• Lower your monthly payments
  • Reduce stress and live your life
  • Avoid personal bankruptcy court

Best Debt Reduction Tools

Reducing your debt is the key to a happier life. Success can be measured by how satisfied we are in our lives and finding financial freedom is an important step. It is one thing to want to do something and quite another thing to achieve it. Millions of people each year plan to reduce their debt but it can be overwhelming. There are a number of tools available to help you create a plan, manage debt, and continue to motivate you on your quest of becoming debt free. This article will highlight the best debt reduction tools. It is up to you to decide which program makes the most sense to you.

Best Debt Reduction Tools

  • ReadyforZero

This software is free and it provides you with charts, progress e-mails and a community forum. The charts are particularly ideal for those that like to see their goals laid out before them and the e-mails track our goal progress. The community forum will help you stay motivated and it is nice to chat with other people working towards similar goals.

  • The Debt Snowball Calculator

Dave Ramsey, of radio fame, is the creator of this program. This calculator is designed as a supplement to people who listen to the Dave Ramsey radio program. This calculator has a monthly fee of $7.49 but it offers a free test period. Enter all of your loans, credit cards and other debts including interest rates and it will provide you with a debt free calendar date. The “Payment Schedule” option will show you a chart with your payments for the next few months and years. The format of this program may be helpful to those who follow Ramsey’s plan and it is among one of the best debt reductions tools.

  • Goals with Mint

Mint is a popular program that many households use to track a budget. The Goals with Mint program option allows you to integrate your monthly finances with your personal financial goals. The Goals section can be customized or you can select saving for college, retirement, take a trip, buy a car, buy a home, improve my home, pay off loans, pay off debt or save for an emergency. This program allows you to link a checking, savings or credit card to the software and it will give you a debt-free date. This program is free with an established account from Mint.

  • CNN Debt Free Calculator

This free calculator offers you three choices; minimum monthly payment, debt-free deadline, or fixed monthly payments. This allows you to adjust the way that you pay your debt and calculates the date based on your selection. This program shows you the best way to re-pay your debt based on what you are capable of doing.

  • LearnVest

LearnVest is the best debt reduction tool for those of us who need a long term plan. The financial planners at LearnVest will help you choose a 5-year plan and design a target date for you to be debt free. This program is $19.00 a month and well worth it. Having a financial planner will force you to be accountable and the results will be nearly instantaneous.

  • Debt Eliminator by Suze Orman

This program is free and it works in a similar manner as the debt snowball plan. Suze Orman calls her plan the Debt Avalanche Method. After you have entered all of your credit cards, loans, interest rates and available funds into the system, it will formulate your plan. The Debt Avalanche method involves paying off high interest loans first and the minimums on other loans or credit cards. Once that is paid off, the leftover income will be used to pay off the next high interest debt until you are free of debt.

  • Unbury Me

This plan offers two program options; the snowball and the avalanche. These programs are the same as aforementioned. This free calculator that will provide you with a chart and a debt-free date once your entire loan, credit cards and interest rate information is put into the system.

The key to all of these programs is accountability and knowledge of your debt. It is important to understand debt in order to develop a comprehensive plan for becoming debt free. These are the best debt reduction tools available but no plan will work if you do not work the plan. I suggest trying the free programs first and then if you do not like those, invest in a monthly plan. A financial planner may be necessary to keep you on track and to help you understand debt and finances. Any fees paid to help you get out of debt should be considered investments in your future. Educating yourself in personal finance could lead you to a more fulfilled life. Perhaps you could prepare for a better retirement or take job risks. These things can be attained through the freedom of debt.

What You Need To Know About Credit Repair Services

There has been a massive increase in the number of companies offering credit repair services. The firms that offer these credit repair facilities claim they can get instant results for a fee so we decided to get the straight facts for you. Based on our cursory review it seems the FTC (Federal Trade Commission) and credit reporting agencies frown upon these credit repair services so let’s find out why shall we? For the sake of convenience we are going to provide some points and then elaborate on them below.

