The coronavirus pandemic has affected everyone in one way or the other. While some had health challenges from infection, a lot more were affected financially. A report by NBC News shows that 6.6 million people filed for employment benefits as at the end of March 2020. And many more actually filed for bankruptcy after the report was released. We see the same effects of debt at Ascend Finance every day.
The sad reality is that a lot of people cannot do without being in debt and filing for bankruptcy. However, with the right strategy, knowledge, and determination, it’s easy to get out of bankruptcy. You should start exploring the following solutions to get out of bankruptcy:
Have a budget overhaul
The chances are high that the coronavirus pandemic is making things a bit lean in your household at the moment. As such, you may need a budget overhaul for a fresh start.
You should first write down your income before creating a budget. If you filed for Chapter 13 after Chapter 7, you should factor-in your Chapter 13 debt payment into your expenses.
If you’re short of budgeting ideas, you can make use of the 50/20/30 rule. This rule recommends that 50% of your income should be allocated to necessities (utility bills, groceries, etc.); 20% to savings; and the remaining 30% for wants (dining, entertainment, etc.)
In a tight financial situation, you will have to budget smart for needed necessities. Although it’s a sacrifice, you’ll feel it, but it’s necessary to come out of your financial woes. If you have debt after bankruptcy, you may want to check out a debt payoff planner app to help alleviate debt faster.
Apply for a personal loan
A Chapter 7 or Chapter 13 bankruptcy case does not stop you from applying for a personal loan, although the process is somewhat tricky. You are mandated to file a Motion to Incur debt first, which the bankruptcy court will review. If you can prove that the new loan won’t affect your bankruptcy payments and your creditors are in on loan, then you can be granted a personal loan. A personal loan may help you get things together in this pandemic—who knows?
Set up an emergency fund
Lack of a financial absorber is the main reason why most people go bankrupt. To prevent yourself from falling into this financial trap, you should set-up an emergency fund —something that’s alien to 28% of Americans.
_________________________Random Success Quotes to Remember ~ "Take up one idea. Make that one idea your life -- think of it, dream of it, live on that idea. Let the brain, muscles, nerves, every part of your body be full of that idea, and just leave every other idea alone. This is the way to success." -- Swami Vivekananda
Personal finance experts believe that an emergency fund should be worth at least a minimum of 6 months of your income. If you’re sticking to the common 50/30/20 rule, then 20% should go to an emergency fund. Approach your bank to open a high-yield savings account today and deposit whatever you can regularly. An easy way to be disciplined about depositing regularly is to ask your bank about an auto withdraw into a separate savings account. Before you know it, there will be a nice amount there for you to help ease your mind.
With a few adjustments, these practices will be a big help in protecting you from any unforeseen, financially demanding situation in the future, e.g., medical emergency, vehicle repairs, etc.
Start an investment portfolio
You should consider building an investment portfolio when you get the momentum going. It’s not necessary that you make big purchases like real estate, but you can opt for smaller investments like buying shares in a small company. However, if you’re investing in the stock market, it is imperative to note that it’s a very volatile market as share prices often fluctuate. As such, investment gurus advice that investing in stocks should be a long-term financial activity. But if you still want to invest in stocks, then you should use stock trading tools as well as an advisor. These tools will help you limit your losses, make smart moves, and help to prevent erratic decisions.
Having said that, you should take note of events that’ll have an impact on the stock market, e.g., a pandemic. For example, the coronavirus pandemic witnessed a rise in the shares of entertainment, communications, and healthcare companies. Just know that stock investing requires that you make timely decisions.
Rebuild your credit
Most finance companies will be concerned about your credit history. As such, you should start taking steps to improve your credit history. Since your bankruptcy details are clearly displayed on your credit report, you should start taking steps to make payments on all debts. This will help you rebuild your credit report. A bad credit rating will linger on your credit report for seven years, which can affect how a credit issuer perceives you.
You may also opt for a co-signer whose role is to ensure that you make payments when due. Also, try to keep your employment records clean, and avoid frequent job changes as that’ll make you look unstable to creditors.
In conclusion, many people may receive relief and not have to worry about whether a collection agency sue for $5,000 after receiving a bankruptcy discharge, but you may want to take note of the options that you can take today to avoid bankruptcy again and recover your financial freedom.