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Although a Chapter 7 filing can eliminate your debts and help you regain your financial footing, a bankruptcy discharge will remain on your credit report for ten years. This will make it hard for you to obtain a loan in the future. However, there are steps you can take to restore your creditworthiness.

Regardless of the reasons for your bankruptcy,, the first thing that you must do is develop better spending habits. Of course, in order to file for bankruptcy, you are required to attend and complete credit counseling with an approved provider. This course is designed to help you learn how to create a budget and fully understand your income and expenses.

Going forward, you must continue to live within your means and stick to a budget. By keeping track of how your money is spent, you can figure out how to reduce your expenses. Some of your choices include using coupons, purchasing generic or bulk items, and most of all, not shopping impulsively.

Once your budget is in place, you should start saving money. While many financial experts agree that the rule of thumb is to save 10 percent of your income, the goal is to create a “rainy day” fund. This is basically enough savings to cover six months of living expenses in the event of unexpected events such as a job loss, being injured in an accident, or suffering a serious illness. Did you know that the leading reason for bankruptcy is medical expenses, even for people with health insurance?

Finally, it is also possible to start rebuilding your credit before your bankruptcy is discharged. Although qualifying for credit will obviously be a challenge, there are options. You may be able to obtain a “secured credit card,” for example, which requires you to deposit money as security, and the amount of the deposit will be the amount of the credit line. By using the secured card carefully, and making timely monthly payments, you can slowly begin rebuilding your credit rating.

The Takeaway

In the end, filing for Chapter 7 bankruptcy is a serious consideration, but there is life after bankruptcy.

If you are faced with insurmountable debt, you should seek the advice and counsel of an experienced bankruptcy attorney who can help you explore all of your options.