  • What Is Credit Repair And Why Do People Need It
  • How Much Does These Credit Repair Facilities Cost?
  • Effectiveness Of These Credit Repair Services
  • Food For Thought

What Is Credit Repair Services And Why Do People Need It?

In a nutshell credit repair services is when a consumer hires a company to have negative data removed from the consumer’s credit report.  The legal term for these companies is “credit repair organizations” and they are regulated by federal law on what they can advertise and communicate to the public. These federal laws are necessary to protect consumers from deceptive marketing practices.

When a person hires one of these companies they will look at all of negative information on the consumer’s credit report and file dispute letters. By law the credit reporting agency must note that these negative files on the credit report are “in dispute” so it will not damage your credit score. While “in dispute” the creditors who made the claim has 30 days to provide documentation to proof their claim but most of these creditors fail to respond to the dispute. Once the 30 days has expired the negative credit details are removed from the report.

credit repair services

Cost for Using These Credit Repair Services

There are three (3) billing formats being used by these credit repair firms, each format has its own distinctive benefits and features.

  1. Subscription Model – The credit repair service provider will bill their clients every 30 days for the work being provided, these fees can vary but never draw the conclusion that higher fees mean better results.
  2. One Time/Flat Fee – The credit repair service provide will charge a one-time fee for their services.
  3. Pay Per Action/Deletion – The client only pays for each successful deletion. One of the benefits of this is the client is paying for results and since it is illegal for these credit repair service providers to ask for payment in advance it keeps things legally compliant. The only disadvantage is if an individual has a large number of negative items in their report.

Does Credit Repair Services Work?

It depends on who you ask, there are reports of these companies helping consumers get inaccurate information removed from the credit reports of unsuspecting consumers but the services being offered by these credit repair agencies are not proprietary, You could do this work yourself for free if you wanted to so you have to ask yourself whether it is worth your time to do it yourself or hire someone else.

Argument against the Use of Credit Repair Service Providers

The FTC and various consumer advocacy groups consider these credit repair services as scams and tell consumers to not use these services. The FTC is using two reasons to justify this approach:

  • You Could Be Breaking The Law – It is illegal to file a dispute on a credit report when you know the debt is legitimate and you are just trying to “trick the system”. There are some credit repair service providers that get clients to sign up for a new SSN to create a new credit report which is completely illegal ad dishonest to say the least. So remember if the debt on the credit report is valid meaning the consumer is aware of it then they cannot in good conscience dispute it.
  • You Can Do Your Own Credit Repair For Free – As mentioned earlier you can do your own credit repair, just get a free copy of your credit report and look it over for errors. When you have the errors identified you can write to the credit reporting agency and dispute the error yourself. By law the credit reporting agency will need to contact you with 30 days with proof of the debt or remove the delinquent account. So why would a person pay some company a considerable amount of money for something they could easily do on their own?

Food For Thought:

There is a large number of consumer complaints posted online from consumers who were ripped off by deceptive credit repair service providers. If you have credit problems and want to deal with them properly you should tackle them head-on and take care of it yourself. There are no short-cuts when it comes to having a good credit report but taking proactive steps now will help you rebuild your good name.

Year-End Tax Planning Is Something That We All Should Think About

Something that people are starting to find important is the year-end tax planning. Many people suggest that you focus your tax planning on specific areas. There are three that are most commonly used, deferring or accelerating your expenses or revenue and expiring tax provisions. Looking into these examples can help a person to find the best way to handle the year-end tax planning.

Year-End Tax Planning

Expenses

Another way to handle your year-end tax planning is through deferring or accelerating your expenses. It is commonly known that if you have more deductibles then you will have less income that is taxable. Many times, it is not smart to increase your expenses at the end of a year just to avoid some taxes.

The expenses cannot be just any expense; it can only be ones that are considered tax-deductible expenses. Some examples of tax-deductable expenses

  • Medical expenses
  • Charitable donations
  • Taxes (sales, state, local, and property, etc.)
  • Education
  • Mortgage interest
  • Childcare expenses
  • Job-related expenses

Accelerating these expenses is something that you should talk to a tax professional regarding. However, to accelerate your expenses is simply paying them before midnight on the 31st of December. Once you begin to accelerate your expenses you will need to do this from year to year.

