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Law Offices of Nicholas Gebelt

4 Mistakes that Impede Your Financial Recovery after Bankruptcy


Whether you like it or not, sometimes bankruptcy is the only way to save your financial future and continue functioning normally. Whether you made bad financial decisions, or had some unexpected financial difficulties like medical bills, bankruptcy is a useful mechanism which can help you get back on track.

However, once you’ve filed for bankruptcy, you should be aware that your life will change and that it will be different for a while. Our friends at the Law Office of Chang & Diamond, APC told us about some lifestyle changes that you need to make after bankruptcy.

What Is Your Goal Post Bankruptcy?

If you are not financially-savvy, you may not know exactly what you are supposed to do after your bankruptcy, but it is really simple. Your credit score took a pretty big hit as a result of the bankruptcy – the trust of creditors in your ability to manage money is reduced.

It is your job to slowly regain that trust by not making any more big mistakes and gradually increase your credit score. Bad credit score can affect your chances of getting loans, housing, and even employment, so you should take it seriously. Here are some mistakes to avoid.

Not Paying Your Current Bills

If you filed for Chapter 7 bankruptcy, chances are that many or all of your debts have been written off. It is meant to provide you some much-needed respite. However, that doesn’t include the current and upcoming bills.

These you will need to pay and you will need to pay them regularly. The regularity of payment can account for as much as 30% of your total credit score, so it is vital. Make sure to pay all of your bills as they arrive, or by a certain time of the month. Set reminders for yourself, if needed.

Closing Your Banking Accounts

If you don’t have too much disposable income, you don’t really need a bank account and you can just close it, right? To some degree, this is true, but if you are trying to build up your credit score, this may not be as good of an idea as you think.

In order to have your credit score improved, it is important to leave a paper trail which can be monitored. And the best way to do it is by going through a bank. If you have all of your payments recorded by a bank (by using a debit or credit card, for instance), your credit score will begin recovering slowly.

Ditching Credit Cards Completely

Not wanting to go into more debt, even if it’s credit card debt, is reasonable, especially if that is what got you into trouble the first time around. Just go full cash and only spend the money you have sounds like a reasonable measure to prevent any future financial problems.

However, just like with your bank account, it is important to show the credit bureau that you are better at managing your finances, which is really hard if you don’t leave easily traceable finance information.

Most bankruptcy experts will tell you to take out a secured credit and use it sparingly, but regularly. And pay off your credit card debt every month, just like you do with your bills. This way, your credit score will recover faster.

Your road of recovery from bankruptcy is probably not going to be easy or quick, but if you apply these few ground rules, you should be able to get on with your life faster and gradually get back to normal. Just make sure to learn from bankruptcy and perhaps adopt some new and handy financial habits.

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About the Author

Mr. Nicholas Gebelt represents debtors—individuals, couples, and Businesses—and helps them succeed in an area fraught with traps for the uninitiated.