Tuesday, October 29, 2013
Monday, October 28, 2013
Can My Son’s Bankruptcy Harm Me Financially?
Having a family member go through bankruptcy can certainly
be a disruptive event for everyone; however, unless your name and social
security number are on debts that your son accrued before the bankruptcy, you
will not be financially harmed.
Still, there are some possible problems you might want to
consider. For example, once your son’s
bankruptcy is discharged, it will be difficult for him to get credit, qualify
for a mortgage or possibly even rent an apartment, so it is highly likely that
you, as a concerned parent, will want to accept a request to co-sign. In this situation, there are definitely some
factors to take into consideration that could potentially harm you financially.
When a co-signer is on a loan, the lender will typically
file a lawsuit against that person first to recoup money, especially
considering that the co-signer is much more likely to have greater financial
resources and job stability (which is why they were needed to co-sign in the
first place). This means that should
your son’s financial history repeat itself, you will likely be stuck with
lawsuits that could be devastating for your credit rating and court judgments
that are your responsibility to pay.
Knowing this, if you still decide to co-sign, do so with
caution and moderation in mind. This
means that if your son is purchasing a car and you are co-signing for it, be
sure that it’s in a lower price range (under $8,000) and over a long enough
period of time. This way, should you be forced to take over payments, they will
be low and not affect your monthly budget so much.
The best way to enter into a co-signing agreement with a
family member who has recently gone through a bankruptcy is to consider it a
loan you will likely have to repay. If
you think of it that way, you’ll be able to make a much more financially sound
decision concerning whether or not you should co-sign in the first place.
Wednesday, October 23, 2013
Tuesday, October 22, 2013
5 Myths About Bankruptcy You Should Know
Image courtesy of graur razvan ionut / freedigitalphotos.net |
Despite the plethora of information available online, there
are still bankruptcy myths circulating that are just that—myths. With something as important as bankruptcy,
it’s important to understand the facts and learn how to distinguish them from
fiction.
1. Everyone will know I’ve filed.
While it is
true that bankruptcy is a public record and is searchable as such, unless you
are a high-profile individual, it is unlikely that anyone in your circles will
know that you’ve filed for bankruptcy.
The number of people who file each month in any given city or area often
makes it impossible for the media to focus on printing names; although in some
smaller communities, the newspapers still do this.
2. If I file Chapter 7, I don’t have to pay
back any of my debts.
This is
certainly a nice thought but it’s a myth, nonetheless. Certain debts such as alimony, child support,
student loans and fines for criminal acts must still be paid, even after filing
for Chapter 7.
3. If I file bankruptcy, I’ll lose my house,
car, possessions, etc.
It is important
to know that each state provides exemptions to bankruptcy filers, allowing them
to keep a considerable amount of their property—up to a particular value. A bankruptcy attorney will be able to explain
in detail what you may or may not lose in the process of filing.
4. I can kiss credit goodbye if I file.
Although for 2-4
years, you might only qualify for subprime loans, there are still many lenders
who are more than happy to provide credit to people who have filed for bankruptcy—even
Chapter 7 bankruptcy.
5. If my husband/wife files, that means I have
to file, too.
This situation
is highly dependent on whether both spouses are liable for the debt. If both names are on most debt, then yes, it
would make more sense for both spouses to file.
However, if only one spouse’s name is on a considerable amount of debt,
that spouse can file, leaving the other spouse’s credit unscathed.
Friday, October 18, 2013
5 Steps To Recovering From A Bankruptcy
Image courtesy of Stuart Miles / freedigitalphotos.net |
Once your bankruptcy is completed, you have a unique
opportunity that not many people get—the opportunity for a fresh financial
start. The best way to use this opportunity
to your advantage is to make the right financial choices from this point
forward.
1. Create a budget
and stick with it.
Making a livable budget is the first (and most important
step) to getting back on track financially after a Chapter 7 or Chapter 13
bankruptcy. Showing your potential
lenders that you have learned your lesson and are able to make smart financial
choices is best done through living within your means and knowing where your
money is going at all times.
2. Learn to live on
cash (or your debit card) again.
After a bankruptcy, cash is your friend. Not only does cash allow you to stick to your
budget better (since it’s a tangible reminder of how much you have to spend
each month), it also helps you get out of the credit habit. This doesn’t mean that you should avoid
credit entirely, though—in fact, you’ll need to re-establish some credit in
order to get your credit score back on track after the hit it takes from
bankruptcy.
3. Pay your bills on
time, every month.
Keep in mind that even the small bills will show up on your
credit report and affect your score.
4. Keep a close eye
on your credit report.
The only way to ensure that your credit is getting back on
track is to watch it closely. A good way
to do this is to sign up for a credit monitoring service.
5. Get a credit card
and use it wisely.
The only way to re-establish your credit is to obtain
credit and use it wisely. While it might
be difficult to obtain credit initially after your bankruptcy has been
discharged, many cards offer low credit lines to people with poor credit with
the opportunity to raise those credit lines after demonstrating over a period
of a few months that it will be used wisely.
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