Home » Page 3

Posts Tagged ‘bankruptcy’

« Older Entries
Newer Entries »
Thursday, September 9th, 2010

Study: Americans are Spending Smarter… Sort Of

A study recently conducted by the National Foundation for Credit Counseling has found that, as a result of the Great Recession, Americans are more interested than before in paying down our debts. But, it seems, we still don’t quite have the financial habits that will get us to that goal.

Eliminating Debt by Watching Your Money

The study found some interesting nuggets of information about the way we tackle debts in this country:

  • More than half of poll respondents reportedly noted that the economic slowdown had inspired them to pay down their debts; but
  • Only 37 percent of those polled indicated that they had a good idea of how they spent their money each month; and
  • Only 20 percent said that they planned to begin budgeting their expenses in order to get on track financially.

The good news from the poll’s findings is that we seem to have had a collective wake-up call about the real cost of debt. But, clearly, we aren’t all on the same page about what kind of financial habits will get us to a debt-free lifestyle.

Steps for Getting out of Debt

Representatives from the NFCC and other financial gurus often offer similar advice for getting on target with financial goals. In fact, the steps to debt elimination are almost identical to those for rebuilding and maintaining healthy finances after filing for bankruptcy:

  • Track your spending: In order to seriously pay down debt, you have to know where your money goes each month. Luckily, this step is fairly easy to accomplish, once you decide to do it: for a month, write down everything you spend money on, including rent, utilities, food, clothes and entertainment. No purchase is too big or too small to count – and if you leave anything out, you won’t have a realistic idea of where your finances stand.
  • Create a budget: Armed with the information about how you currently spend your money, you can devise a plan for spending and saving your money more effectively – that might mean putting more money toward credit card bills and less toward new shoes, or switching to home-cooked meals most nights of the week. Be sure to give yourself some breathing room so you don’t feel deprived by your budget and give up.
  • Start saving money: Now that you’re actively, consciously managing your finances, it’s important to put some money aside each month so you’re ready for any unexpected event (such as illness, injury or job loss). Don’t be daunted if you can only save a little each at a time – anything at all is better than nothing, and your funds will build up over time.

Remember: good intentions are important, but they won’t get you out of debt and back on track financially unless you act on them.

Tags: , , ,
Posted in Economic News: How Are We Doing? | No Comments »

Sunday, August 22nd, 2010

Student Loan Debt Tops Credit Card Debt in U.S.

The Wall Street Journal reported this month that the amount of money Americans owe on student loans has officially surpassed what we they owe on credit cards.

How did student loan debt come to outweigh credit card debt, which seems to dominate the headlines and bankruptcy and personal finance blogs?

Here’s a look at the numbers behind the scenes:

  • Americans currently owe $826.5 billion in revolving credit  -essentially means credit card debt. This is actually down from a high of $975.7 billion two years ago.
  • Current educational debt - student loans - comes to $829.9 billion. Analysts estimate that More than  $300 billion of that was accrued in the last four years.

These numbers suggest a variety of explanations and ramifications. Here’s a look at some of the issues and likely outcomes of the new balance of personal debt.

  • Paying down debt: Because credit card debts tend to have higher interest rates than student loan debt, it seems that people tend to pay off their credit cards before worrying about their student loans. That could be part of the reason why student debt has crept up in recent years while credit card debt has inched down.
  • New credit card requirements: Another potential explanation for the shift is that many credit card issuers have increased minimum payments in recent months, which translates to people paying down more of their debt, whether they like it or not.
  • Attention: Credit card debt generally gets more media attention than student loans, which may make paying it off a bigger priority for some people.
  • Rising cost of college: The cost of attending college continues to rise. And with graduates entering a tough job market many are finding it difficult to pay down large student loan debts.

Bankruptcy and Student Loan Debt

One especially interesting element of the shifted debt load is the role that personal bankruptcy has to play.

Bankruptcy filing rates are on the rise, and the use of bankruptcy as a credit card debt elimination tool has become more common and accepted. However, bankruptcy cannot typically clear student loan debts.

