The time of repayment of a loan in accordance to the repayment plan can be very stressful and you need to be very careful in keeping up with payments. Missing just one of your instalments can lead to your case being dismissed, allowing creditors to continue with their collections efforts. So during the three to five years in which a Debtor is in a Bankruptcy plan, you must maintain utmost caution in your money management. Here are some tips to ensure that you will be financially sound after your chapter 13 bankruptcy.
Spend only on the basics
First and foremost, form a detailed budget and spend only on the basic needs such as food, shelter, childcare and health insurance. Sticking to a stringent budget will be greatly beneficial to your long-term success. Be willing to make the extra effort to save and avoid any extravagant expenditures. Do not make any impulse buys and invest only in the basics. Only once you reach financial soundness should you even consider buying expensive cars or houses. First, pay off your bills on time and make a list of the most essential pays. Food expenditures can be limited by using coupons and avoiding eating out. Finally, consider moving to a smaller apartment or house if your rent is more than thirty percent of your income.
Your credit report.
Your credit report will bear the signs of bankruptcy for the next ten years and it may be difficult to get a low interest loan. You may be asked difficult questions and even be denied loans. You should start a fresh savings account and keep depositing into it. Paying bills out of a bank account will show potential lenders that you are getting back on the right track with your finances and that you are working to gain their trust. Taking out smaller loans and paying them back on time will build confidence in your finances and will lead to larger loans down the road. Using credit cards can be dangerous, but if you are responsible enough and pay them back every month, there is no harm in using them. Credit cards are great for smaller purchases that you can pay off as soon as you get money. A secured credit card does not charge you an application fee or an annual charge for membership, so it is a great option for someone right after bankruptcy.