Tips on Recovering From Bankruptcy and Foreclosure

Filing for bankruptcy is grueling enough, but when the dust has settled, your work has only begun. With your financial state stabilized for the time being, it is time to work hard to restore trust, rebuild your credit, and even start saving money for the future. These tips should help you figure out what your first steps toward recovery from bankruptcy should be.

1. Build a Budget

For many people, bankruptcy is the result of failing to plan. The way out of trouble is the exact opposite-build a budget that is realistic, workable, and detailed, and then stick to it no matter what. A common mistake is to plan major lifestyle changes (extreme frugality; canceling Internet service, etc.) that you really aren't going to be able to continue long-term. Just make a few good changes, and make sure that your expenses don't outnumber your income.

2. Seek Counseling

Bankruptcy is a good time to admit that you need some help managing your money. It is easy to find experts who are willing to sit down with you and critique your financial habits. When you look at your situation, you might think you see everything clearly, but a more experienced mind can usually quickly spot a few areas in which you could be saving money.

3. Repair Your Credit

You don't have to resign yourself to living the rest of your life with terrible credit after filing for bankruptcy. It will take time, but you can rebuild your credit by taking the right initial steps and continuing along the right path. Among your first steps are:

• Examining your credit reports for mistakes. You have enough trouble without erroneous items on your credit reports artificially lowering your credit score even further. Get professional help if necessary; find the mistakes; and dispute to have them removed.
• Opening a new credit card account. Find a bank that will extend credit to you and make it a point to keep up with the account. Your positive activity will really help to combat the debt problems in your past.

Q: What about companies that claim to be able to make my problems disappear?
A: If it sounds too good to be true, it probably is. A promise or guarantee is almost never legitimate.

Q: How long will it take to see results?
A: Your credit score will start to look better after about a year, as long as you avoid hurting it any more.

Q: Who can I contact for help?
A: A bankruptcy lawyer can give you legal advice, representation, and resources to find good counselors in your area.