Archive for August, 2012

As the cost of a college education continues to rise, it seems likely to expect that more and more students from across the country will be facing financial hardships upon graduation.

Many students are under the impression that if they qualify for personal bankruptcy, their student loans will go away. Unfortunately, this is not the case. Learn more about student loan debt and the strain it puts on the students who borrow.


will bankruptcy result from a college education

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Debt: The Price of a College Education

As mounting student loan debt shatters the wallets of more and more Americans, bankruptcy has become increasingly prevalent.

Over $1 trillion in student debt has caused lawmakers to second-guess how educational loans are handled. In this infographic, you’ll learn about student loan debt and the strain it puts on the students who borrow.

Student Debt On Top of Student Debt [1]

How Costly is a College Education?

  • The average tuition fee for a four-year private university is $28,500 a year. [5]
  • Public, four-year universities cost on average $8,240 a year. [5]
  • 7.2% of students drop out of college due to financial problems.
  • Those from ages 18 to 24 spend around 30% of their income on debt obligations though it was nearly half that just 10 years ago.
  • On average, undergrad students have $3,173 in credit card debt and $4, 100 by the time they graduate.

How Are They Paying? [2]

How Are We Paying For It?

  • Over 1 out of every 4 parents were worried that loan rates would increase in their kids didn't immediately enroll in school.

Students tend to borrow a great deal of money from various sources.

Federal Student Loans Private Education Loans Student Credit Card Other Student Loans
30% / $6,983 9% / $6,358 5% / $1,357 4% / $5,437

The Government's Role

  • Due to a bill in 1998, students can no longer get federal student loans discharged during bankruptcy unless they can prove "undue hardship".
  • In 2005, private student loans were given the same restrictions
  • The majority of bankruptcy attorneys agree that this "undue hardship" is nearly impossible to prove in court.

Prospective Changes in Student Loans of 2012 [4]

Income-Based Repayment

  • Currently requires 20 years of income-based repayment to have your loans forgiven.
  • Provision in the Student Loans Forgiveness Act would cut that down to 10 years.

Pell Grant Drops

  • The full Pell Grant is $5,550 and families can only make $23,000 a year to qualify.
  • That's down from the previous $32,000 threshold of years before.

Affordability

  • Those who graduate with a bachelor's degree earn on average 70% more in their lifetimes.
  • On average, the cost of tuition and fees for a four-year public college or university has risen by 33% in the past 5 years.

Informative Borrowing

  • Many student financial aid letters neglect to differentiate between loans and grants.
  • Through credit cards, mortgages, car loans, and 401 (k) plans all require the borrower to be informed, this isn't the case for student loans.
  • The Consumer Financial Protection Bureau has created a financial aid letter template that would allow students and their parents to easily compare financial aid offers, though it's optional to use.

Student Loan Forgiveness Act

This piece of legislation would:

  • Keep federal loan interest rates at 3.4% indefinitely.
  • Only require people who take out student loans to make payments based on 10% of their income.
  • Allow former students to have their debt dismissed after 5 years if they're part of the Public Service Loan Forgiveness program.
  • Give borrowers the chance to re consolidate private loans into federal owned loans.

Conclusion

Both parents and students have felt the strain of being in debt from education.

Though some changes to legislation could help in the coming years, many are still in fear of their financial aid debts.

Many are hopeful that the Student Loan Forgiveness Act will help alleviate some of the pain from student loans.

For more information and to find a local bankruptcy attorney, check out Total Bankruptcy.

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It’s not very often that a professional sports team is in such financial trouble that it is considering filing for bankruptcy.

The New Jersey Devils avoided such fate after team owner Jeff Vanderbeek reached an agreement to continue trying to sell the team or get out of debt and repay the team’s creditors, according to Yahoo Sports.

After an August 14 deadline passed without the banks forcing the NHL franchise into bankruptcy, the team looks to have a new chance to continue operating.

The report also states that Vanderbeek has already worked the debt down to $35 million and raised roughly half of the remaining funds, leaving the team needing roughly $18 million more to pay off what the team owes the bank.

The reported two-year deal is in place for Vanderbeek to either refinance the remaining debt or come up with the capital to cover the rest, according to the NY Post.

