Recovering from bankruptcy – financially

11 Mar Recovering from bankruptcy – financially

Filing for bankruptcy takes courage. It requires overcoming fear, embarrassment and even shame. Recovery from bankruptcy has two components. The first is financial. The second is emotional.

Today, we’re going to focus on steps everyone should take to recover from bankruptcy immediately.

Step 1

Ask yourself what got you into bankruptcy in the first place? And ask yourself what you can do to prevent this from happening again. Bankruptcy is not always preventable. But frequently, people can take affirmative steps after bankruptcy to improve their lives. In so doing, they can reduce the likelihood that they will require bankruptcy again.

Step 2

Identify what went wrong and do something about it.

Underlying cause

Post Bankruptcy Remedy

Overspending Budgeting –
Retraining – especially community college
Accident/injury Rehabilitation
Addictive behavior 12 step programs as appropriate
Mortgage foreclosure Foreclosure defense
Mortgage modification
Move to less expensive housing
Personal injury claim Structured settlement
Medical issues Improved health regimen
Improved diet
Stop smoking
Moderate drinking

Step 3

Take steps to restore your credit and your financial life:

  • Budget – use a tool like
  • Establish savings – pay yourself first
  • Pay your secured debt – like your car note- on time – use auto-pay if possible
  • Check your credit report every six months or so after bankruptcy – be sure that all derogatory pre-bankruptcy references are removed

Step 4

Forgive yourself. You are only bankrupt today. You will not be bankrupt forever. Remember, bankruptcy is a temporary status. It is not a permanent condition.

Tomorrow, we’ll discuss emotional recovery from bankruptcy.

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.
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