The Money Puzzle

If you’re considering bankruptcy, then you’re probably curious as to the difference between Chapter 7 and Chapter 13. It’s important to know what each of these is, so you’ll know what to file. Your attorney will probably advise you of what he or she thinks is best for your situation, but to really be sure and know you’re doing the right thing for you, it’s essential that you know the basics. Knowledge is power, after all!

The main difference between Chapter 7 and 13 bankruptcies is how existing debts are handled. In Chapter 7 bankruptcy, most, if not all, of your debts are usually discharged. This means you do not legally owe the debts anymore, and your creditors can no longer come after you for payments. This is often accomplished without you having to sell any of your assets, as the majority of people filing for Chapter 7 bankruptcy don’t have any assets to sell. You won’t be forced to sell your house or car, either….especially if your car is your ONLY car. Chapter 7 is a good option for someone who is considering filing for personal bankruptcy based on excessive consumer credit debt.

Chapter 13 bankruptcy is different. It’s often referred to as a wage earners plan, and its main purpose is to create an equitable and reasonable repayment play for you to pay back your creditors. This type of bankruptcy is used by people who believe they can eventually pay off their debts, but not in a timely manner.

With Chapter 13, debtors are allowed to make structured payments in installments to creditors over a period of 3 to 5 years. Once the process is in motion, creditors are not allowed to start or pursue collection efforts against the debtor. In no case can the time of repayment be more than 5 years. This type of bankruptcy is most commonly used by people who are self-employed or operating unincorporated businesses. It is strictly for individual debtors, as corporations and partnerships are not eligible for Chapter 13. Also, the amount of both unsecured and secured debts being included in the bankruptcy must be within certain amounts set by statute.

The differences between Chapter 7 and 13 bankruptcies are pretty big, so it’s important to know which one is right for your situation. Despite being a financial setback, however, bankruptcy can ultimately give you a new financial life and help you restore your credit. If you’re thinking of filing, consult a qualified bankruptcy attorney for help and advice. It could be the best financial move you’ve ever made.

This is the first installment in our bankruptcy series. Be sure to check back for updates…

 The struggle for low cost health insurance in America is real, and getting worse every day. While politicians all try to spin the health care issue in their own way and the media plays down the problem, real people every day go without basic health coverage. This often means they can’t afford prescriptions, have to forego doctor visits, and often even go bankrupt from unexpected hospital expenses. It’s a national disaster that needs to be changed.

Worse, many people who have health insurance and have never gone without it look down on those who don’t have it. They look at the uninsured as too lazy to get a “real” job, or as illegal immigrants who don’t deserve to have coverage, anyway. They don’t take into account that everyone, regardless of immigration status, deserves access to health care. They also don’t realize that not every employer provides health insurance to their employees, and that not all policies are affordable. In fact, most health insurance policies are quite expensive. Low cost health insurance is almost unheard of in this country!

According to the National Health Care Coalition, nearly 80 percent of people without health insurance in America are either Native American or naturalized citizens. Further, 8 out of 10 people who are uninsured come from working class families. Many of these people have full-time jobs, but are still unable to afford access to health insurance for one reason or another.

The entire health care system in America is designed to lock entire segments of the population out of it. For example, if you work enough to barely pay all your bills and buy food for your family, you probably earn too much to get state-sponsored Medicaid insurance. If you make good money but work for a small company, your employer may not be able to afford to offer health insurance. The cost of most policies is such that buying one would take a large chunk out of whatever surplus you bring home each month, so a lot of people in this position just decide to forego it. This is especially true among young adults (aged 18 to 24), who usually do not look at low cost health insurance as a priority.

The costs of medical services are so much nowadays that just one trip to the hospital for an unexpected illness or injury could ruin you financially. If you’re not able to pay the bill (and most people won’t be able to do this), then your credit is ruined for 7 to 10 years. So what are you to do if you need coverage but can’t afford it? Where can you find low cost health insurance? There are a handful of policies that offer reduced rates on individual policies, such as Blue Cross/Blue Sheild, which are worth looking into. It also makes sense to call small, local insurance providers personally to see if any specials are available on premiums. Though difficult to find, inexpensive health insurance does exist, and it’s extremely important to make the effort to find it. If you don’t, you’ll surely wish you had when you eventually need it, so get looking today!

his is the seventh installment in our health insurance series. Be sure to check back for updates…

Eliminating debt and becoming debt free isn’t has hard as you might think.  Debt is common, and people get into it for all kinds of reasons.  Just paying everyday expenses like food, water, and electricity can lead to debt, as the prices of these things are going up!  In fact, the price of EVERYTHING is going up, while paychecks are going down.  It can take all the money you have just to pay for your basic needs, never mind savings or doing anything fun. 

If an emergency comes up, or if your kids need braces (or yearbooks or prom dresses, etc.), it could be a major financial disaster for you!  You might turn to your credit cards and get yourself even further into debt.  But how do you get out of it?

