The purpose of bankruptcy is to eliminate certain financial obligations and stop collection activity to better ensure financial stability in the future.
Looking forward, people need to commit to rebuilding both financially and emotionally after a personal bankruptcy if they want to derive the most benefit possible from their filing. The following steps can help people rebuild their lives after bankruptcy.
Bankruptcy typically requires credit counseling, which can help people learn new financial skills. Putting those new skills to use may help people start to recover their financial confidence after a bankruptcy. Some people may benefit from seeing a therapist or counselor during and after bankruptcy to deal with their guilt or sense of frustration over the debt collection that they experience. Finally, those who set goals for the future may find it easier to stay positive and focus on the benefits of bankruptcy instead of criticizing themselves for filing.
Healing financially after a bankruptcy requires patience. People typically start receiving credit card offers within a few weeks of their discharge. While those credit cards may not offer the best terms, the sooner someone starts using credit responsibly, the faster their credit score will improve. Best practices include diversifying the types of credit someone uses and paying off balances in full on revolving lines of credit every month. Many people can qualify for mortgages and competitive vehicle loans within two to three years of a bankruptcy discharge. With some effort, the filer can potentially rebuild their credit score to better than what it was before their bankruptcy by the time the record of the bankruptcy comes off their credit report.
Making personal healing a priority during and after bankruptcy can help people live their best lives after weathering a time of financial hardship.