What is Bankruptcy?

In basic terms, bankruptcy is a process that allows consumers, as well as business owners to completely eliminate or restructure debt under protection offered by the federal bankruptcy court. Although several types of bankruptcy options exist, they are all broken down into two specific categories to include liquidation and reorganization.

What are the different types of Bankruptcy available?

The two primary types of bankruptcy filings include a Chapter 7 and Chapter 13. However, other types of bankruptcies exist such as a Chapter 11 and Chapter 12. While all of these options are designed as programs under the federal government to help people facing some kind of financial crisis, the different bankruptcy options are also unique.

What constitutes a Chapter 7 Bankruptcy?

Of the two primary types of bankruptcy, a Chapter 7 filing would be under the category for liquidation. With this, a trustee appointed by the court would have the option of taking and selling some of the person’s property as a way of paying back a portion of debt owed to creditors. However, as a part of a Chapter 7 bankruptcy, any property considered “exempt” would be protected according to law.

What is a Chapter 13 Bankruptcy?

A Chapter 13 Bankruptcy falls under the second category of reorganization. In this case, a person would hold onto all personal property but in exchange, monthly payments over the course of three to five years would need to be made so some or all of debt to creditors could be repaid.

What are the basics of a Chapter 11 Bankruptcy?

Although Chapter 7 and Chapter 13 are the two more common options, a Chapter 11 Bankruptcy is also available which is used to reorganize finances for business owners who are struggling financially. However, a Chapter 11 Bankruptcy is also available for individuals.

Unfortunately, this type of filing is very expensive and it requires a significant amount of time so in most cases, this type of bankruptcy would only be used when the amount owed to creditors exceeds the acceptable amount accepted for a Chapter 13 Bankruptcy or for people with extraordinarily high non-exempt assets. A Chapter 11 Bankruptcy is rarely used but when it is, it would be essential to work with a bankruptcy attorney.

How is a Chapter 12 bankruptcy set up?

Like that Chapter 11, a Chapter 12 bankruptcy is seldom used but when it is, the person would need to have a minimum of 80% of debt coming from operations of a family farm. Since debt levels would be much higher in this case, the ceiling is also higher as a way of accommodation the significant level of debt. With this, an individual would have options for eliminating certain liens against the family farm to help. This option is also expensive and time-consuming, which is why it is so important to work with a qualified bankruptcy attorney who has full understanding of a Chapter 12 bankruptcy.

What are the different types of protection for a Chapter 7 bankruptcy?

As mentioned, each type of bankruptcy is designed to help with financial struggles but each is also unique. The following are the various components associated with Chapter 7:

• Personal Property – Some personal property might be sold to help pay down debt with most or all unsecured debt being completely erased. Any property deemed “exempt” according to federal law would be maintained by the individual. Most property associated with a Chapter 7 bankruptcy is in fact exempt.

• Secured Debt – Money owed on secured debt could be handled in several ways. The individual could continue making payments according to the original contract, pay the creditor a lump sum that would be equal to the current value of the property and then keep it, or surrender the property back to the creditor.

What are the specifics for a Chapter 13 bankruptcy?

• Repayment Plan – Under the new 2005 laws for bankruptcy, anyone filing a Chapter 13 is required to file a repayment plan, which would provide details on how debt to creditors would be paid back over the following three to five years. The minimum payment would be based on amount of income, total due on debt, and the amount of money creditors would have received if a Chapter 7 bankruptcy had been filed instead of a Chapter 13.

• Debt Limits – For a Chapter 13 bankruptcy, the federal government has specific limits regarding debt. With the new laws, it means that a person could not have more than $1,010,650 in secured debt and $336, 900 specific to secured debt to file this type of bankruptcy.

• Secured Debt – For someone with secured debt, this particular type of bankruptcy makes it possible for missed payments to be brought current as a means of avoiding personal property from being reposed or a home from being foreclosed on. As a part of the repayment plan, the past due amounts would be covered, something that could be paid over time.

How does a person know if bankruptcy is a good option?

For each type of bankruptcy, certain criteria would need to be met. For instance, with a Chapter 7 filing, if an individual had enough disposable income to support a repayment plan under a Chapter 13 bankruptcy after all allowed expenses and monthly payments for approved debt, filing for Chapter 7 would not be allowed. The following are some of the issues that need to be understood and analyzed to know when bankruptcy is a viable option, as well as the type of bankruptcy that would be considered the most appropriate.

