Whether it be a personal money problem or those caused by running a business, bankruptcy cases are surprisingly common and can affect anyone from the highest roller down to the everyday man in the street.
However, what you do when you’re declared bankrupt can make all the difference between recovering quickly from the ordeal or letting it dictate your future financial wellbeing for many years to come.
Facing the unthinkable takes a clear head
Facing the prospect of bankruptcy can have quite severe psychological implications and will likely make you feel you’ve reached rock bottom – however it’s important to keep a clear head. Should you have faced the unthinkable and been declared bankrupt, below are some sensible steps you should take to make the process as painless and speedy as possible.
Ensure you have a good lawyer onside and keep all the paperwork: It should go without saying, but you’ll want to enlist the help of a specialist legal team like McAlister and Co as you traverse the legal minefield that is bankruptcy. Also, however depressing it may seem at the time to keep records of your mistakes, you should ensure you and your legal representative keep as much documentation as possible about your bankruptcy. This can prove invaluable further down the line if you attempt to get credit.
Start as you mean to continue – get into the habit of saving money: The last thing you want to happen is for history to repeat itself, so accept your mistakes, move on and establish new habits. Trying to save money while the lessons taught by bankruptcy are still fresh in your head will help you adapt and learn new ways of living. It will also give you the security of having that little extra cash behind you should you hit lean times again.
Work on your credit score: Bankruptcy obliterates your credit score – but that doesn’t mean you can’t build it back up again. To improve your credit rating, you should ensure you pay all bills on time, try opening a credit card account secured against your savings, and make sure that the bills you pay are reported and counted towards your credit rating (again, on the proviso that you are paying them on time).
Keep a close eye on your credit report: You need to keep a close eye on your credit report for several reasons. Very often, debts don’t get included in the supposed final settlement, which could come back to haunt you at a later date – particularly if the debt is transferred to another collector. Also, anomalies and mistakes can and do happen, and that good work you’re so diligently making towards reducing your debt and improving your rating might not always be picked up by the relevant agencies.
Lastly, you should ensure that the information logged against you is accurate and up-to-date. Incorrect information will work against you and continue to taint your credit score – particularly if previous debts aren’t struck off your record and remain noted as outstanding.