Practical action steps for bouncing back
Taking practical action steps is as vital as having a positive mindset. Plan for the future with a realistic budget and start rebuilding your credit history by paying your bills on time. Realise you can bounce back after bankruptcy. Whether you’re dealing with personal bankruptcy or a company insolvency, you can recover and achieve success in your personal and professional life by following these comeback strategies.
Co-operate with your trustee in bankruptcy
Comply with the bankruptcy process and fully cooperate with your trustee in bankruptcy. Your trustee in bankruptcy is a person (or body) who manages your bankruptcy. You’ll need to declare details of your income, assets, and debts to your trustee.
Your trustee will contact your creditors and inform them you’re bankrupt. He or she can help sell your assets to cover your debts. If you earn above a certain amount, you might need to make compulsory repayments, so comply with these requirements as well.
If you have a business at risk of insolvency then contact the business finance experts at Australian Debt Solvers today for an obligation-free discussion of your situation.
Don’t borrow until your bankruptcy has been discharged
While you can apply for loans while bankrupt, it’s probably best to limit loans until you can live within your means while paying off new debt. If you must apply for a loan, make sure you can meet the repayments. Be careful about submitting multiple applications. Your loan applications are recorded on your credit file and they can affect your credit score.
Your savings were probably drained when you filed for bankruptcy, so one essential strategy for rebounding is to start saving again. Pay yourself first, and set up a nest egg for emergencies and unexpected events. It can seem difficult but saving as little as 5% of each pay cheque can add up quickly.
Explore strategies to reduce the temptation to overspend. For example, limit yourself by using cash to pay for daily expenses. Once you’ve spent the allocated amount, you can’t withdraw more cash until next week.
Set up a budget
Follow a realistic budget as you get back on track. You need to know where your money is going. Tracking your spending makes you aware of how you’re spending your pay cheque and where you can save.
It doesn’t matter whether you use a notebook or computer spreadsheet to budget. Your budget should cover recurring expenses like utilities and phone bills. Assign fixed, realistic amounts for groceries and variable outgoings. Subtract your expenses from you income. If you’re left with a positive number, you’re on the right track.
Rebuild your credit
Rebuild your credit history by checking your credit file at least once a year. You’re eligible for one free credit report per year from the three credit reporting agencies.
Check your credit report for any errors, and contact the agency to raise a dispute if there are any errors. Your credit file affects your future eligibility for loans such as mortgages, so you’ll want to ensure it’s accurate.
Paying your bills on time also helps you build a good credit history. Set up automatic payment so you don’t forget. Live within your means. Budget smart and track your spending so you have enough left over each month to cover utilities and phone bills.
Share and reflect
Share your story with family and friends. Consider what you’ve learned from the experience. While sharing and talking about bankruptcy might be the last thing on you mind, you might be less likely to make the same mistake again if you’re open about it. Family might hold you accountable, and disclosing the experience could help you understand how it happened so you can prevent it from occurring again.
If you’ve experienced a bankruptcy, you probably know major financial challenges aren’t resolved overnight. It can take years to rebound, but you can do it if you follow a budget and set financial targets. Charge yourself with the responsibility of bouncing back and start taking proactive steps today.