bankruptcy http://www.wisebread.com/taxonomy/term/8767/all en-US 11 Steps to Take When Bankruptcy Is Your Only Option http://www.wisebread.com/11-steps-to-take-when-bankruptcy-is-your-only-option <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/11-steps-to-take-when-bankruptcy-is-your-only-option" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000021941715.jpg" alt="Learning steps to take when bankruptcy is the only option" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Filing for bankruptcy can provide a welcome solution for anyone who simply cannot keep up with their debts and credit obligations. But it's never something that should be taken lightly. Bankruptcy can remain on your credit for up to 10 years, making it nearly impossible to apply for credit in the meantime. Having a bankruptcy on your record can even affect your ability to get a job.</p> <p>That's why we've covered the main steps you'll need to take if you're filing for bankruptcy. Consider them before deciding whether bankruptcy is right for your situation.</p> <h2>1. Get Serious About What Bankruptcy Means</h2> <p>Before making the decision to file for bankruptcy, make sure you've explored all other options, like debt consolidation or credit counseling. You will also need to determine if Chapter 7 bankruptcy is right for you (as opposed to Chapter 11, 12, 13, or 15). Most individuals choose Chapter 7 bankruptcy, which will release the debtor from some, or all, financial obligations.</p> <p>According to LegalZoom, the entire bankruptcy process should take four to six months to complete. However, keep in mind that a discharge is not guaranteed. Even after filing your petition in bankruptcy court and going through all the motions, your creditors can still object to your discharge. You might also not receive a discharge if you don't fill out all the necessary documents correctly and on time, if you fail to attend any required credit counseling courses, or if you did not fill out the paperwork truthfully.</p> <h2>2. Complete the Means Test</h2> <p>It is important that you complete what's known as the <a href="http://www.uscourts.gov/forms/means-test-forms/chapter-7-means-test-calculation">means test</a>. This standard test will compare your income to your debts to help you determine if you should file for Chapter 7 or Chapter 13 bankruptcy.</p> <h2>3. Hire an Attorney, if Necessary</h2> <p>A bankruptcy lawyer can be invaluable when you're filing your case. A lawyer can explain your options, answer your questions, make informed recommendations, and even fill out the forms for you and make sure they are filed before the court deadlines. At the very least, call a bankruptcy attorney for a free consultation. You will definitely have questions throughout the process and probably need some form of advice.</p> <p>But you don't necessarily need a bankruptcy attorney for the entire process, and many people are able to successfully file for bankruptcy on their own. Filing on your own can save money on attorney's fees, but first consider whether it's the best course of action in your case.</p> <p>Filing for bankruptcy on your own can be very difficult and confusing. There are a number of complicated legal concepts and terms, as well as regular court requirements that you need to keep up with. A bankruptcy attorney can help you get through the process in far less time and stress. Use a free consultation to determine whether you'd benefit from hiring a bankruptcy attorney.</p> <h2>4. Pay the Fees</h2> <p>While bankruptcy can help to eliminate your debt, it can be an expensive process in and of itself. For starters, you'll be responsible for filing the application fees. On average, debtors who file for bankruptcy on their own can expect to spend approximately $300&ndash;$500 filing for bankruptcy. On the other hand, debtors who file for bankruptcy with an attorney usually spend around $2,000 total. Once you schedule your free initial consultation, you can get more information on the fees and when you would be responsible for paying them.</p> <h2>5. Assemble Your Information</h2> <p>Regardless of whether or not you hire an attorney, you'll need to have all of your financial information gathered and organized. You need to analyze your income, expenses, assets, and debts, and determine your property exemptions. You will also need to have basic information like your average monthly income during the previous six months.</p> <p>In order to have a debt discharged, it needs to be listed on your bankruptcy forms. If it is not listed, you may still be responsible for it after the bankruptcy. This is why it's so important to carefully assemble your financial information before you ever file paperwork or attend any credit counseling programs.</p> <h2>6. Determine Which Debts Are Excusable</h2> <p>Bankruptcy can wipe the slate clean when there is simply no way you can pay off your obligations. However, there are still some debts you may be responsible for, such as student loans, child support, and tax debt. It is also important to keep in mind that anyone who cosigned or guaranteed a loan for you will still be obligated to pay.</p> <h2>7. Attend a Credit Counseling Program</h2> <p>Within six months before filing your petition, you will need to attend a credit counseling program at a court-approved agency. The counseling can usually be completed online or over the phone and will only take about an hour or so. There is a fee for credit counseling, but it is usually under $100. When you file your petition, you will need to provide proof that you have completed this program.</p> <h2>8. File the Forms</h2> <p>There are a number of <a href="http://www.uscourts.gov/forms/bankruptcy-forms">bankruptcy forms</a> that need to be correctly filled out and filed on time. Once the packet of forms (also known as a bankruptcy petition) has been filled out, the debtor will normally receive a discharge of their debts approximately a few months later (if your petition is accepted).</p> <h2>9. Automatic Stay</h2> <p>Once you have filed all the necessary paperwork, an automatic stay will go into effect. This prohibits almost all creditors from continuing collection actions against you.</p> <h2>10. Attend the Meeting</h2> <p>Chapter 7 bankruptcies rarely go to court. However, you will need to attend a mandatory meeting (also known as a 341 meeting) with the creditors and court-appointed trustee. During this meeting, your trustee will ask questions pertaining to your bankruptcy petition and finances. Your creditors may also choose to attend the meeting to question you or the trustee, but this usually doesn't happen. If all goes well, you can expect a bankruptcy discharge within approximately 60 days after the meeting.</p> <h2>11. Post-Bankruptcy Obligations</h2> <p>Once you have successfully filed for bankruptcy, you will need to attend post-bankruptcy credit counseling. This is to help you more successfully manage your debts going forward so that you are not in the same position again. They can also help you rebuild a healthy credit history. Once you have completed the debtor's education course, you will get your discharge. At this time, the automatic stay will end and your case will be closed.</p> <p><em>Do you have any other advice for debtors considering filing for bankruptcy? Please share your thoughts in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-cannon">Andrea Cannon</a> of <a href="http://www.wisebread.com/11-steps-to-take-when-bankruptcy-is-your-only-option">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-times-bankruptcy-is-the-right-move">3 Times Bankruptcy Is the Right Move</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/peak-debt">Peak Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/uk-banks-are-blocking-customers-credit-cards-will-the-usa-be-next">UK banks are blocking customers&#039; credit cards. Will the USA be next?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-the-best-way-to-get-out-of-debt">What&#039;s the Best Way to Get out of Debt?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/recession-journal-part-i-fast-money-in-the-09">Recession Journal Part I: &#039;Fast&#039; Money in the &#039;09</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance bankruptcy chapter 13 chapter 7 credit debt fees means test Fri, 11 Mar 2016 10:30:33 +0000 Andrea Cannon 1660233 at http://www.wisebread.com 3 Times Bankruptcy Is the Right Move http://www.wisebread.com/3-times-bankruptcy-is-the-right-move <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-times-bankruptcy-is-the-right-move" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000008502739.jpg" alt="Learning when bankruptcy is the right move" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Filing for either Chapter 13 or Chapter 7 bankruptcy will cost you, lowering your credit score by 100 points or more. This will make qualifying for new credit cards, a mortgage loan, auto loan, or personal loan nearly impossible, at least for several years after you file. But that doesn't mean that filing for bankruptcy is never the right decision.</p> <p>&quot;We look at bankruptcy as a last resort,&quot; said Leslie Tayne, a debt-relief attorney and founder of Tayne Law Group in Melville, New York. &quot;But sometimes I do advise people to file for bankruptcy. When paying off debt would leave you with no money left over to put food on the table, if it means you can't pay your mortgage, if there is nothing left over, that's catastrophic, and then it makes sense to file for bankruptcy.&quot;</p> <p>But Tayne warns that <a href="http://www.wisebread.com/8-of-your-childhood-heroes-filed-for-bankruptcy">filing for bankruptcy</a> shouldn't be taken lightly. Doing so will damage your credit for up to 10 years. But if there are no other options? There are three times when filing for bankruptcy protection does make sense.</p> <h2>Chapter 13 or Chapter 7? Know Before You File</h2> <p>Before you do file for protection, you need to know the consequences. There are two main types of bankruptcy protection that consumers can typically access: Chapter 13 and Chapter 7.</p> <p>In Chapter 7, you don't repay your debts under a payment plan. Instead, a bankruptcy judge handles the selling of your nonexempt assets to raise enough money to pay back at least some of your debts. Your home might be protected under Chapter 7 bankruptcy, but it's important to check with an attorney first.</p> <p>Under Chapter 13, a bankruptcy judge sets up a repayment plan. Under this plan, you pay back some or all of your debts, but at a rate &mdash; and with monthly payments &mdash; that you can afford.</p> <p>Both forms of bankruptcy will usually drop your credit score by 100 points or more. But Chapter 7 bankruptcy stays on your credit report for 10 years, while Chapter 13 falls off after seven.</p> <p>Lenders will see your bankruptcy filing every time you apply for a credit card, mortgage, car loan, student loan, or any other form of debt. You will struggle to get lenders to approve your applications &mdash; at least for the first several years after filing for bankruptcy protection &mdash; and will often have to pay higher interest rates when lenders do decide to loan you money.</p> <p>When, then, does taking this credit hit make sense?</p> <h3>1. Your Liabilities Are More Than Your Assets</h3> <p>Tayne says that bankruptcy is often the best option when consumers owe so much that their liabilities are far higher than the value of their assets. In such cases, it can be nearly impossible for consumers to catch up with their debts.</p> <p>&quot;If income is far less than expenses, if there is no end in sight even if I help them cut their expenses, then bankruptcy might be the only option,&quot; Tayne says. &quot;If their income will never let them meet the requirements to pay even the minimal amount of what they owe each month? Then bankruptcy might be their only choice.&quot;</p> <h3>2. Negotiations Didn't Work</h3> <p>Before filing for bankruptcy, you should always try to negotiate with your creditors. Many might be willing to reduce the amount of money you owe them if you can prove that you are struggling financially. To prove this, you might have to send your creditors copies of your most recent paycheck stubs and bank statements, anything that will prove that your income has fallen or that your savings are depleted.</p> <p>But if your creditors won't negotiate with you, you might have no other option but to file for bankruptcy protection. Once you do file, a bankruptcy trustee will take over the task of negotiating with the people you owe. These professional negotiators might have more success convincing creditors to forgive at least some of your debt.</p> <h3>3. A Job Loss or Serious Illness Makes It Impossible to Pay Your Bills</h3> <p>Often, people fall into financial troubles because of a catastrophic event, whether a job loss or a serious medical emergency. Bills and debt can pile up quickly when one of these setbacks slashes your ability to generate a monthly income.</p> <p>If a job loss, medical emergency, or other financial disaster has eliminated all or most of your monthly income, and you can't see any way to catch up on your mounting debt, filing for bankruptcy protection might provide you the relief you need on the way to bouncing back from your financial setbacks.</p> <p><em>Have you ever considered bankruptcy?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/3-times-bankruptcy-is-the-right-move">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-steps-to-take-when-bankruptcy-is-your-only-option">11 Steps to Take When Bankruptcy Is Your Only Option</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-rebuild-your-credit-in-8-simple-steps">How to Rebuild Your Credit in 8 Simple Steps</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/prioritize-these-5-bills-when-youre-short-on-cash">Prioritize These 5 Bills When You&#039;re Short on Cash</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-habits-of-highly-responsible-credit-card-users">12 Habits of Highly Responsible Credit Card Users</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-get-a-credit-card-when-you-have-bad-credit">How to Get a Credit Card When You Have Bad Credit</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management bankruptcy chapter 13 chapter 7 credit score loan repayment Mon, 09 Nov 2015 13:15:44 +0000 Dan Rafter 1605062 at http://www.wisebread.com 9 Cities You Never Knew Went Bankrupt http://www.wisebread.com/9-cities-you-never-knew-went-bankrupt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-cities-you-never-knew-went-bankrupt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/abandoned_homes_000053069646.jpg" alt="Cities you never knew filed for chapter 9 bankruptcy" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We all know about the massive Detroit bankruptcy of 2013. The once great &quot;Motor City&quot; entered the record books as the biggest U.S. city ever to file for protection. The problems that caused the financial meltdown were numerous, and included a declining population, low tax revenues, high crime, massive unemployment, and of course, the Industrial Age giving way to the Information Age.</p> <p>But what about other cities in the U.S.? You may not know it, but many more have <a href="http://www.wisebread.com/not-insuring-these-6-things-could-bankrupt-you">filed for bankruptcy</a>. Whether it came about through bad governance, or bad luck, the following nine cities all did the unthinkable, and filed for Chapter 9 bankruptcy.