Debt Help

2005-08-09T16:01:00.000-07:00

Debt Consolidation Help can be located at http://www.1-Debt.com

2005-08-09T15:58:00.000-07:00

What's Not in Your Credit Score?

FICO scores consider a wide range of information on your credit report. However, they do not consider:

Your race, color, religion, national origin, sex and marital status. US law prohibits credit scoring from considering these facts, as well as any receipt of public assistance, or the exercise of any consumer right under the Consumer Credit Protection Act.

Your age. Other types of scores may consider your age, but FICO scores don't.

Your salary, occupation, title, employer, date employed or employment history. Lenders may consider this information, however, as may other types of scores.

Where you live.

Any interest rate being charged on a particular credit card or other account.

Any items reported as child or family support obligations or rental agreements.

Certain types of inquiries (requests for your credit report). The score does not count consumer-initiated inquiries which are requests you have made for your credit report, in order to check it. It also does not count promotional inquiries which are requests made by lenders in order to make you a pre-approved credit offer or administrative inquiries requests made by lenders to review your account with them. Requests that are marked as coming from employers are not counted either.

Any information not found in your credit report.

Any information that is not proven to be predictive of future credit performance. Whether or not you are participating in a credit counseling of any kind.

http://debt-education.org/whats-not-credit-score.html

2005-06-04T17:08:00.000-07:00

Organic Foods Fightback in Store Wars

I'm a bit off topic today, you have to see this! It's both funny and educational at the same time, and the creators are driving home a very important message ... you are what you eat!

Grocery Store Wars is a spoof on the Star Wars theme and it's well done.

You have to check it out and pass on the link to friends because friends don't let friends eat irresponsibly.

2005-05-23T11:53:00.000-07:00

Two-Income Trap Equals Bankruptcy Says Harvard Law Professor

Nearly half of all Americans who file for bankruptcy do so because of medical expenses, according to a new study released jointly by researchers at Harvard Law School and Harvard Medical School this week. The study, which is based on surveys of 1,771 individuals filing for bankruptcy, is the first of its kind to gather extensive information on the correlation between medical conditions and expenses and bankruptcy.

"Both doctors and lawyers care about how health care is financed, but it was only when we put our heads together that we could probe further," explained Elizabeth Warren, professor of law and author of "The Two-Income Trap." "We discovered that in 2004 about two million men, women and children were swept through the bankruptcy system in the fallout of a medical problem. Good educations, decent jobs, and health insurance were no guarantee that a person wouldn't be wiped out by an illness or accident. We believe the current policy debates are overlooking a critical problem: A broken health care finance system is bankrupting middle class America."

"Our study is fairly shocking," explained Steffie Woolhandler, associate professor of medicine at Harvard Medical School, in an interview with the Chicago Tribune. "We found that, too often, private health insurance is an umbrella that melts in the rain."

http://debtcompany.org/debt-blog/

2005-05-21T16:14:00.000-07:00

There's a new blog on the horizon worth watching. They have Women's Debt Help in the featured list of discussion topics and we like it anytime we see that type of help being posted.

So are you contemplating filing bankruptcy? If you are and don't want to get caught up in the new laws that ARE coming, you'd better contact a bankruptcy attorney today. We hear it's rough going to get an appointment with a bankruptcy lawyer these days because so many people are filing for bankruptcy. Don't wait ... that's our advice for those who have absolutely no way out of their debt situation.

2005-05-05T10:39:00.000-07:00

National Endowment for Financial Education

This "action area" of the National Endowment for Financial Education® (NEFE®) was created to provide Americans with practical money-management skills and an introduction to financial planning through course work that covers the fundamentals of money management.

Although not restricted to a particular age group, the Education Programs area has focused largely on increasing financial literacy among the nation's youth. This focus is exemplified by the organization's longest-standing public service effort, the NEFE High School Financial Planning Program® (HSFPP).

This is one of the best resources for debt education and I highly recommend you take some time on this website to educate yourself. http://www.nefe.org/

2005-05-01T13:26:00.000-07:00

Fair Credit Reporting Act

The Federal Fair Credit Reporting Act (FCRA) is designed to promote accuracy, fairness, and privacy of information in the files of every consumer reporting agency (CRA).

Most CRAs are credit bureaus that gather and sell information about you (such as if you pay your bills on time or have filed bankruptcy) to creditors, employers, landlords, and other businesses. The FCRA gives you specific rights, as outlined below. You may have additional rights under state law. You may contact a state or local consumer protection agency or a state attorney general to learn those rights.

You must be told if information in your file has been used against you. Anyone who uses information from a CRA to take action against you, such as denying an application for credit, insurance, or employment, must tell you and give you the name, address, and phone number of the CRA that provided the consumer report.

ALso, you can find out for yourself what is in your credit report. The law says that a CRA must be given you if you request it, and also a list of everyone who has requested it recently.

There is no charge for the report if a person has taken action against you because of information supplied by the CRA, but you request the report within 60 days of receiving notice of the action.

You also are entitled to one free report every twelve months upon request if you certify that:

You are unemployed and plan to seek employment within 60 days
You are on welfare
Your report is inaccurate due to fraud.
Otherwise, a CRA may charge you up to eight dollars.

The law gives you the right to dispute inaccurate information with the consumer reporting agency. If you tell a CRA that your file contains inaccurate information, the CRA must investigate the items (usually within 30 days) by presenting to its information source all relevant evidence you submitted; unless your dispute proves to be frivolous.

The source of your compalint must review your evidence and report its findings to the CRA. (The source also must advise national CRAs, to which it has provided the data, of any error.) The CRA must give you a written report of the investigation and a copy of your report if the investigation results in any change. If the CRA's investigation does not resolve the dispute, you may add a brief statement to your file. The CRA must normally include a summary of your statement in future reports. If an item is deleted or a dispute statement is filed, you may ask that anyone who has recently received your report be notified of the change.

Inaccurate information must be corrected or deleted. A CRA must remove or correct inaccurate or unverified information from its files, usually within 30 days after you dispute it. However, the CRA is not required to remove accurate data from your file unless it is outdated or cannot be verified. If your dispute results in any change to your report, the CRA cannot reinsert into your file a disputed item unless the information source verifies its accuracy and completeness. In addition, the CRA must give you a written notice telling you it has reinserted the item. The notice must include the name, address and phone number of the information source of the filing.

You can dispute inaccurate items with the source of the information. If you tell anyone, such as a creditor who reports to a CRA, that you disputed an item, they may not then report the information to a CRA without including a notice of your dispute.

Outdated information may not be reported. In most cases, a CRA may not report negative information that is more than seven years old, and ten years for bankruptcies.

Access to your file is limited. A CRA may provide information about you only to people with a need recognized by the FCRA, usually to consider an application with a creditor, insurer, employer, landlord or other business.

Your consent is required for reports that are provided to employers, or reports that contain medical information. A CRA may not give out information about you to your employer or prospective employer without your written consent. A CRA may not report medical information about you to creditors, insurers or employers without your permission.

You may choose to exclude your name from CRA lists for unsolicited credit and insurance offers. Creditors and insurers may use file information as the basis for sending you unsolicited offers of credit or insurance. Such offers must include a toll-free number for you to call if you want your name and address removed from future lists. If you call, you must be kept off the lists for two years.

You may seek damages from violators. If a CRA, a user or in some cases a provider of CRA data, violates the FCRA, you may sue them in state or federal court.

For more information contact the Federal Trade Commission.

The above information should be understood to be a general discussion of the subject matter and does not constitute a legal opinion about the situation. For further information please consult a qualified attorney.

http://debt-education.org/fcra.html

2005-04-25T20:36:00.000-07:00

Bush Signs S.256 - Enacting Bankruptcy Reform Legislation

On April 20, 2005, President Bush signed into law S.256, the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" which had been approved by the House of Representatives on April 14, 2005 and previously passed by the Senate on March 10, 2005. The most prominent changes set forth in the new legislation are those that affect individual debtors under the Bankruptcy Code, but this law also contains significant provisions affecting the administration of chapter 11 reorganization cases and international insolvency cases as well. Greater clarity of the treatment of certain financial contracts under the Bankruptcy Code also comprises an important part of the new legislation. Most of the provisions of the law take effect 180 days from its enactment and collectively represent the most sweeping changes to the Bankruptcy Code in many years. This special issue of the Alert highlights many of the key provisions of this legislation.

I. Consumer and Individual Bankruptcy Amendments

Eligibility and Procedural Changes.

Means Testing. The new legislation takes the "Bankruptcy Abuse Prevention" portion of its name from a collection of provisions designed to require consumer debtors to satisfy more stringent criteria as a condition to obtaining a discharge of their indebtedness. These provisions focus on testing whether a consumer debtor has the means to repay a portion of his obligations out of future income. Under the new legislation, the current "substantial abuse" dismissal standard will drop simply to an "abuse" threshold. Such abuse will be presumed if the debtor’s current monthly income less the debtor’s qualifying living expenses, multiplied by 60 months (notably, the maximum term of a Chapter 13 plan) is not less than the lesser of (i) 25% of the debtor’s nonpriority unsecured claims in the case, or $6,000, whichever is greater; or (ii) $10,000. The IRS National Standards will serve as the benchmark for measuring the debtor’s qualifying living expenses. The debtor can challenge the presumption of abuse only under "special circumstances," such as in the case of a major medical condition or a call or order to active military service; and must always certify the nature of the special circumstances and the accuracy of all of the information provided.

Under the new law, any party in interest will be able to move under Section 707(b) of the Bankruptcy Code to dismiss a debtor’s case for abuse or, with the debtor’s consent, to convert the case to a Chapter 11 or Chapter 13 case, which will require the debtor to perform under a payment plan. However, only the judge, the United States Trustee or a bankruptcy administrator will be able to seek dismissal of a Chapter 7 case if the debtor’s income falls below the state median income for a family of similar size.

Mandatory Credit Counseling Education and Debtor Education. To be eligible for any form of bankruptcy relief, an individual must receive credit counseling from an approved nonprofit budget and credit counseling agency. Such counseling can be provided in individual, group, internet or telephone settings, and is to outline the opportunities for credit counseling, as well as to assist the prospective debtor in analyzing his budget. While the court will have the power to waive the pre-filing counseling requirement if the debtor demonstrates exigent circumstances, the debtor must submit to credit counseling within 30 days after the bankruptcy case is commenced. If a debt management plan is developed for the debtor, that debtor must file it with the bankruptcy court. Presumably, it will serve as a benchmark against which to determine whether proceeding under Chapter 7 constitutes abuse, and whether a Chapter 13 payment plan is adequate. The court may deny a discharge to Chapter 7 and Chapter 13 debtors who fail to complete a personal management instructional course.

Notices and Disclosures. The new legislation materially modifies notice requirements on all parties to an individual’s bankruptcy:

Notices to Creditors. Under amended Section 342, notices to a creditor will not be effective unless such notices are served at the address designated by such creditor and contain the current account number used by the creditor with respect to the debtor, provided that such creditor has supplied the debtor with the designated address and current account number in two communications within 90 days before the commencement of a voluntary case. Alternatively, an entity may also file with any bankruptcy court a notice of address to be used by all the bankruptcy courts or by particular bankruptcy courts (as specified by such entity) to provide notice to such entity in all cases under chapters 7 and 13 pending in the courts in which such entity is listed as a creditor.1

Mandatory Disclosure to the Individual Debtor. Amended Section 342 of the Bankruptcy Code also provides that, before the commencement of a bankruptcy case by an individual debtor, the clerk of the bankruptcy court will be required to provide individual debtors with a brief description of chapters 7, 11, 12 and 13 and the general purpose, benefits and costs of relief under each of those chapters. The clerk of the court will also provide descriptions of the services available from credit counseling agencies, which will be a necessary prerequisite for relief. Lastly, the clerk’s notice will also inform an individual debtor that all information supplied by that debtor in connection with the debtor’s case will be subject to examination by the Attorney General of the United States.

Production of Tax Returns and Related Financial Information. At the request of a creditor, the U.S. Trustee or any party in interest, a debtor will be required, under amended Section 521, to file tax returns and in the case of Chapter 13 debtors to identify third parties that are sources of income or support. Certain other information, including any interest a debtor has in an educational or individual retirement account must also be disclosed. Furthermore, amended Section 521(a)(1) will require a debtor to provide an itemized statement of monthly income and a statement disclosing any changes income or expenses reasonably expected to occur in the 12 months following the filing of the petition.
Dischargeability of Debts. Chapter 13 debtors may no longer receive a discharge for trust fund taxes, taxes for which no return was filed (as well as for certain late returns), or taxes for which the debtor filed a fraudulent return. Also excluded from the scope of a Chapter 13 discharge are domestic support payments, student loans, claims resulting from operating a motor vehicle or vessel while intoxicated, claims (including fines and restitutions) arising out of malicious acts causing personal injury or death, debts (i) incurred in connection with a debtor’s fraudulent misrepresentation, (ii) arising out of a debtor’s defalcation as a fiduciary, and (iii) which the debtor failed to schedule. Also, unless his income is below the applicable monetary threshold, he will not receive "discharges" until he has completed a five year payment plan.

The student loan discharge exception has been broadened to include not just governmental loans, but those which are owed to for-profit lenders. Debts of $500 or more owed for luxury goods, and incurred within 90 days before the petition is filed, are presumptively, nondischargeable, as are cash advances

Under the new legislation, the debtor must wait eight (rather than six) years following his discharge to file a new petition under Chapter 7. And, a discharge will not be provided to a Chapter 13 debtor if he had previously received a discharge under any of Chapters 7, 11 or 12 within a four year period prior to filing his subsequent case (or a two year period for a prior Chapter 13 case).

Serial and Other Abusive Filings. In addition to the foregoing constraints upon a debtor’s access to relief, other measures in the new law are intended to discourage serial, bad faith and other "abusive" bankruptcy filings. For example, if an individual debtor’s prior case had been dismissed within one year prior to the commencement of a subsequent case, the automatic stay of debt collection will terminate 30 days after the new case is commenced. While the debtor can seek to demonstrate "good faith" to preserve the stay with respect to affected creditors, there are multiple statutory presumptions against such a finding. A debtor will also lose his right to the automatic stay of real estate foreclosure proceedings if the court finds that the filing of a petition was part of a scheme to delay, hinder or defraud creditors involving either (i) transfer of real estate without creditor consent or court approval, or (ii) multiple bankruptcy filings affecting the same parcel(s) of real property. An order lifting the automatic stay for the benefit of such creditor will be binding on the debtor for two years.

Reaffirmation Agreements. Section 524 of the Bankruptcy Code has been amended in an effort to discourage abuse of reaffirmation agreement practices that had become notorious several years ago. Specifically, once effective, amended Section 524 will require that certain specified disclosures be provided to an individual debtor at or before the time such debtor signs a reaffirmation agreement. These specified disclosures, which must be in writing, will include certain advisories and explanations that are clear and conspicuous. In addition, at the election of the creditor, the disclosure may include a repayment schedule. If the debtor is represented by counsel, counsel will be required to file a certification stating that the debtor has been fully informed of the effect of the agreement, that it represents the voluntary agreement of the debtor, that it does not impose an undue hardship on the debtor or any dependent of the debtor and that debtor’s counsel fully advised the debtor of the legal effect and consequences of such agreement as well as any default thereunder.

To the extent that the amount of the scheduled payments due on the reaffirmed debt exceeds the debtor’s available income, it will be presumed for 60 days from the date on which the reaffirmation agreement is filed with the court that the agreement presents an undue hardship. In that case, the attorney must also certify that, in the attorney’s opinion, the debtor is able to make the payments required under the reaffirmation agreement. If a presumption that an undue hardship exists, the court must review the reaffirmation agreement and disclosure. The presumption can be rebutted by a debtor by a written statement explaining the additional sources of funds that would enable the debtor to make the required payments on the reaffirmed debt. If the presumption is not rebutted to the satisfaction of the court, the court may disapprove the reaffirmation agreement. No reaffirmation agreement may be disapproved without notice and hearing to the debtor and the creditor. Federal criminal enforcement provisions with respect to such agreements have also been explicitly strengthened.

Domestic Support Obligations. Under the new law, domestic support obligations2 will be accorded an administrative expense priority, subject to the costs incurred by the bankruptcy trustee to administer the assets available for payment of domestic support. Moreover, the automatic stay against enforcement of prepetition claims will not apply to the payment of domestic support obligations from assets that are not property of the estate, or to enforcement of wage withholding orders. If a debtor does not remain current on his support obligations, his case may be dismissed. Furthermore, the debtor will be required to remain current on his support payments in order to confirm a plan under, or receive a discharge under Chapters 11, 12 or 13. Such debts will continue to remain nondischargeable in a Chapter 7 case. The Act also obligates the trustee to provide notice to child support claimants and agencies, including notice to domestic support claimants of their right to use the services of the state child support enforcement agencies.

Regulation of the Players in Individual Debtor Cases. The various amendments have a significant impact on the roles of a number of the players in an individual consumer bankruptcy case.

Attorneys. Pursuant to amended Section 707, an attorney’s signature on a petition, pleading or motion will constitute certification that the attorney will have (1) performed a reasonable investigation into the circumstances giving rise to the petition, pleading or motion, (2) determined that the petition, pleading or motion is well grounded in fact, (3) determined that the petition, pleading or motion is warranted by existing law or a good faith extension, modification or reversal of existing law, (4) concluded that the petition does not constitute an abuse, and (5) affirmed that he has no knowledge, after an inquiry, that any of the information contained in the schedules filed with the petition is incorrect. The court may grant a trustee reasonable costs, including attorney fees, or may assess civil penalties payable to the U.S. Trustee if the court finds that the debtor’s attorney violated Rule 9011. Critics of the new law have asserted that this new standard in particular will cause bankruptcy fees to "skyrocket," as bankruptcy attorneys will be forced to invest far more time and effort to verify the information provided to them by their clients.

Bankruptcy Petition Preparers. Pursuant to amended Section 110, a Bankruptcy Petition Preparer (a "BPP") will be prohibited from giving a debtor legal advice. A BPP must advise the debtor of maximum fees permitted3 before accepting any payment or preparing any documents, file a declaration with the petition under penalty of perjury stating the total fees received in the 12 months preceding the filing and, if maximum fees have been set, a certification that the fees do not exceed the maximum. The court must disallow any fees in excess of the value of the services or the maximum amount established. Amended Section 110 also includes sanctions for violations by a BPP, including that a court may enjoin a BPP that has violated a previous order sua sponte or upon the motion of the trustee or U.S. Trustee. Moreover, a BPP may be fined $500 for each violation of the prohibitions imposed upon a BPP pursuant to Section 110. Fines may be tripled under certain circumstances.

Debt Relief Agencies. The new amendments will also provide direct regulation of debt relief agencies.4 Each debt relief agency will be required to provide individuals that have sought its assistance, not later than 5 days after the first date on which it provides bankruptcy assistance services to a particular client, to execute a written contract with such individual. Each contract must specify clearly and conspicuously the services the agency will provide, the basis on which fees will be charged for such services, and the terms of payment. In addition, a debt relief agency will be required to provide an individual that has sought its advice with the notice required to be sent by the bankruptcy court pursuant to section 342 plus a notice providing that (1) all information the individual person provides in connection with the case must be complete, accurate and truthful, all assets and liabilities must be completely and accurately disclosed in the documents filed to commence the case, (2) the current monthly income, monthly expenses and, in a chapter 13 case, disposable income must be stated after reasonable inquiry, and (3) the information an individual provides may be audited and that the failure to provide such information may result in the dismissal of the case or other sanction including, in some instances, criminal sanctions. Waivers regarding these prohibitions will be unenforceable.
Changes in the Composition of Assets of the Individual Debtor’s Estate

Exemptions of Property from an Individual’s Estate. The new law places greater limitations on an individual debtor’s ability to exempt property from that debtor’s estate and to keep it out of the hands of creditors. The two key provisions in this regard are the new Section 522(b)(3) governing the application of state and local law exemptions and the new Section 1115 which governs post-petition earnings of an individual debtor in a chapter 11 case.

