Your Mississippi bankruptcy is over and the court gave you your discharge papers. Congratulations! Now that you have your financial feet on the ground, it is time for you to begin your post-bankruptcy life. You likely learned so much during the past months that you can start afresh to establish and build your credit and responsibly manage it.
Reestablishing your credit, however, is the final of five things you should do. Here are all five.
1. Keep your bankruptcy paperwork
Do not be tempted to discard all the paperwork you collected during your bankruptcy. At the very least, you will need the following documents in the future:
- Your bankruptcy petition
- Your notice of filing
- Your discharge order
Keep these and your other bankruptcy documents in a safe place. Even better, scan them and put them in a file folder on your computer desktop. That way you have electronic copies whenever you need them.
2. Get your credit reports
You may not be aware of it, but all three major credit reporting agencies give you a free report each year. Get all three after about three months to give your bankruptcy dust time to settle. Review each one carefully, making sure that none of your discharged debts appear on any of them. Likewise check to see that no collection agency now has one or more of your discharged debts. The last thing you need is to once again begin receiving harassing phone calls, emails or snail mails demanding payment for debts that your bankruptcy discharged.
3. Establish a budget
Before you roll your eyes at the thought of budgeting, you need to recognize that establishing a budget and sticking to it are two of the most important things you can do for yourself in your post-bankruptcy life. This is the only way you can ensure that your monthly household income can cover your monthly bills.
Unless you are one of those unusual people who keeps your hardcopy bills after you pay them, you probably will need to estimate the amount of at least some of your monthly bills at first. On the other hand, if you have online accounts or do online banking, you can find out how much you paid on each bill each month. If you can discover this, total each bill’s last six payments and divide by six. This will give you a realistic average of how much you spend each month for each bill. Do not forget to determine a monthly average for those bills, such as insurance, for which you pay an annual or semiannual premium.
4. Establish an emergency savings account
While budgeting is one of the most important things you can do, even the best budget seldom makes provision for those emergency situations that invariably arise when you can least afford them. If your air conditioner stops working or your car needs its transmission fixed, you need cash to pay for the repairs. Open a new emergency savings account into which you place any money left over at the end of each month, no matter how small the amount.
5. Begin rebuilding your credit
Once you have your monthly bills in hand, it is time to start reestablishing your credit. Not only does a credit card come in very handy when even your emergency savings account cannot cover an unexpected expense, some businesses, particularly online businesses, refuse to take anything other than a credit card.
Now that your bankruptcy wiped out virtually all your debts, you can apply for a new credit card. Admittedly, you may have to settle for a prepaid one or one with a low credit limit. In addition, you likely will pay a higher than usual interest rate. Nevertheless, getting one credit card and paying it off each month is a great way to reestablish your credit.
For all practical purposes, your bankruptcy gives you the opportunity for a financial “do over.” By following the above five steps, you undoubtedly will discover that this time you can face and overcome whatever financial issues arise in the future.