Recovering from Bankruptcy – Getting Your Life Back on Track


Bankruptcy is a stressful event in one’s life. Any of you that have gone through such a declaration will know that it can be the start of a new way of living. It’s a scary process; the reality of losing non-exempt assets that in reality take the form of family keepsakes or even your home.

There is no questioning that recovering from bankruptcy is both a valuable and challenging lesson to learn. Unfortunately, there are no simple tips and tricks I can give you to boost your credit score rating instantly. Instead, I’m going to show you sustainable methods of slowly building from the bottom up. This will make sure that you won’t have to face the fear of getting back into pressing financial trouble.

  1. Cut down on direct debits

    Before I explain what I mean by this statement, I want to clarify that a direct debit to your credit card bill is the exception to this rule. It is an excellent idea to pay off your credit card bill in full each month.

    Direct debits can get really out of hand; gym membership, phone bills, even, dare I say it charity donations. If you are recovering from bankruptcy, it’s time to cut down on what is essentially a drainpipe to your income. It is a good idea to cut down to the bare essentials of your recurring payments. This also includes entertainment subscriptions such as Spotify and Netflix.

    So instead, run in the park, get a cheap phone without internet and have it set up to a pay-as-you-go contract. There are all sorts of ways in which thinking outside the box will save you money. Make sure that you replace each direct debit with a cheap or free alternative so you won’t feel tempted to quickly set it back up when you’re feeling your lifestyle dip too drastically. Recovering from bankruptcy doesn’t mean you have to be Scrooge, but charity should only occur if there’s money left after paying your utilities and rent.

  2. Steady flow of income

    Perhaps the primary reason you have declared bankruptcy is that your income was too inconsistent. Some industries are highly seasonal or dependent on trends, or your take-home pay simply cannot support your lifestyle.

    These suggest that you need to consider alternative ways to bring home income, especially in the quiet season. It is a good idea to at least look into alternatives. Explore your talents and see if they could be used in a way that could derive a more dependable income. If you enjoy your work and don’t feel it viable to leave, then perhaps take a weekend job while you begin the process of building up your credit score and cutting down on expenses.

  3. The Down-Low on Credit Cards
    What to do with your credit card situation? A secured credit card is what you most need seeing as you won’t qualify for an unsecured credit card. It is the best option to heal your credit score. You’ll be using cash as collateral and will be returned this deposit either after an agreed amount of time, usually a couple of months, or once you have closed the account.

    Not only are these cards secure for the banks but also for yourself. It is not unusual for people recovering from bankruptcy to be reluctant to begin using credit cards again. These credit cards will aid you to live within your means.

    Once your credit score is at the 650 mark, you can look into converting to a secured credit card. Paying off your credit card statements on time each month will help you achieve this. Getting a secured credit card will help to improve your credit score further. The higher your credit score when you apply for secured credit cards, the better the deals that will be made available to you, so it can pay to hold off until you’re at around 700.

  4. Budgeting

    Budgeting after Bankruptcy

    Declaring bankruptcy is often a wake-up call for most people who have let their debt slowly grow out of control. Budgeting starts with tracking all your costs. Think about monitoring a month of expenses rather than estimating because we often underestimate how much we spend. Those takeaway coffees, trips to the cinema and parking tickets often get left out of the list of expenses seeing as each individual cost is negligible. You know where I’m going with this: it all adds up. So, make sure you pencil in every single expense.

    Next, you have to calculate your average monthly income. If you don’t have a stable income, find the monthly average. However, be aware that unless you have money saved from previous months, you’re going to have to tighten your belt on months with lower inflows. Make sure you stay out of the red as much as possible.

    Budgeting is the life buoy of your financial recovery. Don’t let it slip out of reach. Many people become lax after a few months of getting on top of their debt. However, by holding yourself accountable, you will never again find yourself drowning in debt.


I’m going to finish on a positive note: bankruptcy doesn’t last forever. This is why I’ve chosen the image of a phoenix; they are reborn from the ashes. It is an extremely stressful process, but with hard work, bankruptcy can be put behind you, at least in a financial sense, in approximately seven years. In the meantime, as long as you are consistently working towards staying out of debt then you will find that you will be approved for car loans and mortgages.

In a previous article, I talk about the best ways to go about applying for a personal loan. You can find the link here, and I have included a section specifically for people doing so while in the bankruptcy recovery process. I hope this article has given you some guidance on how to take control back from credit issues and if you would like to know more, please let me know in the comments below.

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Ryan Sharma, CIM

Ryan Sharma, CIM

Co-Founder & CEO/CIO

Ryan has over 15 years of experience in Information Technology, within the global financial services industry. His career has primarily focused on leading strategic initiatives within various retail and corporate business areas to innovate and future proof financial institutions for the long term.

This information is just our view and should be not be considered advice of any sorts.
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