State and Local Law Exemptions. Under the Bankruptcy Code, an individual debtor has the option to elect either state and local property exemptions, on the one hand, or the federal exemptions set forth in Section 522(b) of the Code on the other hand to protect certain limited assets from distribution to creditors. The broad coverage offered under certain state exemption schemes, most notably the homestead exemptions in Florida and Texas, has resulted in actual and perceived pre-bankruptcy planning by debtors to shield substantial assets from creditors. New Section 522(b)(3) specifies that the state or governing law for application of the exemption is the law of the place of the debtor’s domicile for the 730 days before filing. Moreover, to the extent that the debtor did not maintain a domicile in a single state during that time, then it is the law of the place of the debtor’s domicile for the majority of the 180-day period prior to the 730 days before filing. This long look-back is clearly intended to prevent debtors from manipulating the state exemption differences to the debtor’s advantage and consequently shield assets from creditors. Additional value and timing limitations are placed on the debtor’s use of a state law homestead exemption as well.

Post-Petition Earnings. A thorny issue in individual chapter 11 cases has been the status of a debtor’s post-petition earnings. A new Section 1115 will define property of the estate of an individual debtor to include property acquired post-petition. Related provisions in new Section 1123(a)(8) will provide for funding of a plan from an individual’s future earnings and require a best efforts test in connection with confirmation of a debtor’s plan under new Section 1129(a)(15). As a result of these changes in the aggregate, an individual debtor’s chapter 11 case will more closely resemble an individual’s case under chapter 13.

Retirement Funds. While the United States Supreme Court has recently ruled on the exclusion of certain individual retirement accounts from property of an individual debtor’s estate, the newly enacted legislation should clarify any historical ambiguities. Subject to certain limitations, retirement funds covered under Sections 401, 403, 408, 408A 414, 457 or 501(a) of the Internal Revenue Code are exempt from property of the estate regardless of whether state or federal exemption laws are applied. Likewise, direct transfers from one such type of account to another will also be protected.
Recovery of Certain Transfers. Like the limitations to be placed on the use of state law property exemption statutes, new Section 348(e) allows a trustee to avoid any transfer by the debtor to a self-settled trust or similar device made as far back as 10 years before the date of the commencement of the bankruptcy case, provided that the trustee can show that the transfer was made (like a fraudulent conveyance) with "actual intent to hinder delay or defraud" certain creditors. The trustee must show, however, that the transfer was made to avoid a particular claim not merely as a general asset protection measure.

Exclusions of Property from the Estate. New Section 541(b)(5) will exclude from a debtor’s estate funds placed in an educational individual retirement account qualified under Section 530(b)(1) more than one year prior to the bankruptcy case and similarly, new subsection (b)(6) protects funds contributed to a state tuition program qualified under Section 529(b) of the Internal Revenue Code more than one year prior to the bankruptcy case. In each case, there are certain limitations including a maximum exclusion of up to $5,000 per beneficiary for the period between 365 to 720 days prior to the commencement of the individual debtor’s bankruptcy case.

Contracts and Leases under Section 365. The new legislation amends Section 365 governing executory contracts and unexpired leases to provide that if a lease of personal property is not rejected or not assumed by the debtor (or trustee) in a timely manner, such property is no longer property of the estate and the automatic stay under section 362 of the Bankruptcy Code with respect to such property is terminated. In a chapter 11 or 13 case where the debtor is an individual lessee of personal property and the lease is not assumed in the confirmed plan, the lease is deemed rejected as of the conclusion of the confirmation hearing. If the lease is rejected, the automatic stay under section 362 (as well as the co-debtor stay pursuant to Section 1301) are automatically terminated with respect to such property.

II. Significant Chapter 11 [Business Bankruptcy], Claims Priority and General Administrative Amendments

While the primary focus of the new bill is consumer bankruptcy, there are many changes that affect all cases and those that relate directly or indirectly to business bankruptcy cases under Chapter 11. The new time limits imposed on debtors in the Chapter 11 process and the favorable treatment afforded to many creditor groups under the new law will make reorganization more difficult and could be expected to result in more liquidations. The bill includes new procedures for small business debtors, restrictions on management compensation and other important amendments.

The Appointment of Chapter 11 Trustees. The new law apparently encourages the appointment of Chapter 11 trustees in some cases which had typically been reserved for cases in which gross mismanagement or willful misconduct was found. Cause under amended Section 1104(a)(3) has been expanded to include failure to pay post petition tax or to maintain insurance or the unauthorized use of cash collateral.5 New Section 1104(e) provides that the United States Trustee may move for the appointment of a trustee if there is misconduct by management. While trustees have generally been compensated on an hourly basis, the percentages contained in Section 326 are now treated as a commission for the chapter 11 trustee under new Section 330(a)(7).

New Time Limits Affecting Chapter 11 Cases. The modifications in the amendments to existing time limits set forth in the Code are expected to have a significant impact on the chapter 11 process.

Exclusivity. The debtor’s exclusive right to propose a plan of reorganization under amended Section 1121 will no longer be extended beyond 18 months. This limit will change the dynamics and timing of complex cases and increase the pressure on debtors in the largest and most complex cases.

Assumption/Rejection of Leases. In addition, under the amendments to Section 365(d)(4), nonresidential real property leases must be assumed or rejected within a maximum of 210 days.
The standard period will be 120 days subject to a 90 day extension "for cause." Thereafter, the landlord must consent to any extension.

Small Business Debtors under Chapter 11. New provisions may subject Chapter 11 debtors with secured and unsecured debts not exceeding $2,000,000 to special procedures intended to expedite the administration of these cases provided that the United States Trustee does not appoint a creditors committee. Under modified 1125(f), qualifying debtors may (i) file a combined plan and disclosure statement, (ii) use a standard form disclosure statement or (iii) combine approval of the disclosure statement with confirmation. While these debtors will have an exclusive period of 180 days to file a plan, they will be required to file within 300 days under Section 1121(c). The court must confirm the plan within 45 days under Section 1129(g).

Treatment of Tax Claims Under a Chapter 11 Plan. The new law amends Section 1129(a)(9)(c) to require that deferred payments to taxing authorities be paid in regular cash payments over a period not exceeding 5 years with an interest rate that preserves the value of the claim on the effective date of the plan.

Administrative Expense Priority Claims. The new legislation has a number of provisions which raise the priority of certain claims or expand the category of claims allowable as administrative expenses improving the prospects for recovery for certain holders of these claims. For example, new Section 507(b)(9) created an administrative expense priority for claims arising from all goods received by a debtor in the ordinary course of business for a period of 20 days prior to commencement of the proceeding. Similarly, under amended Section 546(c) the period for reclamation claims will be expanded from 10 to 45 days after receipt of goods (or 20 days after commencement of the proceeding).

Some claims will receive higher priority treatment indirectly through the operation of other provisions. The new deadlines imposed by amended Section 365(d)(4) in respect of the assumption or rejection of nonresidential real property leases will likely lead to the increase of protective assumptions of such leases, elevating landlord claims for cure and deficiencies to administrative expense priority status. As an offset and acknowledgment of the likely effect of the amendment to Section 365(d)(4), the administrative expense claim for leases assumed during the proceeding and later rejected will be limited under Section 505(h)(7) to two years rent.

Indeed, in at least one instance, existing administrative expense priority status is apparently no longer enough for certain creditors. Specifically, granting administrative expense priority to the claims of utilities will no longer be considered as adequate assurance of payment. Amended Section 366 will require a debtor to post additional security in the form of cash or other collateral to continue utility service post-petition.

Management Retention Bonuses. An area of administrative expenses priority claims that will affect the administration of large chapter 11 cases are the amendments relating to the practice of granting retention bonuses and severance pay to management. Under amended Section 503(c), authorization of such retention bonuses and management severance will be subject to increased scrutiny and limitations. On a related note, payments under employment contracts to insiders may constitute fraudulent conveyances under the new law unless made in the ordinary course of business under Section 548(a).

Retention of Investment Bankers. In a change that is expected to have a profound impact on the professional restructuring community, investment banking firms will no longer required to satisfy the "disinterested" standard set forth in Section 101(14). Historically, an investment banking firm could not satisfy the disinterestedness test if it had served as the investment banker for an outstanding security of the debtor or if within three years of the commencement of a case, it had served as investment banker with respect to an offering sale or issuance of a security of the debtor. Presumably, the large investment banking firms that had been locked out of these restructuring opportunities will now have the chance to compete in this market against the boutique firms that have dominated the restructuring market for years.

Healthcare Proceedings. In light of the spate of bankruptcy cases of certain health care providers over recent years, certain protections will be added to protect patients rights. In particular, new Section 333 will require the Court to appoint a "patient care ombudsman" to facilitate the protection of patient’s rights including the monitoring of the quality of patient care by the debtor facility. In addition, new procedures are established under Section 351 for disposition of patient records in these cases. The expenses associated with the patient care ombudsman and the disposition of patient records will be entitled additional administrative expense priority, along with the cost of moving patient to another facility under Section 503(b)(8).

Exceptions to the Application of the Automatic Stay. With each piece of bankruptcy reform legislation, it seems that the number of exceptions to the application of the automatic stay continues to grow. The current legislation appears to be no different. New exceptions have been added for landlords seeking to evict tenants and enforce judgments of possession, for recovery of personal property collateral upon an individual debtor’s failure to comply with his statement of intent with respect to such property, for prosecution of proceedings before the Tax Court, for expanded rights to close out and offset certain financial contracts, for the repayment of loans from pensions plans and for the enforcement actions by securities self regulatory organizations.

III. International Insolvency Amendments

The new chapter 15 to the Bankruptcy Code incorporates the Model Law on Cross-Border Insolvency completed by the United Nations Commission on International Trade Law in 1997. The new legislation encourages cooperation between the United States and foreign countries with respect to transnational insolvency cases. Insofar as possible, chapter 15 follows the language, section numbering and general structure of the Model Law to promote uniformity in its adoption and application.

Eligibility. Debtors who would be eligible for relief under section 109 of the Code will also be eligible under chapter 15. Foreign banks will not be eligible if they have a branch or agency in the United States; however, foreign insurance companies doing business in the United States will be eligible for relief. They were added at the request of the insurance industry to reflect the common practice of invoking ancillary proceedings in the United States as part of the wind up of multi-national insurers. Insurance regulators can ask the relevant United States bankruptcy court to abstain from exercising jurisdiction over a foreign insurance company under Code section 305 in an appropriate case.

Nature of Foreign Proceeding. New chapter 15 divides "incoming" foreign proceedings into foreign main proceedings, which are pending in the country where the debtor has its center of main interests, and foreign non-main proceedings, which are themselves ancillary proceedings. A case under chapter 15 will be commenced by a petition filed by a "foreign representative" as defined in amended Section 101(23) of a "foreign proceeding" as defined in amended Section 101(24), accompanied by documents evidencing the foreign proceeding and the appointment and authority of the foreign representative. The order granting "recognition" of the foreign proceeding will specify if the foreign proceeding is main or non-main. Pending recognition, a foreign representative will be entitled to seek "provisional" or temporary relief if urgently needed.

Relief under Chapter 15. Unlike section 304, where all relief has been dependant on court approval based on satisfaction of a statutory list of criteria, chapter 15 provides that upon recognition of a foreign main proceeding, the automatic stay and selected other provisions of the Bankruptcy Code will take effect subject to the existing exceptions and protections in the Code. In addition, a foreign representative of a foreign main proceeding will be authorized to continue operation of a debtor’s business in the ordinary course.

The recognition procedure will be the sole entry point for access by a foreign representative to the state and federal court systems in the United States (except for the limited purpose of collecting the debtor’s accounts receivable). Venue will also be narrowed to a single entry point where the debtor has its principal place of business; if none, where litigation is pending against the debtor; if none, where venue will be consistent with interests of justice and the convenience of the parties, having regard to the relief sought (28. U.S.C. section 1410). If recognition is denied, the foreign representative will not be able to proceed in another court. If recognition is granted, the foreign representative can seek additional relief from the bankruptcy court or any other state or federal court, including commencing a full (as opposed to ancillary) case under the Code; if the foreign representative is acting on behalf of a foreign main proceeding, it may commence a voluntary proceeding under Section 301 or 302; otherwise it can only commence an involuntary case under Section 303 of the Code.

Communications and Coordination among Courts and Representatives. Chapter 15 also codifies the Model Law’s provisions for cooperation and communication among courts and representatives, for coordination of multiple proceedings and for untangling chapter 15 cases from cases which involve the same debtor and which have been commenced under other chapters. Under both the Model Law and Section 1525, courts and estate representatives in the enacting country must "cooperate to the maximum extent possible" with foreign courts and foreign representatives. The law entitles courts to "communicate directly with, or to request information or assistance directly from, foreign courts or foreign representatives."

The court will be able to implement such cooperation by "any appropriate means" including the appointment of persons to act at the direction of the court, coordination of administration and supervision of the debtor’s assets and affairs and use of coordination agreements or protocols. Following the Model Law, chapter 15, also promotes the coordination of concurrent proceedings involving the same debtor, including both coordination between a local proceeding and a foreign proceeding and coordination when foreign representatives more than one foreign proceeding seek recognition and relief.

IV. Financial Contract Amendments

Prior Law. Several provisions of the Bankruptcy Code, mostly added in 1997, walled-off financial market transactions from the effects of the automatic stay. The collapse of several large securities dealers shortly after the adoption of the Bankruptcy Code in 1979 raised concerns that the failure of one participant in the financial markets might have a ripple or domino effect causing wide-spread damage in the financial markets and led to changes in insolvency laws giving certain financial market participants broader rights to exercise contract remedies upon the bankruptcy or insolvency of a counterparty to a financial contract. Designed to protect the market from disruption in the event that a participant became bankrupt, the provisions permitted liquidation of certain types of financial contracts based upon insolvency of a party, even if that party was bankrupt.

Purpose and Scope of Amendments. The amendments update and expand the financial contract provisions to allow termination, close-out, setoff and netting across a broader range of financial market participants and products.

Specific Changes. The financial contract provisions in the new legislation amend various provisions of the Bankruptcy Code, the Federal Deposit Insurance Act ("FDIA"), the Federal Credit Union Act ("FCUA"), the Federal Deposit Insurance Corporation Improvement Act ("FDICIA") and the Securities Protection Act ("SIPA") governing the rights and remedies of financial market participants under commodity contracts, forward contracts, securities contracts, repurchase agreements, swaps and netting agreements (collectively, "Financial Contracts"). Previous measures were enacted somewhat randomly in statutes, regulation and policy statements as Congress, the FDIC, and the Securities Investor Protection Corporation ("SIPC") reacted to concerns and problems. The amendments will clarify uncertainties in existing law, harmonize the laws affecting different types of debtors and provide a more coherent scheme for treatment of financial contracts in insolvency proceedings.

The amendments expand the definitions in the Bankruptcy Code, the FDIA and FCUA of "securities contract," "commodity contract," "forward contract," "repurchase agreement," and "swap agreement." The revised definition of "securities contract" now expressly covers margin loans and also makes clear that agreements for the sale and repurchase of securities are included in the definition of "securities contract." The definition of "swap agreement" is expanded to pick up additional swap transactions such as total return swaps, credit swaps and weather swaps and will permit expanded coverage as the swap market develops by including transactions which presently, or in the future, become "the subject of recurrent dealings in the swap markets." The definition of "repurchase agreement" in the Bankruptcy Code will now harmonize with the definition under the FDIA and FCUA to include mortgage related securities, mortgage loans and interests in mortgage loans. The definitions will expressly include any related security agreement or credit enhancement.

The parties eligible to take advantage of these special provisions presently are limited to commodity brokers, forward contract merchants, stock brokers, financial institutions or securities clearing agencies. The amendments add significant market players, defined as "financial participants," who satisfy specific tests for dollar volume of activity in the financial markets. Netting contracts between financial institutions which are enforceable under FIDCIA will no longer need to be governed by the laws of the United States or a particular state. Cross product netting agreements between certain parties will be enforceable in bankruptcy proceedings to the extent the underlying financial contracts could be closed out by the particular counterparty.

V. Overview of the Rules Governing Administration of Financial Contracts in Insolvency Proceedings.

Application of these rules which vary with the type of debtor, the type of insolvency proceeding, the type of Financial Contract and the identity of the counterparty. The following is a brief overview of these rules to facilitate analysis of the foregoing amendments.

Business debtor bankruptcy proceedings. Commodity brokers, forward contract merchants, stockbrokers, financial institutions, financial participants and securities clearing agencies may close out and enforce security for commodity contracts, forward contracts, securities contracts (including margin loans and agreement for the sale and repurchase of securities) and related master netting agreements, notwithstanding the automatic stay and may not be enjoined from enforcing default provisions based on the occurrence of a bankruptcy or the financial condition of a party (commonly called "ipso facto" provisions) or from enforcing other remedies under such contracts.

Counterparties to repurchase agreements and swap agreements may close out and enforce security for repurchase agreements, swap agreements and related master netting agreements notwithstanding the automatic stay and may not be enjoined from enforcing ipso facto provisions or other remedies.

Prepetition margin payments or settlement payments made by the debtor with respect to any such Financial Contracts may not be recovered as preferences or fraudulent transfers, except in the case of transfer made with actual intent to hinder, delay or defraud creditors.

Stockbroker Liquidation Proceedings under SIPA. Creditors may liquidate, terminate or accelerate securities contracts, commodity contracts, forward contracts, repurchase agreements, swap agreements or master netting agreements and foreclose on any cash collateral pledged by the debtor, notwithstanding the automatic stay or any order or decree obtained by SIPC in a stockbroker liquidation proceeding. However, SIPC may obtain an injunction prohibiting creditors from foreclosing on, or disposing of, securities pledged by the debtor, sold by the debtor under a repurchase agreement or lent by a debtor under a securities lending agreement. In the past, SIPC has routinely sought and obtained injunctions against the close out of securities contracts and repurchase agreements, but in a series of policy letters has made clear that following receipt from a counterparty of an affidavit as to the absence of SIPC fraud and the existence of a perfected security interest in any collateral or underlying securities, SIPC would consent (and would urge the trustee to consent) to the counterparty’s obtaining relief from the injunction provided that the collateral or underlying securities were not needed to satisfy customer claims in the liquidation proceeding. In the event SIPC and the trustee determined that the collateral or underlying securities were needed to satisfy customer claims, the trustee would perform the debtor’s obligation or pay the counterparty for the collateral or underlying securities.

Prepetition margin payments and settlement payments would be afforded the same protection as in a regular bankruptcy proceeding, as discussed above.

FDIC-insured Depository Institution Conservatorship or Receivership Proceedings. Counterparties to securities contracts, commodity contracts, forward contracts, repurchase agreements and swap agreements (referred to collectively in the FDIA as "qualified financial contracts") with the insured depository institution may close out such qualified financial contracts, subject to certain limitations and the right of the FDIC to transfer such qualified financial contracts. The FDIC as conservator or receiver of an insured depository institution has the right to transfer to another financial institution all qualified financial contracts between the insured depository institution and any one counterparty or its affiliates. The conservator or receiver is required to notify the counterparty of the transfer by 5:00 p.m. on the business day following the date of appointment of the receiver or the business day following the transfer in the case of a conservatorship.