</p> <h2>1. Prichard, Alabama</h2> <p>Nicknamed &quot;The City of Champions,&quot; Prichard did nothing to champion the cause of the South when it filed for bankruptcy in 2009. The problem was the city pensions fund. Back in 2003, the powers that be hired an actuary to do a full analysis of the city's pension plan; they were told, in no uncertain terms, that the funds would be depleted in the summer of 2009. By October of 2009, the city filed for bankruptcy, and the next few years became a living hell for city employees and pensioners. Budgets were not passed, pension checks were not sent out, and Prichard became the embodiment of mismanaged money and ineffective government.</p> <h2>2. Jefferson County, Alabama</h2> <p>Strike two for Alabama. Okay, so it's a county, not a city. But once again, very shoddy mismanagement of government funds, plus a whole lot of unnecessary expenses, led to the most populous county in the state of Alabama filing for Chapter 9 bankruptcy. First, the county authorized a massive and sweeping overhaul of the sewer system in 1996. The updates were needed, but the project was plagued with corruption, overspending, bribery, and a whole host of other problems. There was also meddling with some very risky bond-swap agreements, resulting in a huge amount of debt being piled onto an already heavily-burdened government. By 2008, Jefferson County debt was lowered to &quot;junk&quot; status by Standard &amp; Poor's, and that led to outright bankruptcy in 2011. Of the $4.2 billion in debt, over $3.14 billion was directly linked to the disastrous sewer project.</p> <h2>3. Mammoth Lakes, California</h2> <p>A beautiful mountain town in the Sierra Nevada, this popular hotspot for skiers was forced to declare bankruptcy after a huge property deal became nothing short of an avalanche. It was all over the development of an airport, which was obviously supposed to be a big help for the town's tourism industry. But, after the deal with the developer turned sour, Mammoth Lakes was sued&hellip; and in turn owed the developer some $43 million in restitution. Considering the annual municipal budget for Mammoth Lakes was less than $20 million, they had no choice but to declare bankruptcy in 2012. However, it appears a settlement was reached after the fact, and the town is back on its feet, hopefully with no further plans for a massive airport.</p> <h2>4. Bridgeport, Connecticut</h2> <p>A victim of the deindustrialization of the United States (much like Detroit), Bridgeport suffered from heavy job losses during the '70s and '80s. As the jobs left, the urban center was abandoned in favor of suburban developments, and the decline spiraled from there. After several major upheavals, including a 19-day strike by Bridgeport teachers (over 270 of them were subsequently arrested and sent to jail), things started looking bleak. In fact, it got so bad that a proposal was outlined getting Las Vegas developer Steve Wynn to build a huge casino; how that would have helped is beyond comprehension. But, it fell through, and in 1991 the city filed for bankruptcy. However, despite the filing, the federal court declared the city to be solvent. A kind of &quot;Sorry, deal with it&quot; verdict.</p> <h2>5. Stockton, California</h2> <p>The housing bubble's burst left many towns, cities, and municipalities in dire straits; Stockton was one of those cities. However, there was also a great deal of government excess and financial mismanagement at the center of the Chapter 9 filing. But it was the massive decline in home prices, as much as 70% in some areas, that wiped out the tax base and left the city struggling to pay its debts. Over $1 billion of red ink was stacked up, including money owed to pension plans, civic improvements, and health care benefits. In 2013, the city filed for bankruptcy. Recently, an exit plan was formulated for Stockton and its 300,000 residents. If you have some time to kill, you can read about <a href="http://www.stocktongov.com/government/departments/manager/bankruptcy/">Stockton's Bankruptcy Plan of Adjustment</a>.</p> <h2>6. Gould, Arkansas</h2> <p>One of the smallest places on our list, this modest town in Lincoln County, with just over 1,300 residents, filed for Chapter 9 Bankruptcy protection in 2008. At the time, the government owed over $900,000 to its creditors; a tiny sum, in comparison to the billions of dollars in debt accrued by the likes of Detroit and Jefferson County. But, with only $10 in petty cash, Gould had to declare bankruptcy. Finger-pointing began, and Gould mayor Juanita Stephens claimed the filing came as a result of <a href="http://freerepublic.com/focus/f-chat/2007387/posts">poor bookkeeping</a>, past lawsuits, and &quot;an employee not having submitted payroll taxes.&quot; That's quite the burden to put on one employee.</p> <h2>7. Central Falls, Rhode Island</h2> <p>For the smallest city in the smallest U.S. state, the 2011 Chapter 9 bankruptcy filing was big news. It had been under state control since July of 2010, but could not find a way to resolve its bulging $80 million unfunded pensions and retiree health liabilities. Considering that the city had an annual budget of just $17 million, that's hardly surprising. And of course, the timing was right after the recession, making it even harder to rebuild and raise funds. &quot;Everything was done to avoid this day,&quot; said state-appointed receiver Robert Flanders, Jr. &quot;We tried in vain to persuade our retirees to accept voluntary reductions in their benefits.&quot; That's a tough pill for anyone to swallow.</p> <h2>8. Harrisburg, Pennsylvania</h2> <p>Perhaps the strangest case for a bankruptcy is the one of Harrisburg. It happened in 2011, but the wheels were put in motion in 2003, when the city borrowed over $125 million to rebuild and expand the city's already enormous trash incinerator. It had been shut down by the federal government due to toxic air pollution, but instead of simply starting afresh, the rebuild plan was put into action&hellip; and it started burning money faster than it ever burned garbage. After big delays, contractor problems, cost overruns, and of course, financial mismanagement, the incinerator was finally finished&hellip; but at a cost of over $288 million. It was too big a burden for the city to take, and Chapter 9 protection was the only course of action.</p> <h2>9. San Bernardino, California</h2> <p>Not many people in public office will come out and make definitive and unpopular statements. But two years before San Bernardino filed for bankruptcy, city manager Charles McNeely made a presentation to the council warning of impending financial ruin. &quot;You're headed for trouble, it's a train wreck, you can't keep doing business this way,&quot; said McNeely. He was staggeringly accurate in his predictions, and yet everyone chose to ignore his warnings and go on doing the same old thing. That involved spiraling employee pay, benefit costs, and budgetary gimmicks, coupled with a sharp and continued decline in tax revenues. In August 2010, around two years after the McNeely prediction, San Bernardino had a $40 million budget deficit for the fiscal year, and filed for Chapter 9 protection. McNeely told everyone, and no one listened.</p> <p><em>Has your town gone bankrupt? How'd it affect you?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/9-cities-you-never-knew-went-bankrupt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/do-these-8-things-to-profit-from-the-improving-economy">Do These 8 Things to Profit From the Improving Economy</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-steps-to-take-when-bankruptcy-is-your-only-option">11 Steps to Take When Bankruptcy Is Your Only Option</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-inflation">Why Inflation?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/25-dumb-habits-that-are-keeping-you-in-debt">25 Dumb Habits That Are Keeping You in Debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/peak-debt">Peak Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Financial News bankruptcy budgets chapter 9 debt government funding u.s. cities Thu, 06 Aug 2015 13:00:18 +0000 Paul Michael 1510305 at http://www.wisebread.com Here's What to Do If You Can't Afford Your Mortgage Payment http://www.wisebread.com/heres-what-to-do-if-you-cant-afford-your-mortgage-payment <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-what-to-do-if-you-cant-afford-your-mortgage-payment" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/house_payments_mortgage_000004582800.jpg" alt="How to keep your home if you can&#039;t afford the mortgage payment" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We know the scenario: Maybe your spouse lost a job, dropping your household income. Maybe your hours at work have been cut. Or maybe your own job has disappeared. Whatever the financial emergency, your monthly mortgage payment has become unaffordable.</p> <p>What can you do if you want to keep your house? There are steps you can take to relieve your burden. But be warned: Most of them involved a sacrifice on your part.</p> <p>&quot;Being faced with the threat of losing your home can force you to make some real serious financial decisions,&quot; said Kyle Winkfield, president and chief executive officer of the Winkfield Group, a financial planning firm in Rockville, Maryland. &quot;There are few things that can keep you as focused on how you are spending your money.&quot;</p> <p>Here are four possible strategies to keep your home when that <a href="http://www.wisebread.com/7-things-you-need-to-know-before-buying-your-first-house">mortgage payment</a> becomes too much of a financial burden.</p> <h2>1. Bring in a Tenant</h2> <p>Rent a room and reduce your expenses. Do you have an extra room in your home? Maybe you have a finished basement that you rarely use. Depending on your municipality's regulations, you might be able to rent out that room. If you're fortunate, that extra income can be enough to help you cover your mortgage payment.</p> <p>Be sure to check with your local government first. You don't want to violate any local ordinances by renting out that extra room on the third floor of your home.</p> <p>If renting a room isn't an option, look carefully at your monthly expenses. Is there anything you can cut to provide some extra dollars for your mortgage payment? You might consider eliminating cable TV subscriptions or gym memberships. Maybe you can cut out restaurant meals and trips to the local movie theater.</p> <p>&quot;Taking a hard look at your budget might be more productive than you think,&quot; Winkfield said. &quot;Depending on how much of a burden that mortgage payment is, you might save enough each month to be able to keep your home until you can somehow boost your income.&quot;</p> <h2>2. Find Part-Time Work</h2> <p>This isn't always ideal, but maybe you can find a second part-time job to bring in enough extra income to help reduce the burden of your monthly mortgage payment.</p> <p>You don't want to spend all of your time at work, and holding down two jobs can be stressful. But so can losing your home to foreclosure. If a second job can help you cobble together enough income to cover your mortgage each month, sign up, and hold that part-time job until you can overcome whatever financial crisis damaged your household budget.</p> <h2>3. Modify Your Mortgage</h2> <p>As soon as you notice that you are struggling to pay your mortgage, call your lender. This can be embarrassing, but it's a necessary step. Ask for help. Ask for a loan modification.</p> <p>In a loan modification, your lender can take several steps to reduce the size of your monthly mortgage payment. It can decrease your loan's interest rate, forgive a portion of your principal balance, or extend the term &mdash; the number of years you have to pay back your loan &mdash; of your mortgage. All of these steps will result in a lower mortgage payment.</p> <p>Be warned, though, that your lender doesn't have to accept your request for a loan modification. You must first offer proof that you have suffered a financial hardship. This can be in the form of bank account statements showing a drop in available funds, paycheck stubs showing that your monthly income has plummeted, or medical bills showing how much you owe because of a recent illness and injury.</p> <p>You must also have the right household income. This can be tricky. Winkfield says that if you earn too much money each month, your lender will deny your modification request because it thinks that you make enough to pay your mortgage. But if you make too little money, your bank will deny your modification request because even after it modifies your loan, you still won't have enough funds to cover your monthly payment.</p> <p>Finding that sweet spot in the middle? That's no easy task.</p> <h2>4. Declare Chapter 13 Bankruptcy</h2> <p>You might be able to keep your home by declaring Chapter 13 bankruptcy protection. But Winkfield says that this should be a last resort. Declaring bankruptcy can hurt your credit score by more than 100 points. And a Chapter 13 bankruptcy filing sits on your credit report for seven years, making it a challenge to qualify for a new mortgage loan or any form of credit.</p> <p>&quot;This should only be used if you have absolutely no other option,&quot; Winkfield said.</p> <p>In a Chapter 13 bankruptcy, a bankruptcy judge drafts a payment plan that allows you to pay back your creditors on a schedule that you can afford. This plan will include more affordable payments to your mortgage lender each month. You'll also get to keep your home.</p> <p>You might also file for Chapter 7 bankruptcy, in which some or all of your debts are permanently wiped out. But this form of bankruptcy protection comes at a steeper price. First, it remains on your credit report for 10 years. Secondly, you might have to sell your home, and other assets, anyway as part of your bankruptcy agreement.</p> <p>Being unable to cover your mortgage is stressful. But being proactive and budgeting creatively can maximize your chances of keeping your home.</p> <p><em>What steps have you taken to overcome mortgage troubles?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/heres-what-to-do-if-you-cant-afford-your-mortgage-payment">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-times-a-refinance-is-the-wrong-move">3 Times a Refinance Is the Wrong Move</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-things-your-real-estate-agent-wishes-you-knew">5 Things Your Real Estate Agent Wishes You Knew</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-why-youre-too-old-or-too-young-for-a-mortgage-loan">4 Reasons Why You&#039;re Too Old — Or Too Young — For a Mortgage Loan</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/prioritize-these-5-bills-when-youre-short-on-cash">Prioritize These 5 Bills When You&#039;re Short on Cash</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-important-things-you-need-to-know-about-the-housing-market-in-2016">6 Important Things You Need to Know About the Housing Market in 2016</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing bankruptcy loans loss of income mortgage Tue, 14 Jul 2015 09:00:09 +0000 Dan Rafter 1481988 at http://www.wisebread.com 8 Cool Stores We Miss http://www.wisebread.com/8-cool-stores-we-miss <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-cool-stores-we-miss" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/borders_bookstore_000017392179.jpg" alt="Borders bookstore is a cool store we miss" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It is sadly the way of life that all good things must come to an end. And <a href="http://www.wisebread.com/heres-how-to-get-a-sale-price-match-at-16-popular-stores">retail stores</a> are no exception. When we look back at the places at which we loved to shop, we may have thought they would be around forever. Who could have known that, just twenty years ago, the Internet would come along and change everything.