U.S. Census Bureau estimation reveals over 700,000 citizens file for bankruptcy while the rest, 1 to 2 million homeowners, fall victim to foreclosure or eviction. Hiring an attorney, filing the right paperwork, and knowing the laws and your rights makes it possible for you to survive and prosper after a financial crisis.
The American Psychological Association (APA) found 72% of Americans suffer from stress because of economic fallout. Nowadays, people from all walks of life deal with financial stress and uncertainty. Whether from job loss, price escalation, unexpected expenses, or debt, these are common stressors due to financial struggles and hardships in modern life.
Financial hardships would affect your finances, life, and family. So rebuild your credit, relocate your family, shuck the social stigma, know the housing options following foreclosure, and take advantage of government and municipal programs to tackle hardships.
In this blog, you'll learn how to make financial and life decisions and rebuild your life when facing financial misfortune.
When you struggle financially, stress and fear take over your control. It hurts your self-esteem and develops a sense of despair. To get out of this situation, follow the six steps to gain control of your financial condition.
Although it seems unimportant to save the paperwork, you should do it. You must show the documents if you apply for a loan, mortgage, or financial assistance. Even a lender or debt collector Can contact you to know about the debt in a bankruptcy filing or a discharged debt.
Here's the paperwork you must save:
● Bankruptcy petition
● Income proof with a petition
● Income's social security proof with a petition
● Final bankruptcy discharge
Managing money is key to rebuilding the process. Once you fall victim to bankruptcy, develop plans and procedures to avoid the situation. Establish financial habits such as creating a savings account for unexpected emergencies.
Whatever amount you receive through a payment check, deposit some percentage to the savings account. Aim to deposit about 10% per paycheck. However, banks and credit unions allow automatic transfers from your account to a savings account.
Another path to recover from financial hardships after bankruptcy is reestablishing a credit score. You can do this in several ways:
Obtain a secured credit card since it has a spending limit while the rest of the money is backed to your savings account, thus rebuilding a positive credit profile. Credit issuers upgrade your card to a traditional credit card system when you keep making timely payments.
Paying monthly expenses, including utility bills, should be a credit history. Check whether utility companies report your on-time payments to credit bureaus. Otherwise, use the Experian Boost tool to include your electricity and phone bills in the credit reports to escalate your credit score.
Credit builder loans involve money deposited in the account. Unlike traditional loans, these loan accounts are secure at a bank or credit union. You make regular payments in a fixed time, typically six to twenty-four months.
When the loan term ends, you get your paid amount with the credit score, except for the interest or fees. Also, these reports pass to the credit agencies.
If you get through an unexpected financial crisis or lose your job, an emergency fund frees you from debt and a disastrous outcome. So, start this savings account to assist you when you have limited money. This way, money will add up in the account, making regular deposits, even if it's a small amount, it builds a habit of saving.
A stable job and permanent home are essential for your financial profile and building trust in the creditors after bankruptcy. Before providing credit accounts, lenders record your job and income to confirm you'll return the loan. However, a resume lacking the credentials of lenders finds you suspicious borrowers.
Similarly, a permanent residence shows you're reliable and won't run away at the time of repayment. Lenders get to know that if you pay your rent bills on time. Thus, you'll also return loans.
Creating and sticking to a budget seems intimidating, but its wise use helps achieve future goals. Establishing a budget keeps you bound within the plan.
When starting to create a budget, calculate your monthly earnings. Then check your spending and savings every month. Also, determine your recurring sources of income to know the overall finance. Include your debts, utility bills, and grocery expenses in the budget.
Furthermore, track your month's spending, identify financial priorities, and create your budget. Keep a check and balance on your spending. If you spend more on unnecessary categories, quit them and allocate money for the ones essential for survival.
One popular 50/30/20 budget rule allows a proper approach. Fifty percent indicates your needs from your income, 30 percent is your desires, and set aside 20 percent is your monthly savings.
Do you want to enjoy the future with your children? So, stick to your life goals and save funding. Creating an actionable plan is crucial for financial well-being. It also allows you to set daunting objectives in manageable steps.
In addition, focus on creating short-term (require immediate attention), medium-term (have time to accomplish), and long-term goals (saving for long-range plans and retirement). The process gets a bit easier when you've clearly defined your goals.
However, follow money-saving habits to accomplish your long-term plans. Making accurate decisions about managing your finances helps provide financial freedom.
If you keep stressing about your financial condition, it won't help. But it's possible to recover financially after bankruptcy through credit score. So saving money diligently, developing budgeting habits, and rebuilding credit score helps in the long run. However, your patience, determination, and discipline create a much better future for yourself and your family.