After 5:00 p.m. on the business day following the appointment of the FDIC as receiver, provided that the counterparty has received no notice that the receiver has made a transfer of the qualified financial contracts to another financial institution, the counterparty may enforce, and may not be enjoined from enforcing, any default based on the appointment of the FDIC as receiver and may terminate, liquidate or accelerate any qualified financial contract with the insured depository institution, foreclose on any security agreement securing such qualified financial contract and enforce any master agreement for the netting of obligations with respect to such qualified financial contracts.

In the case of an FDIC conservatorship, a counterparty to a qualified financial contract with the insured depository institution may enforce, and may not be enjoined from enforcing, any default under a qualified financial contract which is enforceable under applicable non-insolvency law and may terminate, liquidate or accelerate any qualified financial contract with the insured depository institution, foreclose on any security agreement securing such qualified financial contract and enforce any master agreement for the netting of obligations with respect to such qualified financial contracts. However, the counterparty may not enforce an ipso facto provision or default based on the appointment of the FDIC as conservator for the insured depository institution.

Any transfers of money or property by an insured depository institution may not be recovered as a preference or fraudulent transfer, except in the case of transfers made with actual intent on the part of the transferee to hinder delay or defraud creditors.

VI. Conclusion

Although versions of this bill have circulated for many years in Congress, the newly enacted S. 256 represents perhaps the most sweeping changes to the Bankruptcy Code since its enactment. Indeed, many of the amendments represent changes in not only the mechanical workings of the Bankruptcy Code, but also, with respect to at least individual debtors, its underlying philosophy. The amendments affecting chapter 11 cases should also have a material impact on the administration of chapter 11 and as a result, the debtor-creditor negotiating dynamics could be altered dramatically. Lastly, the new chapter 15 represents the culmination of many years of work by international insolvency practitioners and experts in their efforts to harmonize cross-border proceedings.

Footnotes

1 It should also be noted that, unless the creditor has received effective notice under these new provisions, the court may not impose any monetary penalty for the violation of the automatic stay or the provisions relating to the turnover of property (Sections 542 and 543 of the Bankruptcy Code) by such creditor. exceeding $750 within 70 days before filing. And, a debt incurred to pay a nondischargeable tax claim will not be dischargeable.

2 A "domestic support obligation" is a debt that accrues pre- or postpetition that is recoverable by a spouse, child, other family member, or by the government on behalf of such people. It must be in the nature of alimony, maintenance or support pursuant to a separation agreement, divorce decree or property settlement, a court order or a determination by a governmental unit.

3 The maximum amount of fees that may be charged by a BPP will most likely be set in the Federal Rules of Bankruptcy Procedure or by guidelines promulgated by the Judicial Conference of the U.S. (JCUS).

4 Pursuant to new Section 101(12A), a Debt Relief Agency is defined as any "person who provides any bankruptcy assistance to an assisted person" for compensation except (1) an officer, director, employee of agent of the person who provides assistance, a non-profit organization exempt under IRC Section 501(c)(3), (3) a creditor of the assisted person to the extent that creditor is assisting the person in restructuring a debtor owed to the creditor, (4) a depositary institution or credit union, (5) author, publisher, or distributor of works subject to copyright protection.

5 These new grounds also constitute cause for the conversion or dismissal of a Chapter 11 proceeding under Section 1112.

2005-04-24T20:45:00.000-07:00

Buying A Home After Bankruptcy - Get A Mortgage Loan After Bankruptcy
by: Carrie Reeder

If you have a recent bankruptcy on your credit and are looking to get financing for a home, there is hope. Buying a home with bad credit will just put more emphasis on the other two factors needed to get a mortgage loan, which are; income verification and a down payment.

After bankruptcy most lenders want you to wait at least 2 years from the time of the bankruptcy discharge before they will consider you for a mortgage loan. After the two year waiting period is over, you should be able to get financing easily. You should also be able to get 100% financing as well. You can usually achieve this as long as at least most of your payments have been reported to the credit bureau as having been paid on time since the discharge of your bankruptcy.

If you are looking to get a mortgage loan after bankruptcy sooner than the 2 years from the time of discharge, you will need to have almost flawless payment history since your bankruptcy discharge. Also, you may need to have a down payment. If you have even 3-5% to use as a down payment, that may be enough to help you get approved.

There are ways to get a down payment for your mortgage besides having the money saved in the bank. Here are some ideas of ways to do that:

Borrow or ask for a gift from relatives. After you have financed the house, you can usually go and take out a 2nd or 3rd mortgage up to the full value of your house, and then you could repay the relatives. Keep in mind that if you intend the money to be as a loan only from the relatives, you would need to disclose that to the lender before you close. Lenders usually have regulations about where the down payment is coming from and if you are not honest, it could be considered defrauding a lender.

There are down payment assistance programs like Neighborhood Gold or the Nehemiah program. These programs basically aid the seller in helping you with a down payment. Receiving a down payment from the seller of the property is illegal, but through these programs, it is legal. There are also other down payment assistance programs which are grants and do not need to be repaid or paid for by anyone. To find out about these, do a search on “down payment assistance” with your favorite search engine.

You could cash out a 401K or another investment and like in the first example, repay yourself with a 2nd or 3rd mortgage after the loan has closed. Mortgage loans after bankruptcy are getting to be much easier to obtain these days.

Carrie Reeder is the owner of abcloanguide.com. ABC Loan Guide is an informational site with articles and lists of recommended lenders for bad credit mortgage loans.

2005-04-23T10:57:00.000-07:00

Bush Signs Bankruptcy Law

WASHINGTON (AFP) — US President George W. Bush signed into law a measure that makes it tougher for Americans to get out of debt by filing for personal bankruptcy.

"Bankruptcy should always be a last resort in our legal system. If someone does not pay his or her debts, the rest of society ends up paying them," Bush said at a signing ceremony.

"In recent years, too many people have abused the bankruptcy laws. They've walked away from debts even when they had the ability to repay them. This has made credit less affordable and less accessible, especially for low-income workers who already face financial obstacles," the president said.

Bush said the law would force those who can pay back at least a portion of their debts to do so, while people who earn less than a state's median income would not face the same requirement.

The legislation, which drew support from some opposition Democrats, was seen as a major victory for retailers, banks and credit-card companies, which pushed for the legislation for more than a decade.

Business interests complained that previous bankruptcy law amounted to a windfall for consumers, who have been allowed to erase their debts in court after giving up their assets. Some 1.6 million Americans filed for personal bankruptcy last year.

Consumer groups and congressional opponents said that the bill is a bonanza for the already lucrative credit-card industry, and a disaster for consumers enticed by predatory lenders to spend beyond their means, and others who go into debt because of health care debts or divorce.

http://www.debtcompany.org/debt-blog/

2004-08-26T17:13:00.000-07:00

Which Mortgage Should I Choose? Key Questions to Ask Yourself and Lenders When Shopping for a Mortgage! Traditional Fixed Rate Mortgage? Graduated-Payment Mortgage? Adjustable Rate Mortgage? FHA Mortgage? Two-Step Mortgage?
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sponsor: http://1-Mortgage.net
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You are wondering which kind of mortgage is best. The answer: There is no one correct answer. Deciding which type of mortgage will best fulfill your needs can be difficult. There are so many types of loans and different term lengths. Your choice is extremely important and can take some time and effort to research. While often neglected by homebuyers, a little research before choosing your mortgage can save you thousands of dollars in the long run.

There are several elements of a loan that should be analyzed. While one of these elements may suggest one type of loan, another may call for a different type. You must weigh each ingredient separately and collectively. You will find that your answers to the questions below will ultimately determine the type of mortgage that best fits your needs.

How long do you plan to stay in this home?
Five years? Ten years? Thirty years? The length of time you will be in the home will certainly play a part in determining which loan to apply for. If you only plan to be in the home for 5–7 years or less, you should seriously consider an adjustable rate loan. If you intend on staying 20–30 years, a fixed rate mortgage may be right for you.

How much risk are you willing to accept?
If you are the type of buyer that needs to know exactly what you will be paying each month for the term of the mortgage, a fixed rate mortgage will fulfill this need. The fixed rate loan, however, will also net a higher interest rate. If you are willing to take some risk of fluctuations in the interest rate, you may be able to receive a lower interest rate.

What are your income expectations?
Plan for the future. Do you anticipate a gradual or dramatic increase in your income in the next few years? If you expect a big increase, a graduated payment mortgage may be best for you.

How much cash do you have available for upfront costs?
If you have the resources, you may want to make a larger down payment to lower your monthly payment. By keeping a higher monthly payment however, you might be able to shorten the term of the loan to a 15-year loan in order to pay it off quicker.

Keep in mind that you’ll have closing costs and fees to pay in addition to your down payment. If you don’t have much cash saved for your upfront costs, don’t despair. You may be need to accept a higher monthly payment or even lower your monthly obligation by choosing an adjustable rate mortgage.

In addition to choosing a type of loan, you must also consider which lender to use. Once again, several factors will influence your decision.

Annual Percentage Rate (APR)
This is most likely the best way to make an "apples-to-apples" comparison of lenders. The APR reflects the cost of credit on a yearly rate and includes any points and fees in addition to the interest rate.

Interest Rate
Find out the rate the lender will commit and how long the lender will guarantee it. Get any commitments in writing. As with any transaction, if it isn’t in writing it doesn’t exist.

Points and fees
These factors will vary greatly. Look out for hidden fees. Make sure the lenders disclose all fees; ask what they charge and what is included and what is not.

Loan Approval
Both approval and funding time should be considered. You don’t want to lose a prospective home because your lender takes weeks to fund your loan. A lender should be able to fund the loan within ten days.

Lender Reputation
Don’t rely on solely someone else’s recommendation. You, not your friend, must feel comfortable with your lender. If you do feel good about your lender and trust him , it will be much easier to trust his advice on what kind of mortgage will best suit your needs.

We sincerely hope these tips and ideas will be of value to you. The types of loans mentioned above are only a few of the multitude of loan types available. If we may be of any further service please contact us: http://1-Mortgage.net

2004-08-14T11:07:00.000-07:00

What do creditors want?
http://www.debt-education.org/what-do-creditors-want.html

There's an old saying that you can't borrow money unless you can prove that you don't need it. While that technically isn't true, banks, retailers and other companies tend to be cautious about making credit available to their customers. When you understand what credit grantors are looking for, you can increase your chances of qualifying.

First and foremost, credit grantors want to be sure that you will pay them back. While creditors can recover unpaid money through legal action, it is costly. It's less risky for them to lend carefully in the first place. Although that stand seems to lacking in the credit card industry, who is granting credit to consumers who really shouldn't qualify at all.

How do creditors determine whether you'll be likely to pay them back? First, they generally look to see how well you've paid other creditors. Experience has shown that individuals who pay other creditors on time are more likely to pay them on time as well. That's why it's important to pay your bills on time.

Having too much credit is not viewed favorably by credit grantors. Numerous credit cards, loans and other debts on your credit record could mean potential repayment problems if you lose your job or experience other unforeseen circumstances.

Your employment and banking record also gives potential creditors insight into your financial lifestyle. Keeping the same job rather than frequently changing jobs and having money in the bank instill confidence that you will handle credit responsibly.

If your personal finances meet the criteria described here, you'll probably be able to obtain credit without too much difficulty. If not, start taking steps to improve your financial picture. Once credit grantors see the improvement and your commitment to do better, you should be able to get the credit you deserve.

http://www.debt-education.org/what-do-creditors-want.html

2004-08-08T09:37:00.000-07:00

Refinancing

http://www.1-mortgage.org

Refinancing is a good financial move if the current interest rate on your mortgage is at least 2 percentage points higher than the prevailing market rate.

There are other considerations too, such as how long you plan to stay in the house. Most sources say that it takes at least three years to fully realize the savings from a lower interest rate, given the costs of the refinancing. Let us give you a FREE quote!

Refinancing can be a good idea if:

• You need to get out of a high interest rate loan or want to take advantage of lower rates being offered. But you should remain in the house long enough to make the additional fees worthwhile.

• You have an adjustable-rate mortgage (ARM) and want a fixed-rate loan to have the certainty of knowing exactly what the mortgage payment will be for the life of the loan.

• You want to convert to an ARM with a lower interest rate or more protective features (such as a better rate and payment caps) than the ARM they currently have.

• You want to build up equity more quickly by converting to a loan with a shorter term.

• You want to draw on the equity built up in your home to get cash a cash advance.

If you decide that refinancing is not worth the costs, ask your lender whether you may be able to obtain all or some of the new terms you want by agreeing to a conversion of your existing loan instead of a refinancing.

Should You Refinance Your ARM? In deciding whether to refinance an ARM you should consider these questions:

• Is the next interest rate adjustment on your existing loan likely to increase your monthly payments substantially? Will the new interest rate be two or three percentage points higher than the prevailing rates being offered for either fixed-rate loans or other ARMs?

• If the current mortgage sets a cap on your monthly payments, are those payments large enough to pay off your loan by the end of the original term? Will refinancing to a new ARM or a fixed-rate loan enable you to pay your loan in full by the end of the term?

http://www.1-mortgage.org/Refinancing.html

2004-08-07T22:34:00.000-07:00

Reverse Mortgages

http://www.1-mortgage.net/Reverse_Mortgages.html
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If you are age 62 or older and are house-rich, cash-poor, a reverse mortgage may be an option to help increase your income. However, because your home is such a valuable asset, you may want to consult with your family, attorney or financial advisor before applying for any reverse mortgage. Knowing your rights and responsibilities as a borrower may help to minimize your financial risks and avoid any threat of foreclosure or loss of your home. Reverse mortgages are considered risky because at the end of it you don't own your home anymore.

Reverse Mortgages

There are three reverse mortgage plans available today: FHA-insured, lender-insured, and uninsured.

A reverse mortgage is a type of home equity loan that allows you to convert some of the equity in your home into cash while you retain home ownership. Reverse mortgages work much like traditional mortgages, only in reverse. Rather than making a payment to your lender each month, the lender pays you. Unlike conventional home equity loans, most reverse mortgages do not require any repayment of principal, interest or servicing fees for as long as you live in your home. Funds obtained from a reverse mortgage may be used for any purpose, including meeting housing expenses such as taxes, insurance, fuel and maintenance costs.

To qualify for a reverse mortgage, you must own your home. The reverse mortgage funds may be paid to you in a lump sum, in monthly advances, through a line-of-credit, or in a combination of the three, depending on the type of reverse mortgage and the lender. The amount you are eligible to borrow generally is based on your age, the equity in your home, and the interest rate the lender is charging.

Because you retain title to your home with a reverse mortgage, you also remain responsible for taxes, repairs, and maintenance. Depending on the plan you select, your reverse mortgage becomes due with interest either when you permanently move, sell your home, die or reach the end of the pre-selected loan term. The lender does not take title to your home when you die, but your heirs must pay off the loan. The debt is usually repaid by refinancing the loan into a forward mortgage or by using the proceeds from the sale of your home.

http://www.1-mortgage.net/Reverse_Mortgages.html

2004-08-01T10:38:00.000-07:00

Reverse Mortgages

http://debt-education.org/reverse-mortgages.html

If you are age 62 or older and are house-rich, cash-poor, a reverse mortgage may be an option to help increase your income. However, because your home is such a valuable asset, you may want to consult with your family, attorney or financial advisor before applying for any reverse mortgage. Knowing your rights and responsibilities as a borrower may help to minimize your financial risks and avoid any threat of foreclosure or loss of your home. Reverse mortgages are considered risky because at the end of it you don't own your home anymore.

There are three reverse mortgage plans available today: FHA-insured, lender-insured, and uninsured.

A reverse mortgage is a type of home equity loan that allows you to convert some of the equity in your home into cash while you retain home ownership. Reverse mortgages work much like traditional mortgages, only in reverse. Rather than making a payment to your lender each month, the lender pays you. Unlike conventional home equity loans, most reverse mortgages do not require any repayment of principal, interest or servicing fees for as long as you live in your home. Funds obtained from a reverse mortgage may be used for any purpose, including meeting housing expenses such as taxes, insurance, fuel and maintenance costs.

To qualify for a reverse mortgage, you must own your home. The reverse mortgage funds may be paid to you in a lump sum, in monthly advances, through a line-of-credit, or in a combination of the three, depending on the type of reverse mortgage and the lender. The amount you are eligible to borrow generally is based on your age, the equity in your home, and the interest rate the lender is charging.

Because you retain title to your home with a reverse mortgage, you also remain responsible for taxes, repairs, and maintenance. Depending on the plan you select, your reverse mortgage becomes due with interest either when you permanently move, sell your home, die or reach the end of the pre-selected loan term. The lender does not take title to your home when you die, but your heirs must pay off the loan. The debt is usually repaid by refinancing the loan into a forward mortgage or by using the proceeds from the sale of your home.

What to consider about reverse mortgages:

• Reverse mortgages are rising-debt loans. This means that the interest is added to the principal loan balance each month, because it is not paid on a current basis. Therefore, the total amount of interest you owe increases significantly with time as the interest compounds.

• All three plans (FHA-insured, lender-insured, and uninsured) charge origination fees and closing costs. Insured plans also charge insurance premiums, and some impose mortgage servicing charges. Your lender may permit you to finance these costs so you will not have to pay for them in cash. But, these costs will be added to your loan amount.

• Reverse mortgages use up some or all of the equity in your home, leaving fewer assets for you and your heirs in the future.

• You generally can request a loan advance at closing that is substantially larger than the rest of your payments.

• Your legal obligation to pay back the loan is limited by the value of your home at the time the loan is repaid. This could include increases in the value (appreciation) of your home after your loan begins.

• Reverse mortgage loan advances are nontaxable. Further, they do not affect your Social Security or Medicare benefits. If you receive Supplemental Security Income, reverse mortgage advances do not affect your benefits as long as you spend them within the month you receive them. This is true in most states for Medicaid benefits also. When in doubt, check with a benefits specialist at your local area agency on aging or legal services office.

• Some plans provide for fixed rate interest. Others involve adjustable rates that change over the loan term based upon market conditions.

• Interest on reverse mortgages is not deductible for income tax purposes until you pay off all or part of your total reverse mortgage debt.

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The three types of reverse mortgages, FHA-insured, lender-insured and uninsured, vary according to their costs and terms. Although the FHA and lender-insured plans appear similar, important differences exist.

FHA-insured: This plan offers several reverse mortgage payment options. You may receive monthly loan advances for a fixed term or for as long as you live in the home, a line of credit, or monthly loan advances plus a line of credit. This reverse mortgage is not due as long as you live in your home. With the line of credit option, you may draw amounts as you need them over time. Closing costs, a mortgage insurance premium and sometimes a monthly servicing fee is required. Interest is charged at an adjustable rate on your loan balance; any interest rate changes do not affect the monthly payment, but rather how quickly the loan balance grows over time.

The FHA-insured reverse mortgage permits changes in payment options at little cost. This plan also protects you by guaranteeing that loan advances will continue to be made to you if a lender defaults. However, FHA-insured reverse mortgages may provide smaller loan advances than lender-insured plans. Also, FHA loan costs may be greater than uninsured plans.

Lender-insured: These reverse mortgages offer monthly loan advances or monthly loan advances plus a line of credit for as long as you live in your home. Interest may be assessed at a fixed rate or an adjustable rate, and additional loan costs can include a mortgage insurance premium (which may be fixed or variable) and other loan fees.