</p> <p>Here are eight of those cool stores that are now just a memory.</p> <h2>1. Sharper Image</h2> <p>Founded in 1977, just 38 years ago, Sharper Image was the brainchild of Richard Thalheimer. Originally a catalog business for jogging watches, it grew into a retail giant known for selling the latest cool gadgets and gizmos designed to help us live better lives (or spend a ton of money on birthday presents). How many of us stopped into a Sharper Image when we were shopping at the mall to sit in the latest massage chair, or test-drive some remote-controlled car or plane?</p> <p>Of course, the Internet took its toll on Sharper Image, with everything in the stores available in some form or another on Amazon, eBay, and a bunch of other online outlets. In 2008, the company filed for Chapter 11 bankruptcy, and closed every single retail store. You can still shop online at <a href="http://sharperimage.com">Sharper Image</a>, but it's just not the same. The retail stores were an experience, not just a place to pop in and buy something.</p> <h2>2. Wild Oats Market</h2> <p>Founded in 1987 in Boulder, Colorado, Wild Oats was at the forefront of bringing natural foods to the masses. From humble beginnings, with just one store, it became the third largest natural food chain in the USA. Wild Oats Markets were a treasure trove of goodies that supplied everything from fresh organic fruit and veg, to coffee beans, canned and jarred goods, snacks, and a whole lot more. But, they were no match for Whole Foods, who tried to acquire the company in 2007. That deal went sour, and as is the case with many stores in the list, Walmart became the reason for the closure of the Wild Oats stores around the country.</p> <p>Now, the only way you can get Wild Oats products is to buy them at a Walmart or a Fresh &amp; Easy store. It's a shame that a store that had its roots firmly planted in delivering the freshest, most natural ingredients ended up being swallowed by the retail giant that is Walmart.</p> <h2>3. Tower Records</h2> <p>There was a reason some people (<em>cool people</em>) loved Tower Records, and others couldn't stand to be in the store. It was claustrophobic; stacked from floor to ceiling with amazing finds, cheap CDs, bizarre DVDs, and a ton of vinyl. Every trip to Tower Records was another chance to broaden your horizons.</p> <p>Started in 1960 by Russell Solomon, it was named after his father's drugstore in the same building as the Tower Theater. It grew into a giant, with stores from the UK to Colombia and the Philippines. But it grew too fast, and too far, and acquired massive debt from the expansion. Chapter 11 bankruptcy couldn't save it, and Tower Records closed the last of its physical locations in 2007.</p> <h2>4. Borders</h2> <p>Once upon a time, when you wanted a book, you went to a local bookstore. Then along came Borders, and combined the humble bookstore with music, coffee, DVDs, and everything else the entertainment enthusiast could want. It was great. But it did have a slight drawback; everything was <em>really </em>overpriced.</p> <p>Sure enough, Borders became a place where you would browse for a half hour, or more, but just never bit the bullet because you could find it cheaper online. And that flaw became the reason the big book chain went under in 2011. Its biggest rival, Barnes &amp; Noble, had a much better pricing model, and the member perks also helped. Not to mention, the big bargain book section as you enter the front of the store. But for some reason, not having a Borders around seems sad.</p> <h2>5. KB Toys</h2> <p>As a kid, seeing the KB Toys logo in the malls and outlets shopping centers was awesome. Although it was no Toys 'R Us, you could always find something cool <em>and </em>affordable in there. As well as name brands, KB Toys carried a lot of the cheaper versions of popular items, and always had special deals and sale items to help stretch your allowance. Having started in 1922, founded by the Kaufman Brothers (KB), it seemed like KB Toys would be around forever.</p> <p>So, what changed? You guessed it. Walmart's buying power and locations meant that KB Toys couldn't compete with the retail giant. They struggled to stay afloat after a bankruptcy in 2004, and then finally closed down in 2009. Toys 'R Us scooped up what remained of the company.</p> <h2>6. Woolworths</h2> <p>Originally known as F.W. Woolworth Co., named after its founder Frank Winfield Woolworth, this was the first &quot;five-and-dime&quot; store in America. Opened in 1878, and re-opened in 1879, &quot;Woolworth's Great Five Cent Store&quot; sold a variety of household goods at discounted prices&hellip;usually at five cents. This pricing model became five and 10 cents, where the term &quot;five-and-dime store&quot; came from. And it was a very successful business for over 100 years, expanding its reach across the U.S. and the world, until the rise of the K-Mart and Walmart brands.</p> <p>Woolworths (or Woolies to those of us who grew up in the UK) became the cheap cousin to those giants, even though we all enjoyed the low pricing and eclectic mix of products. The stores were also much smaller than the big marts, meaning you could find one in a high street or strip mall. On July 7th, 1997, Woolworths closed its last stores in the USA, and changed its corporate name to Venator. Never heard of them? You're not alone.</p> <h2>7. Filene's Basement</h2> <p>If you're a fan of Ross and T.J. Maxx, you were no doubt in love with Filene's Basement. Also known as simply &quot;The Basement,&quot; it was founded in 1908, and was America's oldest off-price retailer. One of the reasons everyone loved Filene's was the annual &quot;Running of the Brides,&quot; which gave future wives the chance to pick up a bridal gown for an insanely low price.</p> <p>You would think any kind of economic crisis would actually help a store that sells clothing at discounts, but for some reason the troubles of 2009 wreaked havoc with the chain. In 2011, the last Filene's Basement closed its doors for good. You can still shop at Filene's Basement online, but the experience is nowhere near the same. And of course, you can't really run anywhere when you're hunkered in front of a computer screen.</p> <h2>8. Hollywood Video</h2> <p>Unlike Blockbuster Video, a store that dominated the movie rental world and abused us with horrendous late fees and big rental prices, Hollywood Video had a much more friendly approach to movies. The store was way cooler inside, opting for a darker, more industrial look, and staying away from the insipid bright lights and nasty carpeting of Blockbuster. They also had $1 rental deals on movies and games, and their pre-viewed purchases were priced to sell. Even when the last Blockbuster store was closing, their old DVDs and Blu-rays were priced higher than new ones on Amazon. It was always fun to pop into a HV and peruse the Friday night films or new releases.</p> <p>Of course, not even a decent chain like Hollywood Video could compete with Netflix, and the many streaming services offered online. It was just impossible for them to stay afloat, and in 2010 the last of its stores closed for good.</p> <p><em>What stores do you miss?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/8-cool-stores-we-miss">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/get-more-money-for-your-stuff-with-these-retail-secrets">Get More Money for Your Stuff With These Retail Secrets</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-retailers-with-the-absolute-best-customer-service">7 Retailers With the Absolute Best Customer Service</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/these-secrets-of-amazons-pricing-strategy-will-help-you-find-the-best-buys">These Secrets of Amazon&#039;s Pricing Strategy Will Help You Find the Best Buys</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-find-ethically-sourced-products-you-can-afford">How to Find Ethically Sourced Products You Can Afford</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-avoid-sneaky-online-price-changes">6 Ways to Avoid Sneaky Online Price Changes</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Shopping bankruptcy closed cool stores retail Fri, 10 Jul 2015 13:00:17 +0000 Paul Michael 1484684 at http://www.wisebread.com 8 Reasons You're Bad at Money — And How to Fix It ASAP http://www.wisebread.com/8-reasons-youre-bad-at-money-and-how-to-fix-it-asap <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-reasons-youre-bad-at-money-and-how-to-fix-it-asap" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_bad_finances_000043972528.jpg" alt="Woman learning she&#039;s bad with money and how to fix it" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Perpetually broke? Always holding your breath when you run your credit card, worried your balance has finally tipped over the limit? Living paycheck-to-not-quite-the-next-paycheck?</p> <p>Some people are <a href="http://www.wisebread.com/10-lies-rich-people-never-tell-themselves">bad at money</a>. (I should know &mdash; I used to be one of them.) But you don't have to be that way forever. Here are eight reasons you suck at money &mdash; and how to fix them.</p> <h2>1. You're an Impulse Spender</h2> <p>A little retail therapy is fine and dandy, if it's not a chronic issue that causes you financial distress. Had a rough week? Sure, a splurge on a new pair of running shoes or a shade of lipstick that is inappropriate for work can offer a quick (and temporary) pick-me-up, assuming you have the cash to spare. But if you don't, then retail therapy is a bad idea. Actually, spending just to make yourself quickly feel better is almost <em>always </em>a bad idea.</p> <p>If you just had a baby and hate the way your body looks (I know nothing about this, shut up), then an expensive haircut and a bottle of self-tanner aren't actually going to fix the problem, although they may distract you from the issue for a day or two. If you hate your job, binge-buying a ton of video games may entertain you in your off-time, but won't actually make your working hours any more bearable.</p> <h3>How to Fix It</h3> <p>Check yo'self before you wreck yo'self if retail therapy is a regular habit. At the very least, try to determine exactly what the problem is, find the root of it, and address it head-on. If you need more education to land your dream job, then you should be focusing your finances on that, rather than on needless entertainment.</p> <h2>2. You're Unprepared or Lazy</h2> <p>I waste a lot of money on take out. It's not that I don't like cooking &mdash; because I do &mdash; but that I am truly terrible at meal planning and buying groceries accordingly. When I was single, eating was simply a matter of buying a fresh loaf of bread and some good cheese and maybe some cheap wine, but now I have to feed a whole family, it's become a little more complex.</p> <p>Or perhaps you find yourself paying through the nose for services, like yard or home care, that you could do yourself. There's nothing inherently wrong with paying someone else to perform work for you, as long as you can afford it, but if your budget is stretched, then cutting back makes sense.</p> <h3>How to Fix It</h3> <p>Find ways to make the necessary work more bearable. If it's meal planning, take a look at websites and meal planning apps that help you plan, shop, and cook. Enlist the help of your favorite music while cleaning and doing laundry. Get a lawn mower that works. I had to spend $400 to find a lawn mower that I could start, but that's still cheaper than paying someone to come and mow my lawn every week or so.</p> <h2>3. You Had Bad Money Role Models</h2> <p>Maybe your parents were terrible at money and you learned their bad money habits. It can be hard to break out of this mold if you've been shaped by it since childhood, since old habits die hard. But if you want to put yourself in a better financial situation, you need to forget what you learned growing up and start fresh. Fortunately, it's never too late to learn good money management skills.</p> <h3>How to Fix It</h3> <p>The internet is your friend when it comes to money management. You can peruse personal finance websites (like this one!) or take a <a href="http://www.cicmoney101.org/Course-Catalog/Money-Management.aspx">free online course</a> in money management.</p> <h2>4. You Had No Money Role Models</h2> <p>Maybe no one ever taught you the basics of money management and you've been winging it poorly. (Incidentally, back when I was in school in the last millennium, Home Economics courses taught us how to sew and how to microwave eggs, but never mentioned budgeting.)</p> <p>Parents often believe that they are doing their children a favor by not exposing them to the dirty business of money management. While understandable, the notion is misguided. Sometimes families have to tighten their belts to make ends meet, and it's not wrong to explain to children why they can't go to the movies every weekend.</p> <h3>How to Fix It</h3> <p>If you have kids, you can break the cycle of financial silence by allowing your kids to participate in planning meals and family budgets. Although learning basic money management skills can seem daunting when you're an adult, getting the whole family onboard can make it less grueling.</p> <h2>5. You Try to Keep up With the Joneses</h2> <p>Maybe you idolize people who have a lot, and believe that <em>buying things</em> is the only way to be happy. Or maybe you've just bought into the idea (haven't we all?) that you need to have at least as much as your neighbors in order to fit in.</p> <p>Humans are social creatures, and we tend to care deeply about what our peers think of us. This is, of course, why many advertisers sell an image of who you can be when you buy their product, rather than just selling the actual product.</p> <h3>How to Fix It</h3> <p>Just like occasional shopping sprees, there's nothing inherently wrong with wanting to impress other people, but buying things specifically for the sake of shaping someone else's opinion of you is silly, especially if you don't really need what you are buying. Before you buy anything, ask yourself, &quot;Would I spend money on this if I knew that no one else would ever see it?&quot;</p> <h2>6. You Are the Joneses</h2> <p>Or at least&hellip; you <em>were</em> the Joneses, until financial circumstances changed, and your spending habits didn't.</p> <p>Perhaps you lost your job and now you have to scramble to make ends meet for a while. It doesn't matter that people once envied your brand new car and constantly updated wardrobe; what matters now is putting food on the table and paying the bills. A part of your new life involves adjusting budgets and expectations to meet reality.</p> <h3>How to Fix It</h3> <p>You might find that changing your spending habits is as simple as cooking at home instead of dining out, or learning not to shop as much. Some downsizing might be more serious, like reducing the number of cars that you own or learning to live in a smaller house. Regardless of the size of changes that you have to make, you'll do well to learn to let go of the past and accept the present.</p> <h2>7. YOLO</h2> <p>Hey, I'm totally in favor of living for the moment, but that doesn't mean that you can't save for the future. And while you can't take it with you when you die, you're going to need those savings to help you out in old age (sure, it might seem far away now, but you'll be amazed at how time flies once you hit your 40s).