Yahoo reports that the deal isn’t an ironclad get-out-of-debt-free plan but it is better news than the franchise has heard in quite some time regarding their finances.

In November of 2011, Forbes ran a report that the “ice was cracking beneath the New Jersey Devils”.

According to that same report, at the time the New Jersey Devils had $250 million of debt that was due in part because of the team and the arena as well.

They also stated that Vanderbeek was unable to make payments, which experts say would increase the debt that was accrued at the time.

Lessons Not Learned

The shocking thing is that this has happened before to two large-market professional sports organizations. Major League Baseball’s Texas Rangers and another NHL franchise, the Dallas Stars compiled a $600 million debt due to the joint owner’s inability to make interest payments on a number of loans.

The Texas Rangers were ultimately sold in bankruptcy court, whereas the Dallas Stars similarly went through the same process.

According to the NY Post report, Vanderbeek missed a $100 million principal payment that was due on September 1, 2011.

Experts urge that Vanderbeek’s actions to try and sell the team have been the route that one should take in order to avoid the route of Chapter 11 bankruptcy.

Despite his best efforts, he has yet to find a suitor. If a deal cannot be made within the two year extension, a number of outcomes could cripple the recently successful hockey franchise; an outcome many fans do not want to see.

For those who are on a tight budget and struggling to make mortgage payments each month, owning a pet may not be in their best interest. Pet owners can spend hundreds to thousands of dollars a year on their animals.

A pet emergency and a trip to the veterinarian could put someone over the edge, forcing them into filing Chapter 13 bankruptcy. In this infographic, we'll look at some of the expenses associated with pet ownership.


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The Expense of a Pet: From Costumes to Kibble

  • In 2012, American expenditures in the pet industry as a whole were estimated to be $52.87 billion. [1]
    • That’s up from $50.96 billion in 2011 and $48.35 billion in 2010.

So how much do both the necessary items and the pampering purchases cost? How much are pet owners dishing out to make their animals happy and healthy?

Cost Breakdown

While the cost of a pet varies by the breed and where you’re buying them from, if you’re going to adopt, fees can range from $15 to $350. [2]

  • Prices typically reflect how much vet care the animal has received.
  • Humane societies and county shelters sometimes have lower costs (with included vet care) due to subsidies.
  • Fees often include: [3]
    • Vaccinations
    • Spaying/neutering
    • Microchip
    • Flea/tick treatment
    • Heartworm tests

Here’s a look at the average first-year costs of common pets: [4]

  • Medium-size Dog
    • $1,580
  • Rabbit
    • $1,055
  • Cat
    • $1,035
  • Small Bird
    • $270
  • Fish
    • $235

Why do some of these animals need a thousand dollars worth of necessities?

Let’s break down some of the approximate costs of owning a dog or cat: [1][4]

Dog vs Cat

Food/treats: $254/year (vs.) $220/year

Toys: $43/year (vs.) $21/year

Routine Vet Visits: $248/year (vs.) $219/year

Grooming: $73/year (vs.)$34/year

Spay/neuter: $200 (vs.)$145

Collar/leash: $30(vs.) $10

Carrier Bag: $60(vs.) $40

If these are the basic expenses, how much are the more fun (or even extravagant) ones?

Pricier Options

Holidays

  • For Halloween 2011, it was expected that American pet owners would spend a total of $310 million on pet costumes. [5]
    • Three most popular costumes:
      • Pumpkins
      • Devils
      • Hot dogs
  • During the 2011 holiday season, more than 50% of pet owners purchased presents for their pets. [6]
    • They spent an average of about $46 on the gifts.