Loan advances from a lender-insured plan may be larger than those provided by FHA-insured plans. Lender-insured reverse mortgages also may allow you to mortgage less than the full value of your home, thus preserving home equity for later use by you or your heirs. However, these loans may involve greater loan costs than FHA-insured, or uninsured loans. Higher costs mean that your loan balance grows faster, leaving you with less equity over time.

Some lender-insured plans include an annuity that continues making monthly payments to you even if you sell your home and move. The security of these payments depends on the financial strength of the company providing them, so be sure to check the financial ratings of that company. Annuity payments may be taxable and affect your eligibility for Supplemental Security Income and Medicaid. These reverse annuity mortgages may also include additional charges based on increases in the value of your home during the term of your loan.

Uninsured: This reverse mortgage is dramatically different from FHA and lender-insured reverse mortgages. An uninsured plan provides monthly loan advances for a fixed term only, a definite number of years that you select when you first take out the loan. Your loan balance becomes due and payable when the loan advances stop. Interest is usually set at a fixed interest rate and no mortgage insurance premium is required.

If you consider an uninsured reverse mortgage, carefully think about the amount of money you need monthly? How many years you may need the money? How you will repay the loan when it comes due? And, how much remaining equity you will need after paying off the loan?

If you have short-term but substantial cash needs, the uninsured reverse mortgage can provide a greater monthly advance than the other plans. However, because you must pay back the loan by a specific date, it is important for you to have a source of repayment. If you are unable to repay the loan, you may have to sell your home and move.

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One of the best protections you have with reverse mortgages is the Federal Truth in Lending Act, which requires lenders to inform you about the plan's terms and costs. Be sure you understand them before signing. Among other information, lenders must disclose the Annual Percentage Rate (APR) and payment terms. On plans with adjustable rates, lenders must provide specific information about the variable rate feature. On plans with credit lines, lenders also must inform you of any charges to open and use the account, such as an appraisal, a credit report, or attorney's fees.

If you are interested in obtaining a current list of lenders participating in the FHA-insured program, sponsored by the Department of Housing and Urban Development (HUD), or additional information on reverse mortgages and other home equity conversion plans, write to:

AARP Home Equity Information Center American Association of Retired Persons 601 E Street, N.W. Washington, D.C. 20049

For additional information, you also may contact the:

National Center for Home Equity Conversion 7373 - 147 St. West, Suite 115 Apple Valley, MN 55124

This organization requests that you send a self-addressed stamped envelope.

http://debt-education.org/reverse-mortgages.html

2004-07-07T06:37:00.000-07:00

Applying For Your Mortgage
sponsored by http://debt-education.org
===============================================

Want some help going step-by-step through the process of applying for your mortgage loan? Learn what to expect and what your options are.

Keep in mind, there is no substitute for a direct relationship with a reputable mortgage lender. Mortgage can be complicated, and every state has different laws and regulations. Your mortgage lender will know the laws and regulations. So turn to your lender for help if there's something you don't understand.

Buying a home is stressful and the process of applying for and qualifying for your mortgage is one of the most stressful financial transactions you'll ever make. We all worry that we're not going to qualify and that could end our dream of being a home owner.

We think if you know what the mortgage process is all about and what your lender is looking for you'll find applying for your mortgage isn't as bad as you think. Mostly it's just time consuming, but wouldn't you expect that from one of your biggest financial decisions? So, keep it all in perspective.

This material will help you understand the mortgage process.

Section 1: What to expect

When completing an application you don't really have to tell your mortgage lender everything about your whole life. All your lender needs to know about is your employment and finances, and information about the house you're buying. But you do need to provide quite a bit of detail, backed up by documentation about each of these topics.

The best way to make the application process easier and faster is to be prepared for it. Have the necessary information all assembled and ready to use before you start to fill out the application.That will help speed up the process for you.

Next, let's look at the information your lender will most likely need to know. Each lender has different procedures and requirements, so you'll find it useful to review this material with your lender.

The home you're buying serves as the collateral for the loan, your lender is going to want to evaluate the home through an independent appraisal company. When you make your application you will need to provide:

A complete copy of the sales contract (including all addenda signed by all parties), the full names of the sellers and buyers as they will appear on the new deed, the amount of earnest money deposited, and who will be responsible for the closing costs, origination fees and any other fees.

You'll need the mailing address and description of the property. The mailing address must be a complete description meaning the type of property (single family home, town house, condominium, etc.).

Contact information for the appraiser to gain access to the property. You'll need the name, address and telephone number of the real estate agent and/or seller of the property who can let the appraiser inside.

If your doing new construction, you'll need a complete set of plans and architectural specifications specifications.
Your lender is going to need some of your personal information. They will need a detailed and accurate picture of your financial situation. This means, you and your spouse (or other co-borrower(s)) must provide a good deal of personal information to your lender, be prepared to share your whole financial history. Let them ask you for it one piece at a time, but have it with you and ready to present.

Your personal information includes your social security number, age, number of years of schooling, marital status, number and age of dependents, and your current address and telephone number. If you've lived at your current address for less than two years, be ready to provide your addresses for the past seven years.

You'll also be asked for your current housing expenses, including rent or mortgage payments, real estate taxes, homeowners insurance, and the name and address of your landlord(s) or mortgage lender(s) for the past two years.

Your employment history and income sources are going to be very important in qualifying for a mortgage. Lenders need to make sure you can make regular monthly payments to repay your mortgage loan, along with the other costs associated with owning a home. So, they're going to require detailed information about your employment and other sources of income, including:

At least two years of verifyable employment history. This information should include your employer's name, address, telephone number, your job title or position, how long you held the job, and all financial information including salary, bonuses, commissions and average overtime pay. The mortgage lender will mail a form to your employer and previous employers (if you've held your current job for less than two year) to verify the information you provide.

The mortgage lender is going to need pay stubs and W-2 forms. The pay stubs should be from recent paychecks; W-2 forms for the last two years. Many lenders will require copies of your entire federal tax return, depending on your situation.

If you are self-employed, be prepared to provide complete tax returns and financial statements for the last two years, along with a profit-and-loss statement for the current year.

The lender will ask for a written explanation if there are gaps in your employment. If for any reason, like illness, layoffs or other factors, there are gaps in your employment record over the past two years, be prepared to provide your lender with this written explanation.

The lender will also want any records of dividends and interest received from any investments. The form 1099s provided annually for your tax records are ideal for fulfilling this requirement. If this doesn't apply to you, then don't worry about it and just say "none" when asked about investments of this type.

You'll need proof of any other income you rely upon. This can include rental properties, social security or disability payments, child support, and so on. Proof of these sources of income could be canceled checks, copies of leases, certification of benefits, divorce decrees, or other written evidence. You do need something in writing though.
Your lender needs to know the personal assets available to you, so you should be ready to furnish information about bank accounts, investments and significant pieces of property, including:

Show proof of all your bank accounts. These should include checking, savings and money market accounts. For each account, be prepared to provide the name and address of the institution, the name(s) on the account, the account number and the current balance.

You will be asked to sign a form that will be sent to your bank(s) to verify the information you provide. If there are differences, you'll have to account for them, so be sure you provide correct balance information.

Plan on providing statements for at least the last two months.

Be prepared to provide the current values of stocks, bonds, CDs and other investments, including mutual funds as well (available from newspaper stock tables).

Tell the lender your vested interest in retirement funds, including any IRAs, SEP-IRAs, Keogh plans or other personal or company-maintained retirement funds (available in annual or quarterly reports from your retirement fund).

If you have life insurance information, including the face amount and cash value of life insurance policies in force (available in annual or quarterly reports from your insurance company, or from the policy), your lender will want this information too.

Lenders will want automobile information, including the make, model and year of any vehicles you own.

Lenders are looking for all real estate information. The address and market value of any properties you own, along with the rents collected, the mortgage on the property and the monthly mortgage payments. A profit-and-loss statement is required for investment properties.

Be prepared to give the fair market value of significant personal property, including furniture, artwork, jewelry, photographic or computer equipment, and the like.

Your lender will also want to know where you will get the funds for your down payment, closing costs and other fees. Gifts may be used for this purpose, but must be verified in writing (and that includes gifts from relatives). If you're providing less than five percent of the sales price in down payment, the gift must come from a relative, along with a letter stating the person's relation to you, the amount of the gift and that no repayment is expected. It must be signed and dated.
Just as your lender needs to know what assets you have, they will want to know how much your liabilities are, what you owe, and about your credit history. You should be prepared with the following information:

An itemized list of current debts. This list will include all current bills you owe and loans you may have: automobile loans, bank and credit union loans, any existing mortgages or home equity loans, and outstanding balances on credit cards such as Visa/MasterCard/any credit cards in your name. Debts also include any alimony, child support or maintenance payments you're required to make. You should include all unsecured debt here (credit cards, mediacl bills owed, signature loans owed, etc.).
For each separate account or loan on your list, you should include the account or loan number, the monthly payment (if fixed), the number of payments remaining and the outstanding balance.

Credit report. You do not need to provide your lender with a credit report, but your lender will get one independently to verify the information you provide. And any differences between what you tell your lender and what's in your credit report will have to be resolved before your mortgage can be issued. For that reason, some home buyers may want to order a credit report for their own review before they complete their application. That way, if there are any errors or discrepancies you can take steps to correct them.
If you have any reason to believe your credit report may contain incorrect information, you should make every effort to correct it before you make your application. You can order a copy of your credit report by contacting one of the three major credit bureaus: TRW, Equifax, and Trans Union.

If you've have credit problems, do not try to hide them. Tell your lender candidly, and explain what happened. Lenders recognize that there are many legitimate reasons for difficulties with credit, such as unemployment, illness, marital problems or other difficulties. Provide a written explanation of the circumstances to your lender, and your explanation will be considered during the approval process.

Generally, if the problem has been corrected and your payments have been on time for a year or more, your credit will probably be considered satisfactory. However, chronic late payments, loan defaults or judgments against you may damage your credit standing and prevent you from obtaining your mortgage. If you have been through bankruptcy proceedings within the last seven years, you should be prepared to provide complete details along with supporting documents regarding your bankruptcy and the reason behind it.

Once you and your lender have completed your application (or just you, if you're doing it yourself), you will be asked to certify the information with your signature. You must also promise to notify the lender of any important changes in your status.

Finally, you agree that your lender can verify the information you've provided by making contact with all people and agencies you've listed, and agree to allow them to submit your account history to credit reporting agencies.

In addition, you'll be asked for information on your race and gender. This is used by the federal government to monitor compliance with fair housing and equal credit opportunity laws. Even though your lender is required by law to ask for this information, you don't have to provide it. Iit's strictly voluntary on your part and will have no effect on your loan application.

Most lenders ask applicants to pay for the credit report and appraisal at the time the application is completed. These fees are generally less than $500.

http://debt-education.org

2004-07-02T10:17:00.000-07:00

Credit Score Facts & Fallacies
sponsored by http://debt-education.org
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Fallacy: My score determines whether or not I get credit.

Fact: Lenders use a number of facts to make credit decisions, including your FICO score. Lenders look at information such as the amount of debt you can reasonably handle given your income, your employment history, and your credit history. Based on their perception of this information, as well as their specific underwriting policies, lenders may extend credit to you although your score is low, or decline your request for credit although your score is high.

Fallacy: A poor score will haunt me forever.

Fact: Just the opposite is true. A score is a "snapshot" of your risk at a particular point in time. It changes as new information is added to your bank and credit bureau files. Scores change gradually as you change the way you handle credit. For example, past credit problems impact your score less as time passes. Lenders request a current score when you submit a credit application, so they have the most recent information available. Therefore by taking the time to improve your score, you can qualify for more favorable interest rates.

Fallacy: Credit scoring is unfair to minorities.

Fact: Scoring considers only credit-related information. Factors like gender, race, nationality and marital status are not included. In fact, the Equal Credit Opportunity Act (ECOA) prohibits lenders from considering this type of information when issuing credit. Independent research has been done to make sure that credit scoring is not unfair to minorities or people with little credit history. Scoring has proven to be an accurate and consistent measure of repayment for all people who have some credit history. In other words, at a given score, non-minority and minority applicants are equally likely to pay as agreed.

Fallacy: Credit scoring infringes on my privacy.

Fact: Credit scoring evaluates the same information lenders already look at the credit bureau report, credit application and/or your bank file. A score is simply a numeric summary of that information. Lenders using scoring sometimes ask for less information or fewer questions on the application form for example.

Fallacy: My score will drop if I apply for new credit.

Fact: If it does, it probably won't drop much. If you apply for several credit cards within a short period of time, multiple requests for your credit report information (called inquiries) will appear on your report. Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score.

2004-06-22T18:29:00.000-07:00

FICO
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http://www.debt-education.org/fico.html

The FICO score is used to make billions of credit decisions each year, including more than 75 percent of mortgage loan originations. In addition, more than 40 of the nation's 50 largest financial institutions rely on the FICO score to determine an individual's credit risk.

About Fair Isaac Company

Fair Isaac Corporation (NYSE:FIC) is the preeminent provider of creative analytics that unlock value for people, businesses and industries. The company's predictive modeling, decision analysis, intelligence management, decision management systems and consulting services power more than 25 billion mission-critical customer decisions a year. Founded in 1956, Fair Isaac helps thousands of companies in over 60 countries acquire customers more efficiently, increase customer value, reduce fraud and credit losses, lower operating expenses and enter new markets more profitably. Most leading banks and credit card issuers rely on Fair Isaac solutions, as do insurers, retailers, telecommunications providers, healthcare organizations and government agencies.

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A consumer-credit report is a factual record of a person's credit-payment history. Legislation governs who has access to a person's credit history, but typically it is open to lenders who need a quick and objective way to determine whether to grant credit.

Your credit history is a record of how you handle your finances, especially how well you pay back your debts. This credit history is reviewed based on a generally well-established scoring system.

Credit bureau scores are often called "FICO scores" because most credit bureau scores used in the U.S. are produced from software developed by Fair, Isaac and Co. They developed a confusing mathematical formula to determine how high a risk you are as a credit applicant.

There are other credit bureau scores, but FICO is used most often by creditors. With FICO, a higher score is desirable. Be aware that other credit bureaus may evaluate credit worthiness differently, and a high score may mean a consumer is a bigger risk.

FICO considers these factors (the approximate weight of each is in parentheses):

Payment history (35 percent) - Your score is negatively affected if you have paid bills late, had an account sent to collection or declared bankruptcy. The more recent the problem, the lower your score. For instance, a 30-day late payment today hurts more than a bankruptcy five years ago.

Outstanding debt (30 percent) - If the amount you owe is close to your credit limit, that likely will have a negative effect on your score. A low balance on two cards is better than a high balance on one.

Length of your credit history (15 percent) - The longer your accounts have been open the better.

Recent inquiries on your report (10 percent) - If you have recently applied for many new accounts, that may negatively affect your score. Remember, promotional inquiries don't count.

Types of credit in use (10 percent) - Loans from finance companies generally lower your credit score. FICO says this is most important when there isn't a lot of other information upon which to base a score.

Keep in mind that some companies may consider factors other than these when determining credit worthiness.

YOU are the original source of all this information. When you fill out an application, the creditor reports activity on that account to the bureaus. You can reduce errors by filling out the identifying information accurately and consistently.

The typical credit report includes four kinds of information:

· Identifying information, such as your name and date of birth.
· Public record information, such as whether you have filed for bankruptcy in the past 10 years
· Credit information, which includes your history of paying off loans and the amount of credit you now carry.
· Inquiries, which indicate whether you have been applying for a lot of credit lately.

So, what legally can be included in your credit report?

· Your identifying information.
· Your employment history.
· Your credit information.
· Delinquent child-support payments, and court action that has been taken against you as a result.

There also information that cannot be included on your credit report. This includes:

· Your race.
· Your religion.
· Your driving record.
· Notice of a Chapter 7 bankruptcy that is more than 10 years old.
· Debts that are more than seven years old.

So who has access to your credit report?

· Potential lenders.
· Landlords.
· Insurance companies.
· Employers and potential employers (usually only with your written consent).
· Companies with which you already have credit so they can monitor your account.

So you've applied for credit and discovered you have a low FICO score. Why might that have happened? The top 10 most common reasons are:

· Serious delinquency, and a public record or collection filed.
· Derogatory public record or collection filed.
· Time since delinquency is too recent or unknown.
· Level of delinquency on accounts.
· Number of accounts with delinquency.
· Amount owed on accounts.
· Proportion of balances to credit limits on revolving accounts is too high.
· Length of time accounts have been established is too short.
· Too many accounts with a balance on them.

http://www.debt-education.org/fico.html

2004-06-21T08:16:00.000-07:00

Some little know statistics:

http://www.debt-education.org

Did you know that if you make minimum payments to cover a $20,000 debt on your credit card charging 18 percent interest, it would take 28.5 years to pay it off, and actually cost you $68,000?

Did you know that Debt Settlement can help you become debt-free in 24 months or less by negotiating down your debt?

Did you know that American consumers have more than $700 billion in credit-card debt?

Did you know a bankruptcy filing stays on your credit history for up to 10 years and could have a damaging impact on your effort to get new jobs, insurance and credit?

Did you know credit counseling is successful only between 30 percent and 50 percent of the time in getting consumers out of debt and on the road to being investors instead of debtors?

Did you know that 92 percent of the people who take out consolidation loans to pay off credit-card debt find themselves in twice as much debt within just two years?

Did you know that 83 percent of divorced people surveyed said debt and financial distress was the No. 1 factor in the disintegration of their marriages?

Did you know that 90 percent of Americans slide into poverty after they retire?

Did you know that half the people who file for bankruptcy each month - 50,000 Americans - should not have done so because less drastic measures would have helped them get out of debt?

Did you know that if you're paying 18 percent interest on a credit card, your debt would double in just four years?

http://www.debt-education.org/debt-questions.html

2004-06-19T09:16:00.000-07:00

Debt Consolidation Loan
=================================
sponsored by Debt-Education.org
=====================================

Until recently, a debt consolidation loan was the only way to handle your debt in a monthly payment. You apply to a bank or credit union for a debt consolidation loan to pay off your creditors and your debts are rolled into one monthly payment. You pay the bank loan back, and for many people, the single monthly payment is easier for them to manage.

Depending on your income and debt ratio, you may be apply to a financial institution for a debt consolidation loan. This debt management loan could be either secured (backed up by collateral) or unsecured. Talk with a loan officer or a financial planner about your options. You can also talk to other financial institutions to find if they offer a better deal before signing on the dotted line.

When considering a debt consoludation loan, keep in mind that it is very common for consumers to continue to use their credit cards after they have consolidated their old debt. This results in increasing their total debt load and severely limiting their ability to repay all outstanding debts. Statistics show that most people who use consolidation loans to resolve their debt issues will find themselves right back in the same deep debt rut within two years. If you choose this option for managing you debt, you must back it up with practical budgeting and expenditures.

There is a very real down side to considations loans that most people don't take into consideration. A consolidation loan will mix your secured debt (debt which is secured by assets) with your unsecured debt (debt which is not tied to any assets). Since statistics show that debt consolidation as a financial solution is so prone to failure, you need to understand that you are really taking a big risk on yourself. You are agreeing to take debt that can't be tied to your assets (unsecured) and make it all secured debt. And then, if you default on any of it, you will loose the asset(s) and possibly face bankruptcy.

