Life after Bankruptcy

CONGRATULATIONS! You have received your Notice of Discharge and are finally free of your debts! You have a new clean slate and are ready to start over. The question is now, what does a Subranni Zauber client do now?

1. Live within your means – Paychecks should be split deposited at the bank. In other words, a portion of each paycheck should be held in cash to meet normal varying living expenses between pays such as grocery shopping, gasoline, coffee, and the like. The next portion of the paycheck should be left in the checking account. This portion is to pay for “fixed” expenses such as 1/4 of the rent or mortgage, 1/4 of car loan, 1/12 of the car insurance, 1/4 of utilities and 1/4 of all other fixed expenses. Note that no other money is just left in the account so that eliminates the need to use a debit card. In fact, never use a debit card again because budgeting money is practically impossible with that little piece of plastic

2. Try conveniently sized postal money orders from the US Post Office – Put them in envelopes to cover expected future expenses such as a relative or friend’s wedding, trip to see grandma and grandpa, tires for vehicle and the like. Credit card use tends to occur during emergencies, unexpectedly piling up debts. With postal money orders, emergencies can be avoided. Just go the marked envelope, pull out the money orders, go to the US postoffice, show picture ID and cash the money order and pay for the so-called “emergency” all without the use of the dangerous credit card.

3. Avoid the use of debit cards and credit cards – For many of our clients, unplanned and overuse of debits cards and credit cards are what brought them to the point of bankruptcy in the first place. Debit card use tends to be unplanned and often well over the terms of one’s budget. While you are recovering your finances, it is important to maintain your budget and avoid borrowing money.

4. For now, don’t worry about credit scores and credit reports – A Chapter 13 bankruptcy will stay on a credit report for seven years, and a Chapter 7 will stay on a report for 10 years. However, filing bankruptcy creates a great benefit for you because rather than piling months of missed and late payments, your debts will be cancelled and you can start over. In fact, many people find after filing bankruptcy, their credit scores improve faster than scrambling to meet payments.

5. If you don’thave an IRA, get one as soon as you can. – IRA stands for Individual Retirement Account, and it’s basically a savings account with big tax breaks, making it an ideal way to sock away cash for your retirement. A lot of people mistakenly think an IRA itself is an investment – but it’s just the basket in which you keep stocks, bonds, mutual funds and other assets. They are protected from creditors no matter what should you get back into debt.

6. Avoid buying a car at a car dealer. That will get you into a car loan that you can’t easily afford. The payment is every month, whether you are working or not or getting your 40 hours, and the payments go for 5 years or longer. How many folks have the same income over a five year period in this day and age? Not many. But the payments continue like the incoming and outgoing tide.

7. Stick to your knitting and do not buy into financial sophistication – Our firm advises our clients to avoid many services that offer “convenience” with your money. While we value innovative services, we believe the traditional and old-school forms of budgeting allows individuals with financial difficulties to get back on track more easily. Turn the clock back 50 years and you will put yourself back on the road to financial success, and we mean it.

8. Enjoy your life – After your discharge, just sit back and laugh at (and feel sorry for) your friends and neighbors driving the fancy cars with the large monthly payments, and the big houses with the big first and second mortgage payments. Instead, enjoy your family and friends and come home after work and relax. You know you don’t have money worries and you will sleep very well at night.