</p> <h3>How to Fix It</h3> <p>Part of the joy of being young is taking calculated risks and enjoying the freedom that comes from a relative lack of responsibility. But that doesn't mean that you have to struggle with money &mdash; money problems are a stressor, and nothing ruins the fun like stress. Learning to live within your means while young is smart, and it's also easier than trying to learn when you are older.</p> <h2>8. You Have&nbsp;Really Bad Luck (or Dumb Relatives)</h2> <p>Not everyone in a lousy financial situation got there through bad habits. I happen to be good friends with a couple who continually ends up having to empty their savings because their families are financially irresponsible, and they find themselves having to bail out spendthrift siblings or medically challenged parents.</p> <p>Medical bills are a major cause of bankruptcy in the U.S.; even people with health insurance can end up losing all of their savings on expensive treatments. Even Medicare and Medicaid don't cover the full cost of many treatments &mdash; my own mother recently went through both chemotherapy and radiation to treat cancer, and would have paid much more out of pocket if she hadn't purchased supplemental health insurance to cover what Medicare would not.</p> <h3>How to Fix It</h3> <p>There's not much you can do when calamity strikes, other than to pick up the pieces and learn from any mistakes (like gaps in insurance coverage). But you can prepare by having emergency savings on hand and being adequately insured.</p> <p><em>Why do you suck at money? More importantly &mdash; how will you fix it?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-karim">Andrea Karim</a> of <a href="http://www.wisebread.com/8-reasons-youre-bad-at-money-and-how-to-fix-it-asap">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-surprising-ways-bad-credit-can-hurt-you">15 Surprising Ways Bad Credit Can Hurt You</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-improve-your-credit-score">How to Improve Your Credit Score</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/debt/bankruptcy">How to File For Bankruptcy</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/life-after-bankruptcy-whats-next">Life After Bankruptcy: What&#039;s Next?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/do-not-buy-something-just-because-you-can-afford-it">Do not buy something just because you can afford it</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance bad credit bad habits bankruptcy building credit money overspending shopping Fri, 26 Jun 2015 13:00:09 +0000 Andrea Karim 1463013 at http://www.wisebread.com Not Insuring These 6 Things Could Bankrupt You http://www.wisebread.com/not-insuring-these-6-things-could-bankrupt-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/not-insuring-these-6-things-could-bankrupt-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple-budget-468144843-small.jpg" alt="couple budget" title="couple budget" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Getting ahead financially isn't easy. It requires hard work and persistence. So why risk years or even decades of hard work and sacrifice only to lose everything in one unfortunate, very costly event? (See also: <a href="http://www.wisebread.com/marketing-life-insurance-and-behavioral-psychology?ref=seealso">Marketing, Life Insurance, and Behavioral Psychology</a>)</p> <p>&quot;It won't happen to me,&quot; you say? I felt the same way years ago. But life happens. However unfair it may be, over time we all see some of our friends and family members face difficult challenges or even catastrophes. (I'll include a few examples of my own below.) As much as we hope to avoid them, we just can't predict or control all events. But we can at least hedge some of these risks by insuring against them.</p> <h2>What Should I Insure?</h2> <p>Insurance is for the big things. It's to protect you from major events that would cost you more than you can pay for from your short-term financial reserves. In other words, its purpose is to help shield you from serious and potentially devastating financial setbacks.</p> <h2>What Shouldn't I Insure?</h2> <p>As a rule, then, insurance is not for smaller financial risks or expenses you could absorb and pay for in the short term. This is where we often make a mistake &mdash; purchasing insurance or service contracts for goods and services that cost hundreds of dollars or less.</p> <p>Is that to say that you should never consider taking insurance on a cell phone or a computer printer, for example? Maybe not, but be aware of the cumulative opportunity cost of those expenditures. That money could have been used to help you get ahead financially, by paying off an outstanding debt for example. Also, remember that companies that encourage you to buy their service contracts and warranties often make more profit on the warranties than on the actual product or service being insured.</p> <p>So, what are the big things requiring insurance? And what types of insurance can protect you from being wiped out financially? Here are six that cover most if not all of the bases.</p> <h2>1. Health Insurance</h2> <p>By far, the number one cause of bankruptcy in the United States is unpaid medical bills. A <a href="http://finance.yahoo.com/news/pf_article_109143.html">study done at Harvard University</a> identifies medical expenses as a leading cause of 62% of all personal bankruptcies.</p> <p>Even the shortest of hospital visits now costs thousands of dollars. Just a few months ago one of our sons experienced sudden stomach pains, requiring a trip to the emergency room. After a number of tests (isolating the problem as an intestinal disorder) and some antibiotics he was released four or five hours later. The bill? Over $20,000. Thankfully our insurance covered most of the bill and his subsequent treatments. But it's easy to see how a single serious injury or disease, if not adequately covered by health insurance, could deplete your entire savings.</p> <p>And even if you have health insurance, the ever-rising deductibles (sometimes $5,000 or more) can tip you over a financial cliff if they exhaust your short term funds and force you to delay credit card, vehicle, mortgage, and other payments in an attempt to recover.</p> <h2>2. Life Insurance</h2> <p>This one should be a no-brainer. If you have dependents or any unpaid debts or financial obligations that would need to be paid upon your death (not many people can answer &quot;No&quot; to all of those), then you need life insurance. The question is, how much?</p> <p>There are many ways to estimate how much life insurance you need, but I like the following approach:</p> <ol> <li>Determine your household's current TOTAL annual income needs and SUBTRACT income that's available to your spouse/survivor(s) from other existing sources. This will be their NET annual income need.<br /> &nbsp;</li> <li>Multiply this net annual income need TIMES the estimated number of years your beneficiaries will require it.<br /> &nbsp;</li> <li>ADD your total current outstanding debts.<br /> &nbsp;</li> <li>ADD future unfunded expenses (your funeral expense, children's college, etc)</li> </ol> <p>This total should give you a good initial estimate. For a more complete assessment I suggest Tony Steuer's <a href="http://www.amazon.com/gp/product/0984508104/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=390957&amp;creativeASIN=0984508104&amp;linkCode=as2&amp;tag=wisbre03-20&amp;linkId=ZNPG3SINGOTXRIYR">Questions and Answers on Life Insurance</a> toolbook .</p> <p>My strong preference is term life insurance, not permanent life policies like whole life or universal that include an investment component. As a rough guide, I purchased a $300,000 supplemental term life policy at age 40 for $300 per year, or $25 per month. That premium amount will not change until my mid-60s.</p> <h2>3. Vehicle Insurance</h2> <p>Auto insurance is required by most states. It's actually a collection of policies that protects you from financial loss in three ways:</p> <ol> <li>Property coverage pays for damage to your car, either from a collision or from vandalism, storm damage, or theft (if you have &quot;comprehensive&quot;).<br /> &nbsp;</li> <li>Liability coverage pays legal expenses to others for injury to them or damage to their property in an accident.<br /> &nbsp;</li> <li>Medical coverage pays for the cost of treating accident injuries, and sometimes for lost wages and funeral expenses.</li> </ol> <p>According to <a href="http://www.quickanddirtytips.com/money-girl">Money Girl podcaster Laura Adams</a>, you ought to have &quot;enough auto insurance to cover the total value of all your assets &mdash; such as your home, vehicles, savings accounts, and non-retirement investments &mdash; [in case you are] involved in a lawsuit.&quot;</p> <h2>4. Homeowners Insurance</h2> <p>Like vehicle insurance, homeowners insurance is required when you have a mortgage. It should cover the replacement value of your home and its contents, and it pays for claims associated with fire and certain natural disasters. A liability portion also covers you if someone gets hurt on your property. (See also: <a href="http://www.wisebread.com/8-surprising-things-covered-by-homeowners-insurance?ref=seealso">8 Surprising Things Covered by Homeowners Insurance</a>)</p> <p>If you rent, and the loss of your personal belongings would cause a financial hardship, then you should consider renter's insurance.</p> <h2>5. Disability Insurance</h2> <p>As a young girl my grandmother excelled in school. She loved to read and looked forward to attending college. Her father was a successful stone mason and the family lived comfortably, so paying for college was within their means. Then a work-related accident left him disabled. He never recovered, and he didn't have disability insurance, so his daughter had to quit high school and get a minimum wage job to help the family make ends meet. Needless to say, my grandmother never attended college, and she never had an opportunity to achieve her dreams.</p> <p>This is why having disability insurance is so important.</p> <ul> <li>Approximately one out of four workers entering the workforce today will become disabled for some period of time before they retire.<br /> &nbsp;</li> <li>More than 90% of disabling accidents and illnesses are not work related, which means they aren't covered by worker's compensation insurance.<br /> &nbsp;</li> <li>Social Security is only available after you've been out of work for a year and are completely disabled.<br /> &nbsp;</li> <li>Disability is the leading cause of about 50% of all mortgage foreclosures.</li> </ul> <p>Most employers provide short-term disability insurance to non-contract workers, but they are less likely to offer long-term disability coverage, or if they do it's often less than you need. So look into supplemental disability insurance to make sure your family's needs are covered.</p> <h2>6. General Liability Insurance</h2> <p>Sometimes referred to as umbrella insurance, this is a &quot;miscellaneous&quot; policy. It covers amounts in excess of maximums in other policies, and it provides primary insurance for losses that aren't covered by other policies. Take personal injury lawsuits. However frivolous the claim, defending against a lawsuit can cost thousands. For example, my stepfather works for his local township and he spent over $40,000 clearing himself of an unfounded charge against him by a citizen of the town.</p> <p>Also, have you noticed that insurance companies are narrowing the scope of what they cover in their traditional insurance policies? That same stepfather had storm insurance to cover his primary residence but didn't learn until after last year's Hurricane Sandy that the insurance company wouldn't cover $20,000 in damages to the garage on the same property.</p> <p>Our household has a $1 million umbrella policy that costs about $50 per month. It gives us peace of mind.</p> <h2>Protect What You've Worked Hard For</h2> <p>Joni Mitchell wrote: &quot;Don't it always seem to go that you don't know what you've got till it's gone.&quot; I think that sums it up nicely. It's hard for us to appreciate the consequences of a serious accident or unforeseen event until after it occurs.</p> <p>But bad things do happen &mdash; we see it all around us. So do what doesn't come naturally: protect yourself against your big risks before they happen. Take stock now of your insurance needs and make sure you're covered.</p> <p><em>Have you covered your big risks? How many of these insurance policies do you have? Can you think of any others?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/keith-whelan">Keith Whelan</a> of <a href="http://www.wisebread.com/not-insuring-these-6-things-could-bankrupt-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-12"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/going-without-health-insurance-in-2015-heres-what-itll-cost-you">Going Without Health Insurance in 2015? Here&#039;s What It&#039;ll Cost You</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-fall-for-these-common-obamacare-scams">Don&#039;t Fall for These Common Obamacare Scams</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/generic-drug-price-lists-for-six-major-pharmacies">Generic Drug Price Lists For Six Major Pharmacies - Updated</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-reasons-why-life-insurance-isnt-just-for-old-people">5 Reasons Why Life Insurance Isn&#039;t Just for Old People</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-spend-your-last-minute-health-care-fsa-funds">8 Ways to Spend Your Last-Minute Health Care FSA Funds</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Insurance bankruptcy health insurance insurance life insurance Fri, 22 Aug 2014 13:00:02 +0000 Keith Whelan 1190088 at http://www.wisebread.com How to Do a One-Day, Do-It-Yourself Bankruptcy http://www.wisebread.com/how-to-do-a-one-day-do-it-yourself-bankruptcy <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-do-a-one-day-do-it-yourself-bankruptcy" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/8169560070_290a4e1fc4_z.jpg" alt="paperwork" title="paperwork" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>If your debts have become overwhelming and you&rsquo;re facing a significant financial blow, such as wage garnishment, vehicle repossession, foreclosure, eviction, or utility service disconnection, and you don&rsquo;t have the money for a lawyer, don't panic. While bankruptcy should be a last resort, you do have options. It&rsquo;s possible to file a Chapter 7 or Chapter 13 bankruptcy by yourself to avoid or stop these collection attempts. As soon as you file, the court invokes the immediate protection of the automatic stay, which stops creditors from pursuing all collection activities, including phone calls and letters, and mandates utility companies to restore any disconnected services. Filers may also be able to get back repossessed vehicles. By following this timeline, you can file bankruptcy in a matter of hours. (See also: <a href="http://www.wisebread.com/debt/bankruptcy">How to File for Bankruptcy</a>)</p> <h3>The Night Before: Gather Your Documentation</h3> <p>To file either Chapter 7 or Chapter 13 bankruptcy, you must provide documentation of your debts, expenses, and income.