Most financial planners are not going to recommend consolidation loans to you if you've shown a financial spending pattern that indicates you probably won't be able to get yourself out of debt.

Most bank lenders are going to be more than delighted to take your application for a consolidation loan and won't address the pitfalls. Buyer beware!

What if you really wanted to get a debt consolidation loan, but were denied? You still have a few debt options. Dealing with debt will come down to your ability to pay and get mind-set that you are going to be creating a budget, and you're only chance out of debt is to stick to it religiously.

You need to speak with a financial advisor (not paid by the banks) or credit counselor (paid by the banks) who will give you ideas for working with your budget to payoff your debts. You can ask whether Debt Management Plan could work for you.

2004-06-14T10:35:00.000-07:00

Equal Credit Opportunity Act
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sponsored by http://debt-education.org
========================================

Congress paaed a law thats purpose is to ensures that all consumers will be given an equal chance to receive credit. The Equal Credit Opportunity Act says it is illegal for creditors to discriminate against applicants on the basis of their sex, marital status, race, national origin, religion, age or because they get public assistance income.

Creditors can use factors such as income, expense, debts, and credit history to judge applicant's credit worthiness.

The law protects you with regard to creditors who extend credit: banks, small loan and finance companies, retail and department stores, credit card companies, and credit unions. The law also covers real estate brokers who arrange financing and protects businesses applying for credit.

Things a credit cannot in taking your application for credit:

• Discourage you from applying because of your sex, marital status, age, national origin, or because you receive public assistance income.

• Ask you to reveal your sex, race, national origin, or religion. A creditor may ask you to voluntarily disclose this information if you are applying for a real estate loan. This information helps federal agencies enforce anti-discrimination laws. A creditor may ask what your residence or immigration status is.

• Ask whether you are divorced or widowed.

• Ask what your marital status is if you are applying for a separate, unsecured account. A creditor may ask for this information if you apply for a joint account or any account secured by property.

• Ask you for information about your husband or wife. A creditor may ask about your spouse if: your spouse is applying with you; your spouse will be allowed to use the account; you are relying on your spouse's income, alimony, child support income from a former spouse or if you reside in a community property state.

• Ask about your plans for having or raising children.

• Ask if you receive alimony, child support, or separate maintenance payments. A creditor may ask for this information if you are first told that you don't have to reveal it if you won't rely on it to get credit. A creditor may ask if you have to pay alimony, child support, or separate maintenance payments.

Things a creditor may not do in deciding to give you credit:

• Consider your sex, marital status, race, national origin, or religion

• Consider whether you have a telephone listing in your name. A creditor may consider whether there is a phone in your home.

• Consider the race of the people who live in the neighborhood where you want to buy or improve a house with borrowed money.

• Consider your age, with certain exceptions:

• If you are too young to sign contracts. Generally, this applies to those 18 and under.

• If you are 62 or over, and the creditor will favor you because of your age.

• If it is used to determine the meaning of other factors which are important to credit-worthiness.

• If it is used in a scoring system which favors applicants age 62 and over. A credit-scoring system assigns different points to your answers to application questions.

Things a creditor may not do in evaluating you for credit:

• Refuse to consider reliable public assistance income in same manner as other income.

• Discount income because of your sex or marital status.

• Discount or refuse to consider income because it is derived from part-time employment or from pension, annuity, or retirement benefit programs.

• Refuse to consider consistently received alimony, child support, or separate maintenance payments. A creditor may ask you for proof that this income has been received consistently.

You Also Have The Right...

• To have credit in your birth name (Mary Smith), your first name and your spouse's last name (Mary Jones), or your first name and a combined last name (Mary Smith-Jones).

• To get credit without a co-signer, if you meet the creditor's standards.

• To have a co-signer other than your husband or wife, if one is necessary.

• To keep your own accounts after you change your name, marital status, reach a certain age, or retire, unless the creditor had evidence that you are unable or unwilling to pay.

• To know whether your application was accepted or rejected within 30 days of filing it.

• To know why your application was rejected.

What you can do if you think a creditor has broken the law:

• Complain to the creditor.

• Check with your state's Attorney General's office to see if the creditor violated state laws.

• Bring a case in Federal district court.

• Join with others to file a class action suit.

• Report violations to the appropriate government agency. If you are denied credit, the creditor must give you the name and address of the agency to contact.

For more information contact the Federal Trade Commission.

The above information should be understood to be a general discussion of the subject matter and does not constitute a legal opinion about the situation. For further information please consult a qualified professional.

http://debt-education.org

2004-06-12T15:23:00.000-07:00

Tips on Re-establishing Credit

Develop a money management plan or budget. Your plan should include savings, housing, food, clothing, medical, insurance, auto and transportation, childcare costs, entertainment and other expenses. Buy reasonably priced items of real need with payments that fit easily into your budget.

• Pay as promised, on or before the due date.

• Put some money away each month. Establish a savings account. Creditors consider this evidence that you can handle money. Use it, if necessary, as security to borrow against.

• Establish a personal contact with the branch manager or loan officer of the bank or credit union where you maintain your accounts.

• Contact creditors whose accounts you have paid off earlier. They may consider reopening a line of credit. Points they may consider are how regular your payments were before problems arose and how long it took to resolve your problems.

• Do not make several applications for credit within a short time. Creditors sometimes look upon this unfavorably. Apply to one creditor and allow your repayment record to establish itself before applying elsewhere.

• Accept offers for pre-approved credit cards, but be aware of high interest rates.

• Accept offers from dealers who sell and finance their own merchandise. Take advantage of 90 days same as cash.

• If you must borrow money, offer security such as a car, savings account or other valuable property.

• If necessary, ask a relative or friend who has good credit standing to co-sign a loan application and share your liability.

• Avoid so-called credit repair clinics which charge high fees for doing what you can do yourself. The FFI's resource centers section on credit repair can provide information on the procedure to follow.

IF CREDIT IS DENIED

• Ask the creditor to furnish, in writing, the reason credit was denied.

• Check with the credit-reporting agency listed as the source of the adverse report to determine if the information reported is accurate. If the report is in error, you can have the incorrect information removed.

• Do not apply for credit elsewhere until the reason for the denial has been resolved.

• Keep in mind that the creditor is also looking at other factors such as length of time on the job, length of time at one address, and the percentage of income owed out of "take home" pay excluding housing cost. For most people, this should not exceed 20% excluding mortgage and car payments.

http://Debt-Education.org

2004-06-02T19:43:00.000-07:00

Women and Retirement
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Sponsored by: American-Debt.com
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Women receive smaller retirement benefits than men.

Among retirees age 55 and over, 55% of the men received pension benefits in 1994, versus 32% for women.11 The median benefit received by newly retired women was half of that received by newly retired men. In hard dollar terms, women 65 or older in 1995 who received benefits from an annuity and/or an employment-based pension plan, averaged $6,684 in benefits. Men pensioners averaged $11,460.12

Because the pension benefit picture is bleak for many women, the majority of older widows end up relying on Social Security benefits as their primary source of income, says the Administration on Aging.13 But here, too, retirement income disparities exist. According to the Social Security Administration, 58% of all adults receiving monthly Social Security benefits in 1998 were women, versus 42% men. Slightly more than 50% of the women received retired-worker benefits, versus more than 80% of the men, and those retired women workers earned an average monthly benefit of $676, versus $877 for retired male workers.14 Women who received survivor's benefits based on another person's work record (slightly less than a quarter of the women receiving Social Security benefits) received higher average benefits than male survivors ($750 versus $549).

Women live longer than men.

The average life expectancy at birth today for a woman is 79 years, compared with 72 years for a man, according to the Administration on Aging. The overall life expectancy for men and women is likely to increase during the 21st century. Furthermore, women tend to marry older men. Consequently, seven out of ten Baby Boomer women are expected to outlive their husbands. Many of those women will be widows for 15 to 20 years.15 Women who reach age 65 have an average life expectancy of slightly over 19 years, taking them to age 84. That's roughly four years longer than the average life expectancy of men turning 65.16

Women are poorer in retirement than men.

The financial impact of living longer than men is profound. According to the Administration on Aging, older women:17

Are twice as likely as men to live in a nursing home
Are more than twice as likely as men to live their retirement years in poverty
Will spend more years and a larger percentage of their lifetime disabled
Make up three out of four persons over the age of 65 who receive Supplemental Security Income

Especially significant, notes the Administration on Aging, is that over half the elderly widows now living in poverty were not living in poverty before their husbands died.18 The picture is even worse for older women in many minority groups.

Women are more conservative investors than men.

Studies and statistics regarding women and their investing habits, versus those of men, tend to be somewhat contradictory. On the one hand, women generally have been viewed as more timid, or conservative, investors than men. A Charles Schwab study of clients— total investment portfolios found that, while 73% of women owned stocks, 86% of men held these higher-risk securities. Conversely, 26% of women owned certificates of deposit (a safe but low-yielding investment vehicle), versus only 18% of the men.19

Interestingly, when it comes to investing for retirement, women actually contribute a higher percentage of their annual earnings to their retirement plans than men.20 However, they invest more conservatively. A General Accounting Office study in 1996 found 17.3% of women ages 51 to 61 held stocks as their primary investment in retirement plans, versus 31.8% for men.21 The 1997 study by Dreyfus and the National Center for Women and Retirement Research showed that women investors were more worried than men about running out of money in old age, preferred more conservative investments, wanted fixed/steady returns, were more unnerved by stock fluctuations, and worried more about investment decisions.22 The study also showed that women are three times more likely than men to not know what types of investments offer the best returns.23

The 1999 Women's Retirement Confidence Survey found that just as many women as men are saving for retirement (around 70%), though far fewer women actually have estimated how much income they will need once they retire.24 Furthermore, women say they are less confident than men about their financial preparation for retirement, and they admit they are more conservative than men in their investments for retirement. Only 27% of the women versus 42% of the men in the confidence survey said they were willing to take substantial financial risks for substantial gain.

On the other hand, many women who invest seem to do well, despite their more conservative approach. It's been well publicized that all-women investment clubs earn significantly more on average than all-men investment clubs, or those mixed including both genders. The National Association of Investors Corporation, which represents investment clubs, attributes the success of all-women clubs to the fact that women research more before investing, are less emotional about their investments, and stay on course better. Men, on the other hand, are less patient, more willing to take risk, and jump in and out of the market more often. However, the average value of the men's clubs is nearly four times that of the women's clubs because women invest less money on average each month.25

As these statistics underscore, the financial barriers and challenges faced by women are real and formidable. As one incubator participant put it, "Women are frozen in the headlights, caught in the dilemma of , ‘I know I should be doing something, but I don't know what to do.'"

http://www.nefe.org/pages/innovative.html

2004-05-31T10:41:00.000-07:00

Reverse Mortgages
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Sponsored by http://Credit-Card-Debt.Debt-Company.com
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If you are age 62 or older and are "house-rich, cash-poor," a reverse mortgage (RM) may be an option to help increase your income. However, because your home is such a valuable asset, you may want to consult with your family, attorney, or financial advisor before applying for an RM. Knowing your rights and responsibilities as a borrower may help to minimize your financial risks and avoid any threat of foreclosure or loss of your home.

This article will attempt to explain how RMs work. It describes similarities and differences among the three RM plans available today: FHA-insured; lender-insured; and uninsured. It also discusses the benefits and drawbacks of each plan. Each plan differs slightly, so be careful to choose the plan that best meets your financial needs. Organizations and government agencies that offer additional information about RMs are listed at the end of this brochure.

How Reverse Mortgages Work
A reverse mortgage is a type of home equity loan that allows you to convert some of the equity in your home into cash while you retain home ownership. RMs works much like traditional mortgages, only in reverse. Rather than making a payment to your lender each month, the lender pays you. Unlike conventional home equity loans, most RMs do not require any repayment of principal, interest, or servicing fees for as long as you live in your home. Funds obtained from an RM may be used for any purpose, including meeting housing expenses such as taxes, insurance, fuel, and maintenance costs.

Requirements and Responsibilities of the Borrower
To qualify for an RM, you must own your home. The RM funds may be paid to you in a lump sum, in monthly advances, through a line-of-credit, or in a combination of the three, depending on the type of RM and the lender. The amount you are eligible to borrow generally is based on your age, the equity in your home, and the interest rate the lender is charging.

Because you retain title to your home with an RM, you also remain responsible for taxes, repairs, and maintenance. Depending on the plan you select, your RM becomes due with interest either when you permanently move, sell your home, die, or reach the end of the pre-selected loan term. The lender does not take title to your home when you die, but your heirs must pay off the loan. The debt is usually repaid by refinancing the loan into a forward mortgage (if the heirs are eligible) or by using the proceeds from the sale of your home.

Common Features of Reverse Mortgages

Listed below are some points to consider about RMs.

• RMs are rising-debt loans. This means that the interest is added to the principal loan balance each month, because it is not paid on a current basis. Therefore, the total amount of interest you owe increases significantly with time as the interest compounds.

• All three plans (FHA-insured, lender-insured, and uninsured) charge origination fees and closing costs. Insured plans also charge insurance premiums, and some impose mortgage servicing charges. Your lender may permit you to finance these costs so you will not have to pay for them in cash. But remember these costs will be added to your loan amount.

• RMs use up some or all of the equity in your home, leaving fewer assets for you and your heirs in the future.

• You generally can request a loan advance at closing that is substantially larger than the rest of your payments.

• Your legal obligation to pay back the loan is limited by the value of your home at the time the loan is repaid. This could include increases in the value (appreciation) of your home after your loan begins.

• RM loan advances are nontaxable. Further, they do not affect your Social Security or Medicare benefits. If you receive Supplemental Security Income, RM advances do not affect your benefits as long as you spend them within the month you receive them. This is true in most states for Medicaid benefits also. When in doubt, check with a benefits specialist at your local area agency on aging or legal services office.

• Some plans provide for fixed rate interest. Others involve adjustable rates that change over the loan term based upon market conditions.

• Interest on RMs is not deductible for income tax purposes until you pay off all or part of your total RM debt.

How Reverse Mortgages Differ

This section describes how the three types of RMs -- FHA-insured, lender-insured, and uninsured -- vary according to their costs and terms. Although the FHA and lender-insured plans appear similar, important differences exist. This section also discusses advantages and drawbacks of each loan type.

• FHA-insured. This plan offers several RM payment options. You may receive monthly loan advances for a fixed term or for as long as you live in the home, a line of credit, or monthly loan advances plus a line of credit. This RM is not due as long as you live in your home. With the line of credit option, you may draw amounts as you need them over time. Closing costs, a mortgage insurance premium and sometimes a monthly servicing fee is required. Interest is charged at an adjustable rate on your loan balance; any interest rate changes do not affect the monthly payment, but rather how quickly the loan balance grows over time.

The FHA-insured RM permits changes in payment options at little cost. This plan also protects you by guaranteeing that loan advances will continue to be made to you if a lender defaults. However, FHA-insured RMs may provide smaller loan advances than lender-insured plans. Also, FHA loan costs may be greater than uninsured plans.

• Lender-insured. These RMs offer monthly loan advances or monthly loan advances plus a line of credit for as long as you live in your home. Interest may be assessed at a fixed rate or an adjustable rate, and additional loan costs can include a mortgage insurance premium (which may be fixed or variable) and other loan fees.

Loan advances from a lender-insured plan may be larger than those provided by FHA-insured plans. Lender-insured RMs also may allow you to mortgage less than the full value of your home, thus preserving home equity for later use by you or your heirs. However, these loans may involve greater loan costs than FHA-insured, or uninsured loans. Higher costs mean that your loan balance grows faster, leaving you with less equity over time.

Some lender-insured plans include an annuity that continues making monthly payments to you even if you sell your home and move. The security of these payments depends on the financial strength of the company providing them, so be sure to check the financial ratings of that company. Annuity payments may be taxable and affect your eligibility for Supplemental Security Income and Medicaid. These "reverse annuity mortgages" may also include additional charges based on increases in the value of your home during the term of your loan.

• Uninsured. This RM is dramatically different from FHA and lender-insured RMs. An uninsured plan provides monthly loan advances for a fixed term only -- a definite number of years that you select when you first take out the loan. Your loan balance becomes due and payable when the loan advances stop. Interest is usually set at a fixed interest rate and no mortgage insurance premium is required.

If you consider an uninsured RM, carefully think about the amount of money you need monthly; how many years you may need the money; how you will repay the loan when it comes due; and how much remaining equity you will need after paying off the loan.

If you have short-term but substantial cash needs, the uninsured RM can provide a greater monthly advance than the other plans. However, because you must pay back the loan by a specific date, it is important for you to have a source of repayment. If you are unable to repay the loan, you may have to sell your home and move.

Reverse Mortgage Safeguards

One of the best protections you have with RMs is the Federal Truth in Lending Act, which requires lenders to inform you about the plan's terms and costs. Be sure you understand them before signing. Among other information, lenders must disclose the Annual Percentage Rate (APR) and payment terms. On plans with adjustable rates, lenders must provide specific information about the variable rate feature. On plans with credit lines, lenders also must inform you of any charges to open and use the account, such as an appraisal, a credit report, or attorney's fees.

For More Information

If you are interested in obtaining a current list of lenders participating in the FHA-insured program, sponsored by the Department of Housing and Urban Development (HUD), or additional information on reverse mortgages and other home equity conversion plans, write to:

AARP Home Equity Information Center American Association of Retired Persons 601 E Street, N.W. Washington, D.C. 20049

For additional information, you also may contact the:

National Center for Home Equity Conversion 7373 - 147 St. West, Suite 115 Apple Valley, MN 55124

This organization requests that you send a self-addressed stamped envelope.
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Debt Help
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Debt Consolidation and Settlement
http://Debt-Company.com

2004-05-27T23:11:00.000-07:00

Drowning in debt? Let Debt-Company.com pull you to safety.

Let’s see if this sounds familiar. You have several credit cards in your wallet, and you’re not afraid to use the. You’ve run up a fair amount of debt, but so far you’ve been able to stay one step ahead of the debt collector by making the minimum payment on each card every month.

At this rate, guess when you’ll get out of debt?

If you’re $20,000 in debt on credit cards charging 18 percent interest, it would take you 28.5 years to pay them off if you make the minimum payments. Your actual cost to pay off the debt? A whopping $68,000?

What’s worse, that’s $68,000 that you didn’t save to buy a house. Didn’t save for your kids’ college education. Didn’t save for your retirement. You’re now in danger of being among the 90 percent of Americans who slide into poverty once they retire.

And you’re not alone. American consumers have amassed more than $700 billion in credit-card debt. Some 100,000 of us file for bankruptcy every month.

Filing for bankruptcy will stain your credit history for up to 10 years, and could make it hard to get new jobs, insurance and credit.

You could go the credit-counseling route. Guess what? Banks and credit-card companies love people who do that. They shave a little off your interest, and set you up to pay off 100 percent of your debt in four to seven years. Of course, the payment schedule is so unrealistic that credit counseling is successful only between 30 percent and 50 percent of the time.

So you figure maybe a consolidation loan is the route to take. It might be, especially if you own your home. You take out a new loan, pay off the credit cards and pay less each month. Uh-oh, one problem. Statistics show that 92 percent of the people who take out consolidation loans to pay off credit-card debt find themselves in twice as much debt within just two years.

Don’t let the facts get you down, though. Debt-Company.com has a life-ring to throw you in the form of something called debt negotiations. Our team of crack negotiators haggles with your creditors, typically getting you out of debt within two years for about 50 cents on the dollar.

That means if you owe $20,000 in unsecured debt, we’ll be able to get you free and clear for approximately $10,000, and that includes all our fees!

