Back from bankruptcy - Your Money

We all overspend occasionally. But consistently spending more than you earn could ultimately send you into bankruptcy, a move that offers relief from insistent creditors but leaves you without the ability to borrow or engage in any credit transactions. Unforeseen job loss or unexpected medical bills can also easily overwhelm someone living from paycheck to paycheck. These days women who head households and are raising children alone rank as the fastest growing group of those filing for bankruptcy, says Elizabeth Warren, a professor at Harvard Law School.

After bankruptcy, there's no high-speed elevator ride to financial stability. By law, it takes seven to ten years to clear a bankruptcy from your credit file. (If yours is discharged through court, depending on whether it was filed under Chapter 7 or 13 [personal bankruptcy] or Chapter 11 [business bankruptcy], it usually takes two to four years before a consumer can apply to refinance a home mortgage of to get a new mortgage.) But this lengthy period also means you have the time to build healthy new habits that enable you to manage your way back to financial security. Following these basics will pot you on the road to recovery. And mastering these habits can keep you from going over the financial edge in the first place:

Learn to spend less money than you make. It sounds basic, but it's difficult: Regaining control of your finances requires you to hold down your expenses so that your income covers all your bills and you can still pot money into savings.

Demonstrate that you can repay your monthly bills on time. Start by applying for a secured credit card, which requires you to keep a deposit in an account that's equal to the line of credit carried by the card. (Depositing the money up front ensures a potential creditor against your defaulting) Look for a secured card that charges no application fee (go to backrate.com for a list) and a low annual fee. (It can vary from $18 to $120 a year, but try to pay no more than $25.) The interest rate on a secured credit card is typically higher than on a standard one; it may run 19.5 percent of more. Though the secured credit-card issuer will not require you to pay the balance in full each month, it makes good sense to do so because you can reestablish the credit you need without carrying a balance on which you pay high interest. Washington Mutual, which has a nationwide branch network, and Wells Fargo are two institutions that offer secured credit cards on consumer-friendly terms.

Check your credit reports once a year. Order a report from each of the three bureaus--TransUnion (transunion.com), Experian (experian.com) and Equifax (equifax.com). Review them to make sure your new, improving credit is being reported accurately.

Cashing Out at the Lost and Found

Every year state governments collect $3 billion to $4 billion in unclaimed cash, funds belonging to about one out of every eight Americans. Money gets separated from its rightful owners in forgotten bank accounts, unclaimed security or utility deposits, undelivered tax refunds or stock dividend checks, unclaimed life insurance benefits and bequests, even unredeemed gift certificates. It costs you nothing to check missingsmoney.com to see if you're in the money. The National Association of Unclaimed Property Administrators, a trade association of state officials, sponsors the site. The average recovery is $250, but there have also been recoveries of several thousand dollars.

Valerie Coleman Morris is an anchorwoman with CNNfn.

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