</p> <p><b>Debts</b></p> <p>Gather bills, account statements, and other correspondence for all of your creditors. This not only serves as a record of what you owe, it also ensures that you have accurate creditor information. Improperly identifying creditors can cause those debts to be excluded from the bankruptcy case, leaving you responsible for them. Pull copies of your credit report from Equifax, Experian, and TransUnion to ensure you list all creditors.</p> <p><b>Income</b></p> <p>The court also needs to see proof of your income for the past six months. This includes pay stubs, investment account statements, business profit and loss statements, and documentation of unemployment, Social Security, or other social service benefits. You must also include documentation of any child support or alimony payments you receive.</p> <p><b>Expenses</b></p> <p>The bankruptcy petition requires you to list your monthly household expenses as well, so gather the <a href="http://www.wisebread.com/10-monthly-bills-you-can-slash">bills you receive for utilities</a>, rent or mortgage, and other recurring expenses, such as medical care, and court-ordered support payments. You must also provide estimates of how much you spend each month on things like food, clothing, and education expenses for minor children.</p> <h3>The Night Before: Look for Help</h3> <p>If your financial situation is simple, you may not need any assistance with the filing process. However, if you run into any snags, it&rsquo;s imperative to know where to go for help. Visit <a target="_blank" href="http://www.lawhelp.org/">LawHelp.org</a> or search the Internet for legal aid organizations in your area, most of which offer legal advice both by phone and in person. Although seeking assistance may put a dent in your one-day plan, filing an accurate petition is much more important than speed.</p> <h3>7 a.m. &mdash; Credit Counseling</h3> <p>U.S. bankruptcy laws require all filers to undergo 90 minutes of credit counseling and receive a certificate of completion. Luckily, many courses are available online and over the phone. You can complete the entire process within two hours. The price varies depending on the provider, but in general, the class should cost no more than $50. You can receive a waiver of the course fee if your income is below the poverty line in your state. You can find <a target="_blank" href="http://www.justice.gov/ust/eo/bapcpa/ccde/cc_approved.htm">approved credit counseling providers</a> on the U.S. Courts website.</p> <h3>9 a.m.&nbsp;&mdash; Completing the Petition</h3> <p>The bankruptcy petition consists of a multitude of forms, called &ldquo;schedules,&rdquo; to record your debts, income, expenses, and assets. You can <a target="_blank" href="http://www.uscourts.gov/FormsAndFees/Forms/BankruptcyForms.aspx">download the bankruptcy petition paperwork</a> from the U.S. Courts website, under the &ldquo;Official Forms, Instructions, and Committee Notes&rdquo; heading. The list may seem daunting, but the Courts website provides an <a target="_blank" href="http://www.uscourts.gov/uscourts/RulesAndPolicies/rules/BK_Forms_Current/B_200.pdf">index of the forms</a> you need to file each type of bankruptcy. Give yourself at least five hours to compete the petition; more if you need to take breaks to stretch, eat, fish toys out of the toilet, etc.</p> <p><strong>Means Test</strong></p> <p>Officially known as the &ldquo;Statement of Current Monthly Income and Means Test Calculation,&rdquo; this is the first form you should download and complete. This form walks you through calculations to determine if your income requires you to file Chapter 7 or Chapter 13. If your income is above the median in your state and you have at least $150 in disposable income each month, you have to file Chapter 13 bankruptcy and create a repayment plan for your debts. If it falls below the median income, you must file Chapter 7 bankruptcy and surrender any non-exempt assets.</p> <p><strong>Income</strong></p> <p>Use the documentation you gathered earlier to give a complete account of your average monthly income on Forms B 22A, B 6I and B 7. Do not leave anything off, even if it is a small amount or it was given as a gift. The courts will examine your finances carefully, and any dishonesty here can be cause for the judge to dismiss your case for fraud.</p> <p><strong>Debts</strong></p> <p>List creditor names, addresses, account numbers, and the amount you owe on form B 1. Describe whether the debts are secured, such as <a href="http://www.wisebread.com/the-different-types-of-loans-a-primer">mortgages and car loans</a>, or unsecured, such as credit cards, on Forms B 6E and B 6F. If you file Chapter 7 bankruptcy and have secured debts, you must fill out Form B 8 and declare your intention to either keep the property serving as collateral for the debt and continue paying, or surrender the property and be free of the debt.</p> <p><strong>Expenses</strong></p> <p>Your average monthly expenses go on Forms B 22A and B 6J. As with the other forms, be thorough. Leaving off a valid expense could place you over the Chapter 7 threshold or cause you to make higher payments in a Chapter 13 payment plan.</p> <p><strong>Assets</strong></p> <p>If you file Chapter 7 bankruptcy, you must list your assets on Forms B 6B and B6C. This includes real estate, vehicles, jewelry, electronics, collectibles, fire arms, cash, and funds in bank accounts. The document requires a description of the property, as well as the current value. If you don&rsquo;t know the exact value of an item, look in the newspaper, in online classified ads, and on web auction websites for the cost of items similar to yours and estimate from there. The court will perform its own valuation if it seizes the property for creditors or thinks your figure is incorrect. Most of the time, the value of your property will not exceed the exemption threshold in your state, so it&rsquo;s unlikely that you will have to give anything up. You can check the exact exemption amounts by visiting your state&rsquo;s bankruptcy court website.</p> <p><strong>Chapter 13 Payment Plan</strong></p> <p>If you file Chapter 13 bankruptcy, you must come up with a three- to five-year plan to use your disposable monthly income to repay your debt. There is no official form, so if your state&rsquo;s bankruptcy court website doesn&rsquo;t provide one, you must create the plan in a word processing program. Bankruptcy laws require you to pay off priority debts first, or at least bring them current. These include non-dischargeable debts such as taxes and child support, as well as secured debts. Once you pay those, the plan requires you to pay as much of your unsecured debt as possible each month until the end of the plan term. The court discharges any unsecured debt remaining at the end of this time, and you will no longer be responsible for paying it.</p> <h3>2 p.m. &mdash; Filing the Petition</h3> <p>Filers without legal representation must submit the completed petition and the credit counseling certification in person to the court clerk and pay the appropriate fees by cash or money order. To file Chapter 7, you must pay a filing fee of $299. The Chapter 13 filing fee is $279. If you cannot pay the entire fee up front, the court will accept installment payments. People with income that is less than 150% of the federal poverty guidelines can receive a complete waiver of the Chapter 7 filing fee. There is no waiver available for Chapter 13 filers. The clerk will give you a document to prove that you filed.</p> <h3>3 p.m. &mdash; Mission Complete</h3> <p>Once the paperwork is in, the filing process is complete. You are under the full protection of the automatic stay, so you can fax or mail copies of the document to your creditors, who are then legally required to cease all <a href="http://www.wisebread.com/always-answer-the-call-expert-advice-on-debt-collection">collection activities</a> immediately.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/lauren-treadwell">Lauren Treadwell</a> of <a href="http://www.wisebread.com/how-to-do-a-one-day-do-it-yourself-bankruptcy">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-deal-with-collection-agencies">How to Deal With Collection Agencies</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-you-know-when-it-s-time-for-bankruptcy">How You Know When It&#039;s Time For Bankruptcy</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-erase-your-medical-debt">How to Erase Your Medical Debt</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-refill-an-ink-cartridge-with-a-small-piece-of-tape">How to refill an ink cartridge with a small piece of tape</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/surprising-things-that-can-kill-your-credit">Surprising Things That Can Kill Your Credit</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Consumer Affairs Debt Management DIY bankruptcy Creditors emergency plan Fri, 18 Jan 2013 10:48:41 +0000 Lauren Treadwell 961916 at http://www.wisebread.com Slow and Steady Wins the Debt Race http://www.wisebread.com/slow-and-steady-wins-the-debt-race <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/slow-and-steady-wins-the-debt-race" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/4680102985_9943b53fb2_z.jpg" alt="running marathon" title="running marathon" class="imagecache imagecache-250w" width="250" height="240" /></a> </div> </div> </div> <p>When I woke up to the reality of having $20,000 of credit card debt, I had to face this hard truth &mdash; I didn&rsquo;t get into debt overnight, so I&rsquo;m probably not going to get out of debt overnight.</p> <p>In fact, it took me four and a half years to pay off my debt. There were plenty of times throughout that journey when I wished there was some easy way to just wipe it all out.&nbsp;But there was no easy way. I don&rsquo;t recall ever considering bankruptcy. I racked up all that debt. I needed to pay it all off.</p> <p>So I did. Slowly. Month after month, I sent big checks to creditors, paying dearly for trips I had taken long ago and restaurant meals I no longer remembered.</p> <p>Today, with the perspective that time brings, and with lots of experience helping others struggling with debt, I honestly believe that the slow and steady way out of debt is the best way. (See also: <a href="http://www.wisebread.com/how-to-start-fighting-debt-today">How to Start Fighting Debt &mdash; Today</a>)</p> <h2>The Danger of Fixing Symptoms</h2> <p>For many people buried under a mountain of debt, bankruptcy looks appealing. A quick way to end the pain.</p> <p>However, according to a paper published by the <a href="http://bdp.law.harvard.edu/papers.cfm">Bankruptcy Data Project</a>, a Harvard University-based research group that has studied bankruptcy for over twenty years, one year after filing for bankruptcy, one in four filers were struggling to pay routine bills, and one in three said their overall financial situation was similar to or worse than when they filed.</p> <p>Tossing your debt overboard may feel good for the moment. However, for many people, ditching debt without addressing the underlying causes often turns out to provide only short-term relief.</p> <h2>Lasting Changes Require Changes of the Heart</h2> <p>When I was blindly digging my way into debt, I saw buying stuff as the route to feeling good about myself. I bought things I couldn&rsquo;t afford in order to tell the world I <em>was</em> somebody.</p> <p>I also saw carrying a balance on credit cards as normal behavior. How else did most people get by?&nbsp;</p> <p>I probably could have learned some helpful new behaviors around money without changing these attitudes &mdash; how to use a budget, how to set up an emergency fund, and the like. But without a serious attitude adjustment, I doubt I would have been interested. Or, if I did start dabbling in new habits, they probably wouldn&rsquo;t have lasted very long.&nbsp;</p> <p>A psychiatrist friend tells me that attitudes and behaviors work in circular fashion to bring about change. Behavioral changes tend to alter our attitudes, and attitudinal changes tend to alter our behavior. However, they don&rsquo;t usually happen on the same schedule. While we may be able to force ourselves into some short-term behavioral changes, attitudinal changes take time. You can&rsquo;t just slap on a new conviction like cologne.</p> <h2>Getting on the Slow Track</h2> <p>To be sure, getting out of debt requires behavioral changes. You need to stop going any further into debt. You also need to gather the facts. How much debt do you have?&nbsp;Write it all down, and add it all up. Create a <a href="http://www.soundmindinvesting.com/visitors/res/resources.htm">cash flow plan</a> (AKA, a budget). Then start rolling a <a href="http://www.wisebread.com/a-comprehensive-guide-to-the-debt-snowball-method-0">debt snowball</a>.</p> <p>However, getting and <em>staying </em>out of debt also requires the slower work of heart change. Start by taking a close look at your financial attitudes. Are there any ways of thinking that have contributed to your debt? Have you been buying things you can&rsquo;t afford in order to feel better about yourself, like I did?</p> <p>Acknowledging those attitudes is the first step toward changing them.</p> <p>One of the key attitudinal factors that helped me turn things around was accepting responsibility for my debts. The credit card companies didn&rsquo;t manipulate me into carrying balances on my cards.&nbsp;My parents didn&rsquo;t fail me in some way.&nbsp;</p> <p>It wasn&rsquo;t about beating myself up about my debts; it was about acknowledging the truth. I was responsible for my debts.</p> <p>To be sure, some people with debt problems have gotten into financial trouble by way of horrendous life circumstances. A divorce, an extended period of unemployment, catastrophic medical bills. I don&rsquo;t mean to be insensitive to any of that. But it&rsquo;s been my experience that when a person with debt owns their role in the debt &mdash; and most people with debt played at least <em>some</em> role &mdash; they have a far greater chance of getting and staying out of debt.</p> <p>If you have a lot of debt and you&rsquo;re just beginning the process of getting out from under, I&rsquo;m sure the idea that it may take several years doesn&rsquo;t sound the least bit appealing. However, I&rsquo;m thankful to have taken the long way out. It took time to change my money-related attitudes and cultivate some healthy financial habits. Since paying off the last of my debts some 15 years ago, I have carried no debt other than a reasonable mortgage.&nbsp;</p> <p>I firmly believe that taking the slow road was the key to making changes that have stuck.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/slow-and-steady-wins-the-debt-race">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-times-bankruptcy-is-the-right-move">3 Times Bankruptcy Is the Right Move</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-do-a-one-day-do-it-yourself-bankruptcy">How to Do a One-Day, Do-It-Yourself Bankruptcy</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/john-cummuta-transforming-your-debt-into-his-wealth">John Cummuta: Transforming Your Debt Into His Wealth</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/book-review-debt-free-for-life">Book Review: Debt Free for Life</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/runaway-debt-can-you-ever-pay-it-back">Runaway Debt, Can You Ever Pay It Back?