Declaring bankruptcy can erase certain debts that are causing hardship; however, this financial maneuver is not without repercussions. Discharging debt will affect your credit score, and the filing will remain on the report for up to a decade. By following a few simple steps and making strategic decisions after the proceedings, though, bankruptcy can help you regain financial footing.

How to Recover Financially After Bankruptcy

1. Consider the Cause of the Debt

If you were laid off or accumulated most of the debt following a serious accident, you might not necessarily need to change any spending habits; however, it might be wise to contribute more to the family’s emergency fund. If you were living beyond your means, on the other hand, and often made frivolous purchases, consider devising a budget and sticking to it. If the underlying cause of the debt was in your control, it’s essential to address it to avoid ending up in the same precarious financial position in a few years.

2. Track Your Credit Score

There are dozens of companies that offer free credit score tracking. If you bank with a major financial institution, you may already have access to such a program. Start checking your credit score monthly. Not only will this provide the opportunity to note any inaccuracies and address them immediately, but seeing the score increase gradually will also help you maintain the motivation to keep making smart financial decisions.

3. Open a New Account

The average age of all accounts is one of the factors that affect a consumer’s credit score. The sooner you open a new account after filing, the older it will be by the time you are ready to apply for something major like a car loan or mortgage. Be careful of predatory lenders who seek customers who have recently declared bankruptcy, though; they often charge high interest rates because they know such consumers are seeking new lines of credit. Instead, open a secured card with a reputable institution using a few hundred dollars, and pay off the balance every month. Look for a bank that offers flexible accounts you can convert from secured to unsecured after proving your creditworthiness.

If you want to restore your financial health, it may start with filing for bankruptcy. To discuss the situation with a strategic attorney who will protect your best interests, turn to Ibold & O’Brien. Based in Chardon, this full-service firm is proud to represent clients throughout Northeastern Ohio. Whether you need help with real estate and zoning issues or medical malpractice, you can rely on them for quality counsel during every stage of the proceedings. Visit the firm online or call (440) 285-3511 to schedule an initial consultation today.