Pampering

  • Luxury Boarding
    • For the largest deluxe suite at one of the Wag Hotels, pet owners pay $150 a night for their dogs to board in luxury. [7]
    • The Silo suite at the Wagsworth Manor costs $79 a night and includes a decorative mural, TV, and private window for your pet. [8]
      • The resort also offers massages, email reports, and tuck-in services at an additional cost.
  • Gourmet Food
    • Some brands, like Merrick, make pet food that resembles a restaurant menu.
      • For example, a can of Merrick dog food called Merrick Mediterranean
  • Banquet sells for $25.99 and includes: [9]
    • Lamb
    • Chick peas
    • Apples
    • Spinach
    • Brown rice
  • Fancy Boutiques [10]
    • The Fetch Club in New York City charges $125 for a quarterly membership.
      • Features a:
        • Spa
        • Fitness center
        • Theater
        • Pet restaurant

Conclusion

Whether you’re just buying the basics or splurging to give your pet a life of luxury, you’re bound to be spending at least a few hundred dollars a year to own your animal friend.

Provided to you exclusively by Total Bankruptcy.

Thursday, August 16th, 2012

The 7 Most Common Credit Card Mistakes

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Credit cards have become essential pieces of plastic within the wallets of Americans. Without them, people feel out of the loop and unable to fully feel safe if an “emergency” arises.

The problem is; most credit cards aren’t strictly for emergencies. They are often over used and under monitored, causing their owners to fall into serious debt; sometimes even having to file for Chapter 7 personal bankruptcy.

MSN has detailed the 7 most commonly committed mistakes when it comes to credit card usage.

The Mistakes

Paying Your Bill Late

This is one of the most common mistakes. This is a big one too, with higher interest rates and lower credit scores at risk when you don’t pay what’s due on your card. Experts suggest paying bills online so you can monitor your account before it’s too late.

Balance Transfer Nightmare

Some offers seem like a great idea; move high interest balances to low to no interest cards in order to save on the interest. However, some cards have fine print that states the rate will rise to much higher than the introductory rate after the promotional term is completed. Beware say the experts.

The Minimum Payment Rut

By constantly paying the minimum balance due every month, you end up paying much more in the long run for items you purchase on your card. In the end, the interest causes you to pay more than the balance sometimes, say the experts. Pay twice or triple the minimum in order for you to be debt free in less time.

Using All Available Credit

Credit utilization ratio is a large factor in many things, including your credit score. When you have a high balance compared to your credit limit, it looks bad. Experts say, do not spend more than 30 percent of your credit limit at any given time for an ideal credit situation.

Cash Advances

Taking cash advances from your credit card is an easy way to rack up the fees. Credit cards often charge huge penalties when you take out cash advances on credit cards so beware. On top of the penalties, a fee is usually assessed when you take out the money, furthering your financial headache.

Spending To Earn Rewards

Almost all cards are now offering rewards. Many offer airline miles, or credits for cash after you spend a certain amount. Many people don’t realize the amount of purchasing needed in order to rack up the amount of points needed for their desired perk.

Annual Fees

Some cards are only available with annual fees due to the borrower’s credit history. Experts say to avoid these annual fees at all cost due to the wasteful nature of the fee itself. Fees are now capped at 25 percent, thanks to a government program designed at taking much of the burden of credit card debt off of the average American citizen. Experts still say to be diligent in shopping for new credit cards and look for cards that offer no annual fees or excessive annual fees in order to make sure you’re not causing any further financial troubles for yourself.

Tuesday, August 14th, 2012

Four Ways To Save On College Textbooks

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Let’s face it; college is expensive, very expensive.

Between tuition, room and board, textbooks, supplies, food, and everything else, college is one big expense.

Anywhere you can save some money, it’s worth it; every penny.

Textbooks are a big part of college and often cost thousands of dollars over the duration of the student’s collegiate career.

According to The Wall Street Journal, the average college student spent $1,213 on textbooks alone in the 2011-2012 school year. That number is up 3% from the previous year.

Many students struggle to pay for books and often use credit cards that could get them into severe credit card debt if they’re not careful.

Experts say that books will increasingly become more expensive as pricey add-ons, like online tutorials, are included in class syllabuses and considered must-have items within the college classrooms.

These figures may seem bleak but experts say that students don’t have to waste their party money on books anymore; it’ll just take some smarts and know-how.

Options

Rental books and e-books are becoming more popular for their cost effectiveness. However, if a book is lost or damaged the student has to pay a fee that would almost equal (and sometimes surpass) the original cost of a new book, so keep that in mind.

Another option that students have no control over, unfortunately, is professors are using “open source” textbooks that are free. Even if professors use rented textbooks from previous years, savings of up to 75% could be in order, according to experts.

