Sometimes things don’t go as planned and we need a ‘do over’. While such opportunities don’t come along often, bankruptcy is one-way adults can regain control of their financial lives. But many live in fear of what bankruptcy means and how they can get their lives’ back afterward. As such this article will give you some pointers on how to reach financial freedom after bankruptcy.
You’re Not Powerless
Being in debt stinks and it can easily lead to feelings of being powerless as your paycheck evaporates before your eyes and debt collectors continually hound you wherever you go. However, it doesn’t need to be like this as the law gives you an opportunity to get back on your feet. That opportunity is bankruptcy and you are considering it for your personal finances or your business, then you might want to check out this link – https://www.getfreeofbills.com/chapter-13-bankruptcy-attorney/.
One thing to understand when it comes to bankruptcy is that it can happen to the best of us. Yes, even the most financially responsible people out there can find themselves in trouble. Maybe it is due to a medical emergency (by the way the high cost of health care continues to be one of the leading causes of bankruptcy in the U.S.) or maybe it is because you lost your job, or your business has run into problems.
Either way, there are times when some of us need do-overs and bankruptcy can help. Just one thing to remember – bankruptcy can’t be used to discharge student loan or tax debt. Unfortunately, these creditors get paid no matter what, but you can use a bankruptcy to negotiate a payment plan.
Another thing to keep in mind is that bankruptcy will impact your credit score. However, most of the people who file for bankruptcy already have severally impaired credit. As such, the chance to clear the slate can be extremely beneficial – especially as many will be able to reapply for credit within months of coming out of bankruptcy.
Reasons for Bankruptcy
While no two bankruptcies are the same, there are some common threads which many of these actions have in common. As mentioned job loss, a problem with your business, and medical expenses are some of the leading causes of bankruptcy in the U.S. But they are not the only reasons as divorce and losing a civil case can be reasons for filing as well.
The common theme is a drastic shift in financial fortunes – one day you can manage your bills and the next day it becomes overwhelming. As such, one shouldn’t look at bankruptcy as a way for irresponsible people to shirk their debts. In fact, it is quite the opposite as many people who file have often tried to repay their debts without success.
A Few Things to Know
For many of the people considering bankruptcy, the biggest reason for not filing is the fear that they will lose everything. While it is easy to understand how this fear is driven, the reality is that filing for bankruptcy does not mean one will become destitute.
In fact, many assets are protected from seizure. These include homes, up to a certain value, your main vehicle, personal goods, and any tools that you use for work. As such, there is nothing in bankruptcy that will keep you from the pursuit of happiness afterward.
The key to remember here is that if you live in a multi-million home, own several cars, a private jet, and a boat, you might need to rethink your lifestyle. However, how many people do YOU know who live like this? For most of us, bankruptcy is a chance to dispose of our debts and move forward with our lives.
Reaching Financial Freedom
For starters, being free from debt will not only reduce one’s stress level but it will also mean that you can focus on getting your life back on an even keel. This might even include a novel idea – starting to save money.
However, you don’t want to use the opportunity provided by bankruptcy to make the same mistakes again. Instead, you want to learn and grow. This starts by making a budget and sticking to it. In addition, make sure that you are keeping money in at least two buckets. One for emergencies and another for retirement. Doing so will not only separate your funds based on their purpose but it will get you on the road to financial freedom.
Lastly, cut back on the discretionary spending. Sure, we live in a consumerist society and it is often hard to say no to unnecessary things. But if you really want to change to focus on saving and rebuilding your credit first.