Prime Rate Credit

When all attempts to clean up your credit, seek help, make more income and get yourself back on track have not worked, there may be no other alternative than bankruptcy.

There are a number of different forms of bankruptcy and certain legal matters in bankruptcy vary from state to state.
“Voluntary” bankruptcy is when you, the debtor, petition the court for relief from your creditors. Voluntary bankruptcy types include Chapter 7, Chapter 11, Chapter 12 and Chapter 13.

Involuntary bankruptcy occurs when creditors who you have not paid force you to pay by bringing you to court and have a court appointed trustee liquidate your assets to pay them. So, with this form of bankruptcy, the creditor forces the debtor into bankruptcy.

With Chapter 7 bankruptcy, all your non-exempt assets are turned into cash and paid to your creditors. You are entitled to keep your exempt assets.
Chapter 11 bankruptcy is usually used by corporations or partnerships. Assets are not usually liquidated. The debtor expects eventually to be able to pay their creditors. Chapter 11 is usually used as a method of reorganization.

Chapter 12 bankruptcy is specifically for farmers. A farmer who has more than 50 percent of their income and 80 percent of their debt coming from farming is eligible for this kind of debt relief.

Chapter 13 bankruptcy is similar to Chapter 11 and is used for reorganization. Chapter 13 is designed for small business owners and wage earners. The debtor retains all of their assets, but must repay creditors on an installment basis set by a court approved plan.

While bankruptcy has a very negative connotation, there are situations in life where it may be the only viable alternative left. If that’s the case, it’s best to be informed and know which type would apply to you and which assets you may keep when considering filing. Consider getting prepaid credit cards if this is your downfall, because then you will never be tempted to spend more than you earn.

I recently was advised to open up an IRA account, and I really couldn’t be happier with it. It’s basically a savings account that is tax exempt until I cash it out at a certain age, and all the money that goes into it each year will reduce my taxable income by that amount.

That is actually the primary reason that I did it, was so that I could keep that money and not put it in Uncle Sam’s hands, whom I already thought was getting quite a bit from me at that point! Also, I wanted to take advantage of one of the government’s best tax breaks and have my money work for me instead of me working so hard for my money all the time, the typical schpiel, but it’s true.

I got my first statement in the mail, and after about two months, I must say I am more than delighted with the return on my money thus far, and do plan on making several deposits this year so that my money can really build in this account and I can reap the benefits of this awesome tax break as well as awesome investment opportunity. It’s a no brainer, kind of like airline credit cards and gas credit cards, you get something for nothing (if you pay your balance every month that is!)

The only rule I’m aware of is that you can’t invest more than 25% of you income for that year, and that’s the limit that they place on it so that people don’t get too crazy with it and invest over 50% of their income in order to strictly reduce their taxable income. Coming up with the money for it, especially if it’s 25% of your income, can be very tricky, especially if you’re also planning on paying a big tax bill, but if you can, it’s definitely worth it.

Think about it, you’re going to have that money building in an account that you won’t touch for a very long time, and you can still get it out if you need, but there will be penalties, and you will be taxed on it I believe.

Also you need to keep in mind that it’s not a “dollar for dollar” tax credit, but rather it only reduces your taxable income by that amount, so don’t go thinking if you start one for $10k that it will save you that much on your taxes, it will only save you a fraction of that amount on your taxes. A tax advisor can explain it though if you thought it was something you’d like to pursue.

I don’t know how many times I’ve heard the story about how so and so got divorced, but they didn’t “divorce” themselves from the racked up credit cards, loans and other “bad debt” that they and their spouse shared together.

So, how does it usually work when two people get divorced? Usually, if the split is amicable enough, they can work it out amongst themselves as to who is going to take on what debts after the split, but what about the damage done to credit from one spouse to another spouse’s credit?

That’s the part that gets tricky. You see, when you’re married and have joint accounts, one’s actions and lack of responsibility can affect the other person’s credit score. But isn’t it still really up to you in a marital situation to kind of keep your eyes open for any financial troubles that either one of you may create?

For example, unless your spouse is the only one who sees the credit card statements, there is no way they can go charging cards past their limits and making a big mess for the two of you to get out of. Not only that, the other spouse should see the spoils that were purchased if they live together, so usually to claim that one spouse had no idea is kind of a lame excuse, unless your spouse had a good way to keep racking up debt a secret from you.

It’s important to be open with eachother and communicate about expenditures in a marriage, and if you can’t or don’t want to do that, then you should probably maintain separate accounts. I personally have been in a relationship for over five years, and we will get married some day, but I’ve already decided that we will not share an account, because we have a system worked out now that works well for both of us, and I don’t want to jeopardize something that works already!

