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A Guide To Handle The Time After Bankruptcy
Depending on your perception, life after bankruptcy can be either positive or negative. On the positive side, debtors can apply for credit cards and other types of loans and they usually get approved for them. On the negative side, a bankruptcy will stay on your credit report for 7-10 years, depending on which chapter you choose to file. For purposes of getting a home loan, your bankruptcy will always show up and you will have to pay higher interest rates than a typical home loan. Although it is sometimes a necessary evil, it is important to exhaust all other options before deciding on this as a last resort.
One of the biggest complaints that people have about bankruptcy for the sake of a new start is that it does not change a person's habits. Oftentimes, people get deep in debt because of bad spending habits or because of letting their credit cards and consumer debts get out of control. The actions you take after bankruptcy are vital to keeping the management of your finances under control. This is one reason that bankruptcy does not actually help people. Without behavior change, the majority of filers fall back into the same destructive spending habits that they had before their debts were discharged. Therefore, recognizing that you have a spending problem is vital before considering bankruptcy.
Once people have decided to go through bankruptcy, the next step is to change their personal habits in order to avoid the same predicament in the future. Credit cards are dangerous for people who have not shown that they can use them responsibly. A general rule is that if you are unable to pay the balance off every month, then owning a credit card is not in your best interest. Unfortunately, credit is all too often extended to these people soon after bankruptcy, which makes it easy to fall back into the same spending habits that resulted in a bankruptcy in the first place.
The final step following a bankruptcy is to deal with the negative ramifications it has on your credit. For purposes of getting a home mortgage, bankruptcy will stay on your credit record for the rest of your life. This could be bad news for the interest rate or the repayment terms of your mortgage even several years after bankruptcy. If you file bankruptcy due to one single major setback in your life, such as an illness that resulted in huge medical bills or a job loss, some mortgage companies will work with you. While it still shows up on your credit, mortgage companies that do manual underwriting can customize your home loan and they will consider your specific situation. Be sure to save any papers related to the event so you can present them to the mortgage company when it is time to buy a home.
Your life after bankruptcy can return to a sense of normalcy if you take steps to limit its negative implications. Changing your spending habits is the most important thing you can do to ensure that you do not get in the same predicament again. Examine how you spend your money and use a written monthly budget. Only spend money that you have rather than buying things on credit, too. If your bankruptcy was a result of a single life event, keep the papers associated with the event in case you ever need proof of your circumstances. The best thing is to realize your mistakes and move on with your life.
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