However, not every book is available as an e-book or a rental book. For those cases The Wall Street Journal has laid out four options to consider when buying books for your upcoming classes.

Bundle Up

Many textbook retailers offer bundle options for popular textbooks. Bundles often include homework packs and other necessary items that would cost more if sold separately. By bundling the books, you could save lots of money in the long run, say the experts, giving you more money for social events and hanging out with your newly acquainted friends.

Coupon Codes

Saving money has always been on the mind of savvy internet users. Coupon codes are often implemented for retail sites that offer books and you can potentially save big bucks when it comes down to it. Even college bookstores have “hidden” perks like coupon codes and free gifts when you purchase books through them. Experts say it’s important to check out all options in order to make sure you leave no rocks unturned in the eternal quest to save money for the weekend.

Rental Agreements Could Backfire

It always pays to read the fine print. Many rental agreements assess fines and fees for books that are highlighted, damaged, or lost. Make sure you take care of your rental and return it on time in order for the rental to be worth the savings associated with it.

Compare All Formats

According to Amazon, users could save up to 60% on e-books if purchased rather than the new textbooks that are often offered. They also state that 90% savings could be passed to the customer if they buy a used text print so do your homework before you have to do actual homework.

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Even the mighty can fall.

It was recently reported by the Associated Press that the mother of Gabby Douglas, standout gymnastics Olympic gold medalists from this year’s games, filed for Chapter 13 personal bankruptcy.

According to experts, Chapter 13 is a type of bankruptcy that allows people to reorganize their finances and pay down debts over several years.

In the 2012 Olympics, Gabby Douglas has done something no one else has done; she became the first African-American woman to win the all-around gold medal in gymnastics. That is an incredible feat but the report of her family’s finances shows that even the spotlight can find dark areas.

Although her mother’s financial situation is in peril, Gabby was determined to make a name for herself. She did, gaining two gold medals and becoming and international superstar dubbed the “flying squirrel”.

According to the Associated Press report, offers have begun flying in for the flying squirrel. Corn Flakes cereal boxes have already been produced with her likeness on the cover, as well as many other requests for interviews and endorsements.

Experts say she stands to make many millions of dollars on endorsement deals alone when she comes back home to America after her brilliant Olympic stint.

The Chapter 13 bankruptcy filing lists Mrs. Hawkins assets at $163,706, with a majority of the assets being attributed to a townhouse in Virginia Beach, Virginia as well as a 2007 Nissan Maxima.

The filings also show that Hawkins lists nearly $80,000 in debts, with a majority being attributed to her mortgage. Her monthly income is also part of the filing and lists at $2,500 a month. Most of her income is from social security disability as well as child support from her husband whom she is separated from.

Mrs. Hawkins has three other children that she cares for in addition to Gabby. Her disability comes from her permanent disability that she went on in 2009.

An order, according to the Associated Press report, was ordered for Mrs. Hawkins to pay $400 a month for a five-month period in order to pay down her existing debts.

What You Can Do To Avoid Chapter 13 Bankruptcy

Experts have said it is important to note that financial troubles can hit a family hard, even when they have an Olympic dynamo in their ranks with the potential earning power of a Fortune 500 executive. One’s future is predicated on the present. If spending and unforeseen obstacles lie ahead of you, the best chance of survival is being prepared, according to the experts.

One way to be prepared is to have some sort of long term account at a bank or credit union that offers low to no fees associated with withdrawing early. These accounts often have low interest associated with them but it is a good place to store money and forget about it until it is desperately needed for emergency situations.

Another way to be prepared is to have a diversified stock portfolio that mirrors trends in the markets, according to the experts. If that is not an option for you, experts say that traditional savings accounts are good ways to be conservative and have a nest egg prepared if anything were to happen financially.

Friday, August 3rd, 2012

2012: Is it Better to Rent or Own?

In this struggling economy, many people have lost their jobs and are worried about losing their home to foreclosure.

So the question remains: Are you better off paying rent to a landlord or being tied down to a mortgage? This infographic weighs the pros and cons of each. Which is right for you?


Is It Better To Rent Or Own A House?