  • Student loans in bankruptcy: Except in cases of extreme financial hardship, student loans are not dischargeable in bankruptcy court. This means that even if a person files for bankruptcy and has other loans discharged she will still be responsible for paying her educational lenders.
  • Credit cards in bankruptcy: Credit cards, on the other hand, can be discharged during a bankruptcy filing. With a Chapter 7 bankruptcy, some people clear their credit card debt in only a few months.

So what does all this mean for you? If you’ve found yourself saddled with student debt, credit card debt or both, it’s important to consider all of your options for easing your debt burden. Consider talking with a local bankruptcy attorney to explore your options.

Tags: ,
Posted in Economic News: How Are We Doing? | No Comments »

Friday, July 16th, 2010

Credit Scores in the U.S. at Record Lows

A recent report from the Associated Press notes that Americans’ credit scores have dropped to all-time lows, with 25.5 percent of the country scoring below 600. Here’s a closer look at that figure and what it might mean for future borrowing.

Credit Scores & Borrowing

When you apply for a loan, most lenders review your FICO credit score, which can range from 300 to 850 and is based on the information in your credit report. Higher scores qualify borrowers for larger loans and loans with more attractive terms (like lower interest rates); lower scores indicate that a borrower might be a greater risk to a lender, and so qualify borrowers for smaller loans and ones with higher interest rates.

The recently released data on credit scores reportedly show the following figures:

  • Scores of 599 and below: The number of people in the “low” range of credit scores has apparently jumped since the Great Recession hit—while a typical year finds that about 15 percent of those with active credit (about 25.5 million people) fall into this category, currently 25.5 percent (about 43.4 million people) reportedly score in this range.
  • Scores in the middle range (650 – 699): Sources indicate that this group traditionally comprises about 15 percent of active credit users, but has fallen to 11.9 percent in recent years. The shift suggests that those most likely to take out home and car loans might now be deterred from doing so because of lowered credit scores and thus more costly loans.
  • Scores in the high range (800 and above): The good news, it seems, is that the number of people with very high credit scores have increased: while the typical average hovers close to 13 percent, recent research found the group to comprise 17.9 percent of credit users.

So what does this mean for individual consumers and the larger economy?

A Slow Recovery?

Sources note that much of the economic growth in the boom years before the Great Recession was fueled by borrowing—also known as debt. While Americans were spending plenty of money, much of it was money they didn’t actually have (in the form of credit cards, mortgages, car loans, etc.).

The sky-high foreclosure rate and steadily climbing number of personal bankruptcy filings suggests that we’ve learned a lesson or two about debt as a nation, which may mean two things: first, that lenders will be a bit more discerning when issuing loans; and second, that borrowers will be a little more cautious when applying for them.

This could translate to a slow recovery, as we pare back our spending in favor of building up safety nets.

Tags: , , ,
Posted in Your Credit Score | No Comments »

Monday, June 28th, 2010

Congressional Disputes Hamper Unemployment Extensions

Despite some signs of economic recovery across the United States, the nation's unemployment level remains near 10 percent and, according to recent reports, concerns in the Senate over the country’s budget deficit and expansive recovery spending could prevent unemployed Americans from seeing extensions to their benefits.

So how large are the ramifications of Congress’s failure to act? Sources indicate that:

  • As many as 900,000 people have already seen some decrease in the unemployment benefits they receive
  • If no congressional action is taken, an estimated 1.2 million people will lose some or all of their unemployment benefits by the end of June
  • If Congress doesn’t act by the end of July, more than 2 million could be affected

The lack of action —or rather, lack of productive action—:on this matter in Congress will likely mean only temporary halts to unemployment support, but those affected could see their finances take a serious hit, particularly because so many Americans are in financial situations that mean they’re only a few late bills away from default, foreclosure or filing for bankruptcy.

