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5 critical post-bankruptcy tips

Filing for bankruptcy is not the end. It is the beginning. It is the start of your new financial life. It can give you a clean slate. It allows you to reset your debt and move forward in life.

So, how do you do it? How do you make the most of this second chance? Here are a few key tips that can help:

1. Make a budget

Honestly, make the budget before you even file. Consider your expenses. What can you avoid? What obligations do you have? For instance, you have to pay rent but you do not necessarily have to pay for cable TV. You have to buy groceries, but a little bargain shopping can cut that monthly cost down. Once you figure out your necessities, make a budget to show you how to spend your money. Then stick to it.

2. Pay every bill on time

You may want to put due dates right into the budget itself. It's not enough just to pay the bills. You need to pay them on time. Missing the date often gives you a late fee, which then ruins your budget for the next month. In some cases -- like with credit cards -- missing the date also means interest gets added on. This increases what you owe unnecessarily.

3. Use safe lending options

If you're not good at using your credit cards responsibly, consider using secured credit cards. They can offer some safety and security because you need to put down a payment in advance. You can then borrow with that money as collateral. Not only does this help to build your credit, but it gives you a hard limit that you cannot exceed.

4. Consider your lifestyle

Maybe you had to file bankruptcy because of things that were out of your control, like medical debt or the loss of a job. If so, there's not much you can do to eliminate the risk. If your bankruptcy came from poor financial decisions, though, just take a step back and consider your lifestyle. Think about how much risk you feel comfortable with. Think about how you spend the money you have. A few minor adjustments can protect your future.

5. Know all of your legal rights

Bankruptcy is a legal right. It is a financial option you can use for most debts. Make sure you really know what rights you have and how this process works. Many people never look into their options. They hear harmful bankruptcy myths and believe them without fact-checking. They ignore things that could turn their lives around. Don't make these same mistakes.

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