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2012: Is it Better to Rent or Own?

Whether you’re afraid to make a big commitment or unsure of the housing market’s stability, it’s never a bad idea to weigh the pros and cons of renting. Instead of running around searching the Internet for reasons to rent or own, look no further than this infographic to tell you useful info to help you make a well-informed decision.

Pros and Cons of Renting

Pros

  • Jobless Friendly
    • If you lose your job, the government is more likely to qualify you for state benefits if you’re renting a property.
  • Zero Repair Costs
    • No maintenance or repair costs.
    • You generally aren’t responsible for anything that breaks on the property—unless you broke it, that is.
  • Easy Moving
    • It’s a tough housing market for those looking to sell. No House? No problem.
    • Renting allows you to move after your lease expires and that can be a huge relief for some.
  • Lower Deposits
    • Typically you’ll be liable for, at the most, 3 months rent as a deposit.
    • Houses typically require a 20% down payment up front.
  • Landlords
    • Pro: Landlords can be honest and timely people when it comes to repairs or communication.
    • Con: Occasionally, landlords can be neglectful and untimely, resulting in delayed maintenance or sluggish response times.

Cons

  • Insurance
    • The landlord has the house under their coverage.
    • You are still responsible for property-related insurance.
  • No Return On Investment
    • A house is an investment with the ability to appreciate over time.
    • Since you’re not the owner, you won’t gain value from the home you rent.
  • No Customizations
    • Many rental companies and landlords don’t like changes to the house and it could prevent you from hanging pictures on the walls or painting a room.

What You Should Know About Renting-to-Own

  • Cost
    • When you rent-to-own, you’ll typically pay a premium for the lease rather than if you had a normal renting lease.
    • This option is only for those who actually intend to eventually own the house and not for those wishing to just rent the place due to higher rent cost.
  • Static Home Price
    • When signing the lease, you’re agreeing to pay a set amount.
    • This amount depends on the current market price of the home.
    • If you rent-to-buy in a bad housing market, you could stand to gain a great deal when the sector improves.

Pros and Cons of Renting a House versus an Apartment

Pros:

  • More space in a House
    • If you have pets or a desire for a sprawling lawn, a house may be ideal for you.
    • Should you have very few items and possibly no children, an apartment is a logical choice.
  • Improved Privacy
    • While it isn’t always the case, houses can be a lot more private than your typical apartment complex.
  • Infestation
    • So your neighbor at the house you were renting has a bed bug problem. It surely isn’t a common problem between the two of you.
    • Now imagine that same neighbor with the infestation lives just down the hall and the bugs are often seen crawling along the hallway ceiling.
    • You could have a serious issue within the week.

Cons:

  • Maintenance
    • Get out the shovels and lawn mower and get ready to tend to the landscaping. Your lease may not cover this kind of work whereas an apartment complex would maintain the yard for you.
  • Professionalism
    • While it isn’t always the case, many private owners lease out houses.
    • On the other hand, a company that has a professional staff that knows the tenancy laws typically owns apartments.

Who’s renting?

  • In 2011, 66% of Americans owned the housing they lived in.
  • The remaining 34% rent their residence.
Age % owning their housing % renting their housing
Under age 30 58 42
30 to 44 years old 64 36
45 to 64 years old 79 21
65 years or older 83 17

What are renters leasing?

  • Single-family homes: 34%
  • Structures with 2 to 4 units: 19%
  • Structures with 5 or more units: 42%
  • Mobile homes: 4%

Conclusion

There could be a variety of enticing perks that come along with renting or owning an apartment or a house, though there are possible challenges ahead in both instances, such as eviction or foreclosure. Don’t shy away from either option, but you should always make an informed decision and consider all the positives in addition to the negatives.

This infographic was brought to you by Total Bankruptcy.

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One of the most controversial baseball players to ever play the game has filed for bankruptcy, according to ESPN.

Jose Canseco, recently known for his outlandish behavior and outspoken nature, has filed for Chapter 7 bankruptcy in Nevada.

Canseco was MLB’s Rookie of the Year in 1986 and became league MVP six times and a World Series champion 2 times. He ended up with 462 homeruns over a 16 year career in the Major Leagues.