Unemployment Benefits and Extensions

Because of the country’s unusually high unemployment rate and difficult job market, the federal government has extended the 26-week state- and employer-sponsored unemployment insurance programs with three other forms of assistance, all of which could expire without Congressionally approved extensions. The forms of unemployment insurance in jeopardy include:

  • Extension of benefits: This program allows those on unemployment to receive benefits for between 60 and 99 weeks, rather than the half-year state standard.
  • Extra weekly money: Another program offers an additional $25 weekly to certain unemployment beneficiaries.
  • Extension of COBRA benefits: The third program allows those who have lost their jobs to continue the health coverage they had at their last job and subsidizes the cost of that coverage, paying 65 percent for up to 15 weeks.

As some analysts have pointed out, for the millions of Americans unable to find a paying job, these extended benefits can mean the difference between good health and unmanageable medical bills.

Perhaps unsurprisingly, Senate Republicans are reportedly concerned that these extensions, while giving invaluable aid to many American families, are contributing ever more to the United States’ budget deficit, which is skyrocketing thanks in part to recovery efforts.

Though the situation may be sticky for some families, sources note that Congress still has time to act to renew the extensions.

Tags: , , ,
Posted in Unemployment | No Comments »

Sunday, June 13th, 2010

Seattle Earns Dubious Debtor Distinction

It turns out that Seattle leads the country in a category other than caffeine consumption. According to a survey cited in the Seattle Post-Intelligencer, among the 20 most populated metropolitan areas in the country, Seattle has the highest average amount of consumer debt.

The survey, conducted by the information services company Experian, found that the average Seattle consumer owes $26,646. This figure is almost $2,000 more than the national average debt per consumer of $24,775.

However, the news is not all bad for residents of the Emerald City. The survey also revealed that Seattle consumers have very few late payments and stay below their credit limits. These signs indicate that Seattle consumers are using their credit wisely and maintaining healthy credit scores, despite their high level of borrowing.

According to the survey, Seattle narrowly edged Dallas, which has an average consumer debt of $26,599. According to the Dallas Morning News, Dallas is tied with Miami for the lowest average credit score among its consumers, and the number of missed loan payments is higher than the national average.

Rounding out the top five American cities with high amounts of consumer debt were Denver, Atlanta, and Phoenix. Perhaps surprisingly, the two largest cities in the country finished near the bottom of the list. New York came in at number 17, while Los Angeles consumers had the lowest average debt of large American cities.

In conducting the survey, Experian took samples of consumer credit reports from each of the 20 metropolitan areas. The numbers include items such as credit cards and car loans, but do not take into account mortgage debt, which is often excluded from consumer debt surveys.

Lessons for Consumers

  • Late payments are the single biggest factor in lowering credit scores. Dallas consumers’ rate of late payments was nearly 20 percent higher than the national average. This explains the city’s low credit ranking, and shows that making credit payments on time is crucial to maintaining a health credit score.
  • A high level of debt is not an insurmountable obstacle. Seattle consumers owe the most money, but also tend to make their payments on time. By using credit responsibly, Seattle consumers have been able to maintain decent credit scores despite their high levels of spending.
  • Living in a large city may be expensive, but doesn’t have to result in high amounts of debt or even bankruptcy. The presence of New York and Los Angeles at the bottom of the list suggest that it is possible to have high living expenses but maintain healthy credit.

Tags: , , ,
Posted in Your Credit Score | No Comments »

Saturday, June 12th, 2010

Bankruptcy: Separating Myth from Reality

If you’ve recently found yourself buried under a pile of debt, you’ve probably spent some time researching ways to dig yourself out. Most likely, filing for personal bankruptcy did not sound like the most appealing choice. However, like visiting the dentist or and eating spinach, filing for bankruptcy can actually be quite good for your health, financially.

Like most tools that aid in personal finance recovery, the more you learn about bankruptcy, the more comfortable you may feel wielding it as a debt-reducing tool.

The following are some important things to know about personal bankruptcy:

What Will the Neighbors Say?

While many people think bankruptcy carries some stigma, the fact is that more than 1.5 million Americans filed for bankruptcy last year. And these people stretched across all social strata—from doctors and corporate executives to plumbers and house cleaners.

In addition, according to the Orlando Sentinel, a recent Harvard University study revealed that most bankruptcy filers wound up in court as a result of job loss, divorce, or medical issues. So, if one of these problems led to your financial malaise, know that you are not alone.

