Think of Chapter 13 bankruptcy as a business mulligan. Some tremendously successful figures in U.S. history have declared bankruptcy, including our current president and the president widely considered to be among the best ever. Abraham Lincoln had to repay creditors over a period of 17 years after a general store he co-owned failed.
Other notable figures that rebounded following a bankruptcy include Henry Ford, Walt Disney and H.J. Heinz.
There’s nothing wrong with resolving unmanageable debt by declaring bankruptcy or using some other means to eliminate debt. The wrong reaction is to do nothing.
That said, it is important to take some lessons away from a bankruptcy to keep from repeating the mistakes that led to the problem in the first place. Here are some tips for improving your finances following bankruptcy.
Identify the habits that led to declaring bankruptcy – Did you borrow too much money or rely on credit cards too much? Maybe you failed to monitor your financial transactions closely enough. Identifying what caused the money problems will go a long way toward preventing them from happening again.
Don’t link your business with your personal finances – Connecting your personal finances to your business accounts will cause your personal finances to suffer if your business gets into financial trouble. Keeping your own assets separate from the business allows you to protect them.
Expect financial bumps – A business bankruptcy will stay on your financial records for 10 years. That’s going to make it more difficult to get loans. Those that do offer you a loan may charge high interest rates. You need to be ready for that if you start a new business.
Working with a knowledgeable debt consolidation attorney can help you navigate the best way to reconcile debt problems and start a new financial life.