What is the American Dream? Before the economic recession began 3 years ago, many Americans may have described the American dream as having a big house, big car and access to lots of credit so that they too could live like the rich and fabulous. But after millions of Americans lost their jobs to business contraction, their homes to foreclosure and their access to easy credit to the credit crisis, many are beginning to wonder if they can live the American dream without all the glitz and debt. For Americans who have filed bankruptcy or who are considering bankruptcy, it is important to understand that living the American dream does not require that you take on a lifetime of crippling debt, a matter of fact if you want to enjoy a true fresh financial start, debtors must understand that minimizing and eliminating debt where possible is essential to living the American Dream our forefathers envisioned.
Tips for those debtors who are emerging from bankruptcy:
- The irony of living the American Dream after bankruptcy is that you must in fact rebuild your credit. Credit worthiness in not just about the ability to get credit cards and signature loans. Good credit can mean the difference between being employed or unemployed, living in a good neighborhood or a bad neighborhood. Many employers look at the credit reports of job candidates before the hire them and even if a debtor wants to simply rent an apartment they must at least have decent credit.
- While rebuilding your credit worthiness will give you access to fresh new lines of credit after bankruptcy, it is important that you do not abuse the credit you have access to if you want to live the American Dream. Remember, good credit is your ticket to accessing good jobs, decent neighborhoods and a good mortgage if/when you decide to purchase a home. One of the leading causes of toxic mortgages is bad credit. When you have bad credit you become vulnerable to toxic mortgages, foreclosure and eventually bankruptcy. Avoid the trap by protecting your credit rating.
- Being educated about debt and money management is essential to living the American Dream after bankruptcy. Take the time to find out how you can solve financial challenges without relying on debt. And when you do need to use debt, take the time to find the best interest rates that your credit rating will buy.