Kira Botkin Kira is a longtime blogger and serial entrepreneur who enjoys gardening, garage sales, and finding stray animals. She lives in Columbus, Ohio, where football is a distinct season, and by day runs a research study for people with multiple sclerosis. She hopes that the MoneyCrashers team can help you achieve your goals and live a great life.
If you’re considering filing for bankruptcy, you should know that not all debts are treated equally. For example, certain debts cannot be discharged, or forgiven, and must be repaid in full. Other debts, however, can be completely discharged either immediately or after a few years depending on if you file a Chapter 7 or Chapter 13 bankruptcy.
Also, some debts can be modified so that you can afford the payments and keep the property the debt is attached to, such as a car or home. How your debt will be treated during a bankruptcy will indicate what you have to gain from filing one.
The main issue that discourages most people from filing bankruptcy is the detrimental effect is has on their credit. It’s true that a bankruptcy can stay on your credit report for up to ten years and it seriously hurts your credit score. However, not filing for bankruptcy and allowing your debts to go to collections will also negatively impact your credit.
Depending on the kind of bankruptcy you file, Chapter 7 vs Chapter 13 bankruptcy, your credit score will decrease anywhere from 160 to 220 points. This is enough to take a good credit rating down to a fair or poor one. Since most lenders decide whether or not to extend you credit based on your credit score, a bankruptcy will make it much more difficult to qualify for an auto or home loan or credit cards.
You may have heard that you should check your smoke alarm batteries when you change your clocks to daylight savings time. So in the spirit of preventing a disaster, why not check your credit report as well?
Checking your credit report should be a regular item on your financial to-do list, since it can show you how others view your creditworthiness and alert you to potential credit report errors or identity theft. We’ll talk about why your credit report is important, when you should consider checking it, and how you can get your free credit report through AnnualCreditReport.com.
When you’re selling a car, you’re more likely to get the best price from an individual as opposed to a dealer. When you’re looking for a way to find that individual, remember that Craigslist is a competitive (and still growing) marketplace for car shoppers and sellers.
It’s easy for buyers to search through ads, and you’ll be happy with the free posts to an audience of millions in your area. With pictures and lots of space, you can get more out of the listing than those expensive 20 words you might get in the local paper.
Given the alarming rate at which universities are increasing their tuition, saving for your child’s college education can seem like a daunting task. But believe it or not, it’s almost more important when you start saving as opposed to how much. So don’t delay.
Fortunately, there are specific accounts that give you a means to invest in your child’s education and provide you with tax-advantages as well.
One popular college-saving option is known as the Coverdell Education Savings Account, or ESA.
If you’ve had debt in the past you couldn’t pay, some of those accounts may have been written off as “uncollectable.” In other words, the company may have stopped trying to collect because they were unable to get you to pay or to reach you at all.
However, in recent years, a new breed of debt collector has started to buy these old debts and is attempting to collect on them all over again.
Given their propensity to rise from the grave, these debts are known as “zombie debt.”
Declaring bankruptcy is a pretty extreme measure, but used in the right way at the right time, it can save you money, preserve your peace of mind, and get you back on your feet financially.
However, declaring bankruptcy can also be expensive and time-consuming, and have a huge impact on your credit store. This, in turn, can have far-ranging effects on other aspects of your life, such as buying a new car or home, or even applying for jobs. Also, waiting to declare bankruptcy until you are completely broke can actually work against you.
Petitioning for bankruptcy can be a long process, but it doesn’t need to be a difficult one. Most of it is simply a matter of filling out the paperwork correctly and approaching things in the right order.
When a debtor attempts to declare bankruptcy, their case is examined by a government employee called a trustee. The trustee is responsible for overseeing the bankruptcy and handling issues throughout the process. Most petitioners deal mainly with the trustee, and won’t actually have to appear in court, other than to confirm their debt payment plan for a Chapter 13 bankruptcy. A large portion of bankruptcy cases are handled mostly through paperwork, and are more like an administrative process than a legal proceeding.
If you search for health insurance quotes online, you will receive a range of prices from different insurance companies for very similar policies. Different insurance companies assign differing values to components in your risk profile. The information in your insurance application, and your medical history, comprise your risk profile.
Insurance companies use historic data and extensive product research to compile various factors and create a benchmark for risk profiles. The companies review your risk profile, the information included in your health insurance application, against their company benchmarks to decide whether or not to provide you with insurance.
Which one will make sense for you depends on your personal situation including, but not limited to, the amount of debt you have, your income, and the value of your assets.
Which Do You Qualify For?
Anyone can submit a bankruptcy petition (i.e. your “application”) for either Chapter 7 or Chapter 13 bankruptcy. However, the court does not have to accept your petition if the trustee determines that you should be filing for the other type of bankruptcy, or if you do not qualify to declare bankruptcy at all.
Filing for Chapter 13 bankruptcy can stop creditor harassment, runaway interest rates and fees, and can provide you with a structured plan for paying down your debt. It’s sometimes referred to as a “reorganization” bankruptcy because it reorganizes your debts so that you can afford to pay them.
Unlike a Chapter 7 bankruptcy, it does not completely discharge your debts, but rather provides you with the structure to pay them off using your income. People who might benefit from Chapter 13 bankruptcy have regular income, but aren’t able to afford their debt payments and living expenses. Generally, under a Chapter 13 bankruptcy, a three to five year payment plan is established and once all the payments under the plan have been made, any remaining debt is eliminated.
When you think of bankruptcy, you probably think of Chapter 7 bankruptcy. It is sometimes referred to as a “straight bankruptcy” or a liquidation. Chapter 7 bankruptcy allows most debts to be entirely forgiven without entering into a payment plan.
Your non-exempt assets are “liquidated,” or sold off, in order to pay for at least a portion of your debt. After the proceeds are distributed to your creditors, the remainder of your dischargeable debt is forgiven.
Chapter 7 bankruptcy may be appropriate if you have significant debt you can’t currently pay and don’t foresee an ability to pay in the future. It is an extreme measure, but can offer a way out from an otherwise untenable situation.
If you’re handy with finances, you might have helped some of your family or friends do their taxes. Want to get paid for it? If you take the H&R Block tax course, you’ll learn a lot about how taxes work and get an opportunity to work for H&R Block during tax season.
This class is very comprehensive and will teach you a ton about taxes that you can use in your own tax preparation, when you’re helping your friends, or planning ahead for next year. I took it a few years ago and had a great time while learning a lot.
Over the years, many people have conjured up incredible arguments about why they shouldn’t have to pay taxes. Using convoluted arguments or ultra-specific, twisted-around readings of tax codes, they convince themselves that the tax laws are there to be ignored.
There’s a reason the United States Tax Court officially refers to these claims as “frivolous tax arguments.” They have rules about people who try these moves, and they’ve thrown thousands of people in jail for wasting their time with these attempts to get out of their fair share of taxes.
Buying a home can be a big step towards securing your financial future, but saving for the down payment can be very time-consuming.
However, if you already have money in your retirement accounts, you might be able to use it to speed up the process. We’ll discuss which accounts don’t penalize you when you use the money to buy a first home as well as strategies for saving on penalties and taxes.
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