Personal Finance

Important steps to take to start fresh, following the completion of your bankruptcy.

After filing for bankruptcy, many Auburn and Opelika residents are faced with the scary question, “What do I do now?” Life after bankruptcy holds a lot of uncertainty and will come with some hardships, including rebuilding your credit. However, it can also offer a fresh start to your finances.

Nobody is going to tell you that recovering from bankruptcy is going to be easy, but here are some next steps to take to help you transition into a new financial life. 

Adapt Good Saving Habits

They say history tends to repeat itself, but we want to avoid that in every way possible when facing bankruptcy. The best way to ensure you don’t go bankrupt all over again is to start by establishing superior financial habits. Learning to manage your money is crucial in times like these. Begin with opening a savings account that you can access for financial emergencies only.

Create a Budget & Stick To It

Living on a budget can create a lot of unwanted pressure in your life. However, building a budget is simply a tool to help you spend your money wisely and ultimately, achieve your financial goals. Budgets are a great aid for allowing you to personalize your finances based on your wants and needs.

Don’t Trash Your Paperwork

Although it may be tempting to just throw all of the paperwork away in an attempt to forget about the problem at hand, avoid doing that at all costs. It is very important for you to save all of your paperwork from your bankruptcy case. In the future, you may be asked for these files when applying for certain financial products. 

Furthermore, in the instance that a debt collector contacts you about a debt that was discharged in your bankruptcy case, you will have these files on-hand as proof that they were previously discharged.

Rebuild Your Credit, Rebuild Your Financial Freedom

To achieve a new financial life after Chapter 7 or Chapter 13 bankruptcy, it is very important to take the necessary steps to rebuild your credit. Rebuilding your credit can be accomplished by making your payments on time, opening a secure credit card and gaining a credit-builder loan.

Payment history accounts for 35 percent of your overall FICO credit score calculation. Therefore, it is highly imperative that you are consistent with paying your bills on time when rebuilding your credit. This goes to show that you are becoming financially responsible.

You should begin by reducing your dependence on credit cards in general, though the use of a secured credit card can help you gain a sense of trust through the eyes of your creditors. A secured credit card is usually backed by a savings account in your name, where the money serves as collateral and establishes a spending limit. Once again though, it is still just as important to make those on-time payments with your secured credit card.

Credit-builder loans are just another great way for you to continue rebuilding your credit. With this type of loan, you essentially make fixed payments to your lender and then get access to the loan amount at the end of the loan’s term. Credit-builder loans provide you with another opportunity to show that you are financially responsible enough to consistently make on-time payments.

Chapter 7 and Chapter 13 Bankruptcy Attorney serving the Lee County Area – David S. Clark

If you are an Auburn or Opelika, Alabama resident searching for a new start with Chapter 7 or Chapter 13 personal bankruptcy, David S. Clark has years of experience serving this community. Contact David S. Clark today for more information!

While financial irresponsibility is a valid cause of bankruptcy, it is solely the main cause. 

Among Auburn & Opelika residents, it is rarely one thing that leads to financial struggles serious enough for bankruptcy. More often, it is a combination of events, such as a job loss in conjunction with an unexpected medical injury.

So, whether you are overwhelmed by financial struggles or trying your best to avoid bankruptcy, whatever the case is, here are the top five reasons residents in Alabama go bankrupt from David S. Clark, an experienced bankruptcy attorney in Opelika, Alabama. 

The order of the following list is based primarily on a paper by the American Journal of Public Health. 

1. Loss of Income

As cited by nearly 78% of the survey respondents, loss of income was the most common reason for filing for bankruptcy. Unfortunately, this statistic is far from surprising since over 65% of Americans live paycheck to paycheck. 

Income brings stability, so when paychecks stop, financial trouble can be close behind—for example, the failure to pay health insurance payments, car payments, or even mortgage payments. Plus, doctor or hospital visits can be extremely expensive without health insurance. 

2. Medical Expenses

In conjunction with the loss of income, medical expenses were the second most popular reason why a person in Auburn or Opelika, Alabama may go bankrupt. This is not a surprise with the expenses that can come from an accident or illness. 

Furthermore (and as mentioned), in conjunction with a loss of income, the loss of health insurance can lead to seemingly impossible to pay medical bills. 

3. Housing Costs

Home mortgages represent the single most significant portion of household debt in Alabama, far surpassing credit cards or student debt. This is often due to residents taking on mortgages outside of what they can afford, more commonly known as those who are “house broke”. 

When someone is house-broke, it means that they’re spending too much of their total monthly income on housing costs such as monthly mortgage payments, property taxes, maintenance, utilities, and insurance. These expenses can quickly add up, leading to difficult financial struggles or bankruptcy as shown by 45% of survey respondents. 

4. Living Beyond Your Means

Overspending can come in many shapes and sizes—from maxing out credit cards to simply being unwise with money. Whatever the cause, thankfully there are ways to learn how to budget correctly to avoid bankruptcy. 

5. Helping Family Members

Whether helping a child pay off student loan debt or paying off a parent’s mortgage, close to 30% of survey respondents said that assisting their family placed a massive burden on their own finances and became a motivation for bankruptcy. 

David S. Clark – Experienced Auburn Bankruptcy Attorney

In conclusion, many circumstances can lead to bankruptcy, but bankruptcy does not mean the end of your finances forever.  David S. Clark is an Opelika-based bankruptcy attorney who has helped countless Alabama residents find freedom from the weight of immense debt. 

Whether you are seeking to file for Chapter 7 or Chapter 13 bankruptcy, David S. Clark can help you every step of the way. For more information, contact David S. Clark today!