Revenue

It is commonly known that the more income you have that is taxable the more taxes that you will end up paying. It can be weird for a person to think about decreasing their revenue. However, deferring your revenue to the next year can be helpful. Selling any taxable investments is something that you should hold off to do until the New Year.

  • It can be difficult for an employee that is salaried to decrease their revenue. Even though the employer has most of the ability regarding your revenue, you are able to ask the employer to hold your end of year bonus until January.
  • As a contracted employee or the owner of a small business, you have the ability hold off you invoices until the New Year. This can delay payment until the next year and ultimately reduce your revenue for the current year.
  • If you are in retirement, you could possibly have the ability to stop taking your withdrawals until the beginning of the New Year.

There is something important to remember when your year-end tax planning begins to fall into place. Like expenses, if you defer revenue you will need to continue to defer revenue every year. If you do not then you will find yourself in a situation where you will have revenue for 13 months in one year.

Expiring Provisions

The last way that you can help your year-end tax planning is through expiring provisions. Expiring provisions can sometimes entice individuals to use them similar to those last items on the shelf for sale. This is a way of encouraging taxpayers to act when it comes to those provisions.

There are so many things that can be talked about regarding this subject. There are many tax rate changes that could be looked at, just like those from the last year. There are changes in what is considered income, limits, deductions, and credits. These are things that change every year and sometimes they do.

  • It can be exhausting to type all of the expiring tax provisions. However, the Joint Committee on Taxation has an expiring provisions page that can be very helpful.
  • One of the things that will change the most is for an individual is the re-inclusion of income. This can mean that for those people who wish to do a short sale that this is the year to do it. You will not have to pay any taxes on the debt that is forgiven.

It can be important that a person should look into expiring provisions during your year-end tax planning.

Taking Action

No matter what you decide to do for yourself in regards to the year-end tax planning talk to a tax professional to make sure that you are doing what is best for your situation. Three important areas not to forget about when looking into your taxes are expenses, revenue, as well as expiring provisions.

Asking yourself a few questions can help you to decide which way you should steer your year-end tax planning.

  • Is it possible to defer or accelerate your revenue? Is it beneficial with your current situation?
  • Will it be beneficial for you to defer or accelerate your expenses? Is this option even possible in your current situation?
  • With all of the expiring tax provisions, are there any that you can take advantage of?

Knowing the answers to these questions can help you to decide if expenses, revenue, or tax provisions are the best way.

Research before Investing in P2P Loans

People today are learning about a new way to borrow or lend money online. Investing in P2P loans or Peer to Peer lending is to help people to investor without hurting their credit score. The online websites still provide consumers with the same coded security and privacy that banks have with online banking. The consumer is able to diversify their current income and receive profitable returns similar to having a stock portfolio.

Investing in P2P Loans

People who are interested in this type of investing of money will need to take time to research all the pros and cons to see if it is what they to reach a financial goal. Consumers in North America will find that credit borrowers and loaner that want to build a financial portfolio. The information below is there to help in your research and make conscious decisions on financial planning.

Credit Rating: Does It Matter?

A person’s credit rating is important but is not the only thing used to guarantee a payment. The people who are interested in investing in P2P loans will be based on individual basis on what the loan was used for when it was issued along with the financial history.  A main reason people can receive this P2P loan the funds from a network of people in businesses, the private sector along several financial firms. These loans were to provide consumers a way to consolidate loans with a comparable interest rate that was affordable for the public sector.

However a person that has a high credit score may seem to be the one individual that might invest in a peer to peer loan or P2P but not receive it simply because they are not reliable with any payments.  So when it comes to investing in 2P2 loans people should look on the websites that offer signups for new investors and the Better Business Bureau.

