You Hold the Keys

You didn’t want to file bankruptcy.  In fact you probably waited too late.  Last week I met with a couple that withdrew money from their 401(k) hoping to avoid filing a Chapter 7 bankruptcy.  Now, 6 months later, we will file a case for them.

So you’ve done everything you can to avoid bankruptcy, but had to file a case anyway.  So what can you do to give you financial success after bankruptcy?

Here are 7 Keys to Success after Bankruptcy.

1.  Write down your case number and your discharge date and keep it somewhere that it’s easily accessible.  This is important.  Remember that if someone contacts you about an old bill, you’ll want to be able to tell them, I received my discharge on July 4, 2010.  Giving them your case number will just insure that can confirm your discharge when they check.

2.  Establish a household spending plan for the entire household income.  Put it in writing and review it every month.  Here’s why.  Many folks have no idea where their money goes.  Twenty dollars here and there adds up to a bunch over a month.  You absolutely have got to know where your money goes.

3.  If you kept a house or car in your case and it still has payments attached to it be sure that no matter what you pay the payments on or before their due date.  Do your best not to “ride” the payment until the late charge date.  You are building up a new credit history every month.

4.   Pay your bills with a check.  This is important if you have to prove to someone who might give you credit in the future that you pay on time.  This is most important on credit like your car or your house.  Then keep copies of front and back of the checks.  You are then in control of the proof and can produce it if requested.

5.  Disregard the junk mail you receive with new credit card offers for at least the first 6 months after your discharge.  Understand that there is zero chance of you getting back into financial bondage if you will stay away from the “debt machine” that is called credit cards.  Have you ever seen MasterCard’s offices?  Really nice and you probably paid for a portion of them.

6.  Keep your vehicles longer than your friends.  I love fancy cars, you probably do to.  One thing that the 60’s did for us is help us fall in love with automobiles.  Here’s the deal.  If you can see your car (or truck) as simply a tool to get you to grandma’s house at Thanksgiving and to work and school, you’ll not be tempted by the newest 100% financing offer from Ford.  If you can keep your car serviceable, that alone will allow you to keep it longer.  Many of us say our car starts tearing up once it’s paid for.  Most of the time that’s just perception.  Consider setting as a goal not to have a car payment at all.  If you can do it, you’ll find it liberating.

7.  Never forget what it felt to be swamped with calls from creditors, lawsuits and threats of lawsuits.  I’m not suggesting that you drudge up these memories every day.  BUT, as time passes it’s easy to forget the stress associated with being overloaded with debt.  You are in complete control of whether you go back into the financial bondage created by debt.  But it’s up to you.

There really is life after bankruptcy.

Pay attention to these tips and you’ll have a greater chance of success after bankruptcy.