Plus, I must admit, I’m a bit of a control freak when it comes to balancing checkbooks and making sure the bills are paid every month. I may have to work on that a little….

We all work hard to attain and maintain our financial assets, whether it is our home, our vehicles, our savings or retirement plans. With many different life scenarios, these assets we have worked so hard for, can be lost quickly due to divorce, illness or financial difficulties.

You can find out about a number of legal methods to shield your assets with the help of good legal counsel. Since state laws are complicated on this subject, the assistance of a good lawyer is a necessity.

One method of asset protection is a real transfer, in which you sell or give property to other people. There must be a valid reason for it and the transfer must be done long before a creditor makes a claim.

Transfer of property between spouses can give some asset protection. The laws and degree of protection vary from state to state so make sure you are familiar with your state’s legal status on this issue.

For businesses, incorporation can provide more asset protection. In this situation, all financial records of the corporation are maintained separately from the owner’s.

“Spendthrift” trusts are another mode of asset protection. With this method, the beneficiary is unable to reach the assets. The same principle therefore applies to the creditors.

Certain types of retirement plans cannot be reached by creditors. An ERISA Qualified Retirement Plan or a KEOGH cannot be reached by either an employer’s or an individual’s creditors. IRA accounts protection from creditors varies again from state to state. So check which laws apply in your individual location.

After working so hard to acquire our homes and other assets, it’s worth investigating the best way to protect them for our unique life situation.

Studen Loan Xpress, a student loan company, and officials at Johns Hopkins University are being investigated for a scheme which involved the officials, who are supposed to be unbiased and only steer students in their best interests instead of benefitting from financial gains.

The problem is that an undisclosed kickback scheme was going on where counselors at the school and officials were involved in steering students to get loans from the student loan outfit for kickbacks, some to the tune of many thousands of dollars a year, in exchange for the busienss recommendations.

This may seem perfectly legal, but apparently the whole problem comes in when the officials did not disclose that they were being paid to recommend the student loan to students, and it was not always in the student’s best interest, which is considered steering for financial gains.

The officials records are being investigated, as well as the student loan company. Maybe they didn’t offer the student the best rate for their situation and someone got wind of it or got suspicious, and that’s how authorities at the school were alerted to the problem.

We all have heard personal stories that are pretty close to home about someone who had their home foreclosed by the bank they borrowed the money from for their monthly mortgage. But why have these stories significantly increased, and why is everyone walking on eggshells when they go to buy a house now, for fear they are “getting in over their head”?

Well, a friend of ours was over last night, and he had an interesting theory of why the rate of home foreclosure has gone up. First of all, what is a foreclosure? Well, a home foreclosure is when you have not made your payments for a designated amount of time to your mortgage lending institution, and they exercise their right to do what’s called foreclose on your home loan.

They legally seize your property and you are basically forced to move out of your home because you could not make your monthly payments. Fair enough, right? The bank has lost money on you, and you are essentially backing out of a contract that you signed (numerous, headache-inducing documents) saying and promising that you are going to repay this loan in good faith.

When you don’t pay, or are unable to pay, the bank has the right to seize your home and property and put it up for sale to try to gain the money back that they have lost by you breaking your financial obligation with them.

And now, back to my friend’s theory. He thinks that one of the primary reasons were these ARM mortgage loans, where the rate is variable, not fixed. When the rates were low, everything was great, the people who had the Adjustable Rate Mortgage were paying lower payments, maybe even lower than what they expected.

But when the interest rates went up, many people’s mortgage payments were going up in the hundreds, monthly and many people just simply could not handle this huge wrench being thrown into their financial situation, and were not able to make the newer astronomical payments thanks to the high interest rates. The mortgage they calculated in their minds as a feasible payment for their monthly budget was suddenly blown out of the water. This is a huge consideration if you’re thinking about gettin an ARM for your mortgage loan.

February has reported lower than average mortgage borrowing activity, and it’s no wonder why in the wake of all this bad publicity on mortgage lenders over extending credit to those who were not necessarily able to repay their debts, and a record amount of foreclosures, as well as bad publicity for some mortgage lenders who purposely extended loans to those they knew could not repay on time.

And actually, my mistake, consumers not only borrowed less for mortgage loans (home loans), but they also borrowed less in general. This means that there were less car loans, general loans, home improvement loans, lines of credit and the whole shubang. This may have been a sign of decreased consumer confidence, which did ebb in February as reported by some financial institutions.

