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The day you are discharged from bankruptcy can be a very happy moment and it’s certainly reasonable to enjoy it and maybe even have a little celebration.  You do, however, have to accept that it is only the first step in the “journey of a thousand miles” back from bankruptcy.  Here is a brief guide as to how to manage that journey.

Ignore any and all companies who claim to be able to repair your credit

You cannot (legally) erase a bankruptcy from your credit record before it has run its course.  In certain circumstances, it may be possible to annul a bankruptcy, however, this is a very specific, legal process and if you need help or advice with it, then it is strongly recommended to go to a reputable professional rather than accept help from a company touting for business on the internet or by direct mail (this advice tends to apply in most situations).

Check your credit record

Counterintuitive as this may appear, you actually want to make sure that your bankruptcy is recorded on your credit record, because it shows that all your previous debts have been dealt with (at least the ones to commercial lenders, if you owe money to the government it may still be outstanding).  If your bankruptcy does not show correctly, then, rather ironically, your financial position may look a whole lot worse than it actually is.

Keep up the good budgeting habits

Casting off your bankruptcy may feel like a financial sigh of relief and it does have the very practical effect of leaving you at liberty to do whatever you like with your money.  Resist the temptation to slide (back) into poor financial habits, which may well have been what led to you being made bankrupt in the first place.  As an absolute minimum, you need to make sure that all your obligations are met in full and on time and that you have sufficient money for all essentials.  Hopefully you will now have some disposable income on top of this and, in principle, it is entirely up to you what you do with it.  In practice, however, you may want to resist any temptation to spend it all enjoying yourself now that you finally can.  Of course, it may be fine to spend some of it on small treats, but it might also be a good idea to build up a solid “cash cushion” of savings and to think about how you will provide for your longer-term future, especially your retirement.

Make sure to keep on top of your tax and/or benefits

The onus is on you to report any change in circumstances to the relevant authorities and also to report any errors they have made so that they can be corrected.  Dealing with mistakes in tax and benefits can be a frustration at the best of times, but the better you are at keeping on top of your finances and having mistakes rectified quickly, the easier it can be.

Start using credit again

It’s perfectly understandable that you may feel like you never want to use credit again, but these days, your credit record is used for all kinds of purposes.  In fact, the state of your credit record can influence your ability to rent property, or even to get some kinds of jobs.  As a newly-discharged bankrupt, your ability to get credit may be very limited, but you do need to start somewhere to rebuild your credit history and there are lenders who specialize in products for high-risk borrowers who wish to clean up their credit records.  These tend to be very expensive for what they are, but hopefully you will only need to use them for a short period of time.

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