Archive for September 18th, 2007
To file or not to file, that is the question! When struggling on paying your debts, bankruptcy filing is an option you can explore to get away from financial pressure. Here are some of the things you should know before making a decision.
What Are Your Alternatives?
To seek non bankruptcy filing alternatives, you should first create realistic monthly budget expenditures. You can include in your list your car and mortgage payments. Each month, after paying your current expenses, you should ask yourself if you can pay off your other debts at current interest rates within 3 years. List down all your debts; calculate what should be paid off and where your money goes. 35 % of your budget should be on housing, 15% on transportation, 15% on your debts, 10% should be go to your savings, and 25% for miscellaneous items.
Think of ways how you can increase your income in order to reduce your expenses. You can even consider selling some of your assets.
Bankruptcy Filing: Chapter 7
This type of bankruptcy is frequently selected by individuals. The debtor is given a fresh start. All your assets, except those exempted, are liquidated. The proceeds are used to pay off all your creditors. This chapter is the quickest and simplest form of bankruptcy and available also for married couples, partnerships and corporations. In most cases, debts discharged in Chapter 7 include:
Personal Loan
Credit cards
Auto Accident Claims
Medical Bills
Judgements
leases
Federal income tax
Bankruptcy Filing: Chapter 13
This is available to individuals with regular income, who have unsecured debts (credit cards) not exceeding $336,900 and secured debts (mortgages and car loans) not exceeding $ 1,010,650. If you received a discharge from Chapter 7, you will not be granted a Chapter 13 discharge within 4 years.
Not Discharged In Bankruptcy
Chapter 7- recent taxes; family support; debts from divorce; student loans; criminal fines; fraud debts or intentional debts.
Chapter 13- Family support; restitution; student loans are non dischargeable.
Bankruptcy Filing Considered
Remember that bankruptcy filing is a long process that requires your time and patience, and if alternatives given are not feasible. These are enough reasons to hire an experienced bankruptcy lawyer to guide you through out complicated processes. Pick a lawyer whom you are comfortable giving all your personal information. Ask questions until you understand everything. A trustee will be assigned to you to make sure all information provided is accurate and complete. Your creditors will be notified that you are filing for bankruptcy, so they will stop any actions they are taking against you.
Bankruptcy filing is a personal decision, influenced by serious amount of debt and your ability to pay the full amount. Being annoyed by creditors is a nerve wracking experience. If you are stressed by your financial situation and it interferes with your work, sleep, considering bankruptcy is the healthy option for you. But this decision should not be made just to stop annoying creditors but also to give you a chance to start over.
September 18th, 2007
Student debt consolidation program is an ingenious solution to a pressing problem of millions of students education loans. The students, who obtain education loans, are required to commence paying them off immediately, when six months grace period after their graduation is over. Managing the installments of multiple loans so early in their professional lives, proves to be an uphill task for most of these young people. They require money to pay for their accommodation, car, and other expenses. Apart from this, their newfound professional lives keep them too busy to remember all the due dates. A suitable student debt consolidation program does help considerably reduce the amount of installment and merge all due dates into one. However, student debt consolidation program, if not opted for with due deliberation, may act to the detriment of the individual. Here are a few dos and donts that must be kept in mind.
Student Debt Consolidation Dos:
You should opt for student debt consolidation program only, if you find a consolidation company that offers overall lower rate of interest than what you are paying on your present student loan. In addition, it is best to apply for a consolidation loan, when you are still in the grace period as not only does it give you a better chance of getting low interest rate, but you get an additional reduction of 1% on interest rate as well. Remember to strike a deal with the company that offers student loan debt counseling. A good counseling session really helps you to choose the most suitable student debt consolidation program. It also enables you to ask for a lower rate of interest or any special bonuses. Also its advisable to obtain multiple quotes from online companies. This is less time consuming and genuinely effective. You can draw comparisons among the respective benefits of different offers, and go for the best one. It is prudent to check the online company on the Better Business Bureau, before entering into a contract with them. In any case, make it a point to thoroughly go through the terms and conditions of the agreement of the company, before signing up.
Student Debt Consolidation Donts:
First of all, if you have already repaid most of the education loan amount, then its not worthwhile for you to go for debt consolidation. And dont wait till your grace period is over to apply for the loan. This will reduce your chances of getting low interest rates. Dont go for loan consolidation along with your spouse, as you would face a complicated situation in case of divorce. Also dont choose too long a period for repayment of consolidated loan. In most of the cases, longer period entail payment of greater interest.
Moreover, remember, you get the chance to consolidate your loans only once. So dont make the mistake of acting in haste. If you do consolidate, make sure it is a well thought of decision.
September 18th, 2007
Debt is a four letter word we can all live without! Yet we don’t. Instead we seem to thrive on it. Over 40% of us spend more than we earn each year. Debt is emotionally draining and financially devastating, limiting our ability to save for the future. Mindless spending creates overwhelming financial difficulties.
Is should be simple to live without debt. All we have to do is spend less than we make. Now there’s a concept! The number one reason that most of us are in a financial bind is our spending habits. Apparently the word “no” has disappeared from our vocabulary. If we want it, we buy it. Why save the money to pay cash for it, when we can whip out the credit card and have instant gratification?
Credit cards should be considered the root of all evil! Using credit cards makes it seem like you are not using real money. Once you get a balance on one it is hard to get it paid off. If your credit card balance is $8,000, and you make the minimum monthly payment at 18% interest, it will take you 25 years, 7 months to pay the debt off. The total amount of your payments will be $23,432.
How do you know if you are in financial trouble? If you can only afford to make minimum payments on your credit cards and worry about finding the money to make all your other monthly payments then it’s time to get serious about getting your debts under control.
What can you do? The first step is to stop acquiring new debt. Set a budget and use cash for all of your purchases. Cut up your credit cards or at least hide them from yourself! Using credit cards leads to impulse spending and overspending. End your love affair with credit. Use a debit card instead. A debit card is like cash so it will keep you from overspending. If the money is not in your bank account you won’t be able to use your debit card. This will stop impulse spending and require you to stick to a budget.
It usually takes longer to get out of debt than it did to get in debt. Take a long hard look at your financial situation and get determined to do something about it. Don’t get discouraged. Develop a strategy to eliminate debt and stick with it.
September 18th, 2007