• People need to understand what each type of bankruptcy filing is and what it entails. As an example, a Chapter 7 means that most, if not all of outstanding debt would be eliminated, which takes up to six months to complete whereas a Chapter 13 involves paying some or all debt back to creditors over a period of three to six months. Then a Chapter 11 involves debt exceeding the allowable maximum for Chapter 13 opposed to a Chapter 12 bankruptcy that is designed only to help people and family farms.

• Of course, an individual would need to understand the different types of bankruptcy to know what, if any filing would be a viable solution.

• Alternative Solutions – Because bankruptcy has a negative impact on the credit score, it should always be used as a last resort. Therefore, it would be worth for people to consider alternative solutions such as:

o Negotiation with creditors

o Repayment plan outside of bankruptcy

o Debt counseling

• A person would also need to learn about debts that would not be covered in the bankruptcy.

• Consequences should also be understood in that depending on the person’s situation and type of bankruptcy filed could have a negative impact on the home, car, boat, or other personal property being saved or lost. However, one of the best debts to include in a bankruptcy is credit cards.

Who should consider filing for bankruptcy?

Anyone who is facing a dire financial situation and has considered all alternatives without success could be a good candidate for bankruptcy. The goal would be for an individual to determine if bankruptcy of any type would get the situation under control but without doing significant damage to credit or resulting in all personal property being lost.

How does someone know whether Chapter 7 or Chapter 13 is the best bankruptcy to file?

Part of knowing the right type of bankruptcy to file is determined for the person. For instance, to file for Chapter 7, an individual would be required to pass a “Means Test.”, which calculates the gross income and personal assets, as well as deductions for liabilities and expenses over the past six months. From there, the numbers would be compared with the average median income in the same state. If the person’s income is less, then filing for Chapter 7 would be permitted but if the same or higher, the option may be to file for Chapter 13.

Because a Chapter 13 bankruptcy is a repayment option, the individual’s income versus debt ratio would be looked at, as well as job security to see if paying creditors back what is owed is even possible. If approved, the court would appoint a trustee to oversee the repayment of debt as outlined in the plan. Regardless, the new laws passed in 2005 have made filing for any type of bankruptcy far more difficult so for many people, working with a qualified attorney is the best way to go. With this, the attorney would be able to provide pros and cons of both options so the right decision is made.

How long does bankruptcy appear on a person’s credit history?

The actual time a bankruptcy stays on a person’s credit report would depend on the type of bankruptcy filed. However, most would remain a part of the credit history up to 10 years. As you will discover below, during this period a number of things would be affected negatively so bankruptcy of any kind should be taken serious.

Would debt to the Internal Revenue Department (IRS) be discharged with bankruptcy?

For some income tax debt, both Chapter 7 and Chapter 13 would discharge it. For Chapter 7 bankruptcy, Internal Revenue Debt would be fully discharged whereas for a Chapter 13 filing, some debt would be discharged with the rest being paid back according to the accepted repayment plan. It depends on how old the debt is.

Are there any special considerations for including tax debt in a bankruptcy filing?

Yes, five specific rules would apply to having tax debt discharged whether as a part of a Chapter 7 or Chapter 13 bankruptcy, which include:

1. Your tax returns must have been due three years or more before the petition was filed;

2. The person would need to have filed a tax return within the past two years

3. Any tax assessment could not be older than 240 days

4. The tax return could not have been fraudulent

5. The person wanting to include tax debt in a bankruptcy could not have ever been convicted of tax evasion

Additionally, the person would need to provide proof that four prior tax returns had been filed with the Internal Revenue Service, filed no later than the due date of the first creditor’s meeting for the bankruptcy case. The individual would also be required to offer a copy of the most recent tax return and if creditors want a copy, they would need to make a formal request after which time the person would be required to provide one.

If someone has retirement accounts, what happens to these when filing for bankruptcy?

For the person filing bankruptcy, regardless of type, any retirement accounts would be excluded. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, the federal government put clauses in place whereby all tax exempt retirement assets would be protected to include an IRA and 401K. Even though some IRA accounts have a limit of more than $1 million, the individual would have complete peace of mind. Obviously, retirement accounts are a sensitive subject and something that people work hard for so anyone with concerns could always work closely with a bankruptcy attorney to understand the details specific to retirement accounts.