His accomplishments on the field were overshadowed by his flamboyant personality and post-baseball controversy.

Now 48, Canseco has had some high-profile problems, well documented in the media. He recently came out with a book about steroid use in baseball and was one of the first major league players to admit to using the drug for performance enhancing abilities.

Known as a perennial slugger, Conseco played with numerous teams during his major league career including the Oakland Athletics.

The filing, as reported by the Las Vegas Sun, lists only $21,000 in assets and over $1.7 million in liabilities.

The filing also reveals that Jose Conseco owes the Internal Revenue Service, better known as the IRS, more than $500,000 in back taxes.

Media stunts such as celebrity boxing matches were deemed to be his cash cow and only option for an income after his long and illustrious career.

Why Do Athletes Fail With Finances?

Many athletes nowadays seem to struggle with retaining money made while being at the top of their game in the sports arena. Athletes such as Allen Iverson, Lenny Dykstra, and Dennis Rodman have all recently filed for bankruptcy.

How do these millionaire superstars fall from grace? The answer is complicated and no one really knows why some of these athletes squander away millions of dollars, according to the experts.

One expert points to the large entourages that often accompany these athletes everywhere they go. When their team is on a road trip, a team of friends and family members often travel with the athlete, giving them the creature comforts of home. Many people within the entourages rely on money from the athlete to travel with them. Some even provide services like cutting the athletes hair and managing his press schedule to stay on the athlete’s payroll.

Another theory that experts concocted was that athletes often come from poorer areas and aren’t taught the value of a dollar at a young age. When an athlete goes from barely being able to afford Ramen noodles, to being able to buy the company that supplies Ramen noodles, it’s an extreme transition to make, and adjust to.

Whatever the case may be, the warning signs are often there for these athletes. There are lessons to be learned, even if you aren’t an all-pro athlete, when these cases are brought to the forefront. Experts say that hearing about these cases can often translate into average American citizens becoming aware of their own spending habits and adjusting accordingly.

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Middle-aged Americans are feeling the student loan debt crisis at a growing rate. Not due to the fact that they decided to go back to school to fulfill their collegiate dream (although some have tackled that task), but because the loans from their college days, over twenty-some-odd years ago, are still haunting their lives today.

According to SmartMoney.com, about one-third of the nation’s student loan debt is attributed to citizens over the age of 40. Experts say that the borrowers within this age range seem to be struggling the most with their loan payments.

The delinquency rate, or percent of debt of which has not been paid in 90 days or more, of borrowers between the ages of 40 and 49 is at 11.9% compared to 8.7% for all other age groups in the month of March this year.

Borrow Down The Line

Not only is this age group stifled with their own existing student loan debt, but they have now taken on the role of borrowers for their children who are becoming old enough to start attending college.

Experts say that 17% of parents whose children graduated from college this past spring had federal Parent PLUS loans out for their kin. Ten years ago that percentage was at 10%.

The staggering figures lie within the average amounts of each of these loans. According to SmartMoney.com, the average amount held within these loans is $34,000. That is up 123% from a decade ago.

To add fuel to the financial fire, many private lenders are requiring parents to co-sign their children’s loans in order for them to qualify for a lower rate, or even be eligible for a loan in the first place. This puts the burden on them if (more like when in this economy) the student fails to make payments on the loan.

Many students don’t have credit histories when they enter college and some leave college with massive amounts of credit card debt due to the overabundance of credit card applications aimed at them and the aggressive nature of the credit card companies to secure young adults in long-term financial quandaries.

Since the financial crisis of 2008-2009 hit, over 90% of private loans have co-signers on them, according to SmartMoney.com. Prior to 2008, that figure was roughly at 50%.

What Can Be Done?

With these “impending doom” type figures, many fall into deep, deep debt. Unlike all consumer loans, federal and private student loans cannot be wiped out after bankruptcy, which is often a go-to tactic for people stuck in a cycle of debt.

Congress has recently taken on the task of listening to pleas that student loans be allowed to be forgiven in bankruptcy but many consumer advocates say that it will cost the tax payer a heap of money in order for these proceedings to take place and be played out in the federal court system.