Returns Can Be Reinvested Into Other Accounts

Since this a loan, you and others may wonder how the borrowers can receive any returns.  This is where it is similar to shares bought and sold in companies that participate on the stock market. The reinvesting would be used in a portfolio especially for people that are reaching their late 50’s and early 60’s. This way the borrow could make lower payments each month and reinvest into an IRA so they can receive a return. The person who borrows money would have considerable advantage of using these compound earnings to see a financial growth for the future. This would benefit their financial portfolio along with tax advantages not just in a traditional style IRA but in a Roth IRA.

People who live in the United States and Canada will find that having an account that allows tax deductions a financial strategy. However people need to remember that the P2P loans are taxed in the United States and Canada at a marginal rate.

You May Ask Who the Lenders Are.

The competitions of online and traditional financial firms have increased because of the availability of the notes that are being bought by individuals.  So why are people afraid to invest or reinvest in loans that use notes. This is simply no one likes to lose money especially people who have a high net worth. Loans of any type along the process of buying or selling stock can be a financial risk.

It is important to know all the risk and even reinvesting in P2P loans people still can default on the loan. The reason people are interested in the P2P loans and notes is a way assets can have some principal protection compared to the stock market. Presently finding the right assets to reinvest for growth can be difficult in this economy. People are trying to find the best yet with less risk for financial stability. They are hoping that this will help provide a better portfolio and when it does come to retirement it will help them. If you or others that are looking into this a form of income for the standard of living you will be disappointed.

The peer to peer loan or P2P is not income it is still a loan that individual’s can use to start a new business or use it for expensive merchandise. The loan is based on individual financial status and why they need the loan at any amount for the purchase. The reasons vary and the notes that are reinvested are to provide some financial stability that can be paid off in 2 to 7 years.

Consumers that use this plan of financial planning will need to be comfortable with the idea of not being able to get their money out. On the other hand if they place the notes into a traditional IRA or a Roth IRA there are specific age and governmental regulations that need to be followed especially y in the United States.

Alternate Ways to Handle Student Loan Debt

Parent’s that have one or more children in college will have accumulated student loan debt. Furthermore if the child is placed on college suspension or graduating will owe on the average $30,000 in student loan debt.  In fact those graduating this year the debt may even be more simply because Congress was unable to reach a decision regarding the interest rates on government issued student loans.  The interest rates just doubled from the 3.4% to 6.8% for federal student aid which includes both subsidized and unsubsidized loans.

Handle Student Loan Debt

This of course does not apply to a child taking out or the parent signing a promissory note to obtain a loan through a financial institution. At the same time young adults between the ages of 19 to 28 have to worry about the professional job market. The job market for many of these college graduates will be bleak to say the least. Since they will be up against adults that have lost their job because of outsourcing or the business has foreclosed do to the economy. These adults have experience along with high education will most like get the job before the new graduate from college.

Of course if the bachelor degree is in the following fields of science, technology, medical, research, STEMS or mathematics then finding a job is slightly easier compared to other saturated fields. Unfortunately for these individual’s it might take months to years before they can find employment in their field of study. While the graduate is continuing to look for employment and still not working then how will they handle student loan debt?

Ways to Qualify for Repaying Student Loans

Consequently parents, graduates or young adults have two options when it comes to handling student loan debt and the interest of loans that equaling $30,000 or more. Parents and young adults struggling with student loan payments may qualify a deferment or make payments on the interest during forbearance. Many of the deferments are not done automatically so the individual would need to submit a request to the financial institution that services the loan. In addition the person would also need to contact the college or university financial aid office. If at any time the student is in college part-time, in grad school or a career/technical school, along with not being able to find full-time employment or unemployed are all ways a person may qualify for a deferment from the loan. Another way to have a student loan deferred if they have experience economic hardship do to being away for military service, natural disaster and being in the Peace Corps. There are several websites that have information available about getting a loan deferment. One of the websites that is important to check with at the beginning of each New Year is the Federal Financial Aid or FAFSA at the www.FAFSA.GOV.  The application should be completed no later than the first of March each year or as soon as all the prior year’s tax information is available to them.