Where Do I Start?

First, figure out if you can stay out of bankruptcy by reducing your household expenses, or adjusting the payment plans on the debts you owe. If such tactics dramatically reduce your debts, you may be able to navigate the road to financial recovery yourself.

However, if these strategies prove ineffective, consider filing for personal bankruptcy. See if it makes more sense to file for Chapter 7 or Chapter 13 bankruptcy. Each of these options comes with its own advantages. For example, Chapter 7 bankruptcy can help discharge your debts more quickly, while Chapter 13 may allow you to keep more of your assets.

Of course, both options are pretty complex, especially after the legislative overhaul of bankruptcy law in 2005. It is possible to file for bankruptcy yourself, but seeking legal advice from an experienced bankruptcy attorney is often worth the investment.

Caveat Debtor

Reportedly, some companies promising immediate debt relief peddle misleading, or outright wrong, information. Be wary of promises to drastically reduce your debt or painlessly repair your credit, especially if these promises come attached with large up-front fees.

Also, beware of pressure tactics from your creditors. One tall tale occasionally given by debt collectors is that the 2005 reforms banned bankruptcy altogether. This couldn’t be further from the truth. Personal bankruptcy is alive and well, and over a million Americans use bankruptcy every year to reduce their debt load.

Additional Resources

To learn more about your legal rights before and after bankruptcy, check out ConsumerLaw.org

Tags: , ,
Posted in The Truth about Bankruptcy | No Comments »

Thursday, June 10th, 2010

The Student Debt Debate: Who’s to Blame?

Student loans provide people chances for their education, dreams and future career opportunities. But what happens when it’s time face the hefty debt waiting after graduation?

Who is to blame if the recent grad gets overwhelmed with debt and can't afford to pay their loans back?

A recent New York Times article profiled one indebted grad and tried to address all the parties involved.

For students like Courtney Munna, blame is no longer her concern. Now she regrets taking out $100,000 in student loans to attend N.Y.U. and wishes she made better financial decisions regarding the loans.

Since graduation in 2005, Munna has deferred her loans as a short term solution to scrape by and pay the rest of her bills.

But the question still remains, who’s to blame for students like Munna getting in over their heads.

The article said that both the students and their families have personal responsibilities to know their finances and take out loans they can afford to pay back.

The article also placed some responsibility on the universities since they have access to student’s finances after they fill out the financial aid forms, and are in a familiar situation helping students find aid. Students, on the other hand, are often overly trusting of universities to look out for their best interest.

The Times suggests that these schools should advise prospective students they cannot afford their school, an idea that Vice President of Enrollment at N.Y.U. Randall Deike said “would be completely inappropriate.” Besides discrimination issues, it’s not the schools decision to make whether or not a student can afford their school.

Their business is to enlist students, not turn them away. Deike agreed that prospective students should not take on too much debt, but he said that’s their decision.

There are other reasons universities do not want to tell students to search for a cheaper education. They said it might reflect poorly on their school and suggest that their education might not provide opportunities after graduation.

The lenders themselves have continued to take the blame for loaning too much money with too lax of standards. In Munna’s case she was approved for $40,000 in loans by Citibank, even after she was already deep in debt.

As of now, Munna makes $22 an hour and barely makes the bills. She knows she’s responsible for taking out to much money in loans. But said she doesn’t “want to spend the rest of her life slaving away to pay for an education…[she] would happily give back.”

Student loans typically take decades to repay, even if the student is fortunate to find a well-paying job after graduating. Many students see a series of forbearance and deferrals while they wait to land the right job, as interest and fees pile onto their original loans.

And there is typically no way to eliminate student loans other than to pay them in full. Currently, student loans are one of the rare types of debt that cannot be discharged in bankruptcy.

Tags: , ,
Posted in Predatory Lending | No Comments »

Monday, March 29th, 2010

Bankruptcy Demographics: Who’s Filing Bankruptcy?

The recession has affected us all, but who's been hit the hardest?

Last year there were nearly 1.5 million bankruptcy filings--learn about the people behind those numbers. Check out our latest You Tube video and please share it with your friends.