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management bankruptcy debt relief slow and steady Fri, 11 May 2012 10:36:11 +0000 Matt Bell 929129 at http://www.wisebread.com Book Review: Debt Free for Life http://www.wisebread.com/book-review-debt-free-for-life <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/book-review-debt-free-for-life" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/debt-free-cover-wide.jpg" alt="Cover of Debt Free for Life" title="Cover of Debt Free for Life" class="imagecache imagecache-250w" width="250" height="126" /></a> </div> </div> </div> <p><a href="http://www.amazon.com/gp/product/0767929861/ref=as_li_ss_tl?ie=UTF8&amp;tag=wisbre08-20&amp;linkCode=as2&amp;camp=1789&amp;creative=390957&amp;creativeASIN=0767929861"><em>Debt Free for Life: The Finish Rich Plan for Financial Freedom</em></a> by David Bach</p> <p>There are really two steps to getting out of debt. First, cure whatever problem lead to you getting into debt. Second, pay down the debt.</p> <p>David Bach's new book seems to be aimed at people for whom taking the first step is mainly a matter of exhortation &mdash; that is, people who are in debt primarily because they've been unable to resist the lure of easy credit. The right message for them is simply &quot;don't do that,&quot; and the book does a good job of delivering that message, hitting all the right notes &mdash; how expensive credit is, how risky it is, how dangerous it is, and how it utterly thwarts your ability to build capital. (See also: <a href="http://www.wisebread.com/good-debt-bad-debt">Good Debt, Bad Debt</a>)</p> <p>Having delivered that message, Bach goes on to walk people through the second step &mdash; getting the debt paid down &mdash; with careful attention. He calls his procedure the DOLP method, short for Done On Last Payment. (He says that it was formerly Dead On Last Payment, but that readers suggested that Done was more motivating than Dead).</p> <p>The DOLP method is a variant of the classic debt snowball, where (after making the minimum payment on each debt) you apply all your additional cash to one debt. (The name comes from the way your additional cash snowballs as you extinguish each individual debt and are able to add its minimum payment into the additional cash to apply to the next debt.)</p> <p>The two main variants are:</p> <ol> <li>Pay down the highest-rate debt first.</li> <li>Pay down the smallest debts first.</li> </ol> <p>Option two is often recommended as &quot;more motivating&quot; because you can see some early success (the first debt quickly paid off) and you get to see the snowball effect in action &mdash; that minimum payment getting added to the additional cash to apply to the next debt.</p> <p>Bach's DOLP method aims to improve on option two by arranging to pay off <em>whichever debt can be paid off most quickly</em> (not necessarily the smallest, because different debts have different minimum payments).</p> <p>Option one (highest-rate debt first) is generally the cheapest way to get out of debt, if you can manage it. But Bach makes a good case that his DOLP method may well be cheaper in practice, because the more debts you have, the more opportunities you have to miss a payment, pay the wrong amount, or have a payment go astray &mdash; and just one late fee can easily eat up all the savings from getting the high rate debt paid off first.</p> <p>There's a lot to like here.</p> <p>I particularly like Bach's look at student loan debt, with a careful analysis of just how pernicious that system has become in the United States (leading so easily to the <a href="http://www.wisebread.com/wage-slave-debt-slave ">wage-slave, debt-slave trap</a>), with the bad news nicely ameliorated by a thorough look at the various alternatives for dealing with student loan debt. If you've got debt problems and any of it is from student loans, that chapter alone could be easily worth the price of the book.</p> <p>Bach also has a good chapter at how to find any money that you've misplaced &mdash; forgotten bank accounts, lost tax-refund checks, savings bonds that have gone astray, etc. (See Lindsay's post on <a href="http://www.wisebread.com/everything-you-need-to-know-about-unclaimed-property ">Everything You Need to Know About Unclaimed Property</a> for a quick look at the same topic.)</p> <p>The sections on credit counselors and debt-settlement companies are also very good and well worth reading if you're considering using either one. (There's nothing they can do that you can't do yourself, if you're willing to put some effort into learning how such things work.)</p> <p>Two things in the book struck wrong notes for me.</p> <p>The first has to do with what Bach chooses to present as unbreakable rules versus what he presents as suggestions. There <em>are</em> unbreakable rules in personal finance &mdash; for example, you have to live within your means &mdash; but many other things are just a matter of style. When Bach suggests &mdash; in italicized capital letters &mdash; that to succeed &quot;you must make your plan automatic,&quot; I know that he's wrong. (I've <a href="http://www.wisebread.com/pay-yourself-last-is-okay-too ">never made an automatic payment</a> in my life, and yet here I am: debt-free, with enough savings and investments that I can afford to be a full-time writer.) I don't doubt that he's speaking from experience, having seen many people who had failed in the past succeed once they put their bill payments on automatic, but it would work better for me if he'd just said that.</p> <p>The second has to do with that first step for getting out of debt &mdash; curing whatever problem got you into debt in the first place. As I mentioned above, Bach's audience seems mainly to be people whose problem with debt comes from the fact that they overspend. All you have to do is look around to see that, even as the great recession winds down, there are a lot of people who need that message. But there are also people who don't fall into that category. For example, people who borrowed <a href="http://www.wisebread.com/how-debt-fools-people ">perfectly ordinary amounts of money</a>, and then suffered a loss of income, need to take a different approach to curing the problem &mdash; as do people who are in debt because of huge medical bills.</p> <p>It's worth comparing this book to Feeney and Connolly's <a href="http://www.amazon.com/gp/product/0470498862?ie=UTF8&amp;tag=wisbre08-20&amp;linkCode=as2&amp;camp=1789&amp;creative=390957&amp;creativeASIN=0470498862 "><em>Road Out of Debt</em></a> that I <a href="http://www.wisebread.com/book-review-the-road-out-of-debt ">reviewed</a> last month. That book, written by a bankruptcy judge and a bankruptcy attorney, is probably a better choice for someone whose debt is so large that it cannot be paid back (although Bach's book also has an excellent chapter on bankruptcy).</p> <p>For its target audience, though &mdash; people whose debt problem is mainly a result of overspending &mdash; <a href="http://www.amazon.com/gp/product/0767929861/ref=as_li_ss_tl?ie=UTF8&amp;tag=wisbre08-20&amp;linkCode=as2&amp;camp=1789&amp;creative=390957&amp;creativeASIN=0767929861"><em>Debt Free for Life</em></a> is a great choice.</p> <p><em>Disclosures: I received a free copy of </em>Debt Free for Life<em> for review. This post contains affiliate links, and I will earn a commission for any purchase made through these links.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/book-review-debt-free-for-life">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-times-bankruptcy-is-the-right-move">3 Times Bankruptcy Is the Right Move</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-do-a-one-day-do-it-yourself-bankruptcy">How to Do a One-Day, Do-It-Yourself Bankruptcy</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/slow-and-steady-wins-the-debt-race">Slow and Steady Wins the Debt Race</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-you-know-when-it-s-time-for-bankruptcy">How You Know When It&#039;s Time For Bankruptcy</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/book-review-the-road-out-of-debt">Book Review: The Road Out of Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management bankruptcy book review debt advice Wed, 13 Apr 2011 09:48:19 +0000 Philip Brewer 523954 at http://www.wisebread.com Book Review: The Road Out of Debt http://www.wisebread.com/book-review-the-road-out-of-debt <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/book-review-the-road-out-of-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/road_out_of_debt_2.jpg" alt="Cover of The Road Out of Debt" title="Cover of The Road Out of Debt" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p><a href="http://www.amazon.com/gp/product/0470498862?ie=UTF8&amp;tag=wisbre08-20&amp;linkCode=as2&amp;camp=1789&amp;creative=390957&amp;creativeASIN=0470498862"><em>The Road Out of Debt: Bankruptcy and Other Solutions to Your Financial Problems</em></a> by Joan N. Feeney and Theodore W. Connolly</p> <p>You've read stories of people becoming debt-free. In personal-finance blogs, the stories are always ones of debt problems overcome through hard work and frugality. Sadly, in the real world, that doesn't always work. For reasons like illness, divorce, job loss, economic downturn, business failure, natural disaster, war &mdash; some debts entered into in good faith simply cannot be paid back. (See also: <a href="http://www.wisebread.com/citimortage-told-me-to-default-on-my-loan-if-i-want-their-help">CitiMortgage Told Me to Default on My Loan</a>)</p> <p>Feeney and Connolly's new book is about how to find the dividing line between these cases, and what to do once you know which side you&rsquo;re on.</p> <h2>Money-Management Skills</h2> <p>The authors provide a good short course in money management much like you&rsquo;d find in any personal finance book or blog &mdash; how to budget, how to cut expenses, and how to take control of your finances. Then the book starts talking about debt &mdash; mainly about the many, many ways to use debt unwisely. In particular, they&rsquo;ve got a great chapter on the sort of debt that people with financial troubles turn to in a usually futile effort to stave off financial catastrophe for one more month &mdash; payday loans, car title loans, pawn shops, loan sharks, etc.</p> <p>Even before that, they provide some basic advice on negotiating with your creditors. Especially in the world of finance as it is today, there are plenty of people who could actually fulfill their obligations &mdash; except that the creditors have written rules that let them lard up a debtor&rsquo;s obligations with late fees and penalty interest rates. A knowledgeable debtor with good negotiating skills can often cut through those problems and get their obligations settled reasonably cheaply.</p> <p>One bit in that section that I particularly like is on the psychology of debt collectors: Some will browbeat you, some will humiliate you, some will pretend to be your friend &mdash; but however they act, they&rsquo;re all just trying to get as much money from you as possible. They don&rsquo;t care what other debts you have or whether you can support your family. If you don&rsquo;t understand this &mdash; if you allow yourself to imagine that the ones who act like friends are actually friendly &mdash; you&rsquo;re going to be less successful in your negotiations. (I talk about the same psychological issues in my post <a href="http://www.wisebread.com/dont-treat-businesses-like-people">Don&rsquo;t Treat Businesses Like People</a>.)</p> <p>The authors provide some useful advice on seeking help (credit counselors and the like) if your financial problems are beyond what you can manage with those basic skills &mdash; and about avoiding the scams that often masquerade as help for people with debt troubles.</p> <p>Sometimes, even with help, debt problems cannot be overcome. Specifically, if you can&rsquo;t cover your minimum expenses plus interest on your debts and have money left over to pay down the principle on your debts, then you're over the line. Once you're in that situation, your financial situation can only get worse &mdash; your debt burden will rise every month, even if you don't borrow any more money.</p> <h2>When to Consider Bankruptcy</h2> <p>If you could support yourself &mdash; pay for your family&rsquo;s shelter, food, and clothing &mdash; except that other obligations drain away more than all the rest of your money, then it&rsquo;s time to consider bankruptcy.</p> <p>Even if it&rsquo;s time to consider bankruptcy, it may not be the best choice. Some obligations (child support, student loans) cannot be wiped out in bankruptcy. Alternatively, if you can&rsquo;t even afford the necessities, then your household is not a viable economic unit and bankruptcy won&rsquo;t help.</p> <p>The core of the book is the information you need to figure whether bankruptcy is worth considering &mdash; and the information to consider it and make an informed decision.</p> <h2>Navigating the Rules</h2> <p>Bankruptcy is basically a bunch of rules for recognizing that some debts will never be paid back, and then sorting out how that situation will be dealt with. But because they're <em>rules,</em> it&rsquo;s possible to break them &mdash; and get into kinds of trouble that ordinary people don&rsquo;t need to worry about.</p> <p>For example, it&rsquo;s legal (although perhaps foolish) to borrow money even if you don&rsquo;t know how you&rsquo;re going to pay it back. But if you&rsquo;ve already decided to declare bankruptcy and have no intention of paying the money back, it&rsquo;s probably fraud. Normally you can choose to pay back some creditors (such as a relative who lent you money to keep the electricity turned on) before others (such as the credit card company). But once you've decided to declare bankruptcy, those decisions must be made according to the rules.</p> <p>A big chunk of the book is about threading a path through those rules &mdash; protecting your ability to make a fresh start while making sure that you meet your obligations to the extent required by law.</p> <p>A <a href="http://www.wisebread.com/bankruptcy-is-a-good-thing">system of bankruptcy</a> is a good thing. Some debts are never going to be paid back. A system that refuses to recognize that just drives economic activity underground (ruining lives in the process).</p> <h2>An Important Story</h2> <p>There's a reason why the story of overcoming debt problems through hard work and frugality is so compelling: The story models successful financial behavior. The behaviors that it takes to work through debt problems &mdash; spending less than you earn, taking control of your finances &mdash; are the same behaviors that lead to financial security in general.</p> <p>That, I think, is why the story of bankruptcy is less compelling: It doesn&rsquo;t serve as much of a model for households that aren't in debt. The skills &mdash; understanding an arcane area of law, filling out government forms correctly &mdash; don&rsquo;t contribute much to an average person's life.</p> <p>But that doesn&rsquo;t make it an unimportant story. For those who are in trouble with debt, bankruptcy can free up the time and effort they&rsquo;ve been spending trying to handle the demands of creditors and put that effort toward supporting their families.</p> <p>Written by a bankruptcy judge and a bankruptcy lawyer, <em><a href="http://www.amazon.com/gp/product/0470498862?ie=UTF8&amp;tag=wisbre08-20&amp;linkCode=as2&amp;camp=1789&amp;creative=390957&amp;creativeASIN=0470498862">The Road Out of Debt</a></em> does a good job of integrating these two stories in a way that illuminates the line between the sort of debt that can (and should be) worked through, and the sort of debt that will never be paid back.</p> <p><em><span>Disclosure: This post contains affiliate links, and I will earn a commission for any purchase made through these links.