Achieving financial stability after bankruptcy

Bankruptcy can give people the opportunity to get out from underneath crushing debt and make a fresh financial start. However, unless people are proactive after they receive their bankruptcy debt discharges, they could find themselves back in the same financial straits that led them to file bankruptcy in the first place.

Document discharge

The debt discharge in bankruptcy is a powerful tool to help people reorganize their finances, but not all debts are discharged in bankruptcy. People need to get a clear picture of their remaining debts, such as alimony, child support, taxes owed for years a person did not file tax returns, payroll taxes and student loans. The bankruptcy discharge order will not list all of the debts that remain after the discharge, so people need to inventory their remaining debts for themselves.

Additionally, people will want to note what liens still remain after bankruptcy. The debt discharge only extinguishes personal liability for a debt; a lien holder still has a right to recover property on which he or she has a lien. If a person chose to keep property that has a lien on it such as a house or vehicle, he or she will want to verify the remaining balance of the amount owed on the property and resume payments so the lien holder does not repossess the property.

Document discharge

It is critical for people to keep documents proving the bankruptcy debt discharge. Many people who have successfully discharged debts in bankruptcy report being hassled by debt collectors trying to collect on debts they purchased from other companies that had been discharged in bankruptcy. People can shut down those debt collection attempts with discharge documentation.

People should also pull their credit reports several months after their debt discharges to ensure that the debts that were discharged show a zero balance on the reports. If credit reports contain inaccuracies, having documentation of the debt discharge can help a person refute the inaccuracies with credit reporting bureaus.

Set a budget

People should establish budgets after bankruptcy to manage their expenses. People should list their monthly debts such as rent or mortgage payments, utilities, insurance and transportation costs and compare the totals with how much income they receive each month. If expenses exceed income, people can make adjustments.

It is also wise to set aside a portion of each month's income to build up an emergency savings. Financial experts recommend having enough money saved to pay six months' worth of expenses.

Speak with an attorney

The opportunity to start over financially that comes with bankruptcy can be liberating. However, deciding to file bankruptcy is not something you should do before speaking with an experienced bankruptcy attorney who can advise you of all your debt relief options, including bankruptcy.