Two Types of Forbearance

  • Mandatory is for students who do not qualify for a deferment.  However it can be requested if the student is in a dental/medical internship, medical residency program, a national service program, providing teaching service, or have been activated by the governor as a member of the National Guard. The other way a person may receive mandatory forbearance if the student loan payments each moth totals more than 20% or more of their gross income.
  • Discretionary is only granted by the financial institution that gave the student loan. This helps the student to learn the best way to handle student loan debt.

If the choice is not to pay the interest but to let the interest of the student loan accumulate then this may also be capitalized. Capitalized means that it can be added to the principal balance resulting with the person paying interest on it as well. Then again if they do not qualify for either deferment or forbearance the next step is to negotiate a change in the repayment plan. Parents and college graduated adults for this reason should go to the Studentloans.gov website. There they can use a repayment estimator to see if they are eligible for a variety of payment plans and give them an estimate of monthly payments. This way they can begin to handle student loan debt in their budget.

Consolidate Student Loan Payments

However parents and college graduates might find that this simplifies to a onetime payment each month.  People need to look at all payment plans before making an important decision and learn how to handle student loan debt. These loans usually have a 30-year term which will increase the interest in the long run. This will also mean for the college graduate that they will be paying on the student loan until they are in their 50’s and have a family to take care of along with its responsibilities. Of course if the parents are paying for more than one child in college and financial responsibilities until that graduate student gets on their own. These individuals will be paying on student loans until their 60’s before the student loan is completely paid off.

In this case parents and young adults should compare any new payment to their current monthly payments to make sure the best option is a direct consolidation loan. Provided below is several types of loans that can be placed into a direct consolidated loan. People should check on the financial aid government website to see if there have been any changes to the loans for college students.

  • Direct subsidized/unsubsidized
  • Federal Family Education Loan Program (FFEL)
  • Parent Plus Loans
  • Federal subsidized/unsubsidized Stafford Loans
  • Supplemental Loans for Students (SLS)
  • Direct Plus Student loans
  • Federal Perkins Loans
  • Health Education Assistance Loans

A final point is there is a movement to forgive the debts of student loans. The following video discusses the idea of forgiveness and why it might not be such a good idea for the economy.

5 Debt Mistakes to Avoid

Millions of people are in debt, it’s been true since the concept was invented and will be for the foreseeable future. The ways to get into debt are as plentiful as there are people who are in the situation. It can feel hopeless sometimes but you can get through it like so many people have before you.

5 Debt Mistakes to Avoid

Whether you bought a car you couldn’t afford, lost a job that paid more money than you make now or have student loans hanging over your head if you are serious about ridding yourself of the debt there is a way. In fact, there are a few ways, but the wrong ones can put you in worse shape that you were in before. Too many people make debt mistakes but if you continue reading you will be able to avoid them.

No Negotiation

Some people are afraid to call the credit card company, or embarrassed to ask for their help. Others just don’t realize it is a possibility. Whatever the reason a surprising number of people lose out on a significant savings just by making the debt mistake of not calling their credit card company and asking for a lower interest rate.

If the debt is medical they may be willing to negotiate for a lower amount if you can pay a portion of the bill in cash immediately. Figure out how much of the bill you can afford to pay right now and have the cash ready. You may be surprised at how often they will say yes.

If you are legitimately having a problem making the minimum payments ask for help. There are all sorts of programs out there to assist but you’ll never know if you don’t inquire about them. For example payments on federal student loans can be lowered dramatically thanks to the Income- Based Repayment plan.

It’s No Big Deal, Everyone Is Doing It

When everyone else is spending like there’s no tomorrow it’s easy to get caught up in the fun. Swiping the card and feeling that rush of having bags of new purchases or buying lunch for the gang is a temporary high and one you have to learn to let go of it you don’t want to spend the rest of your life under a mountain of debt. The first rule of debt mistakes is not to repeat them.

Thinking they can pay their bills off by winging it

You can’t. If you understood your financial situation well enough to control it naturally you wouldn’t be in this situation. Make a personalized plan that not only works toward removing your debt and avoids future debt mistakes but also helps to build your wealth. Forcing yourself to pay attention to the amount of money you need to pay off those spur of the moment purchases will help you avoid making them the next time.

