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Avoid personal bankruptcy using these tips

As difficult as it may be to achieve a credit score of 700 or greater, bankruptcy experts say it can be remarkably easy to send your credit score plummeting into the 500-point range, simply by making a few common mistakes. Buyers throughout the nation are facing personal bankruptcy because they made bad credit decisions that will have long-lasting consequences. However, using these expert tips can help you avoid such an unlucky plight.

Student loans are among the most ubiquitous debts throughout the nation, with billions of dollars still outstanding and more people defaulting every day. One woman said she received a rapid tax return one year without realizing that she had defaulted on a student loan. As a consequence, her tax return was taken by the student loan agencies, and she was left with two debts where she had only one before. It is important to abide by the student loan due dates in order to avoid this predicament.

Avoid taking out second mortgages unless absolutely necessary. In the current economy, many people are finding that their homes are worth far less than they owe, especially if a second mortgage has been acquired. Even if you are able to pay off the first mortgage by selling the home, the second mortgage could still bankrupt you.

Remarkably, some people are in credit-score trouble because other people have convinced them that they do not have to pay income taxes. This can ruin a person's ability to purchase any major item, including a home or car.

Finally, financial mistakes do not always result from over-spending; in fact, if you fail to spend on your credit cards at all, you can end up in big trouble. One man reports that he spent five years overseas, backpacking through Europe without using his credit card. When he returned to the States, he found out that he had gone "off the grid" and thus had a credit score near zero.

When you play by the creditors' rules, you are more likely to avoid personal bankruptcy.

Source: Yahoo! Finance, "How 5 people ruined their credit," Tim Sprinkle, Nov. 28, 2012.

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