For some New York residents, filing for consumer bankruptcy is the only option to stop the hemorrhaging of a bad financial situation. While the benefits of bankruptcy often outweigh the challenges of tackling financial hardship without legal assistance, many people are left after the process ends with new money-related problems. One of those problems is a lack of useful credit history.
People who have filed for individual bankruptcy often lose points on their credit scores. They can also find it challenging to get approved for mortgages, car loans and other necessary lending options. An expert in the financial field suggests that one of the best ways to rebuild one’s credit and get back on strong financial footing is to practice diligence in the management of one’s personal finances.
Diligent financial management can include tracking all expenses and identifying bad spending habits. It can also involve identifying the amount of and timeline for repayment of outstanding debts and handling them appropriately. Good money management also entails building personal savings to cover at least a month’s worth of necessary expenses.
Once a person has his finances in order he can consider applying for a secured or unsecured credit card, or even a small loan. Many lenders will attach extra terms or high interest rates to loans given to people with questionable credit histories but options are generally available. Following a disciplined plan of financial management can help a person avoid the financial downfall that often accompanies unexpected life changes as well as the need to file for bankruptcy more than once.
Bankruptcy offers people solid legal options for liquidating and reorganizing their debt. It can also affect a person’s credit and make moving forward a challenge. Individuals who are interested in learning about the advantages and disadvantages of the varied forms of consumer bankruptcy can consult legal resources in the bankruptcy field for more information.
Source: USA Today, “Personal Finance: Re-establish credit after bankruptcy,” Robert Powell, July 3, 2014