Can a husband and wife file separate bankruptcy cases?

Even under the new bankruptcy laws, a married couple is not required to file bankruptcy jointly although they could if wanted. This means that filing separately is an option and in fact, several possible benefits of doing so should be considered which would depend on a number of factors to include.

• The way in which personal property is held

• Who is responsible for the incurred debts

• Whether bankruptcy would have a negative impact on just one person and not both

One of the main benefits of a married couple filing bankruptcy separately is that in most cases, only one person was responsible for the financial mess. Therefore, filing as individuals would not affect the innocent party. In other words, if filed separately, a husband or wife’s case would have zero negative effect on the other person’s credit. However, if bankruptcy were filed jointly, then credit for both people would be affected.

What role does the bankruptcy trustee play?

The trustee is appointed by the court in bankruptcy cases to oversee the individual’s estate, which would include all assets and liabilities. In addition, if any assets were found to be exempt from bankruptcy, it would be the trustee’s responsibility to liquefy them to help pay debt to creditors.

The bankruptcy trustee would also make sure the individual is not hiding or concealing any assets that should be included in the filing. During the hearing, the trustee would ask the individual if any assets had been excluded in the bankruptcy petition. The trustee has a job that is to protect creditors and help them recover as much debt possible but also to provide needed guidance to the person filing bankruptcy.

What are the steps for starting the bankruptcy process?

Whether for an individual or business owner, or the type of bankruptcy being filed, a petition must be filed with the United States Bankruptcy Court in which a declaration is made. This request is for the federal court system to provide both relief and protection under the Bankruptcy Code.

In addition to the petition, filing would involve providing an array of documentation about assets, liability, income, expenses, etc. Depending on the complexity of the case, some people will hire a bankruptcy attorney to file the petition and assist with other steps for filing bankruptcy.

How much does it cost to file bankruptcy?

Although the purpose of bankruptcy is to help people in the middle of a financial crisis, it still costs money to file a case. For instance, the cost to file a Chapter 7 bankruptcy is $299 while a Chapter 13 is $274. In addition to this, there would be the cost of an attorney if one were hired, which could range anywhere from hundreds to thousands of dollars.

While the incidentals do not add up to much, people would also have the expense of copying required documentation and in some cases, paying to get hold of certain paperwork.

Once a person files for bankruptcy, how many years would it be before bankruptcy could be filed again and how many times can someone file?

When it comes to filing bankruptcy, the number of times filed is not so much the focus but more the type of bankruptcy, as well as the number of years between filings. Many people think the answer is based on a state-by-state case but they need to remember that bankruptcy falls under the law of the federal government and actually goes through a specific federal bankruptcy court system therefore states have no say in these cases.

Now, to answer the question, since the new laws were enacted in 2005, a Chapter 7 bankruptcy cannot be filed unless the person owning the debt had been discharged from an earlier Chapter 7 bankruptcy or this type of bankruptcy had been filed more than eight years prior. For Chapter 13, the person would not be allowed to file unless a discharged had been received under Chapters 7, 11, or 12 more than four years prior or the person had received a discharger under a Chapter 13 bankruptcy more than two years prior.

Now, for corporations, which usually file Chapter 11 bankruptcy, no restraints exist as to the number of times a case could be filed or the length between each filing specific to this type of bankruptcy. However, the bankruptcy court system would have to agree that benefit of reorganization exists and that reorganization is possible.

Finally, people need to know the difference between a “discharged” and “dismissed” case. The rules for how many times and the length in between filings for bankruptcy are allowed for discharge are as outlined above. However, if a case was dismissed, it means that for some reason, the bankruptcy was not completed. In this case, the person would be required to wait 180 days from the dismissal date of the earlier filing to file the case again.

Once bankruptcy has been filed, are creditors allowed to contact the person or company?

The answer to this question is no, which is one of the benefits of filing for bankruptcy. After the case has been filed with the bankruptcy court, creditors are not allowed to call, email, or mail requesting money and they cannot continue charging late fees and other penalties. With bankruptcy being federal law, it has very strict rules that prevent creditors from even discussing debt with the person or company that filed.

That means all annoying and threatening contacts are eliminated. The only exception is that if a creditor named in a bankruptcy case had other debt not listed in the case, then discussions about that debt could still take place with the person or company.

What are some of the top misconceptions about bankruptcy?