Tags: , ,
Posted in Year in Bankruptcy | 2 Comments »

Thursday, March 25th, 2010

Healthcare Bill Facts: How The Bill Affects the Uninsured AND the Insured

Why does the healthcare bill matter? Well, for starters, a 2009 Harvard study published in the American Journal of Medicine found that 60% of filers cited heath problems/medical bills as the main reason they filed bankruptcy.

The healthcare bill is now signed into law; but what does it mean for you?

We sifted through the press and propaganda to uncover how the new healthcare bill may affect you.

How the Healthcare Bill Will Affect…

The Uninsured

  • $5 billion immediately goes to provide temporary coverage to the uninsured living with preexisting conditions. This measure is intended to bridge the divide until all the healthcare changes go into effect in 2014.
  • By 2014, more people will qualify for Medicaid coverage, such as people who are low-income and have no children.
  • By 2014, small businesses, the self-employed and the uninsured will be able to join together to buy less-expensive policies.
  • By 2014, Americans who don’t qualify under a hardship plan must have healthcare insurance or face fines. Those who qualify under the hardship plan will be low-income individuals and families of four making less than $88,000.*
  • By 2014, the uninsured will face fines of $95 (or 1% of the uninsured’s income). By 2015, the fines increase to $325 or (or 2% of their income). By 2016, the fines increase to $695 (or 2.5% of their income).*

The Insured

  • If you buy a policy, insurance companies can’t limit your lifetime coverage anymore. This means your insurance money shouldn’t “run out” if you’re diagnosed with a serious illness.
  • Insurance companies can no longer deny your child coverage because of a preexisting condition.
  • By 2014, the same preexisting condition protections will arrive for adults.
  • Adult children can now stay on family insurance plans until they’re 26 years old.
  • By 2011, prescription drug costs are expected to drop by 50% as manufacturers drastically discount brand-name drugs. By 2020, it’ll drop by 75%.
  • Those on Medicare Part D will soon receive $250 for prescription help.
  • By 2014, families will receive tax breaks to help cover healthcare premiums. The amount will depend on household income.
  • Six months from now, insurers must provide some specific preventive healthcare (such as immunizations) for infants, children and teens with no cost to the insured.

* Based upon House changes to the bill, which must still be approved by the Senate.

Quick Healthcare Facts

The Bill Aims to Cover 32 Million People.

That’s the combined populations of Alabama, Colorado, Illinois, New Mexico and Wisconsin, according to the Census Bureau.

Healthcare Spending = 16% of the U.S. Total GDP.

That’s $8,000 per person ($2.5 trillion), according to the Organisation for Economic Co-Operation and Development.

Check Out These Illustrations of Medical Bankruptcy:

More Changes to the Healthcare Bill May Come

In order to get enough votes to pass this bill last night, the House had to make certain changes to the bill and create a reconciliation bill. The Senate still has to vote on this reconciliation bill, so there may be some bill tweaking.

Stay tuned to Total Bankruptcy for more healthcare and medical bankruptcy news.

What Do You Think: Is the Healthcare Bill a Good Deal for Americans?

Tired of politicians and reporters telling you what’s best for you? Post a comment and share your thoughts.

Sources:

Organisation for Economic Co-Operation and Development

The U.S. Census Bureau, U.S. Population Projections

TheWhiteHouse.Gov: Health Reform by the Numbers.

Harvard Study: The American Journal of Medicine, August 2009 issue

BBC News: Obama Healthcare Reforms May Pay Off for Drug Firms, March 22, 2010

Reuters U.S. Edition: Factbox: Winners, losers in House Healthcare Bill, March 22, 2010

Associated Press: House Sends Health Care Overhaul Bill to Obama, March 22, 2010

CNN Health: How the Health Care Bill Could Affect You, March 22, 2010

The Christian Science Monitor: Health Care Reform Bill 101: What Does it Mean for Kids and Families? March 22, 2010.

Tags: , , ,
Posted in Economic News: How Are We Doing? | No Comments »

Tuesday, December 29th, 2009

Top 10 Celebrity Bankruptcies of the Decade

It's been a rough decade economically, and not even celebrities were immune from financial turmoil. Some of the names on this list were no longer in the spotlight, while others encountered difficulty at the peak of their fame.

