How to rebuild your life after bankruptcy

At times, it can feel as though there is no end to the bankruptcy nightmare and is difficult to see the light at the end of the tunnel. It is an incredibly stressful and emotional time where people often cannot imagine how he or she will be able to rebuild their lives again after bankruptcy.

But it can be done.

Here are some tips on how to do it.

1. Change your mental outlook

A common thread for those who have declared bankruptcy is the thought of shame, guilt and sense of failure that engulfs them. However, it is important to note that this shouldn’t be the case and that if you have filed for bankruptcy, you are not alone. According to statistics, one in 911 Australians become bankrupt at some point in their lives and nearly 20,000 Australians declare bankruptcy each year.

James Feazell, the vice president of education at the National Foundation for Debt Management, reveals that there are many circumstances that can drive people into bankruptcy; some of which is out of their control. This list includes job loss, medical bills, unexpected illness or death in the family and divorce.

He suggests that the best way to try and piece your life back together again after bankruptcy is to make peace with the past and let go instead of holding onto the guilt and shame of declaring bankruptcy.

“The challenge now is to adopt the right attitude. You have to get yourself mentally back in the right place where you can become more disciplined and better educated, and where you can learn from life and not make the same mistakes.”

A critical part to changing your mental outlook is to make sure that you surround yourself with the right people. Make sure that you have a circle of people in your life who are supportive and encouraging, especially when you hit speed bumps along the way.

2. Reassess

In order to avoid the same mistakes and ending up in a financial crisis again, it is important to look back at what led you to get to that point and how you can do things differently. Ask yourself these key questions:

• How did I get to this point?
• What could I have done differently?
• What have I learned from all this?

By reflecting back – objectively, not emotionally – you may be able to identify key mistakes or gaps in your finances and can create a better and more efficient mindset for your financial afterlife.

3. Create a realistic budget and stick to it

After a bankruptcy, you have to be very strict with your finances and spending. This is where you create a budget – one that is realistic – and stick to it. A budget will provide you with an insight into how much you are spending over a regular basis and assist in managing your cash flow.

In order to create a successful budget, Dawn Brown, a certified financial planner and senior financial advisor with Altfest Personal Wealth Management in New York City, stipulates, “to live below your means and stop keeping up with the Joneses. Your budget should also have a line for saving, so you can pay yourself.”

Your budget should stipulate when you need to pay your bills so that you are always paying your bills and other due payments in a timely manner. This way, you avoid any unnecessary, excessive payments such as late payment fees or dishonour fees.

If you are finding it difficult to pay all your fees at once, then prioritise. Pay off the most important bills first such as housing and utilities and any other payments that will hurt your credit score.

In addition to a budget, it is also vital to have an emergency fund that is put aside. This means that if you have a future emergency or need cash quick fast, you have a backup source that can support you momentarily.

If you want to get to this point where you see the light at the end of the tunnel and want to rebuild your life after bankruptcy then speak to us at Australian Bankruptcy Services. Our team of expert and experienced bankruptcy specialists can offer you free and professional advice, can answer any questions about your bankruptcy options, and provide a tailored and comprehensive assessment of your situation.

Call Australian Bankruptcy Services on 1800 462 767 (toll free).




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