The New Year is a great time to start afresh economically if you have been through any financial struggle in the previous year. The most common unlucky financial phases are bankruptcy, divorce or foreclosure. Big personal debts can also be a major reason to put your foot down and take steps to bounce bank to a healthy financial life.

Lost home to foreclosure – A rainy day fund to your rescue

Recent surveys show that a record number of homeowners have been through foreclosure in past years. What a lot of these people did not recognize was the opportunity presented by the foreclosure. Going through foreclosure is an opportune time to bounce back from a financial crunch, in that you can rebuild your savings. Since you are not paying the mortgage during foreclosure, it is essential to amass your savings, and perhaps build a rainy day fund or an emergency savings account. Without such financial safeguards, there will be an increased chance of repeating the financial mess that initially lead you to foreclosure.

Basically a rainy day fund is nothing but a small savings account. This can have funds anywhere from $500 to much more. This fund can help you tackle unexpected expenses. A rainy day fund can help you avoid using credit cards to pay for unexpected expenses. Since your credit has already taken a hit thanks to foreclosure, overusing credit cards would do nothing to repair your credit.

Filed for bankruptcy – There’s a brighter future ahead

Bankruptcy is one of those legal proceedings that has a lot of terrible implications associated with it. For most people, the implications are not warranted. So hard times hit, and it was not possible for you to pay your bills, and were forced to file for bankruptcy. Well, you are not alone. Sometimes, through no fault of your own, unexpected bad things happen, such as Wall Street gambling poorly, causing the economy to dive, leading to pension fund losses, mass layoffs, and the like. Indeed, recent reports suggest 1 in 8 adults in the United States have contemplated or filed for bankruptcy. That is about 13 percent of the population, and that says a lot.

Do not allow feelings of guilt and shame overpower you. Take your time and think things out. Bankruptcy is a fresh chance to start things anew. Put any negative thoughts at bay, learn from any bad expenditures that lead to bankruptcy, and use the opportunity to restructure your finances.

Went through a divorce – Restore your credit

Divorces can spell ruin, both to your emotions as well as your finances. However, you cannot let it haunt you forever. Take charge and restore your credit. This should be done in your own name after your marriage has ended.

First and foremost, get to know where you stand by ordering credit reports from the 3 credit bureaus – Experian, Equifax and TransUnion. Contact your creditors and try to prevent continued listing of joint debts. Given that paying down recent debts is the best way to increase your credit score, consider applying for credit card for small, common monthly expenses, so you can pay the entire balance each month. Consistenly paying the balance in full each month should lead to a noticeable increase in your credit score.

In sum, when you incur a financial setback, be it divorce, bankruptcy or foreclosure, realize the opportunities presented by the situation, take charge and move forward.