In truth, many misconceptions surround bankruptcy, especially since the new law went into effect. The following are some of those that keep floating around we would like to clear up.

• Most people believe that after filing bankruptcy, credit is forever ruined but in truth, it is not. In fact, after filing, people are often inundated with unsecured credit card offers because creditors know that the person is free from the burden of debt. Other than this, it is true that it takes some time to recover from a perspective of credit after filing bankruptcy but it is possible. The goal is to learn from past mistakes so falling into a financial mess could be avoided in the future.

• Another misconception is that the new 2005 laws have made it nearly impossible to file for bankruptcy. While it is more challenging, it is not necessarily difficult. The laws that were enacted in 2005 were needed because unfortunately, too many people were using bankruptcy to defraud the federal government. Therefore, while additional steps may be needed and more restrictions apply when filing bankruptcy, everything has been done to protect both creditors and consumers.

• One of the most annoy misconceptions is that only irresponsible people file for bankruptcy. While financial irresponsibility is one reason, bankruptcy could be the result of a death in the family, job loss, business going under, serious illness, and so on.

• Finally, prior to filing the petition for bankruptcy, a person has the opportunity to max out credit cards. Well, this is a very dangerous thing to do and actually illegal. To a bankruptcy judge, maxing out credit cards prior to filing for any type of bankruptcy is fraud!

Best Bad Credit Consolidation Loans

The best bad credit consolidation loans are ones that have fixed interest rates through the whole term of the loan. In many cases the only way these loans can be obtained is by having some sort of collateral. Home equity loans can be a great way for someone with bad credit to get a low interest rate loan. These loans carry with them outstanding terms which can be very helpful. Banks are not afraid to give out low interest loans if you have bad credit as long as they have your house as security. On the other hand if you have a home that has built up equity you might as well use it to your benefit. Making proper fiscal decisions can help you get out of debt once and for all.

High Risk Loans for Bad or Poor Credit

Most Americans credit scores have dropped in the past few years due to the current economic crisis. Job loss and the inability for many citizens to pay their bills on time have caused a catastrophic deterioration of their credit. Knowing your credit score can be a great way for you to find out if you are a high risk customer for your banking institution. You can get a free credit report online once a year. This can give you a great idea of where you stand. Bad or poor credit loans do exist but normally come at a hefty price. We have found that in many cases consumers are delightfully surprised that their credit score is not as bad as they first thought. Do not be afraid to check.

Knowing where you Stand

Before you apply for a bad credit debt consolidation loan we recommend that you follow the steps below. These positive actions can give you a great idea of where you stand and can be very helpful when filling out your loan application.

1. Get your credit score

2. Inventory your assets

3. Add up your debt that you are looking to consolidate

4. figure out how much interest you are paying to each one of your creditors

5. Think of a possible cosigner that may be able to help you

The steps will give you a better idea of where your finances really stand. Sometimes making a detailed list of all of your assets and debt can be a great way in helping you determine what your next step will be. Bad credit debt consolidation loans can be a great way for you to get your financial situation back on the right track.

In general the companies providing the cheapest life insurance are usually the companies based online.  They have to compete harder for your business.  They must have an affordable life insurance rate or you will look elsewhere.  While this is a good place to start looking for the cheapest life insurance, there is one small catch.  Among the top insurance companies there will be very little difference in price, this is where other factors besides the cheapest life insurance should be taken into account.

Aside from the premium you should look at which companies are more likely to give you a “preferred” status.  This is based on your health and lifestyle.  While the difference in price between companies can be minimal, the difference between categories in one company can be enormous.  The cheapest life insurance will be the company who can give you a preferential status; those categories will have a more affordable life insurance rate.

Another important consideration is how long it will take to get the cheapest life insurance.  Some companies can take several months to finish the underwriting process and get the policy issued.  And should you not qualify for the requested affordable life insurance rate you’ll have to decide whether to accept a more expensive rate.

Some of the best companies that have a reputation for providing a very affordable life insurance rates can also be the most diverse.  West Coast Life Insurance has been in business since 1997 and, although small, has a reputation for providing cheap life insurance rates and great customer service.  On the other end of the time spectrum American General Life has been in business for almost a century and are among the country’s top insurers.

In that time they have proven to have among the cheapest life insurance rates in the business, and with over 4,000 employees they are more than capable of handling and claim you may have to file.  Along the mid-line is   Banner Life Insurance.

