Life after bankruptcy can be difficult, but you can do it. The team at Maxwell Dunn can also help you work through this significant life or business change. Call to set up an appointment today.