</span></em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/book-review-the-road-out-of-debt">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-you-know-when-it-s-time-for-bankruptcy">How You Know When It&#039;s Time For Bankruptcy</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/credit-counseling-when-you-need-it-and-when-you-dont">Credit Counseling: When you Need it and When you Don&#039;t</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-times-bankruptcy-is-the-right-move">3 Times Bankruptcy Is the Right Move</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-do-a-one-day-do-it-yourself-bankruptcy">How to Do a One-Day, Do-It-Yourself Bankruptcy</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/book-review-the-trap">Book Review: The Trap</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management bankruptcy book reviews books credit counseling Mon, 07 Mar 2011 12:36:07 +0000 Philip Brewer 500426 at http://www.wisebread.com 10 Massive Companies That Crashed in 2010 http://www.wisebread.com/small-business/10-massive-companies-that-crashed-in-2010 <div class="field field-type-link field-field-url"> <div class="field-label">Link:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="http://www.openforum.com/idea-hub/topics/money/article/10-massive-companies-that-crashed-in-2010-glen-stansberry" target="_blank">http://www.openforum.com/idea-hub/topics/money/article/10-massive-companies-that...</a> </div> </div> </div> <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/small-business/10-massive-companies-that-crashed-in-2010" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000014587184Small.jpg" alt="Woman in video store" title="Woman in video store" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>It was a tough year for some major companies. Many of the largest closed their doors in 2010, some after being in business for more than 150 years. Media outlets, car manufacturers, and grocery chains all felt the sting of bankruptcy or worse.</p> <p>Below is a list of 10 large and established brands that folded in 2010. Most suffered from not being able to keep up with the changes in technology, and others simply grew too fast for the current economic climate.</p> <p>Whatever the reasons behind each company's sad story, there is plenty we can learn from their demise to ensure that we don't make the same mistakes with our own businesses. Remember: Each of the companies below started out as a small business.</p> <h2>1. Blockbuster</h2> <p>In the last few years the video rental industry has changed drastically. Netflix abolished the notorious late fee, instead relying on the trusty subscription model. RedBox now serves video rentals in convenient kiosks for only a $1. Caught in the middle is Blockbuster. It seems renting a video at a brick-and-mortar establishment may be a thing of the past, and traditional rental companies like Blockbuster are having a hard time finding their place in the digital world.</p> <p>Blockbuster filed for bankruptcy in September of 2010, 25 years after the movie rental chain was started in Dallas, Texas.</p> <p>Changing with the times is (and always has been) critical for sustainable success, and Blockbuster is an excellent example of not adjusting.</p> <h2>2. Canwest</h2> <p>Canwest was one of the largest media outlets in the world, covering assets in radio, television, and other media throughout Canada and other countries. In fact, the vast size and growth of Canwest may have been the leading factor in the company filing for bankruptcy in 2010. Canwest was notorious for gobbling up Canadian media outlets and was soon using the bulk of its income to pay off high-interest debt for their acquisitions. The company never recovered after the financial meltdown of 2008.</p> <p>Fast-paced growth can kill a company just as easily as stagnant growth.</p> <h2>3. <em>Newsweek</em></h2> <p><em>Newsweek</em> is one of the most popular magazines in U.S. history. Started in 1933, <em>Newsweek</em> has become the second-largest magazine in the U.S., with a circulation of around 2 million subscribers.</p> <p><em>Newsweek</em> shifted focus in 2008 with hopes of attracting a different audience and improving the financial outlook of the company. Unfortunately, the combination of a bad global economy and different business directions caused the company to lose 38% of their revenue from 2007 to 2009.</p> <p>Sometimes change can do more damage than good in tough times.</p> <h2>4. Pontiac</h2> <p>It's an age when conservative, economical cars with high miles-per-gallon rule the roads. But Pontiac, at the height of its day, was exactly the opposite. The car manufacturer was once known for its muscle cars like the GTO and Trans-Am, and it was the first high-performance division of General Motors.</p> <p>Pontiac was shut down in 2010 after a massive restructuring at General Motors. The brand never fully recovered from the increased fuel costs, higher insurance prices, and federal emissions from the 1970s on.</p> <h2>5. A&amp;P</h2> <p>The Great Atlantic and Pacific Tea Company (A&amp;P) is one of the oldest companies on the list, started in 1859. The supermarket chain has 395 stores along the East Coast. In 2009, A&amp;P was the 34th largest retailer in the U.S.</p> <p>The company has faltered during the recession, and rising real estate prices and more competition have left the chain in rapid decline. A&amp;P added a chunk of debt when it acquired Pathmark in 2007 as well, which added to the increasing overhead of the chain. A&amp;P declared bankruptcy in December.</p> <h2>6. Mercury</h2> <p>Car manufacturers are having a tough time in the current economic state. The Mercury division was shut down as part of Ford's restructuring. Ford's focus on fewer models has helped the company become more profitable, and unfortunately the Mercury brand had to be sacrificed. By 2010, Mercury only made up about 1% of the entire automobile market in North America.</p> <h2>7. Hollwood Video</h2> <p>Hollywood Video joined Blockbuster as the other video and game rental chain that declared bankruptcy in 2010. Like Blockbuster, Hollywood failed to keep up with the changing market of video rentals, relying on the older models of distribution and mostly discounting the Internet as a platform to distribute movies.</p> <h2>8. Saturn</h2> <p>Saturn was started in 1985 as a direct response to the growing popularity of foreign cars in the U.S. During its heyday Saturn competed with Japanese car manufacturers like Toyota and became popular for its &quot;no haggle&quot; pricing. Yet Saturn could never really <em>convert</em> car buyers, as 41% of Saturn owners were previous General Motors owners.</p> <p>Saturn eventually met the same demise as its sister company, Pontiac, and was shut down after the massive restructuring of General Motors.</p> <h2>9. Uno Chicago Grill</h2> <p>The original Uno Chicago Grill claims to have started the deep dish pizza in Chicago in 1943. The company has since grown to 216 restaurants and various other enterprises.&nbsp;</p> <p>Uno Chicago Grill filed for Chapter 11 bankruptcy in January of 2010.</p> <h2>10. Hummer</h2> <p>General Motors' Hummer was a hot commodity for the first half of the 2000s. The Hummer was based off of the rugged, all-terrain, military-issued Humvee that was made popular for its role in the Gulf War. In fact, the Hummer was partially pushed to be manufactured as a civilian vehicle by Arnold Schwarzenegger, who had seen a convoy while filming a movie.</p> <p>As oil prices rose and the economy fell in the late 2000s, demand for large SUVs like the Hummer waned. On April 7, 2010, General Motors officially shut down the Hummer line.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/glen-stansberry">Glen Stansberry</a> of <a href="http://www.wisebread.com/small-business/10-massive-companies-that-crashed-in-2010">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-do-a-one-day-do-it-yourself-bankruptcy">How to Do a One-Day, Do-It-Yourself Bankruptcy</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/250-tips-for-small-business-owners">250+ Tips for Small Business Owners</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/lessons-we-can-learn-from-blockbusters-demise">Lessons We Can Learn From Blockbuster&#039;s Demise</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/could-your-city-go-bankrupt">Could Your City Go Bankrupt?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-you-know-when-it-s-time-for-bankruptcy">How You Know When It&#039;s Time For Bankruptcy</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Consumer Affairs Small Business Resource Center bankruptcy Blockbuster Hollywood Video small business Thu, 03 Feb 2011 18:00:13 +0000 Glen Stansberry 483249 at http://www.wisebread.com Life After Bankruptcy: What's Next? http://www.wisebread.com/life-after-bankruptcy-whats-next <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/life-after-bankruptcy-whats-next" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/bankruptcy-wb.jpg" alt="life after bankruptcy" title="Life After Bankruptcy" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>Having to file for bankruptcy is something we all hope we never have to do in our lifetimes. Whether you file for Chapter 13 or Chapter 7, there are repercussions to going through this process. However, like with other setbacks in life, you can recover. There may be different paths to recovery for each form of bankruptcy, but there is always hope!</p> <p>You may have done everything you can to avoid bankruptcy but those sweet 0% interest credit cards may have gotten the better of you. Or your health or unemployment issues may have taken center stage in recent years, and you were left with no recourse but to declare bankruptcy. When considering your financial future following such an event, you can expect that trying to secure credit for the next 3 to 5 years is going to be tough. Also, you can expect this negative mark to appear on your credit report for the official length of time of 10 years; although sometimes you may get lucky and the time can be reduced to 7-8 years. For those who need to weigh their options further, check out <a href="http://www.wisebread.com/how-you-know-when-it-s-time-for-bankruptcy">How You Know When It's Time For Bankruptcy</a>.</p> <h3>Bankruptcy And Your Credit History</h3> <p>It&rsquo;s legal for creditors to keep financial events on your report for 10 years, but that&rsquo;s not a hard and fast rule. So how does bankruptcy actually affect your credit? It does so by lowering your credit score by 200 +/- points &mdash; usually because of late payments on accounts and not just because you filed for bankruptcy. If you find yourself becoming overwhelmed by payments, then this is an ominous sign. This is one symptom that can eventually lead to serious financial consequences for you if you fail to make any changes about your situation.</p> <p>Now the good news: if during the bankruptcy proceedings, you decide to reaffirm or keep some of your debt and you continue to take responsibility for these loans (e.g. your car loans or house mortgage), then you may have a shot here (to some degree) to preserve your credit score and future credit worth in the eyes of lenders.</p> <p>Additionally, there will be credit card companies (yes, they are out there) that will solicit you after the bankruptcy. You'll be debt free after all, right? You should certainly be cautious and wary, although you may think of this as a second opportunity to do things the right way. While taking on new credit and applying for a secured credit card can be a way to rebuild your credit history, you'll have to evaluate just how responsible you can be with handling debt all over again. You'll need to tread down this road very carefully because if caution is not heeded, your actions could lead you back down the same path towards bankruptcy. Here's more on how to build good credit (and clean up your bad history).</p> <h3>Bankruptcy And Your Living Situation</h3> <p>For those who have gone through bankruptcy, you may wonder just how your living situation may become affected. If you're a prospective tenant, you may be surprised to know that in many cases, landlords who own individual homes will be open to considering your application: after all, you've got no debt after you've filed for bankruptcy, and you're eager to build up your finances. Your living expenses and rent are surely a high priority for you. On the other hand, you may find it more difficult to deal with some large apartment complexes and management companies that frown upon those with a record. At any rate, you're likely to still find housing, and things may not be as bad as you thought it would be.</p> <p>Now if you&rsquo;re a homeowner, reaffirming your mortgage is the sole way to keep your home. Let&rsquo;s consider the advantages of this move. The most obvious benefit is that you get to keep your home! This helps your credit and puts a roof over your head while keeping your bank or lender happy. But if you do decide to include your mortgage in the bankruptcy, you&rsquo;ll be handing your home back to the bank and walking away. If you aren&rsquo;t a homeowner yet, keep in mind that you can get approved for an FHA (HUD insured government loan) mortgage after two years from the date you are discharged from bankruptcy.</p> <h3>Bankruptcy And Your Financial Future</h3> <p>Do keep in mind that you'll need to continue making payments if you have other credit lines, and that you'll need to keep an eagle eye on your credit score. What most people may not realize is that this is precisely what credit monitoring services are intended for. You can best keep track of your FICO credit score by using myFICO products, which offer visibility to the most widely used score that lenders use.</p> <p>It may take 3 years before you can qualify for a conventional loan once more, and when you do, the credit score requirements will no doubt be pretty stringent. or such loans, you'll typically need a credit score of at least 620 or higher, while you'll need a score of at least 680 to snag the best mortgage rates. For the lowest unsecured personal loan interest rates, you'll need your score to be in this general vicinity. Approval for these various loan scenarios will be up to the underwriter&rsquo;s discretion. If you&rsquo;re considering a mortgage after bankruptcy, I would consider talking with a financial advisor or mortgage banker about specific bank guidelines and your specific scenario so you can get a better understanding of your situation.</p> <p>Given everything that we've discussed, anyone facing bankruptcy can hopefully see that there's light at the end of the tunnel. Recovery from bankruptcy can happen, and will happen if you're diligent, committed, and positive.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/silicon-valley-blogger">Silicon Valley Blogger</a> of <a href="http://www.wisebread.com/life-after-bankruptcy-whats-next">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-reasons-youre-bad-at-money-and-how-to-fix-it-asap">8 Reasons You&#039;re Bad at Money — And How to Fix It ASAP</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/debt/bankruptcy">How to File For Bankruptcy</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/youve-defaulted-on-your-loan-now-what">You&#039;ve Defaulted on Your Loan. Now What?