There’s no doubt that are some serious financial repercussions in declaring bankruptcy, and there’s no question that your life will go through some considerable changes. If you’re in this situation, don’t be alarmed. The challenging economic times observed today means that a growing number of individuals are filing for bankruptcy. In reality, there are around 20,000 Australians every year that declare bankruptcy. So rest assured, you’re not alone.

Instead of dwelling on the past, it’s essential that you look towards the future and attempt to recover as best as possible. Bankruptcy doesn’t mean the end of the world, it just means that some adjustments will need to be made to secure a bright future for you and your family. So here are some simple strategies that you can use to best recover after filing for bankruptcy.

Emotional recovery

It’s normal for individuals who file for bankruptcy to experience feelings of failure, self-loathing and guilt. Although it may seem natural have these thoughts, becoming bankrupt is the result of simply another mistake that we all make as humans. You need to stop punishing yourself and look towards the future. Bankruptcy is the first step towards financial freedom, and recovering from a bad credit rating is much easier than you think. The longer you surrender to these negative feelings, the longer it will take to recover. Confronting your financial difficulties is the first step in overcoming them, so you’re certainly in a better position than you were prior to filing for bankruptcy.

Self-Evaluation

It’s important that you examine the reasons why you became bankrupt to make certain that you don’t make the same mistakes again. Declaring bankruptcy offers you a second chance to get your finances in order, so it’s best you make the most of it. Even though there’s possibly a range of reasons why you declared bankruptcy, most of them probably relate to bad spending and borrowing habits. So it’s a good idea to produce a list of two or three things that led you to declaring bankruptcy and commit yourself to not making these mistakes again.

Create a budget

After you’ve bounced back emotionally from bankruptcy, the next step is to develop a rational and conceivable budget. You’ll have to review your earnings and expenses carefully, and figure out a way to save money while still paying all of your living expenses. Even if it means that you downsize your house or bypass some luxury items, becoming financially stable is your main priority. There are some simple ways to save money, for instance eating at home as an alternative to eating in restaurants and cancelling your gym membership in favour of walking to work. Remember to include in your budget an amount for unanticipated expenses.

Pay your bills on time

The initial step in repairing your bad credit rating is to ensure that you pay all your bills on time. While this won’t increase your credit rating instantly, it will ensure that your rating doesn’t decrease any further. You might choose to create automatic bill payments with your bank to guarantee that you don’t overlook any payments. This will demonstrate to lenders that you’re financially responsible, and the longer you do this, the better your credit rating will get. This is regarded as the single, most powerful action you can take to restore your credit rating.

Increase your income

If you haven’t currently got consistent employment, now is the time to do so. Consistent income over time will not only increase your credit rating but it will allow you to increase your liquid assets, presenting you with more options. If you’re in a situation where you can acquire a weekend job, you should genuinely consider it. Or take a look at your interests and aim to create a way to increase your income by doing something that you enjoy. Cash is king when you’re bankrupt so anyway to increase your earnings is an excellent idea.

Even though declaring bankruptcy is never an easy decision, it is the first step in confronting your financial issues and learning from the past so you can enjoy financial freedom in the future. It’s critical that you review the reasons that created your financial hardships to ensure they don’t happen again. Steady employment and paying your bills on time will improve your credit rating eventually, and following a budget is extremely important.