Everyone who has filed for bankruptcy remembers the agony of being overwhelmed with bills they couldn’t pay, the weighing and reasoning that comes from making a decision bankruptcy was the right choice, and the relief when they finally had their bankruptcy discharged. Unfortunately, some people find themselves facing a situation where they consider filing bankruptcy for the second time. Only you and your lawyer can decide if bankruptcy is your best choice.
At Kinnaird & Kinnaird, P.C., we understand sometimes things happen which may lead you to a second bankruptcy filing. However, from our vantage point, we offer a few thoughts about proactive steps you can take to avoid the need for a second bankruptcy in many cases.
Design a Budget that Fits Your Needs
It seems elementary, but many people, including people who have previously experienced bankruptcy, do not have a family budget. You should budget for weekly, monthly, and yearly expenses. Next, consider whether your current income can encompass your budget. If not, can your budget be trimmed?
Consider a Second Source of Income
Consider, for a while, the second source of income. Then, use that income to create an emergency fund. Slowly but surely, your emergency fund will grow. With an eye towards three to six month’s worth of your regular income in an emergency fund, you may only need your second job for a year, perhaps less if your spouse also gets a second job. An emergency fund, or lack thereof, is often the tipping point for those who eventually file a second bankruptcy.
Treat Credit Cards with Respect
Yes, having and using credit cards increases your credit score. But carrying balances can get you back into financial trouble. Make small, intentional credit card purchases, and pay them off. The idea is to have the credit cards available if you face an emergency your emergency fund can’t handle. By slowly building your credit, you increase both your credit score and your credit limit. In a perfect world, your emergency fund will take care of any emergency, but it’s nice to have a cushion.
Take a Look in the Attic
We all have things we aren’t using or don’t need. Consider how much money you could make selling your possessions. Even a few hundred dollars can go a long way towards an emergency fund. Also, consider your space. Can you rent out a room, either to a service such as Airbnb, or can you take on a roommate for a time? You probably have revenue streams you hadn’t previously thought of. Consider what steps you might take to generate additional funds, either on a one-time basis or over time.
If You Are Considering Bankruptcy
If you are considering bankruptcy, for the first or the second time, the lawyers at Kinnaird & Kinnaird, P.C., can help. You have several options for proceeding in bankruptcy, and what worked best for you the first time you filed bankruptcy may not be your best option now. The only way to tell for sure is by consulting with an experienced bankruptcy attorney. Contact our office to discuss the facts and circumstances of your case.