This list includes those who filed on personal debts as well as celebrity business owners who used bankruptcy to protect their brand.

  1. Randy Quaid (2000): The actor, famous for his role as Cousin Eddie in the National Lampoon's Vacation movies, had a rough decade. He ran into money problems and filed bankruptcy in 2000, ironically over a film called "The Debtors", which starred Quaid, was directed by his wife Evi, and was produced by the couple. The decade ended with Randy Quaid banned from stage acting, and the Quaids arrested for allegedly defrauding an innkeeper.
  2. Stan Lee (2001): Creator of Spider-Man, The Fantastic Four, The Incredible Hulk and The X-Men, Stan Lee got caught up in the dot-com bubble of the late 1990s. He and a business partner created Stan Lee Media, an internet-based comic book venture. However, the company quickly burned through its capital, Lee's partner was accused of securities fraud, and Lee and the company filed Chapter 11 bankruptcy.
  3. Mike Tyson (2003): After retiring from boxing and going through a divorce (plus getting a facial tattoo), the former Heavyweight champ found his finances in disarray. Tyson blamed lavish spending on cars, mansions and Bengals tigers, plus poor financial advice, for the state of his affairs, leading to his 2003 bankruptcy.
  4. Lorenzo Lamas (2004): The former Renegade and soap opera star filed bankruptcy for debts that included $200,000 for a private jet. He also owed on a Harley-Davidson motorcycle, a H2 Hummer, and alimony for his four ex-wives.
  5. Donald Trump (2004, 2009): Trump's Atlantic City hotel & resort company filed Chapter 11 bankruptcy twice this decade in order to reorganize debts related to construction. In the first bankruptcy in 2004, Donald Trump gave up his majority stake in his Trump Hotels & Casino Resorts company to creditors, which reemerged as Trump Entertainment Resorts. The second time around in 2009, Trump stepped down from the board. Trump has since reached a deal to reacquire the company.
  6. Michael Vick (2008): Vick's financial problems were directly tied to his legal ones. After being convicted on federal dog-fighting charges, Vick was left was heavy fines and no income to pay his obligations (or entourage). Vick, once of the highest-paid athletes in the country, filed bankruptcy from behind bars in 2008.
  7. Bill Buckner (2008): Sports fans will know that Bill Buckner is no stranger to bad luck. Despite a productive career in Major League Baseball, his error in Game 6 of the 1986 World Series became his legacy. After retiring, Buckner moved to Idaho and founded a car dealership. It was another error, and Buckner was forced to file bankruptcy in 2008 to recoup his losses.
  8. Lenny Dykstra (2009): Another baseball star, Dykstra became an entrepreneur after retiring from the Major League, and founded The Players Club, a glossy magazine for athletes, in 2008. The venture tanked, and led to at least 20 lawsuits. As a result, Dykstra filed Chapter 11 bankruptcy.
  9. Stephen Baldwin (2009): The youngest brother of the acting family, Stephen Baldwin had a resurgence this decade—as a professional reality show cast member. However, his appearance fees were not enough for the actor to keep up on his mortgage and other debts. Baldwin and his wife filed bankruptcy in New York in early 2009 as their home was in foreclosure.
  10. Sinbad (2009): The mononymous comedian may have made a career as a family-friendly entertainer, but allegedly failed to pay taxes on his income from Jingle All The Way and his other hits. The state of California filed a lien for more than $2.5 million in unpaid taxes in 2008. Sinbad filed bankruptcy in December, 2009.

And an honorable mention goes to...

  • Jose Canseco (2008): The baseball star and New York Time best-selling author didn't file bankruptcy, but he did walk away from his Encino, Calif., mansion, which went into foreclosure after he stopped paying the $2.5 million mortgage. Canseco was one of the first celebrities to admit being caught up in the foreclosure crisis.

Tags: , ,
Posted in The Truth about Bankruptcy | 1 Comment »

« Older Entries
Newer Entries »