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Recovering from bankruptcy after a divorce

by | Apr 27, 2021 | Bankruptcy

The time is now to begin your recovery from divorce and the financial downfall that fell upon you. Your bankruptcy filing was a necessary second step. Even before your marriage fell apart, you had certain issues with money in building up excessive credit card expenses, coping with exorbitant medical bills and a job loss. The divorce pushed you to the bottom.

In dusting yourself off after your divorce and financial collapse, you get a second chance to set a new direction in your financial life. That is what bankruptcy will do for you in starting afresh. However, there are some critical steps to take in leading you on to a new path. If you remain realistic and cautious, you have a solid chance to recover from bankruptcy after a divorce.

Create a budget, save money

Each year, thousands of people file for bankruptcy. In 2018, nearly 462,000 U.S. residents filed Chapter 7, while more than 288,000 sought Chapter 13 bankruptcy, according to the American Bankruptcy Institute.

And some of them are like you in that they may have gone through a divorce. Here are some advisable steps to take that may make your recovery a bit easier:

  • Create a budget and abide by it: Track all expenses to see where your money goes. Make spending changes and prioritize the necessary things, while eliminating other expenses. Your belt-tightening has begun.
  • Limit credit-card spending if you still have one: Consider using cash exclusively for purchases and use your credit card sparingly.
  • Make timely bill payments: Conditioning yourself to do this will help you in the long run.
  • Consider getting a secured credit card: This move helps you rebuild your credit. Such cards are backed by the cash deposit you make into the account. And that cash deposit represents the equivalent of your credit limit.
  • Start saving your money: Every little bit counts as you build up an emergency fund, which, ideally, should be six months of expenses.
  • Check your credit report: In tracking your progress, you will find out where you stand. Your goal is to improve your credit rating.

All that aside, you also may consider working with a therapist to help you recover from your divorce, which likely had a direct tie-in with your bankruptcy. Then, in time, your personal and financial recovery is well on its way.