Old Attitudes = Old Debt Mistakes Repeated

Change doesn’t happen without a conscious effort and it isn’t easy. Some people never get into debt because it is natural for them to be conservative with their income. Others of us do not have that natural instinct and for us changing how we view and spend our money is an essential but monumentally difficult task. Try to make it fun to change your attitude and at the very least consciously decide how to put your new attitude into practice in your daily life. Eventually these practices will become second nature when you stick to them.

Not making fixing debt mistakes a priority

Getting out of debt is a serious business. If you wanted to become a concert pianist you would not also take up boxing. First you’d need to concentrate all of your efforts on the piano and second boxing would damage your hands to make playing more difficult.

Think of debt payment the same way. You need to put 100 percent of your efforts into paying down the debt and any extraneous purchases, no matter how fun, are just setting you back from your goal. Set up a budget and remember to make room in it for things that are important to you, but keep removal of debt as the most important focus.

Try to consider the money you are spending as money you’ll be able to save once the bills are paid. You may begin to realize just how wealthy you could be if you weren’t treating your credit card as if it didn’t come with a consequence.

 

Freedom from debt is one of the greatest feelings in the world. If you can get there by changing your attitude it is liberating to know you will never again be in the position of feeling under the pressure of credit card bills and debt mistakes. Using the guidelines above you should learn to build your wealth and never fall into the debt trap again.

Bankruptcy – Chapter 7 vs. Chapter 13

Filing for bankruptcy can be either the best thing or the worst thing that you will ever do. When it comes to bankruptcy, you have two choices, avoid it or pick the best program. In both cases, you are in for a lot of work. There are many ways that one can avoid having to file for a Chapter 7 bankruptcy.

Chapter 7 bankruptcy

Ways to Avoid Bankruptcy

It has become a way of life for many people to have debt. When debt becomes overwhelming, an individual can turn to bankruptcy to help eliminate it. However, here are some ways that you can avoid it all together.

Selling and Reduce

When your payments get to be too much for you sell it. Get a cheaper car if the car payment or insurance is too much. Reduce your home size if you can no longer afford to make the monthly rent payments. Downsize your bills to help reduce your expenses. It can be amazing how much money that you can make from just selling some of your things.

Ask for Help

It is important that before you are cornered into a Chapter 7 bankruptcy you ask for help. You can contact your creditors. Let them know you are having financial troubles, express your willingness pay the debt; many times, they will help to decrease your monthly payment. If the creditors refuse to help then you could turn to a debt management company to help you.

Let Others Know

It is also important to always let you family know what is going on so that they do not require you to place yourself in further debt. You may even need to turn to them for help financially so do not be afraid to let others know of your situation.

Chapter 7 vs. Chapter 13

There are two types of bankruptcies that you can undergo, a Chapter 7 or a Chapter 13. A Chapter 7 bankruptcy has many advantages that the Chapter 13 does not have.

Terms

Bankruptcy terms are shorter with a Chapter 7 bankruptcy. A Chapter 13 bankruptcy usually takes between three and five years in order to complete. However, a Chapter 7 bankruptcy only takes four to six months to complete.

Fees

The legal fees are more manageable when you file a Chapter 7 bankruptcy. The fees compounded based on the length of time that you involved in the programs, in most cases. Since a Chapter 7 bankruptcy only takes a few months rather than three to five years required when filing for Chapter 13. With a Chapter 13 you will pay a monthly payment until you have completed your terms, however when you complete the Chapter 7 bankrurptcy you no longer have payments so there are no continual monthly fee.

Discharged Debts

When you file a Chapter 7 bankruptcy you are able to remove all of your unsecured. There are two types of debts, secured and unsecured. Secured debts are debts that have collateral such as mortgages, and car loans. Unsecured debts are debts that are not backed by collateral, like your credit card bills, medical bills, and personal loans. There are some unsecured loans that are distinguished from the others like student loans, child support, and taxes.