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-surprising-ways-bad-credit-can-hurt-you">15 Surprising Ways Bad Credit Can Hurt You</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-improve-your-credit-score">How to Improve Your Credit Score</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance bankruptcy building credit filing bankruptcy managing debt Tue, 23 Feb 2010 14:00:39 +0000 Silicon Valley Blogger 5396 at http://www.wisebread.com How to File For Bankruptcy http://www.wisebread.com/debt/bankruptcy <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/debt/bankruptcy" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000005533942XSmall.jpg" alt="Bankruptcy time" title="Bankruptcy time" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>Bankruptcy is the last resort to dealing with <a href="http://www.wisebread.com/debt" title="Debt Management Guide">debt</a>: when a person finds himself in so much debt that paying it off simply isn't an option, bankruptcy can be the only way to handle the situation. It may not be the result of reckless spending &mdash; medical bills and other factors can contribute to the need to declare bankruptcy.</p> <h2>The Types of Bankruptcy</h2> <p>There are two different types of personal bankruptcy available to most people: Chapter 7 and Chapter 13. Chapter 7 requires that nonexempt assets are sold to reduce unsecured debt, such as credit card balances and medical bills. Any unsecured debts remaining after the sale are excused. You are allowed to keep your retirement accounts along with any other exempt assets. While exactly what counts as an exempt asset differs from state to state, most people will be able to keep a car and their home as long as they keep making payments on them.</p> <p>In order to qualify for Chapter 7 bankruptcy, you'll typically need to complete a means test. If the test determines that your income is sufficient to make payments on your debt, you will be unable to file for a Chapter 7 bankruptcy and will need to file Chapter 13. Under a Chapter 13 bankruptcy, you keep your property and agree to a repayment plan for part of your debt that will last either three or five years. As long as you follow the repayment plan, the rest of your unsecured debt will be excused.</p> <p>No matter which type of bankruptcy you file for, you will receive an automatic stay as soon as your paperwork is filed. An automatic stay stops all collection attempts. In the case of secured debt (such as a mortgage or a lien), the stay is only temporary and you must continue to make payments or risk repossession or foreclosure. You'll also be asked to attend a personal finance course and a creditors meeting, although it is unlikely that creditors will attend.</p> <h2>A Smoother Bankruptcy</h2> <p>Bankruptcy is a hard process, both emotionally and financially. It's important to make the process go as well as possible, both to speed it along and reduce the stress.</p> <ul> <li>Put all your paperwork together. When you begin the bankruptcy process, you need documentation of both your debts and income for your lawyer to prepare your paperwork. Gather your pay stubs, deeds, titles, letters from collection agencies, tax returns and any other documentation your attorney requests. You'll also need to prepare a complete list of your <a href="http://www.wisebread.com/credit-card-guide" title="Wise Bread's Guide to Credit Cards">credit cards</a>.<br /> &nbsp;</li> <li>Hire a reputable attorney who specializes in bankruptcy cases. The laws governing bankruptcy are complicated and using a cheap service or a lawyer who is not knowledgeable can result in problems that will cost you extra money, as well as risk your home and other assets.<br /> &nbsp;</li> <li>Reduce your spending as much as possible. If you run up a big bill on your credit cards just before you declare bankruptcy, you may be accused of fraud. The court can require you to pay what you owe on those cards.<br /> &nbsp;</li> <li>Make plans for <a href="http://www.wisebread.com/debt/credit-scores" title="Wise Bread's Guide to Credit Scores">building your credit</a> back up as soon as your bankruptcy is complete. It can be very difficult to obtain new lines of credit after a bankruptcy and options like secured credit cards may be necessary. After a year, you'll likely be able to apply for a regular credit card.<br /> &nbsp;</li> <li>Request your credit history from each of the three credit bureaus after your bankruptcy is complete. You want to make sure that the reports list that all of your unsecured debts have been &quot;discharged in bankruptcy.&quot;</li> </ul> <h2>After Bankruptcy</h2> <p>Once your bankruptcy is complete, you'll have a clean slate for your finances &mdash; mostly. If you have <a href="http://www.wisebread.com/college/federal-student-loans" title="Wise Bread's Guide to Federal Student Loans">student loans</a> or a secured debt, such as a mortgage or a car loan, you'll still be obligated to make payments on those loans. You may also be asked to sign a reaffirmation agreement for your car loan, guaranteeing that you intend to keep the vehicle and make payments on it. It's important to make payments on those loans on time and in full to help rebuild your credit. Having an additional line of credit, such as an installment loan or a secured credit card can also help.</p> <p>Keep a close eye on your finances and work hard on rebuilding your credit. If something happens, it is possible to file for bankruptcy again &mdash; the limitations are that you can only file once under Chapter 7 every eight years and once under Chapter 13 every two years &mdash; but the consequences for your credit are dire. If a lender sees multiple bankruptcies on your credit history, it can become impossible to get credit, even at high interest rates.</p> <h2>When Not to Declare Bankruptcy</h2> <p>If there are debts piling up, bankruptcy may seem like the only way out. However, it's important to consider all the alternatives before choosing bankruptcy. After all, bankruptcies can ruin your credit for years to come. Once you've declared bankruptcy, you'll be looking at higher interest rates on new loans, including credit cards, higher insurance premiums and even a harder time renting a new apartment. Any time someone pulls your credit history, they'll see your bankruptcy on it.</p> <p>There may be alternatives:</p> <ul> <li>Negotiating with creditors to reduce your interest or payments may make your debts manageable.<br /> &nbsp;</li> <li>A <a href="http://www.wisebread.com/dealing-with-debt-credit-counselors">credit counseling</a> agency may be able to help you handle your debts and pay them off.<br /> &nbsp;</li> <li>A combination of cutting expenses and earning extra income, along with a debt repayment plan may make your financial situation manageable.</li> </ul> <p>If you have a chance of paying off your unsecured debts, such as credit cards, in less than five years, declaring bankruptcy could actually do more harm than good. Because a bankruptcy can stay on your credit history for up to ten years (Chapter 7 bankruptcies remain listed for seven to ten years, while Chapter 13 bankruptcies are listed for seven years), any alternative that would let you handle your debts and get the negative information off of your credit report faster is preferable.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/thursday-bram">Thursday Bram</a> of <a href="http://www.wisebread.com/debt/bankruptcy">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-reasons-youre-bad-at-money-and-how-to-fix-it-asap">8 Reasons You&#039;re Bad at Money — And How to Fix It ASAP</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/life-after-bankruptcy-whats-next">Life After Bankruptcy: What&#039;s Next?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/youve-defaulted-on-your-loan-now-what">You&#039;ve Defaulted on Your Loan. Now What?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-surprising-ways-bad-credit-can-hurt-you">15 Surprising Ways Bad Credit Can Hurt You</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-steps-to-take-when-bankruptcy-is-your-only-option">11 Steps to Take When Bankruptcy Is Your Only Option</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance bankruptcy building credit debt management Thu, 04 Feb 2010 22:50:52 +0000 Thursday Bram 6321 at http://www.wisebread.com How You Know When It's Time For Bankruptcy http://www.wisebread.com/how-you-know-when-it-s-time-for-bankruptcy <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-you-know-when-it-s-time-for-bankruptcy" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/Bankruptcy Lawyer.JPG" alt="" title="" class="imagecache imagecache-250w" width="250" height="190" /></a> </div> </div> </div> <p>While producing news stories and researching books (here's my latest: <em><a href="http://moneytalksnews.com/store">Life or Debt 2010</a></em>), I've explored virtually every way to deal with debt. This story is about the nuclear bomb of debt destruction: bankruptcy.</p> <p>When I produced the news story you&rsquo;re about to see, I was just looking for a lawyer to interview regarding the basic facts. What I got in addition was a heartbreaking, personal story from just one of the 1.4 million Americans who filed <a href="http://www.wisebread.com/debt/bankruptcy " title="Wise Bread's Guide to Bankruptcy ">bankruptcy</a> last year.</p> <p>Watch this 90-second news story, then meet me on the other side and we&rsquo;ll go into more detail about what bankruptcy is how it compares with other ways of dealing with a debt dilemma.</p> <p><embed height="390" width="480" src="http://blip.tv/play/kjqBlMsMAg%2Em4v" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true"></embed></p> <p>So bankruptcy is the ultimate debt destroyer, because rather than paying it back, you're often wiping it out, or at least partially so. But it&rsquo;s not the only way out.</p> <p>You could obviously try to repay your debts yourself. You can try to repay them in full on better terms by <a href="http://www.wisebread.com/dealing-with-debt-credit-counselors">going to a credit counselor</a>. You can try to satisfy specific debts by <a href="http://www.wisebread.com/solving-a-debt-dilemma-with-debt-settlement">paying less than you owe</a>. Or you can try to take out a new loan to pay off your old ones in a process known as debt consolidation.</p> <p>When is bankruptcy the right choice? Ultimately, you file bankruptcy because there&rsquo;s no other way out. For example, in Ron's case, his monthly payments were higher than his monthly retirement income. He couldn't repay the debt, even with help from a credit counselor, debt consolidation or settlement.</p> <p>But before you even contemplate bankruptcy, <a href="http://articles.moneycentral.msn.com/Banking/BankruptcyGuide/12MythsAboutBankruptcy.aspx">understand it</a>. For individuals (as opposed to corporations) there are two types:</p> <ul> <li><strong>Chapter 7</strong>, which wipes out all your debts</li> <li><strong>Chapter 13</strong>, where you&rsquo;ll be required to pay some of your debts back over time</li> </ul> <p>Which you&rsquo;ll be eligible to file depends on how deeply in debt you are relative to your ability to pay, as well as other factors, including the median income where you live. But even a Chapter 7 won&rsquo;t rid you of all your debts. You can&rsquo;t ditch student loans (except in rare cases), IRS liens (unless you successfully file a tax bankruptcy), child support, or alimony. You can&rsquo;t use Chapter 7 to discharge debts you incurred through fraud. And bankruptcy isn't a way to get rid of mortgage debt.</p> <p>It will probably come as no surprise that bankruptcy will also cost you big time when it comes to your credit score. According to Fair Isaac (creator of the most popular credit scoring model), you&rsquo;ll lose from 130 to 240 points out of a possible 850. That&rsquo;s enough to turn even a perfect score into a subprime one. (Here's a story I did about <a href="http://www.moneytalksnews.com/2009/02/11/3-ways-to-improve-a-credit-score/">three ways to improve your credit score</a>.)</p> <p>Is there credit after bankruptcy? Yes, if you can afford it. There are people who will sell you a car on credit or give you a <a href="http://www.wisebread.com/credit-card-guide" title="Ultimate Credit Card Debt">credit card</a>, but expect to pay exceedingly high rates of interest, since you&rsquo;ll be a high-risk borrower.</p> <p>And bankruptcy will remain in your credit history for 10 years. Most other infractions only last seven. But a bankruptcy won&rsquo;t leave you living in the streets. Depending on the state where you file, you might still end up with some home equity, a car, clothing and furnishings.</p> <p>The cost of bankruptcy filing varies, but expect to pay at least $1,500. (Here are <a href="http://www.moneytalksnews.com/2009/11/13/3-tips-for-lower-lawyer-bills/">three tips to lower lawyer bills</a>.)</p> <p>Does all this sound like I&rsquo;m discouraging you from filing bankruptcy? Not if you're like Ron.</p> <p>Bankruptcy involves hiring a lawyer and going to court, which makes it by far the most serious way to deal with debt. It also means getting rid of most of your assets and really screwing up your credit history. That's why it's a measure of last resort. But most people don't mess up by filing. They mess up by not doing it soon enough.</p> <p>Because my news story was so short, you didn&rsquo;t get to hear much from Ron, the guy who filed bankruptcy. You didn't get to see the tears in his eyes when he described how he had sacrificed everything he had to take care of his grandchildren. Or the relief on his face as he talked about putting his pride aside and getting help.</p> <p>For months before he walked into that lawyer&rsquo;s office, he&rsquo;d been verbally abused by creditors and frozen like a deer in the headlights by shame. He admitted feeling suicidal.</p> <p>When you're in major trouble, whether it's legal, health, or financial, hesitation is natural. But recognize that when you hesitate, you waste stress, time, and money. Before he got help, Ron wasted all three trying to stay ahead of bills he had no hope of ultimately paying. Especially since rather than helping him, his lenders chose instead to bury him with impossibly high rates and penalty fees.</p> <p>So if you ever consider this path, or know someone who does, remember that. Assess your situation honestly, forget your embarrassment, and talk to a lawyer or credit counselor sooner rather than later. They can give you advice on your options and, if bankruptcy is the right one, they can help with a strategy to maximize what you keep and minimize what you lose.</p> <p>If you're a proud, responsible person like Ron, you'll probably feel that bankruptcy is the end of your life. But it might just turn out to be a new beginning.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/stacy-johnson">Stacy Johnson</a> of <a href="http://www.wisebread.com/how-you-know-when-it-s-time-for-bankruptcy">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dealing-with-debt-credit-counselors">Dealing With Debt: Credit Counselors</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/credit-counseling-when-you-need-it-and-when-you-dont">Credit Counseling: When you Need it and When you Don&#039;t</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/surprising-things-that-can-kill-your-credit">Surprising Things That Can Kill Your Credit</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dealing-with-nasty-debt-collectors">Dealing with Nasty Debt Collectors</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-do-a-one-day-do-it-yourself-bankruptcy">How to Do a One-Day, Do-It-Yourself Bankruptcy</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Consumer Affairs Credit Cards Debt Management bankruptcy credit counseling Debt Problems Mon, 25 Jan 2010 15:00:02 +0000 Stacy Johnson 4762 at http://www.wisebread.com