5 Tips for Staying Out of Debt After Bankruptcy

 Posted on September 05, 2024 in Bankruptcy

Going through bankruptcy can be a fresh start, but staying out of debt afterward is important for avoiding the cycle of debt in the future. While bankruptcy can help erase overwhelming debts, it is important to develop good habits to avoid falling back into the same financial struggles. If you are in San Antonio and have questions about filing for bankruptcy, contact an attorney and then check out these five tips to help you stay out of debt.

Create a Realistic Budget

One of the most important steps to take after bankruptcy is to create a budget that includes your income and expenses. Write down all your sources of income and then list out what you always spend your money on, like rent, utilities, food, and transportation. Be sure to include savings as a priority in your budget, even if you can only start small.

If you are unsure how much money you spend, keep a record. Write down every time you spend money, even on a coffee, so you know exactly where your money goes. Many people are surprised by how much they spend when they start keeping track. Once you know where every penny is going, you can make adjustments as necessary.

Build an Emergency Fund

Surprise expenses can easily push someone back into debt after bankruptcy, so building an emergency fund is essential. Even if you can only set aside a small amount each month, having some savings available for car repairs, medical bills, or other surprises can prevent you from turning to credit cards or loans. Over time, these savings will grow, giving you more peace of mind and protection against future financial issues.

Avoid Unnecessary Credit

It can be tempting to start using credit again after bankruptcy, especially when trying to rebuild your credit score. However, relying too much on credit can lead to the same problems that caused debt in the first place. Be cautious when taking on new credit cards or loans. If you do need to use credit, make sure to pay off the balance in full each month to avoid interest and additional debt.

Focus on Needs, Not Wants

After bankruptcy, it is important to prioritize spending on what you truly need rather than on things you want but are not necessary. While it is okay to treat yourself occasionally, make sure that non-essential purchases fit into your budget and do not take away from necessary expenses or savings. Before making a purchase, ask yourself whether it is something you really need or if it can wait.

Watch Your Credit 

Keeping track of your credit report is important after bankruptcy. Regularly checking your credit allows you to monitor any mistakes or signs of identity theft, both of which could harm your financial recovery. You can get free credit reports from the major credit bureaus annually, and there are many free monitoring services that also help you build up your credit. This will help you stay on top of your financial health and keep you from unintentionally falling into debt again.

Talk to a Financial Advisor

Sometimes, the best way to stay out of debt is to get professional guidance. A financial advisor can help you develop a long-term plan that fits your income and goals, while also giving you advice on managing debt, savings, and investments. A financial advisor costs money but can be well worth the cost because you can save and invest so much more.

Contact a San Antonio Bankruptcy Attorney

If you have questions about your financial situation after bankruptcy, or if you are considering filing for bankruptcy, reach out to the San Antonio, TX bankruptcy lawyer at Law Offices of Chance M. McGhee. We are here to guide you through the process and help you regain financial stability. Call 210-342-3400 to schedule a free consultation and start on the path towards a better future.