Freedom with Income

With a Chapter 13 bankruptcy you will be making payments every month for the next three to five years to payback the amount settled on in the bankruptcy estate. However, with a Chapter 7 bankruptcy you are not expected to make any payments or have a reduction on income. This allows you to keep all of the income you learn after the petition has been filed.

Assets

A Chapter 13 bankruptcy allows you to keep your assets, where the liquidation process is part of the Chapter 7 bankruptcy. However in the United States there are exemptions that can be applied which can be the loophole to keep many of your current assets. Just remember to look at the Bankruptcy Code to ensure that your assets are listed in their exemptions.

Bad Credit

When you file for bankruptcy, it is going to hurt your credit. The Chapter 7 bankruptcy has been shown to increase your credit score after the first 12 months. This can be a bonus because otherwise you are looking between seven and ten years of bad credit.

Whenever you find yourself in any amount of uncontrollable debt, know there are things you can do. You can search for those ways to begin to repair mistakes made. You can take the road of bankruptcy. It is important that no matter which bankruptcy chose you explore all of your options. Remember that not everyone will qualify for a Chapter 7 bankruptcy. If your income is above what the state median is then you will require filing a Chapter 13.

Take the Right Steps to File Bankruptcy

Take the Right Steps to File BankruptcyBankruptcy is a major step with long lasting consequences for our financial future. It is normally the last option that we consider so that by the time it becomes our only option we are in terrible financial shape. Bankruptcy is a legal way to get time to put our finances back on track and to allow us to protect certain assets from our creditors. The normal process includes:

  • Consulting a bankruptcy lawyer to work out the best strategy for your particular situation.
  • File bankruptcy documents as soon as possible once the decision is taken to protect assets from seizure by creditors.
  • Completing the educational and credit counseling sessions mandated.
  • Finalizing the bankruptcy proceedings.

The process can be expensive and can cost a minimum of one thousand dollars to three thousand dollars. If you haven’t got the funds to pay this because of your financial situation then the temptation can be to look for a cheaper option. These options need to be carefully considered because bankruptcy law is complicated and your creditors will exploit any mistakes you make to obtain as much from you as they can.

Filing For Bankruptcy by Yourself

This is becoming much more common as online resources and cheap fee for service paperwork filing companies urge people to do it themselves. There are some consequences that you need to be aware of if you are thinking to file bankruptcy documents by yourself.

  • Incorrectly filed documents will mean the proceedings are dismissed and that creditors can continue to pursue you and your assets.
  • You will need to respond to any motions initiated by your creditors by yourself.
  • If you have significant property and assets it is very likely that creditors will attempt to have them exempted from bankruptcy protection.
  • Creditors can seek to have the money owed to them exempted from the bankruptcy proceedings.

It is important to understand that document filling services cannot offer legal advice. Even if they do make suggestions, which they should not be doing, you have to accept the consequences when you file the documents and appear. The local jurisdiction may have slightly different rules so be very aware what you are committing to when you sign the forms and file bankruptcy on your own.

You should investigate if there are bankruptcy legal aid services available. These services are not available everywhere and have a very restricted ability to help people because of limited funding. They may be able to represent you or alternatively can help with a strategy and documents so that you are better prepared for court.

There may also be low fee services that are available if you qualify for them. It is best to approach your local bankruptcy court as they will have the details of these programs and how to apply for them. There may also be Pro Se clinics, such as the joint federal Pro Se clinic in California. This is a place that people can go for help with their bankruptcy cases that are filed in the US bankruptcy court.

Consider Your Financial Position

In some cases you may not have any assets that could be used by creditors and an income level that would make garnishing your wages pointless. This is known as being “Judgment Proof” and it means not that no judgment may be made against you but that any judgment would be unenforceable.

This of course does not apply to bankruptcy exempted debts such as owed taxes and government supplied educational loans. Almost all other debts would be unrecoverable and it can be advantageous to approach creditors through a lawyer with you position as it can lead to creditors stopping recovery action. This is because they do not want to spend more money trying to recover a debt that has no prospect of being repaid.

