Bankruptcy is often a scary word to many people because of its negative impact on one’s credit score. It’s a state where you’re not able to pay your debts or service your loans and so you’re forced to make the declaration in writing. Though it may sound scary, on the other hand it enables you clear your old debts and gives you a chance to have a fresh start. Therefore it’s not all doom and gloom because many people have gotten out it better than they were before and have applied the lessons learnt to build their credit scores to over 640. Hence, there are some tips to help you bounce back after bankruptcy
Below are 6 tips to help you bounce back after bankruptcy
1. Find out what went wrong
There’s always cause for everything that happens under the sun. For you to reach bankruptcy point, several reasons obviously caused it, and so, in evaluating what could have gone wrong you will avoid the same mistakes in the future. The causes may include loss of income, huge credit card debt or medical debt.
For instance if it’s the case of reduction/loss of income, you can draw from some of your savings accounts like the emergency fund to keep the business going until your income flow stabilizes again. You can as well opt to minimize your expenses to a certain percentage e.g. 50-60%.
2. Budget budget budget
Lack of budgeting can lead to loss of huge sums of money. It may seem difficult for the first few times but at the end of the day you will be in a position to fully manage your finances. There are plenty of ways to keep track of your income and expenses e.g. spreadsheets or budgeting apps such as mint.com or YNAB. They help you calculate your fixed expenses and recurrent expenses against your monthly income.
3. Have a secured credit card
In today’s business world credit cards help in building one’s credit. Unfortunately when you become bankrupt, card issuers cancel all your cards. Secured credit cards therefore help individuals with bad credit, as they’re always available. They enable qualify up to the card’s unsecured version and then receive back your deposit after a period of making sufficient payments on time.
4. Don’t borrow cash yet
The worst mistake for you to make is getting into another debt before recovering from bankruptcy. This may lower your credit score further and so you’ll be forced to pay higher interest rates whenever you take a loan.
5. Build business relationship with your bank
Establishing lasting business relationship with your local bank through the CEO or credit managers will help you in your financial future, should you desire to take up another loan. Make them understand why you landed into bankruptcy in the first place, why it was necessary to file for it and the necessary measures you’ve put to ensure it never happens again.
6. Always pay on time
Your credit history always accounts for 35% of your entire credit score. If you regularly make late payments, your lenders/investors will never trust you with their money thus denying you loans in the future. There’re many ways to help you pay on time, such as Auto-pay.
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Established in 1992 and previously known as Yong Seng Credit,
Singa Credit Pte Ltd is Licensed Moneylender in Singapore regularly updated with the latest regulations to be in line with the requirements set out by Registry of Moneylenders.
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