Go Bankrupt

The year 2020 has put many people around the world in a bad financial spot. If your situation becomes irreparable and bankruptcy is inevitable, you’ve probably been fighting the good fight for quite a time. To successfully move forward, be ready to embrace this opportunity to lower your debt and your stress level and regroup as you move back into the world.

Work With a Bankruptcy Professional

Many projects are easy to DIY, but bankruptcy isn’t one of them. Be aware that you may be able to shed some debt, and some you can restructure. You may be able to keep your home, and each adult should be able to keep one car, but these debts may need to be reconfigured and some form of payment continued.

As these parameters are defined, your bankruptcy professional can help stop threatening letters, unwelcome phone calls from collection agencies, and other forms of debt harassment as you move into bankruptcy protection.

Steps to Take on the Other Side of Bankruptcy

For the first three months, go back to cash. Unless you can’t go in-person to pay a bill, do not use any electronic form of payment. This will give you multiple benefits.

First, it will make it easier to create a budgeting process. If you need groceries or other household goods, you can make your list, keep a running estimate of the total bill, get out the cash you need to shop and buy what’s on your list.

Secondly, going back to cash makes money more tangible. This is not to say that your bankruptcy was caused by profligate or excessive spending; the COVID-19 pandemic has decimated many industries and made it nearly impossible for many folks to keep up a steady income. However, people spending cash tend to spend less than those using a card even when picking up the necessities of life, so cash consciousness is a good step to take.

Finally, going back to cash will allow your credit rating and credit report to settle down so you can start checking. Avoid checking it for the first three months after filing for bankruptcy. You need to give the credit reporting agencies time to catch up and you need to give yourself a break.

Set Up an Account with a Credit Union

If you’re already banking at a credit union, check to find out if they have a credit builder loan program. Most banks and credit unions offer secured loans, but a credit builder loan is an even better option.

A credit builder loan is a savings account that you pay like a bill. At the end of the loan, you get access to what you paid in on the loan, and you may also get some accumulated interest.

Another option is to apply for a secured credit card. For this card, you’ll need to make a deposit for the balance you want access to, and be able to pay the required payment each month. You will face a hard credit pull for this application, so don’t apply unless you have the deposit ready to go.

Other Options for Cashflow and Credit Building

If you live alone and are working at least part-time, seek a second job that could provide tips. While you will be required to report this income, having cash coming in could give you the chance to let your bank account catch a breath and let the balance come up.

If you need a vehicle to find or keep your current job and don’t think you can get a loan on your own, consider asking a friend or family member for a co-sign. Be very aware of the burden this places on them and do your best to get the debt paid off as quickly as possible. Even if you pay the loan promptly every month, you limit what they can borrow, so if they need to raise cash quickly, your loan may be a barrier.

Finally, do not beat yourself up over your financial challenges. The COVID-19 pandemic has wiped out or severely curtailed the gig economy for many people, and many parents are struggling to find a way to support their children as they learn from home. Hire a pro, use the protection they provide, and move forward in the best direction for you and yours.

By Anurag Rathod

Anurag Rathod, as a blogger he used to spread all about app-based business, startup solution, on-demand business tips and ideas and so on.

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