One of the best and easiest ways to go about eliminating debt abd becoming debt free is to use the following method:

1.  Start paying the minimum payment each month on all but ONE of your debts.

2.  Choose the debt that has the smallest balance and start paying as much extra on that each month as you can, whether it’s $5, $10, $20 or more dollars.3.  You’ll pay off this debt quickly by paying extra.  Once it’s paid off, take the next smallest debt and pay the minimum amount of the payment on the previous debt, plus the extra you were adding to it.  So, for example, if you started with a Visa that had a $300 balance and a $15 minimum monthly payment and added an extra $20 a month to that, you’d be paying $35 a month on that Visa.  Once it was paid off, let’s say you begin paying on a MasterCard with a $450 balance.  The minimum payment on that is $25 a month.  Continue to pay the $25 a month, but add the $35 a month to it that you were paying on the Visa, so that you’re paying a total of $60 a month on the MasterCard.

4.  As you pay off each debt in turn, working your way up from the smallest to the largest, always add the extra payments you’re making on the previous bills to the minimum payments on the new ones.  For example, that $60 a month you ended up paying on the MasterCard will be added to the $35 a month minimum payment on your Discover card when you start paying that off, for a total of $95 a month going toward Discover.  That’s $95 a month you’ll add to the minimum monthly payment of the next bill in line, and so on. 

Using this method, you can even potentially pay off your house in about five years! This is one of the quickest and easiest ways of eliminating debt and becoming debt free out there, and it doesn’t even require a loan or credit counseling, or even a change in your lifestyle!  All it takes is organization, and you’ll be debt free for good!

This is the fifth installment in our credit & debt series. Be sure to check back for updates…

Can you get out of debt? Yes, you can, no matter how far in the hole you’ve allowed yourself to get. Times are tough, it’s true, but that doesn’t mean you have to live in debt forever. Even now, with businesses failing left and right and paychecks getting lower, you can still take measures to reduce your debt and ultimately get rid of it entirely, probably much sooner than you expected.

So, how to you get out of debt? First of all, you need to learn how to spend less and save more. However, you must also allow yourself to have fun and enjoy life, otherwise you’ll feel deprived and start spending wildly again.  Having an entertainment fund is just as important as having a savings account, so be sure you set aside money for entertainment each month.  Then, follow these simple guidelines to put more cash in your pocket:

   1. Cook at home instead of eating out.  Save dining out for one night a week or month, whichever you can afford.  When cooking at home, involve the whole family to make it more fun for all of you and to create meaningful time together.
   2. Borrow from friends or buy from thrift stores whenever you need new clothes and appliances.
   3. Sell things you never use on eBay or have a garage sale to earn extra money.
   4.  Instead of going to the bookstore, go to the library.  It’s free, and they get new releases almost as soon as the stores do.
   5. Find free events in your community, such as museums, parks, concerts, and more!
   6. Watch DVDs at home instead of going to the movies.
   7. Learn to fix small things yourself, like holes in clothes or nicks in furniture.
   8.  Learn to change the oil in your car yourself.
   9.  Rent video games instead of buying them.
   10.  Instead of staying in expensive hotels when you go on vacation, go camping in the national parks. Many of them offer free campsites, or only charge a few dollars a day.  Plus, you get to get out and see the best natural settings our country has to offer!

Also remember that paying yourself first is important.  You should always set aside a certain amount of money for savings from each check, and you need to save it BEFORE you pay any of your other bills. YOU are your most important investment, and if you don’t take care of you, no one else will.  By paying yourself first, you’re securing your own financial future, and that’s the best kind of security there is. In this way, you can get out of debt and finally have control of your finances from now on.

This is the fourth installment in our credit & debt series. Be sure to check back for updates…

If you’re struggling under the huge burden of credit card debt, it can be frustrating, especially if you see no easy way out. The interest rate on most cards are unbelievably high and if you’re only paying the minimum each month, it could be years before you’ve got it all paid off. Meanwhile, your other bills and overall financial life are suffering.  However, there IS a solution to your problems, and it’s called consumer credit debt counseling. This could be the solution you need to become debt free at last!

In consumer credit debt counseling, a qualified counselor be able to help you negotiate your current debt balances with your current creditors, and might even help you qualify for a debt consolidation loan. By rolling all your outstanding balances into one large loan, you can almost always negotiate a lower interest rate with your creditors, which saves you money. It will also reduce your overall monthly payments.

Your debt counselor could even find a way to extend your consolidation loan term, so that your payments are further reduced. These steps are a positive way to make sure you have more money in your own pocket at the end of each month, rather than having to continue to live from paycheck to paycheck just to survive. Plus, once you’ve got your debt under control, your counselor may be able to help you control your debt in the future by learning how to regulate your spending.

Believe it or not, learning to use your paycheck wisely is a habit that can be taught. The most important thing is to learn how to avoid temptation. Banks and other lenders are actively trying to increase their businesses by convincing you to borrow money. Learn to ignore them and know when and when not to spend and borrow, and you’ll do just fine. Then, your consumer credit debt counseling will have been well worth it!

This is the third installment in our credit & debt series. Be sure to check back for updates…