No one would deny that bankruptcy is stressful. Bankruptcy petitioners must sit as every source of income, each and every asset, and every dollar attached to their name is examined by the bankruptcy court. Once the process is over, and the discharge of debt is issued, you should enjoy the relief that washes over you. However, don’t sit back and enjoy it too long without making a few decisions about your financial future. Bankruptcy offers you a fresh financial start, but it’s up to you to make the most of it by developing healthy money management skills.

You may already have a budget, but that old budget may very well be one of the things that led you down the path to bankruptcy in the first place. Examine your old budget, and identify any problem areas. It’s hard to fix a problem unless you know what the problem is, and you might be able to identify a few problem areas by looking at the budget you had in place in the months or years leading up to your bankruptcy filing. Once you’ve identified any problem areas, rewrite your budget. Make sure to include fixed expenses (rent or mortgage, car payment, etc.), variable expenses (food, entertainment, clothing, etc.), and irregular expenses (medical costs, some insurance payments, holiday gifts, travel, annual membership fees, etc.). Include your target savings rate (many choose to aim for 10% of their income). Go through your list of expenses, and attempt to lower or eliminate expenses.

See if your bank offers automatic transfers for savings. Setting up automated savings significantly increases successful savings rates. Many find that it’s a good idea to set up a savings account at a different bank, so their savings are not as accessible. It’s also a good idea to ask your employer if there is an option to “split” the direct deposit of your paycheck to allow you to immediately deposit a designated portion to savings each pay day. Immediately following bankruptcy, it’s a good idea to first focus on saving up an Emergency Fund to cover those random expenses that pop up and send your finances reeling (random car repairs, or surprise medical bills, etc.) How much money you need in your emergency fund depends on you, and your lifestyle. It’s a personal decision. But start with a simple goal of $1,000, and then move toward one full month’s worth of expenses.

There are no quick fixes to credit post-bankruptcy, but it’s best to get started fairly quickly after receiving your discharge. We suggest giving creditors a few months to update the listings, and then pull your credit report. Find any errors. Most (or possibly all) debts should show a $0 balance. If there are any inaccuracies, or suspicious listings, contact the credit bureau to have it fixed. Obtain a secured credit card – it’s a good start to rebuilding your credit after filing bankruptcy. However, if you know credit cards are your kryptonite, avoid them. Don’t fall back into the same habits that led you to bankruptcy. If you do decide to open a secured card, make sure they report to all three credit bureaus before you decide to go with their company. Start by setting up one recurring bill to bill to the new secured card. You can even set up an automatic payment from your checking account to pay off the “balance” each month.

If you are filing bankruptcy and you are worried about staying clear of debt once you receive your bankruptcy discharge, please don’t hesitate to contact Ken Rannick. Most bankruptcy offices in the Chattanooga area don’t have a single Consumer Bankruptcy Specialist on staff. Our office is the only one with two. You are in good hands with Kenneth C. Rannick P.C.

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