Avoid Filing for a Second Bankruptcy

  • Bankruptcy Law

Tips to Avoid Filing for a Second Bankruptcy

Filing for bankruptcy, though tough, is a smart decision to overcome your financial problems. However, as lawyers of Sacramento based law firm Recovery Law Group inform, debtor’s need to make these changes in their habits to avoid filing for bankruptcy again:

  • Lack of emergency reserve is one of the major reasons why a person ends up in debt. It is extremely important for people to maintain a corpus catering to emergencies like unexpected medical bills, unemployment, unexpected crisis, etc. An emergency fund should help cover a minimum of 3 months of expenses. Having an emergency fund provides a sense of financial security and also helps avoid bankruptcy. Thus if you haven’t planned for it, this is one of the very 1st things that should be on your mind after your bankruptcy proceedings.
  • Once your debts are discharged, you will be pursued by many credit card companies with lucrative offers. Though it is important to rebuild your credit, however, debtors should avoid accumulating huge amounts of debts. While taking new credit cards, ensure that you make timely payments on them to not just improve your credit rating but also to avoid a bankruptcy filing for a second time.
  • Foreclosure has been an important factor for the increasing number of bankruptcy filings. It should, therefore, be important for the debtor’s coming out of bankruptcy proceedings to avoid buying more property than they can afford. Buying an expensive house will stretch your budget, causing delayed payments and extending your debt, thereby increasing chances of falling on hard economic times again.