Bankruptcy Discharged – Now What?

Your bankruptcy has been discharged, and you’re wondering what to do now.  The bills aren’t cluttering the mailbox, and the phone calls have stopped.

It’s a new dawn, it’s a new day, it’s a new life for me, as Nina Simone (and later, Michael Buble) said.   So let’s put you in position to start feeling a little better than you were before your bankruptcy was discharged.

Assess The Financial Landscape

You filed for bankruptcy because you couldn’t pay your bills.  Whether it was a temporary setback or a long-standing problem, the fact remains that you didn’t have enough money left over at the end of the month to keep a decent savings cushion.

Some folks say it’s important for you to have a 6-month savings cushion, but that’s daunting and likely unattainable in the short-run.  Instead, think about where you can cut back without feeling the pinch.

Maybe you can get rid of your landline phone, opting to use your cell phone more often.  Perhaps that Netflix subscription can be discontinued in favor of a $79 annual Amazon Prime membership that will give you free streaming as well as free 2-day delivery on your Amazon purchases.

As to cable or satellite, take a look at the shows you’re actually watching.  Now determine the lowest rung of service that will provide for all of those channels.  If you’re into a particular premium channel’s offerings, do the math and see if it’s cheaper to just buy the episodes on iTunes rather than paying each month.

Split Your Direct Deposit

Now that you’ve been discharged in your bankruptcy, you no longer owe money to those credit card companies.  It’s a good time to force some savings onto yourself.

First, open up a savings account at a bank that’s not local to you.  You want it to be inconvenient to raid the savings account.

Second, call your payroll department and ask for your direct deposit (you DO have direct deposit, right?) to be split.  Send $50 (or $100, or whatever you can tolerate) per pay period to the savings account.  The rest goes to checking.

Third, forget about the savings account for the next 6 months.

Clean Up The Leftovers

Some of your debts may not have been discharged in your bankruptcy – student loans, car loans, your mortgage, and other miscellaneous obligations may be left over.  If so, take some time and consider how you may be able to pay them down more quickly.  Even if you can’t pay more quickly, consider paying the long-term debts every other week to lower the finance charges in the long-run.

Watch Your Credit Report

After you’ve been discharged in your bankruptcy case, your credit reports should all reflect that you have a $0 balance on each of the discharged debts.  All too often, a mystery debt shows up months or years after your bankruptcy – this may be indicative of a problem.  If this happens, you need to speak with an attorney who’s well-versed in credit reports after bankruptcy.

Remember that civil judgments will continue to show up on your credit report even after discharge.  In some places such as New York, you may be able to file a motion with the state court a year after your bankruptcy to get the judgment marked as discharged.  Your bankruptcy lawyer may be able to help you with this process.

Remember The Feeling

If you’re like any of my clients, filing for bankruptcy wasn’t an easy decision for you.  The emotional turmoil of the process is easily forgotten, much like any traumatic event.

But as the old saying goes, those who cannot remember the past are condemned to repeat it.

The longer you remember the anxiety and confusion surrounding your decision to file for bankruptcy, the more likely it is that you’ll never need to do it again.

Image credit:  .imelda