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How to prevent another bankruptcy

On Behalf of | Oct 17, 2017 | Blog

Once the bankruptcy process is complete and you are debt free, it is not time to rest easy. Of course, filing for Chapter 7 bankruptcy will put your burdens behind you and allow you a fresh start. Your next goal is to stay on the right financial track.

If you do not learn from your mistakes, you are bound to repeat them. Here is what you need to know about preventing the need for another bankruptcy.

Slow and steady wins the race

Now that your dischargeable debt is gone, your credit rating will begin to increase. You may receive many credit card and loan offers, but do not accept them yet. Rebuild your credit one step at a time to avoid accumulating debt again too quickly. Start with a secured card or loan for an important yet affordable purchase. Allow time for your cash flow to grow and your interest rates to go down before you go for something bigger. The key is to be patient.

Knowledge is power

Perhaps a contributing factor to your bankruptcy was not fully understanding your financial decisions. No one is free from the risk of falling for the sneaky tactics of lenders. Make sure you read all fine print and ask questions before you make any moves. Credit card companies are especially good at keeping secrets to squeeze out every penny from you. Use what you learned in your credit counseling classes and educate yourself further through reputable resources.

Save for a rainy day

Even the most financially responsible people can end up facing bankruptcy when unexpected events occur, such as a medical emergency or loss of employment. To prepare for these situations, it is imperative to get into the habit of setting aside money every time you receive income and living on a sustainable budget even during successful times. You never know when financial disaster will hit, so emergency preparedness is the best preventive measure against a future bankruptcy.