Did you know that Debt-Company.com has a 97.5 percent success rate getting its clients out of debt? Why does it work? Because we know what we’re doing, and because credit-card companies know that it’s better to get something than nothing.

Debt-Company.com doesn’t stop with negotiating a settlement with your creditors. We also review your tax filings and monthly expenses, create a financial plan and set you on the road to becoming an investor instead of a debtor. All at no extra cost.

For more information, go to our website at www.Debt-Company.com.

2004-05-24T06:38:00.000-07:00

Debt Settlement or Negotiation
================================
sponsored by http://www.debt-company.com
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A Debt Reduction Settlement is a process used by both debtors and creditors to settle a debt for less than what is owed. The process is also called Third Party Debt Negotiation. If negotiated properly on behalf of the debtor it can quickly and dramatically reduce the debtor's debt. Settlements typically range from 20% to 80% of the current debt, with the typical debt settled for less than 50 cents on the dollar.

While debtors may try to negotiate their own debt settlement, it is usually best working through a professional who knows the ropes, so to speak, and can watch out for the debtor's best interest. There is definitely a right way and a wrong way to handle this procedure and failing to do so correctly may yield negative results. Debt negotiation requires some knowledge and expertise in order to negotiate the most favorable settlement. The process is very different than that used to place consumers in a Debt Management Program.

Most professional debt negotiator fees are contingency-based. You are not billed by the hour as do most attorneys, but rather charged a percentage of the savings that are negotiated for you. If a debt settlement is not reached for you within YOUR desired range, there is usually NO settlement fee. The beauty of this fee arrangement is that it is in the agency's best interest to get you the best possible deal. The more the agency saves you, the more the agency earns. And vice-versa; the more the agency earns, the more it saves you. It is truly a win-win situation for all concerned

For more info visit:
http://www.debt-company.com
http://www.1-debt.com
http://www.american-debt.com

If you are a consumer with unsecured debt of at least $5,000, you may be able to reduce your debt 20% to 80% through a Debt Reduction Settlement. While a typical debt is settled for about 50 cents on the dollar, how much you save will depend on numerous factors.

Examples of the types of debt which may be settled include credit card debt, store charges, medical bills, service contracts, lease defaults, billing disputes, repossession deficiencies, signature loans, charge offs, past due utility bills, liens, judgments, attorney fees and debt stemming from lawsuits. Most any types of unsecured debt can be settled!

There are numerous factors to consider when negotiating a debt settlement. Some of these factors include, the type of debt, who the creditor is, the amount of debt, how old is the debt, your ability to pay the debt as agreed, your assets and liabilities, and so on.

But there is another important factor÷the ability to settle the debt. Debt settlements often require up-front cash to settle the debt. For example, if you have a $1,000 debt, you may need $500 cash to settle it, although the amount could be more or less. Most debtors, however, do not have ready cash to settle their debt÷and chances are, neither do you!
But don't fret! As you will soon learn there are effective ways to resolve this problem by various methods consumers can use to raise the funds required to settle their debt. In addition, a debt settlement specialist can help you establish a strategic savings plan in which to use to chip away at your debt.

It is important to understand that money obligations can often be settled over a period of time, settling each account as funds are raised. Because of all the factors involved, the first step in the debt settlement process is to determine if you have money obligations that meet the requirements of a successful debt settlement. For example, you may have a half dozen accounts of which all of them qualify, some of them qualify, or none of them qualify. The only way to determine this is to analyze your accounts and weigh all the factors with your objectives.

http://www.nfff.us/resources/debt/debt_settle.html

2004-05-21T19:57:00.000-07:00

Credit Scores: Facts & Fallacies
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sponsored by http://www.1-Debt.com
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Fallacy: My score determines whether or not I get credit.

Fact: Lenders use a number of facts to make credit decisions, including your FICO score. Lenders look at information such as the amount of debt you can reasonably handle given your income, your employment history, and your credit history. Based on their perception of this information, as well as their specific underwriting policies, lenders may extend credit to you although your score is low, or decline your request for credit although your score is high.

Fallacy: A poor score will haunt me forever.

Fact: Just the opposite is true. A score is a "snapshot" of your risk at a particular point in time. It changes as new information is added to your bank and credit bureau files. Scores change gradually as you change the way you handle credit. For example, past credit problems impact your score less as time passes. Lenders request a current score when you submit a credit application, so they have the most recent information available. Therefore by taking the time to improve your score, you can qualify for more favorable interest rates. Click here to see how improved scores can lead to savings.

Fallacy: Credit scoring is unfair to minorities.

Fact: Scoring considers only credit-related information. Factors like gender, race, nationality and marital status are not included. In fact, the Equal Credit Opportunity Act (ECOA) prohibits lenders from considering this type of information when issuing credit. Independent research has been done to make sure that credit scoring is not unfair to minorities or people with little credit history. Scoring has proven to be an accurate and consistent measure of repayment for all people who have some credit history. In other words, at a given score, non-minority and minority applicants are equally likely to pay as agreed.

Fallacy: Credit scoring infringes on my privacy.

Fact: Credit scoring evaluates the same information lenders already look at - the credit bureau report, credit application and/or your bank file. A score is simply a numeric summary of that information. Lenders using scoring sometimes ask for less information - fewer questions on the application form, for example.

Fallacy: My score will drop if I apply for new credit.

Fact: If it does, it probably won't drop much. If you apply for several credit cards within a short period of time, multiple requests for your credit report information (called "inquiries") will appear on your report. Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score.

http://www.1-Debt.com

2004-05-20T09:54:00.000-07:00

Credit Score

http://www.American-Debt.com
=========================================

When applying for credit, lenders review a variety of information to help them in their decision of whether or not the consumer is a good lending candidate. In this process, they will review one or more credit scores of the consumer applying for credit. A credit score is a number that tells a lender how likely an individual is to repay a loan, and if their payments will be made on time. A ñscorecardî or scoring model is used to determine the overall credit score. This is a mathematical equation that evaluates many types of information contained in the consumerâs credit report. This information is compared to a database of past credit reports and the scoring determined identifies what level credit risk the consumer is.

There are different types of credit scores; the most common scoring method used is the risk scoring system from Fair Isaac, commonly known as a FICO score. FICO scoring (Fair Isaac Company) is an automated rating process for credit reports. The score is meaningless by itself and must be used in conjunction with a validated strategy, which may be different for every creditor.

With the FICO system, there are five major categories that comprise a credit score.

1) Payment History: 35% of score.

This is a huge determining factor in determining a credit score. Lenders obviously want to know how a consumer has managed their financial obligations in the past. Late payments are not a complete negative, however, they are definitely frowned upon. An overall good credit score can outweigh one or two instances of late payments. It is important to realize that having no late payments does not constitute automatic approval either.

This factor evaluates:

• Payment information. This includes payments on various types of loans such as Visa, MasterCard, American Express, retail store credit cards, installment loans, finance company accounts and mortgage accounts.

• Public record and collection items. This includes bankruptcies, judgments, lawsuits, wage garnishments and collection items. These are considered serious, however, older items count less than recent items.

• No late payments. Each account that shows no late payment will increase a credit score.

2) Amounts Owed: 30% of score.

Many consumers carry balances on their credit cards, car loans, mortgages and other types of accounts. Depending on the amounts owed, it can mean the consumer is overextended, which may lead to late payments, or no payments at all. This factor determines if the consumer can currently manage more credit responsibly.
This factor evaluates:

• What is owed. Even if an account is paid in full, a credit report may still show a balance on that account. The balance on the consumerâs last statement is generally what is shown on their credit report.

• Who is owed. Part of this score takes into consideration the amount owed on specific types of accounts, such as credit cards and loans.

3) Length of Credit History: 15% of score.

A longer, positive, credit history will increase a score. However, those with shorter credit histories may still get high credit scores depending on what the rest of their credit history is like.

This factor evaluates:

• The age of accounts. This considers the age of the oldest account and an average age of all the accounts.

• How often accounts are used.

4) New Credit: 10% of score.

Opening several new accounts, or having many inquiries into credit history in a short period of time will affect the chances of qualifying for credit. The FICO scoring system distinguishes between searching for many new credit accounts and shopping around for the lower rates.

This factor evaluates:

• New accounts. This considers the age of newest accounts.

• Recent credit history. If there is a period of late payments and the consumer has re-established their credit, the score will rise over time.

5) What Types of Credit Used: 10% of score.

This factor usually doesnât play a big part in the lenderâs decision in extending credit, however, if there is not a lot of other information in the other factors, this factor will become more important. This takes into consideration the mix of credit cards, loans, finance accounts and mortgages the consumer has.

This factor evaluates:

• Creditors: If the consumer exclusively deals with ñDî lenders, it will put them into a high-risk category even if their payment history is perfect.

These factors are all considered when establishing the consumers credit score; no one factor will determine the score. Depending on the information in the credit report, one factor can play a more important role in the overall score regardless of the percentage the particular factor contributes. When a lender receives a credit score, they will also receive up to four ñscore reason codes.î These codes explain the reasons the score was not higher (if it is low.)

The information within this publication is designed to provide accurate and authoritative information in regard to the subject matter covered. If legal advice or other expert assistance is required, the services of a competent professional should be sought. All information is deemed accurate and reliable at time of release.
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http://www.American-Debt.com

2004-05-17T09:30:00.000-07:00

Debt Consolidation Loan

Who Should Consider A Debt Consolidation Loan?

A debt consolidation loan is the traditional way to handle your debt in a monthly payment. You go to a bank or credit union for a debt consolidation loan to pay off your creditors, and your debts are rolled into one monthly payment. You pay the bank back and the single monthly payment works better within your budget.

Depending on your income and debt ratio, you may be able to see your financial institution for a debt consolidation loan. This loan could be either secured (backed up by collateral) or unsecured. Talk with a loan officer about your options, because it is important you feel comfortable with the person serving you and the advice that is being given. You can also talk to other financial institutions to find if they offer a better deal before signing on the dotted line.

If You are Considering a Debt Consolidation Loan...

Keep in mind that it is very common for a lot of consumers to have a tendency to continue to use their credit cards after they have consolidated their old debt. This results in increasing their total debt load and severely limiting their ability to repay all outstanding debts."

What if You Can't Get a Debt Consolidation Loan?

Remember that you still have options. They may be simplified, but they are still options. Dealing with debt will come down to your ability to pay. Look at your budget to see what you have left over to deal with your debt.

Knowing that you don't have the option of a bank loan, what do you think would be the most realistic way for you to become debt-free? Talking with a financial advisor or credit counselor will give you ideas for working with your budget to payoff your debts. You can ask whether Debt Management Plan could work for you.

Learn more about Consolidation Loans as compared to Debt Settlement at:
http://no-debt-consolidation.com

2004-05-16T21:40:00.000-07:00

Marrying Again

sponsored by - http://1-Debt.com
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If you are marrying for the second or third time, you are not alone. The United States has the highest remarriage rate in the world; more than 40% of marriages are remarriages for one or both partners. Most of us remarry with more experience than we had when we married the first time. We also come with more financial complications.

Whether remarrying after a divorce or after the death of a spouse, those who marry again are likely to have some ideas about how they want this marriage to be different. Sometimes in the flush of emotions surrounding remarriage, couples may put aside the very real need for discussions and decisions about how they will manage money in a new marriage. But avoiding money management discussions and decisions can have significant consequences.

T A L K I N G About Money

Often, people who are reluctant to talk about money will tell you that financial problems contributed to a prior divorce. However, as difficult as it may be, talking about money management prior to a remarriage is one way to pave the road for future financial success. That’s why the National Endowment for Financial Education® (NEFE®) has written this brochure—to help you and your future spouse talk to each other about important money management matters. While all questions in this brochure may not apply to your situation, discussing those that are a fit may help to create the financial future you both envision.

http://www.nefe.org/fple/remarriagepage1.html

2004-05-15T09:11:00.000-07:00

LIFE AND RETIREMENT PLANNING TO FINANCIAL PLANNING
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sponsored by ... http://American-Debt.com
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A Meeting Sponsored by the National Endowment for Financial Education
St. Louis, Missouri—November 14, 2000

Thirty years after its birth, financial planning continues to evolve. What began as more or less a better sales tool for financial services product providers is today recognized as a profession in its own right. Thanks to aggressive marketing and public relations by the various organizations and associations that support financial planning, and by planners themselves, a majority of American consumers are familiar with the term "financial planner," the advisory role that planners can fill, and the profession's most prominent designation, the CFPTM license. One can easily make the argument that financial planning has grown and prospered because people need what it has to offer.

As the planning profession matures, there is at least anecdotal evidence that its emphasis may be starting to shift from financial planning to a more personal and holistic focus on their financial and non-financial needs.

In November 2000, the National Endowment for Financial Education® (NEFE®), a non-profit foundation headquartered near Denver, hosted a day-long meeting, "Practical Applications of Life and Retirement Planning to Financial Planning," to explore the concept of "life planning." The participants included CFP licensees, researchers and consultants in retirement planning and productive aging, a professor of gerontology and age-related employment issues, human resources consultants and executives, a wealth and philanthropy counselor, a minister and vocational specialist, a vice president of a major brokerage firm, and life planning specialists. Many of the participants are involved in some form of life planning—as they self-define it—in their financial planning practices or in positions within corporations or other organizations.

One participant noted that, in his opinion, the life planning "movement" comes down to this key question for clients: "Is life just about putting the numbers together—or is there more?" The NEFE Life Planning meeting brought professionals together to explore this fundamental issue and whether or not the concept of life planning represents a new "model" for financial planning for both the profession and the public. As a first step, the meeting participants agreed that a professional dialogue on life planning requires a thorough examination of its multi-faceted messages and a definition.

What Is Life Planning—and Where Did It Come From?
Several of the Life Planning meeting participants noted that aging Baby Boomers—a generation of 77 million Americans whose leading-edge members are facing retirement in just a few short years—are prompting a shift in the relationship between planners and clients. Confronting the transition that retirement represents, Baby Boomers are contemplating a new "vision" of retirement. According to a 1998 AARP survey, 80 percent of Baby Boomers said they wanted to work in retirement but in a more flexible framework—this generation is seeking more options than just all work or no work. A May 1999 NEFE meeting explored this new vision, which sees retirement as a life-period with many "models" that individuals choose and self-define, rather than as a single event.

The challenges for financial services professionals become even more complex when a longer life span, earlier retirement, new definitions of "work," and significant changes to income sources at retirement (defined contribution vs. defined benefit plans) are added to this changing picture of retirement. But, commented one participant at the Life Planning meeting, "the real questions for clients and planners looking toward the future are not just 'Will my money be there?' Instead, they are more soul-searching: How will I spend my time? What do I really like to do? What will keep me motivated? How will I—and my family—react to my not having a job?" Helping clients think through and answer those questions, the participants decided, is a major part of life planning, with significant implications for financial planning practitioners.

The meeting participants first reviewed the accepted definition of "financial planning" and then offered thoughts on how "life planning" is, would, or could be different. Facilitator Steven S. Shagrin, J.D., CFP, CRPC, CRC, a vice president with Salomon Smith Barney in Youngstown, Ohio, offered the following thoughts on the subtle, but significant, differences between financial planning and life planning: "[financial planning's accepted definition] presents the establishing of personal and financial goals as the first step. It is my belief that life planning is the process of bringing a deeper structure and framework to this very important step. It does so with an approach that the client tends to appreciate, understand and, most importantly, revisit over time—more so than a standard financial plan. This is because clients come to realize that, as fellow financial planner Michael Stein, CFP, has so aptly put it, 'life is not a dress rehearsal'."

Life planning, offered Shagrin, adds a "holistic" element to the process of financial planning by considering the non-financial needs of life transitions, including the one most people aim for—retirement. Shagrin, who uses a life planning approach in his practice, believes that as clients age they recognize the truth in Michael Stein's comment and begin to view life planning as personal and tied firmly to one's values. Shagrin described how he incorporates life planning into his work with clients. "I take the approach of first helping clients think about their lives and how they want them to evolve based on their values and goals. Then, we assign a financial cost to their needs and wants. We talk about how life's transitions require that they model out how they might 'look' financially so they can see if things are on the right track. Then, we talk about choices we have to make for adjustments in today's activities to better prepare for tomorrow."

One definition of life planning, written by Carol Anderson, a researcher, writer, and consultant on retirement preparation and life planning, and Joyce Cohen, the founder of Unconventional Wisdom, a firm specializing in creative aging, career transition, and retirement preparation, was offered to participants. Life planning, write Anderson and Cohen, "is a comprehensive approach to planning that is appropriate and useful for all ages—young adults as well as those nearing retirement. It is based on the philosophy that the most successful and satisfying retirement experiences are based on a series of thoughtful, future-focused decisions made throughout one's adult life. Skills, values, attitudes, resources, and relationships that are developed and honed during one stage of life all contribute to meeting the challenges and recognizing the opportunities of the next stage of life."2 Life planning, says Cohen, explores and honors past knowledge and experience; assesses and confirms present reality; and, finally, visualizes and designs future possibilities. In a practical sense, life planning is an on-going exercise in "what if?" scenarios that can help people sort out the possibilities and use creative solutions to shape the lifestyle they desire.

It is worth noting that nowhere in either of these two working definitions of life planning are the words money, finances, financial resources, wealth, or investments used. That message is reiterated in the introduction to Putting Money In Its Place by Ken Rouse, formerly president and founder of The Rouse Companies and currently a principal with Ernst & Young's Personal Financial Counseling division, in Phoenix, Arizona. It begins: "Welcome to a discussion of money which does not begin with money at all. It begins with you!"3

Closely aligned with this approach is the work of Barbara Culver, CFP, CLU, ChFC, of Resonate, Inc., in Cincinnati, Ohio. Culver writes that life planning is a new model that "takes clients from transaction to transformation; away from product to process; from compartmentalized planning to comprehensive planning; and shifts the planner's focus from the client's economic value to their human value. This approach provides expert and caring life planning, as one helps link the valuation of the client's financial assets with the values of their lives." As for how this approach would change financial planning as we know it today, Culver believes "what financial planners will find is that by employing this approach, their daily activities change focus from merely helping the rich get richer to helping the successful find significance in their lives."4 The comments of one CFP practitioner who attended the meeting support this definition. "Many of my clients," said this participant, "have their retirement and future financial security in place. For them, it's like 'enough is enough.' It's what they're seeking for everything else about their lives—values, satisfaction, a legacy—that they're looking to me for help with."

Culver's definition of life planning is similar to that offered by Av Lieberman and Barry LaValley of The Retirement Education Centre, Inc., in British Columbia, Canada. Lieberman and LaValley say life planning is a dynamic educational process that allows people to visualize their personal goals, and then to model the financial consequences of those choices. Financial planning, they say, starts when life planning leaves off—you don't start with the financial plan and then work the life plan into it.

