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- Life without debt is life without chains. Many Americans find it hard to stay debt free. It takes a little effort and lots of dedication to stay debt free. Here are some tips that can help you:
- Before buying anything, ask yourself the following set of questions:
- Do I really need this item?
- Do I already own a similar item?
- Did I research price options for this specific item?
- What will be my return on this item?
Most of the time, we create debt by purchasing things we already own or don’t really want. Examine what you already own and start thinking outside of the box about other possible usages. - Be aware of your income capacity. Income is slower than debt. APRs and fees add up quickly and will cause you stress, which in turn, will be reflected on your work and social life.
- Simpler life leads to happier life. You don't always have to pay in order to have fun. Examine your community and look for local recreational activities that carry a cheaper price than a lavish life style.
- A penny saved is a dollar earned. The old saying is true. Every penny you save will add up to create dollars, helping you to establish a comfort stash for rainy days.
- Think in terms of costs. Ask yourself: How many hours will you need to work in order to repay back your debts? Also include costs for your health and other items you could be doing.
- Draft a monthly budget. Sit down and figure out what your needs and wants are and then divide your income accordingly. You must always include a portion to be saved in order to cover unexpected costs, such as sudden car repairs.
- Before buying anything, ask yourself the following set of questions:
- Almost every person filing for bankruptcy has a concern regarding the effect of bankruptcy on his/her credit. Under bankruptcy laws, your credit history will reflect bankruptcy filing status for 10 years from date your case was discharged. Thus, your ability to access credit will be greatly limited.
There is no reason to be hopeless. Most debtors who filed for bankruptcy regained control over their credit in 2 – 3 years. This is the result of three reasons. First, they are almost, if not completely, debt free. Their disposable income greatly increased allowing them to make bigger payments.
Second, debtors who filed for a bankruptcy can apply for a secured credit card through their local credit union or some of the commercial banks. During the first couple of years after bankruptcy, credit card offers will carry above normal APRs and will include membership fees. If you maintain a good record, your interest rate will be dropped and you will start receiving credit offers from competing commercial banks.
And third, people who filed for a bankruptcy become wiser in their credit decisions. During bankruptcy procedures, you will need to attend credit counseling sessions, where professionals will educate you on budgeting strategies, enabling you to learn how to live within your mean.
Finally, bankruptcy is not a tool to destroy your credit; rather, bankruptcy is a tool to restructure your credit with the ability to become debt free.
Bankruptcy is part of your legal rights. Don't let creditors or media scare you. Contact a consumer debt attorney to discuss how bankruptcy can save your credit.
- Under bankruptcy law, student loans are given special status. Generally, bankruptcy can not discharge labiality of repayment of student loans. But because of special status, student loans payments are considered as an exemption in Chapter 7 and incorporated in chapter 13 repayment plans.
Bankruptcy court will require debtor to repay back his/her student loans. In a Chapter 7, some trustees and courts will allow debtors to deduct their student loan payment as an expense. By the same token, other trustees and courts will not grant such motion because it will reduce "disposable income".
In a Chapter 13 bankruptcy, debtors are granted a forced forbearance on their student loans. Because Chapter 13 includes a repayment plan, debtors don’t make any direct payments to creditors; rather, debtors send their payments to a court assigned trustee who dispenses a portion to each creditor, including student loans. Still, debtors will be required to resume their normal student loans payments after the payment plan is over.
Before making any requests, debtors are encouraged to consult an attorney with specialization in consumer debt and bankruptcy procedures. Debtors will need to file varies motions that can carry very undesirable results if the proper language is not used. Finally, debtors must be aware that a bankruptcy case is different from other court cases, and each case is treated separately depending on information and associated circumstances.
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