However, in sharp contrast to the decrease in borrowing on non revolving lines of credit, credit card activity, which is revolving debt, that kind that shoots us all in the foot, was up pretty markedly in February. Reportedly consumers were spending like crazy on their credit cards, so this may have signified some sort of a push for less borrowing and more of a convenience spending perhaps?

We all know how convenient credit cards can be, and that can be what gets us in trouble with them, even if they are low apr balance transfer credit cards. Just remember the rule, try to pay them off every month if you can, that way you can benefit from credit card use.

According to most real estate analysts and forecasters, the once boom market that saw a crash landing during 2006, is starting to stabilize. Nationwide, single family home prices should rise an average of 3.5% in 2007.

If you’re in the market and looking to buy, look for homes that have been up for sale for at least 90 days. When you decide to make a bid, make it for 10% lower than the asking price. Also, get on a good mortgage calculator and figure out what your payments will be before you make a bid so you can judge what will fit best in your budget. Don’t forget about those fun closing costs and all the other expenses that go along with moving too!

If the seller won’t move at all on the selling price, look at other areas that can be negotiated and keep in mind that negotiations can be made right up until closing time. Make sure to get a fixed rate mortgage when buying so the payment won’t inflate over time.

If you’re selling a home, do your research and see what other sellers in the area are listing their homes for. You’re better off to set your price on the higher end when setting your initial price. This way, you can negotiate your price at a later date if you need to.

When looking for a broker, there are full-service brokers who charge 6% commission on the selling price. There are also discount brokers or the possibility of making a deal with a full-service broker on the percentage of the commission.

Prep and stage your home for the market. Landscape, clean out closets and declutter your home for presentation.
Another trend of interest is the smaller energy efficient homes are gaining in popularity.

The quality of homes and not the quantity of square footage in a home is taking precedence. Keep this in mind when buying and thinking about resale value.

The cost of living is on the rise. Just look at gas prices, the grocery bills and home heating bills that have skyrocketed. Most of us shop and look from one gas station to another to see which one is lowest for the day when we need to refuel. For groceries, we read the sales fliers and try to buy our food items when they go on sale.

When trying to maintain a budget, there’s another area we often overlook but it’s present everywhere we turn. This area is the ridicilous amount of fees we pay for services from money transfers to payment to payment of bills.

Here’s a list of a few examples that effect almost all of us. ATM fees, the amount you pay to use an ATM at another bank, is usually a surcharge of $1.68, with Fifth Third topping the list at $2.50 for a non-customer. The way to solve this is to simply ask for cash back when making a debit card purchase. Usually, there is no fee.

Another example we are all familiar with is the over the limit fee for overdrawing your checking account with your debit card or surpassing your limit with your credit card. The way to solve this dilemna is to request that purchases and ATM withdrawals only be approved when they are within your limits.

For credit card payments, if you pay on the due date and are still on time, you may be charged a same-day payment fee. Washington Mutual charges $15.00 for this. The best way to solve this fee problem is to take your business to a company that won’t charge you for this situation.

Here’s a fee that costs you money when you’re trying to save on interest charges. It’s the balance transfer fee or the money you’re charged to move your credit card balance to another card to lower your interest rate. It can be as high as 3% of the balance transferred. Solve this one by asking about fees prior to transferring your balance.

The list of fees are almost endless. So, before doing business, ask questions and get answers. This way, there will be fewer surprises and hidden costs to your business transactions.

It appears that having a debit card fraudulently used may be a much worse thing than having an occurrence involving theft with a credit card. According to a news story that recently broke on the recent breach of consumer information involving retail outlets TJ Maxx and it’s partners, credit card consumers were pretty much covered after their identities were stolen and their credit cards were charged with fraudulent charges, while the debit card customers who were impacted may have been left unprotected by current laws, which say that credit card companies cannot hold individuals accountable for fraudulently brought charges on a credit card.

That’s where the law appears to get hazy on debit cards, not really providing specific recourse or relief for those with debit cards who are victims of fraudulently made credit card and debit card charges.

Apparently the problem lies in the extent of liability, and how soon you happen to discover your card was used against your wishes and report it to the financial institution for investigation. You will usually owe more, a lot more, if you do not discover the fraudulent activity for a while, which is the problem. This must mean that credit card companies have a much longer “statute of limitations” when it comes to credit card vs. debit card identity theft and fraudulent charges being brought by a thief.

There may be some changes in this though, seeing how the debit cards are becoming so much more popular now than they were when they first came out. The greatest thing about debit cards is that when you charge something, you’re not really “charging” it, but rather deducting from money you know you have, instead of racking up debt against funds that are only there when you pay them in the future! They’re definitely a way to stay out of bad credit card debt I suppose!