To Dos After You Declare Bankruptcy

After you’ve declared personal bankruptcy, are there any additional steps you should take to protect yourself? A recent article in the Huffington Post reported on an interview with Suze Orman, a well-known financial advisor and business television host. In the interview, Orman discusses some of the most important steps to take after you declare bankruptcy. In other words, after filing for Chapter 7 or Chapter 13 bankruptcy, you’re not finished thinking about your finances. Indeed, if you want to stay debt-free and to manage your finances, you’ll have to think carefully about the relationship among your income, your needs, and your wants for the next several years to come.
In the meantime, if you have questions about whether consumer bankruptcy is the right decision for you, it’s important to discuss the details of your situation with an experienced Chicago bankruptcy lawyer. Personal bankruptcy can help many debtors to regain financial independence when they’re buried by overwhelming debt.
You Should Live Below Your Means, But Live Within Your Needs
What does Suze Orman think are some essential “To Do’s” after you file for bankruptcy? First thing’s first, she explains: “live below your means, but within your needs.” In other words, say you take home $4,000 per month. It’s important to spend less than $4,000 per month. Try to only spend, for instance, $3,000 per month and to save the rest.
How can you do this? According to Orman, it’s important to distinguish between your needs and your wants. When you’re about to make a purchase, you should ask yourself, “is this something I need or something I want?” Things you need are easy to identify: food from the grocery store, for instance, or medication. What items clearly fall within the “want” category? Food at a restaurant, for example, represents a clear “want” and not a “need.” Other obvious “wants” might include products like DVDs and entertainment media, or fashionable new clothes and jewelry.
In addition, you should find a way to take pride in the money you’ve saved. Once you can be happy with your savings in the same way you would a new object that would fall into the “want” category, you’re more likely to be on the road to maintaining reasonable post-bankruptcy finances.
Limit Your Credit Cards
In short, you don’t need to have more than a couple or a few credit cards. While it may be difficult to obtain credit in the months after you’ve declared bankruptcy, your credit will soon begin to recover. When it does, don’t sign up for store credit cards—try to steer clear of a Nordstrom store card or a Home Depot credit card. These types of cards will encourage a lot of “want” rather than “need” buying. These cards also charge much higher interest rates—sometimes up to 23 percent. Orman emphasizes that you only need “two or three credit cards at most,” and they should be Mastercard or Visa cards. These credit accounts have lower interest rates, and they can help you to rebuild your credit if you charge appropriately.
It’s important to understand how bankruptcy can work for you, as well as how it can affect your financial life afterward. Contact an experienced Chicago bankruptcy attorney at the Emerson Law Firm today.
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