There’s no doubt that are some substantial financial consequences in declaring bankruptcy, and there’s no question that your life will experience some significant changes. If you’re in this scenario, don’t be alarmed. The challenging economic times observed today means that a growing number of people are declaring bankruptcy. In reality, there are approximately 20,000 Australians each year that file for bankruptcy. So rest assured, you’re not alone.
Instead of dwelling on the past, it’s essential that you look towards the future and aim to recover as best as possible. Bankruptcy doesn’t mean the end of the world, it just means that some adjustments need to be made to secure a bright future for you and your family. So here are some simple strategies that you can use to best recover after filing for bankruptcy.
It’s normal for people who file for bankruptcy to experience emotions of failure, self-loathing and guilt. Whilst it may seem natural have these thoughts, being bankrupt is the result of simply another mistake that we all make as humans. You should stop punishing yourself and look towards the future. Bankruptcy is the very first step towards financial freedom, and recovering from a bad credit rating is much easier than you think. The longer you give in to these negative feelings, the longer it will take to recover. Dealing with your financial difficulties is the first step in overcoming them, so you’re actually in a better position than you were prior to filing for bankruptcy.
It’s critical that you look at the reasons why you became bankrupt to make sure that you don’t make the same mistakes again. Filing for bankruptcy gives you a second chance to get your finances in order, so it’s best you make the most of it. Although there’s probably a range of reasons why you declared bankruptcy, most of them probably relate to poor spending and borrowing habits. So it’s a smart idea to make a list of two or three things that led you to filing for bankruptcy and devote yourself to not making these oversights again.
Create a budget
After you’ve recouped emotionally from bankruptcy, the next step is to make a practical and achievable budget. You’ll want to inspect your earnings and expenses thoroughly, and figure out a way to save money while still paying all your living expenses. Even if it means that you downsize your house or relinquish some luxury items, becoming financially sound is your key priority. There are some easy ways to save money, for example eating at home as an alternative to dining in restaurants and cancelling your gym membership in favour of walking to work. Don’t forget to include in your budget an amount for unexpected expenses.
Pay your bills on time
The initial step in mending your bad credit rating is to ensure that you pay all your bills on time. Whilst this won’t improve your credit rating instantly, it will ensure that your rating doesn’t decrease any further. You might choose to create automatic bill payments through your bank to guarantee that you don’t miss any payments. This will demonstrate to lenders that you’re financially responsible, and the longer you do this, the better your credit rating will get. This is thought to be the single, most effective action you can take to restore your credit rating.
Increase your income
If you haven’t already got consistent employment, now is the time to do so. Regular income over time will not only improve your credit rating but it will allow you to increase your liquid assets, presenting you with more opportunities. If you’re in a position where you can get a weekend job, you should genuinely consider it. Or take a look at your hobbies and try to come up with a way to increase your income by doing something that you love. Cash is king when you’re bankrupt so anyway to increase your income is a fantastic idea.
Although declaring bankruptcy is never an easy decision, it is the very first step in confronting your financial issues and learning from the past so you can enjoy financial freedom in the future. It’s vital that you reflect on the reasons that created your financial hardships to ensure they don’t happen again. Secure employment and paying your bills on time will improve your credit rating gradually, and following a budget is very important. If you’re considering filing for bankruptcy and need some advice on your options, get in touch with Bankruptcy Experts Perth today on 1300 795 575 or visit www.bankruptcyexpertsperth.com.au