The number of bankruptcy filings in the state of Massachusetts has risen in the previous two years. So, if you find yourself in this unfortunate predicament, you’re not alone. But there is a silver lining. Many of those before you are living proof that you can rebuild after bankruptcy and have the financially free life you’ve always dreamed up.
Bankruptcy provides more than debt relief, it’s an opportunity to regain control of your finances.
Rebuilding takes time, but keeping a few key things in mind can help set you on solid footing for a better financial future
Accumulating Overwhelming Debt
Before discussing tips on how to recover following a bankruptcy filing, it’s important to understand how you can find yourself in this situation so you can avoid the big mistakes.
Lack of budgeting seems obvious, but it’s actually surprising how many people do not work off of a set budget. Without appropriately monitoring what you’re spending your money on, it can be easy for excess to go unnoticed and important savings are easily missed.
This can lead to credit cards, which are a major pitfall for many consumers. Once someone starts using cards they can’t pay off in full, particularly high-interest, the amount owed grows regardless of the payments made.
Before you know it, your statement is way bigger than any of the purchases you’ve made. And the real kiss of death is when you find yourself paying off one credit card with another.
Similarly, financing items out of your budget such as homes or cars can lead to missed payments, repossessions, and even bankruptcy.
How to Bounce Back
Now that you understand how easy it can be to fall victim to overwhelming debt, let’s look at some tips for rebuilding if it happens to you.
Budget
As we mentioned above, budgeting is key. You should break down your income versus your monthly expenses that are required such as rent/mortgage, car notes, insurance payments, groceries, and utility bills. From there, you can determine how much of your remaining amount can be placed in savings and what’s remaining for fun!
Pay Bills on Time
Paying close attention to your budget ensures you know where every dollar is going. This power makes it easier to pay your bills on time, which is vital when rebuilding your credit. Every missed payment is another ding that’s harder to overcome. And while it may be hard, if you have payments on items you don’t truly need, it might be worth sacrificing those until you’re on more steady financial footing.
Secured Credit Card
While credit cards can be dangerous, when used appropriately they can help you rebuild your credit. Specifically, a secured credit card is a great option looking to rebuild. In these unique arrangements, you as the cardholder pay a deposit that acts as your credit limit, typically in the $200-$500 range.
By having a small amount to work with and knowing the funds are already available to pay the statement, it helps in making on time payments that gradually increase credit score.
As your payment history improves, your credit limit will increase. Eventually, you’ll be able to graduate to more traditional credit cards armed with the knowledge of how to make them work for you, not against you.
Credit Counseling
Finances are stressful and can be confusing. Credit scores, interest rates, loan terms, and other financial terms can be hard to make sense of, so don’t be afraid to ask for help! Credit counseling experts can help you determine which steps are best for you to rebuild your financial life with the lowest amount of risk.
Bankruptcy Assistance and Debt Solutions in Massachusetts
While anyone can file for bankruptcy, certain requirements must be met. Thankfully, Hines Law is here to assist. If you are not sure where to start with your bankruptcy filings, or aren’t even sure which you’ll qualify for, reach out to one of our Boston area locations for a Free Consultation.
Our bankruptcy lawyers are true experts with more than 20 years of experience. You will get solid direction and trusted counsel so you can come out on the other side and start rebuilding as fast as possible.