There are a range of payments that are generally protected from being garnished such as social security payments and disability payments. This can mean that you can avoid having to file bankruptcy because you are effectively protected from any action taken by your creditors.

  • Collect all your creditors’ details including amounts owed and contacts.
  •  Contact a bankruptcy attorney.
  •  Once they confirm your position they can send letters on your behalf to all of your creditors.
  • Be aware that this does not stop the creditors from trying to contact you or seeking judgments against you.

Funds to Pay for Filing Bankruptcy

It is vitally important to be represented when you file bankruptcy so your assets and income are protected as much as possible. Here some options you might consider to get the funds.

  • Approach friends or family for help.
  • Reduce expenses such as cell phone plans, cable, gym memberships that you do not need.
  • Stop any debt repayments you are still paying and use them for fees instead.
  • Cash out the amount from your 401k. Note you may have to pay a penalty and tax on the amount withdrawn.
  • Use a 401k loan to cover bankruptcy costs.

Getting Consumer Credit Counselling Help

Getting Consumer Credit Counselling Help

It can be very difficult in the current climate to manage your money and it is possible that you might benefit from consumer credit counselling to help solve your problems. It is possible that many people are living within the limits of the money that they have coming in and this is supplemented with the use of credit cards and loans. It is a recipe for problems, it can mean that each month you are paying off the previous months spending with your wage check or even worse it doesn’t meet your monthly expenses.

This might be the time that you turn for consumer credit counselling help. There are many of them that will provide you the right help they will help you create your budget and work with your financial problems. You will need to be careful about the company that you chose because there are some companies that can increase the debt that you owe and not reduce the money that you owe. It is important that you are able to identify the good consumer credit counselling companies from the bad.

Expect

It is important that you understand what the company is going to be able to offer you. They are going to be able to provide information on how you need to go about preparing a budget and work out the financial situation that you are in. They might provide some training for you too; they should also be trained and certified as a consumer credit counselling company.

The first session should be free and they should take about an hour with you to talk through your situation and look at the debts that you have and the money that you have coming in, from this you should be given a plan as the best way to get you out of debt.

It will depend upon the amount of debt that you owe; they might offer to start up a debt management plan. This is a plan that you will need to agree to, you pay them a set monthly fee and they pay off money to your creditors, they will also include a monthly management fee as well. They should be able to get a deal from your creditors to reduce the amount of money that you owe.

But be warned this will affect your credit rating and you could end up with owing more paying back the debt plus their fees. If they are ever late with your payment it is not the consumer credit counselling company that gets the late payment on their credit file, it is you.

Selecting the Right Consumer Credit Counselling Company for You

It is important that you get the right company that will help you with your financial situation. Check that the company that you are looking to do business with is registered with the Better Business Bureau they will be able to tell you if the company has got any complaints about them. This will give you a hint as to the quality of the company and should ring alarm bells that they might not be the company for you.

Remember when you contact them that you are armed with a list of questions. Ask them about:

  • The services that they will offer you
  • Ask them for any free information that they can provide
  • Ask them about the fees that they will charge
  • Ask them when they think you will be debt free
  • Ask them to see their licence to practice and check this is legitimate

Is the Consumer Credit Counselling Company Suitable?

Is the company the best fit for you, is it going to give you the help that you need. It is possible to do all the work that the credit agency is going to do for yourself, but you will need to be committed and able to follow through. You will need to change how you have been living and using your money and this can be difficult but it is not impossible to do.

If you feel that going to the credit counselling is going to be the best option for you then you need to make sure that it is the right company for you. It is important that you read through any agreement before they make you sign, you need to know what you are agreeing to, and it is not unheard of for a company to tell you one thing and you actually sign something completely different. So read any agreement before signing.

They should tell you in the agreement any fees that they are going to charge you and this should be clearly displayed in the information that you receive.

It is the goal of many people to reach the status of financial freedom, this is not going to be an easy road but when you get to the end you will have travelled a long and eventful journey.