Participants at the NEFE meeting offered certain meaningful terms5 they believe reflect the philosophy of life planning:

Choice—Life planning focuses on identifying the choices an individual has in mid-life and beyond. Having choices is a goal for individuals planning for their future. These choices are expressed in financial strategies, retirement decisions, and quality-of-life decisions such as careers, relocation, meaningful use of time, and personal and professional growth.
Consequences of options—Part of life planning addresses not only the choices but the consequences of choices. It requires a "thinking through" of decisions. In fact, if the consequences are not considered, exercising a choice may be ineffective, inappropriate, or even useless.
Self-direction—Self-direction implies that individuals are responsible for themselves; they may not be able to control their future, but they can influence it. Self-reliance and personal responsibility are two overriding themes in life planning.
Intentional—Life planning is not an accidental occurrence. It is a process of intention. At times, this intent needs definition, direction, and clarification. Professionals in life planning can facilitate this process.
Empowering—The life planning process is designed to empower individuals to make good decisions for themselves and their loved ones. At times, individuals need to recognize that they have the power to design their own future. This is closely aligned to being self-directed and intentional in one's efforts.
Holistic—Life planning is holistic. Webster's dictionary defines holistic as "an emphasis on the functional relationship between the parts and the whole." Life planning exemplifies this relationship: financial security is only a part, an extremely significant part, of the whole, which comprises the values, visions, and aspirations of individuals now and in the future. The relationship between finances and how individuals plan to live their lives is an irrefutable connection. A holistic approach will strongly increase the probability for individuals to successfully plan and implement their retirement strategies—affecting every aspect of their lives.
Integrity—Integrity suggests honesty. The intention of life planning is one of candor. Individuals make an attempt to be honest with themselves in designing their lives. Professionals are honest in their analysis, presentation of options, and counsel. The professionals involved in life planning consistently keep the welfare of the client as a top priority.
Personal—Life planning is focused on the individual. Therefore, it is highly personal. No two individuals are the same. The uniqueness of each individual is valued on a personal level.
Comprehensive and specialized—Those involved in life planning cannot be experts in every area, but they should have knowledge and understanding of the total planning challenge. Financial experts should be knowledgeable about non-financial issues; equally important, those dealing with non-financial issues should have some understanding of the financial issues. Ideally, life planning will be approached as a team endeavor for the benefit of the adult planning his or her future.
Increased self-efficacy—Self-efficacy implies self-reliance and growth or, using Maslow's approach, self-actualization. One of the values of life planning is to enhance opportunities for growth, self-reliance, and self-satisfaction. These values cross both the financial and non-financial areas.

Life planning, however, is more than just a philosophy. If it is to be meaningful and valuable, it needs to integrate specific "outcomes" that represent its philosophy. The Life Planning meeting participants identified these outcomes as follows:

Be motivated to make wise choices
Be educated about life choices
Live purposefully
Be prepared to meet challenges and opportunities
Provide structure and flexibility
Make informed decisions and take action to improve total well being
Be self-aware
Be personally fulfilled
Use and replenish resources, i.e., stewardship of resources and sustainability
Give back to the community, in all ways

Incorporating both life planning's philosophy and desired outcomes, the participants agreed on the following definition of life planning for financial planners: "Life planning is the process of (1) helping people focus on the true values and motivations in their lives, (2) determining the goals and objectives they have as they see their lives develop, and (3) using these values, motivations, goals, and objectives to guide the planning process and provide a framework for making choices and decisions in life that have financial and non-financial implications or consequences."

Life Planning vs. Financial Planning—Individual and Societal Implications
Although life planning at its best is envisioned as extraordinarily personal to each individual, the NEFE meeting participants explored the "incredible" societal ramifications implied. As one participant noted, since money is the most powerful secular force on the planet today, financial skills have become 21st century survival skills—"and they don't come in the DNA." How, one participant asked, do people function in an economy that demands you respond to money as though you are an intelligent, rational human being if you can't fill out an employment application? Or make informed choices about careers, housing options, or intra-family issues? Financial planners, this participant commented, can provide the crucial links between individuals and the money-based world around them.

These survival skills, it was discussed, go beyond helping people live better lives. There are also social implications for life planning, especially with an expected $40 trillion projected to change generational hands in the next 10 years and a staggering $140 trillion in the next 30 years—an enormously significant shifting of the keys to the kingdom, if you will. Large amounts of money will go into the hands of people who, for a variety of reasons, may or may not understand what money means in terms of stewardship and the responsibilities that wealth brings. As one participant commented, life planning and money issues "include everything from the most 'micro' issue of what you're going to order for lunch—or even that you have the power to order anything for lunch, for that matter—to global issues like how we use our resources and how we deal with expanding populations and advancing age."

While many financial planners may actually be "practicing" life planning by implicitly creating relationships that reflect its philosophy, many aren't—or, at the very least, they are not perceived that way by consumers. And, according to the participants, rarely do large, institutional financial services organizations take it to that level. Despite the advantages of these companies—depth of talent, skills, and enormous market reach—they frequently fail to address the individual needs that are part of life planning and make financial planning personal. Many, in fact, are still working with a "broken sales model," according to one participant. Another recounted an incident at a large firm that illustrates this point: a young planner had a client who had just exercised $40 million in stock options. The participant asked the planner what the client was going to do with his life in view of his newfound wealth. The planner replied he had no idea—"That's not my problem. It's not what we get paid to do. We get paid to show people how we can reduce taxes or increase their returns."

Yet, says Steven Shagrin, this is precisely the problem. "Financial planners," he explains, "concentrate on building wealth, while life planners emphasize helping clients find ways to use their wealth effectively to get more out of life." He tells the anecdote about an older divorcee who was living comfortably on her retirement savings—but was also unhappy with her "empty" life. Shagrin, her financial planner, helped the woman to identify a number of core interests that eventually led her to look for, and find, a job she enjoys. Her new "interest" is satisfying her emotional and social needs—while also supplementing her savings. Says Shagrin, "People don't want to run out of money before they run out of breath; yet they shouldn't spend their lives dwelling on where their next dollar is coming from, either. They should act based on their interests, their likes and dislikes, and not solely to build wealth."

Minnesota financial planner Ross Levin, CFP, describes another situation in which a couple's need for more living space for themselves and their children triggered a host of issues and challenges. Although not married, the partners were deeply committed to their relationship, their home of many years, and their neighborhood. One of them also enjoyed considerable, though not outwardly visible, inherited wealth. Should they stay in the house they loved, or move? Would a large addition to the home seem ostentatious, even "broadcast" their wealth? How would this affect their relationships with friends and neighbors? What impact would it have on them—as well as their already uncomfortable relationship with money? Did it matter that the home's value didn't support the costly improvement? Levin ended up counseling the couple about not only the financial aspects of their decision, but the emotional and psychological issues they were struggling to resolve, as well.

These examples illustrate how the concept of life planning—with its emphasis on a personal and relevant understanding of clients' goals and dreams, rather than just a focus on taxes, asset allocation, money management, and estate planning—can "transform" financial planning, and not only for the wealthy. After all, as one participant said, money "surprises" and "failures" are not specific to a given population group or economic strata. Several participants agreed that life planning may be even more critical for those with fewer financial resources—single parents, divorced women with limited career experience to fall back on, young adults just entering the workplace. These individuals are not always well represented in the typical financial planner's practice, but they comprise a large, and contributing, part of our society. One way to do that, the participants agreed, is to disassociate money from work within the context of life planning—to practice values-based financial planning, not economic-based financial planning. Doing so requires not an event-based approach, but an embedded client approach which recognizes that "life happens—continuously." As one participant put it, "We all live in a world where we may not make it to dinner tonight; or, we may have to account for the next 60 or 70 years." While life is certainly the great unknown, the participants agreed that life planning can help individuals better prepare for its many potential outcomes.

Life Happens—Throughout Life and Throughout the Generations
Participants at the NEFE Life Planning meeting acknowledged that "life planning" is almost an oxymoron. In other words, said one, "life happens—all during the time you're trying to plan for it." The continuum of life, with its inherent "happenings," should be the focal point for financial planners and clients. As one participant noted, a planner's value can be in "showing people how their decisions fit together along the life planning continuum." The participants also noted that while many "life junctures" are shared by all generations, discrete differences also need to be addressed.

Participants examined three generational groups:

The Silent Generation—those born before 1946
The Baby Boomer Generation—both early Boomers (born 1946-1955) and late ones (born 1956-1964)
Generation X—those born between 1965-1982

For each generation, the breakout groups examined 13 life-happening "Facets" and each facet's related "Dynamic." By better understanding the nature and influence of the different generations' dynamics, life planners address these dynamics in the holistic, interrelated way that the very term "life planning" suggests. Although financial planners and other professionals who advise clients of different generations are aware that one generation is different from another, rarely do as many of a generation's life dynamics need to be addressed, together, as they do in a life planning approach.

The Silent Generation
Unlike their "noisy" and "activist" offspring—who challenged institutions, conventions, mores, and values in a dramatic and visible way—the Silent Generation is more compliant, deeply rooted in a strong work ethic, and accepting of a lifelong career of relative sameness. This generation also has a deeper respect for the inviolability of marriage and less interest in and understanding of the need for "personal growth."

Key points discussed for this generation's "Facets" and "Dynamics" include:

Financial—The Silent Generation is less inclined to ask for, and is more resistant to, financial help. They are learning to live on limited resources. Women of this generation are far less financially literate and aware. They are being impacted financially by the changing dynamics of health care.
Work—This generation is more or less split between those who desire to continue working in their later years and those who believe that retirement is their due. They have more firmly and longer-held notions about work and retirement. They ascribe to a lifelong belief of "work hard—get ahead."
Leisure—Members of this generation expect "leisure" in retirement but have limited experience in developing leisure activities.
Physical Health—Their self-reported physical health status is "high," although they are experiencing the beginning of chronic health conditions.
Mental Health—This generation has the lowest suicide rate.
Relationships—Although they grew up with a belief in marriage as a long-term commitment, there is an increased level of divorce among the Silent Generation. Members of this generation are beginning to lose their spouses and, because of increasing mobility, may live long distances from adult children.
Family Matters—Although they experience it to a lesser degree than many Baby Boomers—who are the "sandwich generation"—the Silent Generation's younger members may be facing issues related to elderly parents, as well as new relationships with now-grown children.
Home Life—This generation also faces, among its members and their adult children, the complexities inherent in re-marriage and "combined" families.
Housing—Most of the Silent Generation are homeowners in the literal sense of the word. They are facing decisions on relocating, downsizing, and alternative housing such as assisted living communities.
Personal Growth—The Silent Generation doesn't particularly embrace "personal growth" as important to one's life. Life or financial planning discussions that use this terminology could create a barrier to reaching this generation. The notion of therapists and counselors to help them "fix" aspects of their lives is not something they're used to, although they do tend to trust and rely on "experts" (e.g., a trusted doctor).
Problems and Surprises—Unfortunately, the Silent Generation has sometimes found that "work hard—get ahead" is not necessarily true. Widowhood is common and presents unique challenges and, often, crises. Members of the Silent Generation are uncomfortable with the term "aging." They face an extended life expectancy that may challenge their preparations for retirement, both financially and in other ways.

The Baby Boomer Generation
No group of people has had a more dynamic impact on society than the 77 million Baby Boomers, from those who came of age in the still-innocent '50s to the Woodstock-and-Vietnam War generation of the '60s and '70s. They challenged, mocked, and even frightened the previous generation but, as it turns out, they have now become the previous generation—middle-aged people with mortgages, career concerns, family pressures, and financial uncertainty, who are closer to retirement than to Woodstock.

Key points discussed for this generation's "Facets" and "Dynamics" include:

Financial—Baby Boomers are more financially savvy, yet more burdened with debt—both credit card debt and big mortgages—than their parents. They also have far more complex financial choices in their lives. They are simultaneously living with having to be much more self-reliant for financial security in retirement than their parents and with expecting significant inheritances from those parents and the implications of "sudden money." Their status as the "sandwich generation" may require them to assist aging parents financially at the same time they are putting children through college.
Work—Because of the corporate downsizing phenomenon in the '80s and early '90s, Boomers have come to distrust company "stability" and have much less corporate loyalty than the Silent Generation. Their sheer numbers have resulted in many Boomers bumping up against the reality that they won't always rise to the top in their career. Many are creating second careers or have become self-employed. Consulting or self-employment may lead to isolation and some disconnect from the rest of the working world. Boomers are still looking for "meaning" in their work. They expect, and often desire, to work far beyond "traditional" retirement age.
Leisure—Because of the demands of work and parenting, Boomers think of leisure as a foreign concept and often experience it only as short bursts of immediate gratification, such as a luxury trip to Europe. Time pressures lead to a lack of ritual or routine for leisure.
Physical Health—As parents age and die, Baby Boomers are beginning to confront their own mortality and are taking steps to maintain physical health. The stress associated with mid-life career transitions or disappointments, high debt loads, and other financial obligations, is impacting their health.
Mental Health—As a generation, Boomers are coming to grips with mortality, struggling with both discouragement about whether this is all there is and empowerment that the best is yet to be created. Stress is high, resulting from career pressures, aging parents, and the financial obligations of raising children. Boomers are dealing with a creeping sense of fatalism as they hit mid-life and mid-career.
Relationships—Boomers are often losing parents and spouses, due to death or divorce. Blended or stepfamilies are common. Single status is not necessarily a stigma, but presents unique financial planning challenges. Members of this group are trying to come to grips with what their obligations are to parents and children.
Family Matters—Heavily influenced by their diverse, and changing, relationships, Boomers are struggling with "sandwich generation" issues. Many have young children at a much later age than did their parents. Education is a priority, but having children later has made funding college education a financial drain in later life.
Home Life—Boomers place a high priority on home life but feel its quality is often compromised by competing demands on time.
Housing—Housing isn't the comfort to this generation that it has been to the Silent Generation. Mortgages are high and will likely be carried into later life. Boomers who own second homes are under increased financial pressure. Many Boomers may desire to relocate or downsize housing as their children go to and through college. Conversely, some may actually upsize, to accommodate a live-in aging parent.
Personal Growth—Boomers are still trying to figure out "what it all means." Because things have not always worked out as they envisioned in their earlier, idealistic days, Boomers are becoming very introspective about their lives. They are beginning to think about a moral or values-based "legacy" and want signs that their lives have personal significance.
Problems and Surprises—This generation believed they were entitled to a better world and have paid for it—but not with their own money—so they are now reaping the results of their spending habits. Divorce, unemployment, mid-life health problems, and the death of family members are frequent "problems." Unexpected financial windfalls and an incredibly strong investing environment in the 1990's have been pleasant surprises.

Generation X
Though they have been referred to as "slackers," the typical Generation X individual is often extremely work-focused. Their work, though, has been in a dramatically different environment than that of previous generations—a jeans-wearing independent contractor today might be employed by a "dot-com" company in a converted warehouse loft, for example. Gen Xers are also fit, healthy, nutrition-conscious, technology-savvy, less committed to a serious relationship at an early age, and somewhat wary of big corporations.

Key points discussed for this generation's "Facets" and "Dynamics" include:

Financial—Generation Xers learn about credit, money, and their own buying power at a much younger age.
Work—This generation lives and works in a "24/7" environment. Its members will experience much mobility in their work lives and careers. They have jobs that previous generations couldn't even imagine.
Leisure—Gen Xers tend to think of leisure as a "right" in their lives. They are more likely to be involved in "extreme" leisure activity. They expect their employer to help them find the balance that allows leisure in their lives.
Physical Health—Because of their relative young age, they currently think of themselves as "invincible." Yet, Gen Xers are very fitness- and health-oriented, except when they're living on fast food because of their work schedules.
Mental Health—This generation is more "medicated" than previous ones. Their mental health is unburdened by exposure to any serious national or international political or economic crisis.
Relationships—Because of technology, Generation Xers have many on-line "relationships," which indicates that they, too, seek a sense of community, even if through a computer. Gen Xers are experiencing later or delayed commitment in long-term relationships. They are more flexible in their views about relationships and more open to diversity in them.
Family Matters—Many members of this generation grew up in "non-traditional" families—single-parent families, extended families, non-related families—so their definition of family is often different than that of previous generations.
Home Life—GenXers indicate that this is "important" to them.
Housing—Generation X expects, and demands, more conveniences, such as on-line shopping and delivery of products to their homes. They are a generation of microwaves, not gourmet grocery stores. Their housing necessities include TVs, VCRs, and, of course, computers.
Personal Growth—Gen Xers would like to experience a sense of spiritual "peace," and many are beginning to explore it. The challenge for this group is being able to disconnect from a hectic work life to find it. On the whole, they are interested in "balance" in their lives.
Problems and Surprises—Life, for members of this generation, often seems disjointed. They live with an overload of information and too many choices. Sometimes it's hard for Gen Xers to sort through it all and make relevant choices. They frequently have unrealistic expectations about money and jobs.

Generational Dynamics and Their Implications for Life Planning and Individuals

So what can financial planners do to better incorporate life planning "facets" and "dynamics" into their relationship with clients? As a start, they need to realize that if life planning is to be meaningful and valuable to individuals of different ages and generations, it will have to address both message and medium for each market. It also will have to address individuals' and generational groups' deeply rooted feelings about money—even as it seeks to distance money from life goals.

For example, noted participants at the NEFE meeting, Baby Boomers have both a love affair with and a fear of money. To this generation, money frequently represents achievement, status, and a way to "keep score." And yet, it also represents a looming crisis. Many Boomers, commented one planner, are scared to death about retirement because they think they can't afford it. This generation has lost control because they started using money in the wrong way—and it just kept getting worse.

But given the fact that the Boomer generation is also rooted in notions of idealism and individualism—or, "what is my life all about?"—life planning's focus on personal relevance and individual choices can resonate with this group. They also are at mid-life, a time for re-evaluation and reflection, a time when they recognize that "oops" at 50 is far different than "oops" at 30. Life planning, said one participant, is in a position to be able to offer much to this generation, to be able to say: "No matter how fallible you are, no matter how imperfect your life may seem right now, you still have time to do what you want, you still have time to make a difference. Here are the baby steps to begin that."

Generation Xers, on the other hand, may feel there is so much time ahead of them that life planning is not yet critical. The opportunity with this generation may lie in the fact that a 25- or 30-year-old has yet to form an unyielding opinion about "financial planners." Tapping into this generation early on allows financial or life planners to create and mold an individual's expectations about a planner's role in their life. Creating personal relevance—and strong personal relationships—is both a challenge and an opportunity. After all, these technologically savvy young people can have any amount of information they desire. Considering a specific investment? They can log on and get as much information about it as any analyst in a top money management firm—all at the click of a mouse. Stereotypically skeptical about large institutions, marketing gimmickry and, perhaps, investment and financial professionals, Gen Xers may respond better to those life-planning messages that stress personal empowerment, not financial choices and consequences. In addition, because they are seeing certain crises of both the soul and the balance sheet for the Boomer group ahead of them, life planning could emphasize safe harbors for this group—"financial fluoride," in the words of one participant. This financial fluoride would, in effect, say to Gen Xers, "Here are ways you can protect yourself in advance from the possibility of certain things happening to you."

The Silent Generation also poses unique challenges for life planning's messages—a general wariness of things "new" and less black-and-white, a reluctance to pay for services that aren't easily defined, more resistance to change, a tendency to believe money is a "private" issue. But many of the later Silent Generation members—someone age 67, for example—realize their lives may stretch another 20 years, and life planning could feed the awakening desire to create new types of retirement. And retirement, as Silent Generation members are seeing, includes decisions on housing, leisure, health care and, quite possibly, community service or philanthropy.

For all generational groups, clarification of values, especially as they relate to money, could provide a universal life planning thread—values are formed in early adulthood, questioned and re-examined in mid-life, and affirmed and often acted on in later life.

