Bankruptcy | Bankruptcy Information

Bankruptcy can be an extremely devastating experience. It can affect individuals both emotionally and psychologically. However, it also can be a great relief for individuals who have struggled to be pay their bills and who have been constantly fielding phone calls from bill collectors. It is important to note that bankruptcy is not the end of one's financial life, although it will have a big impact on it. Bankruptcy will stay on your credit report for a period of 7 to 10 years. Most experts suggest that within two to three years, an individual can begin to receive loans with rates almost as good as they could before they begin to get into financial trouble if they take steps to rebuild their financial reputation . In order for this to occur, individuals have to make sure that they figure out the root of their initial financial problems, take inventory of their income and outgoing bills, budget, consider going to a cash based system, track their expenditures and pay their bills on time.

Individual have to figure out why they got into financial trouble. Was it a case of attempting to keep up with the Joneses? Did someone get sick and lose their job? Is there a problem with impulse control? Once the determining factors are uncovered, an individual can begin to make efforts and changes so that they don't get into trouble again. This may include getting psychological or financial counseling. It may also require someone in the household looking for a new or extra job. Safeguards and accountability measures will also need to be put in place.

Next, individual needs to find out how much money is coming into the household and how much has to go out to pay the bills. This will provide individuals with the information that they need to create a budget.

Some financial experts suggest that people go on a cash based system. Individuals that have debit card or credit cards tend to overspend even when you don't have the money. This is because many banks offer overdraft protection and while individuals are assessed a fine for their overdrawing their accounts, the purchase is still covered. As a result, people tend to spend more than they normally would. In contrast, if an individual uses cash, they can only spend what they have in their pocket. Therefore, this is a great way to handle extra money set aside for groceries, gas or the extras.

Tracking one's expenditures is also very important. A lot of times people get in trouble because they don't know what they or their spouse have spent. When it is time to pay the bills, there's no money available.

Paying ones bills on time will be very important in rebuilding credit. After a bankruptcy, your past debt is wiped clean and you get the chance to rebuild your credit. Therefore, you need to make sure that you pay all your bills on time, every time. Work with businesses that report your payments to the credit agencies. This will ensure that on-time payments will be recorded by the credit agencies. This will benefit you greatly both in the present and future.