Obviously, there is much groundwork to be laid and significant effort required for life planning to be understood and accepted by individuals. Participants at the Life Planning meeting identified several ways that life planning could be "mainstreamed." These include:

Refine the message, but continue to focus on life planning as being "beyond money."
Treat life planning as a "brand."
Create a "process" or "curriculum" for life planning, similar to that done for financial planning.
Identify the "gatekeepers" and "centers of influence" for each generational group and develop appropriate communications, coaching, and/or training programs for them.
Identify life planning's entry points—or "interest junctures"—for members of different generations.
Develop a media strategy for championing life planning.
Use multiple delivery channels—i.e., both the broader media and other outlets, such as the "bully pulpit" of government, to disseminate the message, as well as highly specific outlets. Life planning's messages, the participants agreed, must be delivered where the people are—in companies, faith communities, on-line. "We can't expect people to come to us to get the message," said one participant.
Explore partnerships for delivering the message—in other words, develop a life planning "distribution system." These partnerships could include a variety of groups or professions. For example: Certified Employee Benefits Specialists, accredited human resources managers who help employees explore options for retirement and who manage work-life programs and benefits, could partner with life planners. Life planning, in fact, is already getting some attention within this community. A December 1999 article in Employee Benefits Journal proposes "total life planning" as a new work-life program. These total life planning programs, says the article, "are designed to help workers examine the most important aspects of how their professional and personal lives are working today. Employees look at life as a whole, assess relationships, emotional and physical well-being, career, spirituality, and their personal financial situation."6

Since life planning may be a new model for financial planning, the Certified Financial Planner Board of Standards, Inc., and the Financial Planning Association would be likely organizations to research and explore education, advocacy, and championing of the brand and the message. Other professional groups—the American Bar Association, the American Medical Association, the American Institute of Certified Professional Accountants, the Association for Financial Counseling and Planning Education, small business associations, personal coaches, philanthropy consultants, community service organizations, credit counseling organizations, and professional associations for gerontologists, social workers, and marriage and family counselors—could be linked to the life planning movement.

Ultimately, however, more important than how the message is championed and by whom is the message itself: it must be clear enough so individuals from all walks of life recognize its benefits. It should help them answer the question, "What does the world look like when you integrate planning into your life?" Life planning, the meeting participants agreed, must not only have an agreed-upon definition, the definition must also be understood by consumers in a practical, results-oriented way:

Life planners are people who. . .

and

Life planning is a process that . . .

With an emphasis on the non-financial events, transitions, and goals of an individual's life, life planning could also be viewed by more people of all generations as "affordable." It's not about minimum investable assets or net worth or stock options or even current income. For individuals, it represents a shift from making life choices based on one's economics to making economic choices based on one's life.

Ideally, the participants agreed, life planning would become a part of the national lexicon. "In a perfect world," said one participating planner, "it would filter throughout society, be taught to children through the educational process, be in the workplace, and be part of families' conversations. It may take a generation, but it should be like breathing."

The Challenges for the Financial Planning Profession
"There's an old saying that when the student is ready, the teacher will appear. At some point, maybe soon, a lot of people are going to be ready for the life planning message." This comment from a participant at the meeting assumes financial planners will embrace life planning as their new mission and model. Will they? Should they? Are they already? If so, what challenges confront them—both individually and as a profession? Or is some other profession going to fill the "teacher" void? As some participants noted, if the life-planning message begins from the bottom—with individuals—and rises, will financial planners be left scrambling?

For life planning to become "like breathing," financial planners and those in related professions must be able to build a viable and profitable business around it, participants at the Life Planning meeting concluded.

A key question to be addressed should be: "Is life planning part of financial planning, or is financial planning part of life planning?" The answer may lie in two distinct models of a financial planning practice for the future—planners who come from the "analytical" side, and whose clients respond to this approach, and those who come from the "counseling" side, with clients who respond to and value that accordingly. Under either scenario, financial planners can create a network of related professionals—therapists, social workers, employee assistance professionals, money dynamics counselors, and career counselors for those who wish to quarterback from the "analytical" side. For those who concentrate on the "counseling" side, the network could include investment managers, money managers, portfolio specialists, attorneys, and CPAs. Either way, life planning could be made personal and relevant by treating its philosophy and activities as an ingrained and dynamic part of the planner-client relationship.

The participants agreed that financial planners have the knowledge to help people achieve their goals, serving as facilitators to bring the broadest range of expertise to the life planning process. "Our role might be to provide clients with access to the other experts," said one participant. Many planners already have moved "beyond product" with their clients; those who have are well positioned to continue to add value to clients' lives by incorporating a life planning team approach into their services.

The financial planning profession also will have to address the issues of training, accreditation, competency, ethics, and compensation if life planning is to become the "new financial planning." Compensation, the participants agreed, is a critical component of building a viable and profitable practice around life planning. Unfortunately, commented one participant, "if financial planners of the future look more like social workers, we may end up being paid more like social workers."

Compensation, one participant predicted, "could be a brutal reality to deal with, as well as the fact the people delivering financial planning today may be vastly different from those delivering it tomorrow." Others agreed, noting that while there has to be a "delivery system" for life planning, nobody will deliver it if compensation is inadequate. "What will the real world look like for financial planners who integrate life planning into their practices?" asked one participant. "Will people pay planners for 'good ideas' about their lives? Something has to be 'sellable' for a delivery system to develop." Life planning has to become so valuable that people will seek and pay for it, or companies will offer it as a benefit to employees, said another. The financial planning profession has recently enjoyed several good business years, another participant commented. "We're strong, we're prospering, and I believe we have a responsibility to pass the life planning message on. We have been privileged lately, and with privilege comes responsibility."

Although it remains to be seen whether life planning is the new financial planning, whether it will resonate with clients (especially the 84 percent of consumers who make financial decisions without an advisor, according to a 1999 Consumer Survey done by the CFP Board), and how financial planners will incorporate life planning into their individual practices, financial planners can and should be players in this evolution, said the meeting participants.

"We talk about this notion of 'life happens,' but life planning happens, too," said one planner. "It's already happening. And it's going to happen with us or without us."

Where Does Life Planning Go From Here?
The participants in the NEFE life planning meeting committed to certain action items that they believe will help advance the life planning concept, among them:

Write a funding proposal to make a "business case" for life planning. The business case could center on life planning being an employee productivity issue, a mental health issue, a societal impact issue, or others to be explored and/or determined. Participants felt that without a strong business case for the benefits of life planning it wouldn't realize its potential.
Write a fact sheet on life planning's definition, mission, and expected outcomes.
Write and seek to publish articles on life planning in various financial planning publications.
Write a draft of the "universal concepts of life planning."
Write a series of articles about life planning with the goal of developing potential partnerships with other professional groups or associations.
One participant at the NEFE Life Planning meeting noted, "We all run practices where we market some form or another of life planning. We understand what it is from our standpoint." The challenge for those wishing to move life planning forward will be to make it understood from the standpoint of the larger financial planning community and the public.

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sponsored by ... http://American-Debt.com

2004-05-13T23:08:00.000-07:00

Bankruptcy - Free Forms

Free bankruptcy forms if you want to do it yourself.

http://www.findforms.com/cgi-bin/search/search.pl?Realm=All&Match=0&Terms=bankruptcy

Not necessarily recommended, but if you find yourself up against a rock and a hard place with no money the attorney, you might consider it. Most attorneys will put their retainer fee onto a credit card just before filing your bankruptcy. How that's legal is beyond me, but it is.

http://debt-company.com

2004-05-10T11:03:00.000-07:00

WHAT DO CREDITORS WANT?

sponsor: http://debt-company/com
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There's an old saying that you canât borrow money unless you can prove that you donât need it. While that technically isnât true, banks, retailers and other companies tend to be cautious about making credit available to their customers. When you understand what credit grantors are looking for, you can increase your chances of qualifying.

First and foremost, credit grantors want to be sure that you will pay them back. While credit grantors can recover unpaid money through legal action, it is costly. Itâs less risky for them to lend carefully in the first place.

How do credit grantors determine whether youâll be likely to pay them back? The first thing they generally do is see how well youâve paid other creditors. Experience has shown that individuals who pay other creditors on time are more likely to pay them on time as well. Thatâs why itâs important to pay your bills on time.

Having too much credit is not viewed favorably by credit grantors. Numerous credit cards, loans and other debts on your credit record could mean potential repayment problems if you lose your job or experience other unforeseen circumstances.

Your employment and banking record also gives potential creditors insight into your financial lifestyle. Keeping the same job rather than frequently changing jobs and having money in the bank instill confidence that you will handle credit responsibly.

If your personal finances meet the criteria described here, youâll probably be able to obtain credit without too much difficulty. If not, start taking steps to improve your financial picture. Once credit grantors see the improvement and your commitment to do better, you should be able to get the credit you deserve.

http://www.nfff.us/resources/credit/creditors_want.html
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2004-05-09T13:54:00.000-07:00

Debt Lawsuits

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Since October of 2003, the credit card companies have become much more lawsuit happy. This is due to the hand-slapping the banking industry, which includes consolidators and credit counselors, received from the Federal government.

The banks really get you coming and going. First they offer you credit cards, and lots of them, enticing you into their web of financial doom with low interest rates. Maybe you get offered instant cash, better known as signature loans. Either way, it's all based on false moneys that aren't really there anyhow ... after all that's what credit is, pretend money.

So, you use their credit and run up a bill, maybe too much of a bill. Opps! Wow, it's gotten harder to make your monthly payment. And, that just what the creditors want. They want you to fall behind in just one payment because then, they've got you. Be late on one payment, one time, and your interest just went from 8-9% to 27-28%. And guess what, no matter how many times you phone them and ask for it to be lowered, they tell you NO.

So, you ignore it for awhile. And, pretty soon you realize you're quickly falling deeper and deeper into debt with absolutely no way to bail yourself out. The creditors refuse to work with you, what are you to do?

Now for their next hook. The banking industry also pays for the services of the consolidators and the credit counselors. Chances are you'll end up contacting one of these groups because you don't know any better. Perhaps you do a search on a search engine to find out information, and guess who is paying a lot money for the top advertising? That's right, the banks.

Let's look at each of these separately. Debt consolidators offer to take all your debt and lump it into one payment. You end up having to make your unsecured debt, secured debt. Do you know the difference? Secured debt is tangible. It means if you default, you'll loose everything. Unsecured debt has no assets attached to it. Your credit cards and signature loans are unsecured debt. The banks can't touch your assets unless they sue you and win. When you consolidate your debt, you make all of your assets within reach of the creditors. That's a bad thing.

Now, how about the credit counselors. You know they tell you they are a non-profit organization and then, they demand a "donation" from you. What's that about?! Well, hello ... there's a reason why they got hand-slapped by the Feds. A credit counselor will help you get your interest rate lowered ... yeah, you remember when you called the bank and asked them to lower your interest rate and they said NO. Funny how the credit counselor, who is paid by the banks, can call and get your interest rate lowered for you. Who's kidding who here? It's all a sham. And, you'll only get it lowered to 12-14%. You'll never see that 8-9% again.

I saw a statistic that said 95% of all people who enter a credit counseling program drop out. Want to know why? In a credit counseling program you get to keep your credit card. How nice is that? You get to keep running up your debt. Yeah, they've got you coming and going alright.

So, how does all of this relate to the increase in lawsuits? When the Feds slapped the hands of both of the debt management groups, the banking industry responded with ... fine, we'll just take those clients to court and go after their assets. Thus, the increase in lawsuits.

So, when people ask me about lawsuits I explain quite bluntly, here are your real choices: screwed, screwed and maybe screwed.

If you choose bankruptcy, you're screwed. Your credit is messed up for 7-10 years, and just so you know there are marks that go onto a bankruptcy credit report that will be there forever even though by law that's not supposed to happen. They have ways of marking you for having filed bankruptcy forever. You're screwed.

If you choose to do nothing, you're screwed. The lawsuit will be filed and there will be a judgment against you. You will loose and your wages will be garnished, possibly a lien place on your properties. You have to come up with about $5,000 in attorney fees. You're screwed.

The third option is debt settlement. Here you're going to be playing the odds and hence the maybe screwed, but it's really your only hope to get out of this quickly and avoid the lawsuit. Debt settlement means they work for you, not the banks. They close your credit card accounts and they negotiate your debt down with your creditors. They make you pay as much as you can to pay off your debt as quickly as possible to get out from under the debt before the banks might possibly decide to pursue a lawsuit. If accepted into a debt settlement program, you will be out of debt in three years or less. It's no picnic in the park either. You're creditors are going to try all sorts of lies to get you to drop out of a debt settlement program. They might even offer you more ways to amass debt. BEWARE! Debt settlement is your best choice hands down.

sponsor: http://www.american-debt.com

2004-05-08T12:08:00.000-07:00

10 Ways to Get Out of Debt!
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sponsored by http://no-debt-consolidation.com
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1) Use your Assets
If you have assets with some significant equity, such as a home or a car you may be able to use these to get control of your debt. For example, you could get a loan on your home sufficient to pay off your debts. You could be saving a considerable amount of money on interest if you pay off high interest credit card debt in return for lower cost debt.

If you have a car, consider selling it, paying off your debts and buying a cheaper car. Be careful though! Your don't want a "cheaper" car that will cost you a fortune in repair costs.

2) Get a Second Job
Use the money from this job to only pay off your debts. List your debts noting the interest rates. Pay off the debts with the highest rates first and work your way down the list.

3) Put your Credit Cards on Hold
One of the best steps you can take to get out of debt is to immediately stop using credit cards. At the very least destroy all your cards keeping just one card for emergencies.

4) Set up a Repayment Plan
Cut back on your expenses and/or use freed up cash to pay down your debts. Pay off the debts with the highest rates first and work your way down the list.

5) Get a Consolidation Loan
A consolidation loan can make lots of sense. Get a loan to pay off all your many debts and have just one payment to make. The new loan usually has a smaller payment and a lower interest rate.

6) Use the Services of a Credit Counselor

In The News
November 20 '03 - Credit counselors controlled by credit card companies. Statement to the Subcommittee on Oversight of the Committee on Ways and Means

October, 24 '03 AmeriDebt to Stop Seeking New Customers Because of Recent "negative publicity."

Sept. 11 '03 - State of Missouri Sues Credit-Counseling AmeriDebt

There are two types of credit counselor, for profit and "nonprofit". We do not distinguish between the two as they provide similar services and both charge a fee. Credit counselors can assist you in acquiring the discipline you need to get control of your debt. Be careful! Many people do not fully understand all the ramifications involved such as:

Impact on your credit rating.
The credit bureau will record that a plan is in place.

Are your payments too high?
Your payments should be high enough to significantly reduce your debt but not so high that you have "no life". If you do not have money left over at the end of the month to pay for the small pleasures in life you may find that you end up defaulting on your payments.

For how long should you pay?
Most experts feel that the term should be three to four years. It is a stipulation in the new Bankruptcy Reform Bills that the term be 3-5 years. Terms longer than this have a very high failure rate, because people cannot see a "light at the end of the tunnel".

7) Informal Proposal - Payments over time.
In some cases you can make a proposal to your creditors to set up a payment plan that will allow you to pay your creditors in an orderly way and thus help preserve your credit rating. This operates similar to a debt consolidation loan except you do not borrow the money to pay off your creditors.

8) Informal Proposal - Lump sum payment.
You may be able to pay less than 100 cents on the dollar. For example, a relative may be willing to pay a lump sum to the creditor of say 50% of the amount owed in order for the balance of the debt to be written off. Your creditors will be more willing to accept this offer rather than have you file Chapter 7.

This works best when there are few creditors.

9) Chapter 13 Bankruptcy
You are probably a good candidate for Chapter 13 bankruptcy if you are in any of the following situations:

You have a sincere desire to repay your debts, but you need the protection of the bankruptcy court to do so. You may think filing Chapter 13 is simply the "Right Thing To Do" rather than file Chapter 7.
You are behind on your mortgage or car loan, and want to make up the missed payments over time and reinstate the original agreement. You cannot do this in Chapter 7 bankruptcy. You can make up missed payments only in Chapter 13 bankruptcy.
You need help repaying your debts now, but need to leave open the option of filing for Chapter 7 bankruptcy in the future. This would be the case if for some reason you can't stop incurring new debt.
You are a family farmer who wants to pay off your debts, but you do not qualify for a Chapter 12 family farming bankruptcy because you have a large debt unrelated to farming.
You have valuable nonexempt property. When you file for Chapter 7 bankruptcy, you get to keep certain property, called exempt. If you have a lot of nonexempt property (which you'd have to give up if you file a Chapter 7 bankruptcy), Chapter 13 bankruptcy may be the better option.
You received a Chapter 7 discharge within the previous six years. You cannot file for Chapter 7 again until the six years are up.
You have a co-debtor on a personal debt. If you file for Chapter 7 bankruptcy, your creditor will go after the co-debtor for payment. If you file for Chapter 13 bankruptcy, the creditor will leave your co-debtor alone, as long as you keep up with your bankruptcy plan payments.
You have a tax debt. If a large part of your debt consists of federal taxes, what happens to your tax debts may determine which type of bankruptcy is best for you.
Chapter 13 Bankruptcy Information

10) Chapter 7 Bankruptcy

If these alternatives will not work for you, bankruptcy may be the only way for you to get a fresh start. Chapter 7 Bankruptcy offers a quick solution to getting out of debt.

Chapter 7 Bankruptcy Information.

http://www.bankruptcyaction.com/10waysoutofdebt.htm

21 December, 14:56 How to Reduce Debt
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How to Reduce Debt

Action plan to reduce your debt
Getting out of debt can take a long time. However, with a little extra effort and a solid plan a consumer can speed the process up and lessen the time it takes to get out of debt.

Resist temptation.
This is a prerequisite for debt reduction. Before buying, stop and consider if the item you covet is really necessary. If the answer is a resounding "Yes," then investigate alternate price structures from competing products or services. Is there a substitute that's just as good but not as expensive.

Stop using credit cards and start paying cash.
You might even consider canceling all but a few charge card accounts.

Develop a specific monthly budget for you and/or your family.
This plan should address a plan of action that eliminates spending on unnecessary goods and services.

Ask your creditors to reduce your interest rate.
These days, the competition between credit-card issuers is so intense that you can often negotiate your interest rate. Chances are that your current credit-card company will match the interest rate of a competitor.

Consolidate your debt by transferring outstanding balances to lower-rate cards.
Take the time to research the competition. Your savings could translate into the thousands depending on how often or how much you rely upon your credit cards as a part of your lifetstyle.

Pay more than the monthly minimum required by your credit card company.
You can eliminate debt and save money by paying more than the minimum monthly amount on your credit cards. Because credit card companies make their money from interest payments, they purposely set those payments low so it will take you years to pay off the balance. If you're paying the minimum, you're accruing interest charges faster than you're paying down the principal. At that rate, your debt will be around longer than you will.

Pay off credit cards with the highest interest rates first.
Take a step by step approach toward eliminating your debt. List your cards by highest interest rate and then pay them off in order of the highest rate. If you have multiple cards and can't seem to get your monthly balance reduced, analyze the rates and try to work out a plan that allows you to make a dent in each card's principal.

Consider a Consolidation Loan.
Look into low interest loans that can be used to consolidate high interest credit balances. This is a popular loan category for people with multiple credit cards.

Ease up on your IRA contributions.
Consider cutting back on contributions to your retirement savings plan and use the extra funds to pay down debt. But make sure to first ask an account administrator if you can adjust your contributions in the future.

Set up a realistic payment timetable and stick with it.
If you need to readjust your timetable, do so. If you have trouble, talk to a professional.

Track your spending.
Track your spending to find out where your discretionary income is going. You may want to use one of the personal finance software programs available to track your spending.

Look into debt-management counseling.
If you're overextended, these no-cost or low-cost organizations can work deals with your creditors to reduce monthly payments and help put you back on track financially

http://www.edebthelp.org/debt-reduction.htm

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