Having been in business for a little over 50 years, they know all about the cheapest life insurance.  They rate very strongly in financial stability as well as providing an affordable life insurance policy. These are just a few of the great companies providing cheap life insurance rates every day.  It is by no means a complete list; it’s likely the company to give you the cheapest life insurance isn’t even listed.  But look at the company carefully before making your decision.  Weigh all factors and decide which is the most affordable life insurance policy for you and your loved one.

Define Your Needs For Life Insurance

Everyone knows that you need life insurance, especially if you have a family.  But saving money is also a priority so you need an affordable life insurance policy.  Before you can determine was the cheapest life insurance is you need to know what options there are for insurance.

Term Life Insurance Policy

A term life insurance policy is the most common option.  It is also the best if you are looking for the cheapest life insurance.  Because it is such an affordable life insurance policy it allows you to buy a lot more coverage than you could otherwise afford.  It is also very easy to buy.  All you have to know is how much you need and how long you need it then shop around to find the cheapest term life insurance.  A term life insurance policy is not perfect however; there are a few drawbacks.  First, it does expire.  Not a problem unless you need the coverage after it expires.  If you cancel the policy or outlive it, you get no compensation.  If everything goes as you hope and you’re alive when the policy expires you’ve paid thousands for an affordable life insurance policy that you won’t use.

Whole Life Insurance

Whole life insurance is usually not a good option for an affordable life insurance policy, but it is available.  On the plus side, it is permanent so you’ll always benefit from your investment.  It also forces you to save money; it puts aside some money from your payment into a savings account.  In this way it can be seen as an affordable life insurance policy as it doubles as a savings account.  As mentioned it can be expensive and is generally very complicated.  Trying to shop for the cheapest life insurance can give you a headache with the complex nature of the policies.

Return of Premium

This option is sort of the in between option for being an affordable life insurance policy.  It’s also a compromise on benefits compared to the other two.  It is a policy that expires, but if you outlive the policy then you get your money back.  It is a very affordable life insurance policy perhaps only outdone by a term life insurance policy.  They are also very easy to shop for so you’ll be able to find the cheapest life insurance easily.  There are always drawbacks even with the cheapest life insurance.  With a return of premium policy there is the drawback of not making any money if you outlive the policy.  Yes, you get the premium money back but not the interest that the company made on it.  Also, should you cancel the policy you will get almost nothing.  For example if you cancel a 30-year policy after 10, you’ll only get about 10% of the money you put into it.  Even with the cheapest life insurance , this isn’t a great deal.

Lower Your Deductible

If you take the time to read enough articles about finding affordable car insurance one piece of advice that you will be given over and over again is that you can lower the premiums you pay by increasing your deductible.

For those who do not know what a deductible is, it is the amount of money that you must pay out of pocket when filing a claim before the insurance company will help you out. The higher amount you are willing to foot the bill for in the event of an accident or any type of altercation your vehicle is involved in, the lower will be the money they will charge you in premiums.

Let us look at an example of this. Let’s say that you have a deductible for 500 dollars. One evening it is raining and you run into a tree and damage the front end of your car.  When you file a claim with the insurance company you have to pay 500 dollars to your insurance provider before they are willing to pay out any money in order for your vehicle to be repaired.

Why a Deductible?

A deductible is in place in order to reduce any fraudulent claims that the insurance company has to deal with. The logic behind it is this- the more you have to pay out in terms of a deductible the less likely you will be to file a claim. This then makes it possible for your premium to be lower.

According to the Insurance Information Institute, if you decide to raise your deductible from $200 or $300 and bump it up to $500 then this can serve to lower your premium by as much as 15 to 30 percent. If you in turn decide to go even higher and raise your deductible to as much as $1000 then your premium can decrease by as much as 40 percent or in some cases, even more. Be aware however that this applies more to newer cars or cars that are only a few years old as opposed to older vehicles. If your car is at least 10 years old or older then you may able to lower your deductible somewhat but the savings will not be as great.

When it comes to finding the lowest car insurance rates you need to have your wits about you. Not all car insurance companiescharge the same premiums. As well, costs can differ depending on the city and/or state you live in.

Read on for some tips as to how to get car insurance that is as low as possible and will not take too big a chunk out of your monthly budget!

1.    Purchase your house (or apartment) insurance at the same company that you insure your vehicle with. While it is not necessarily standard across the board, there are many insurance providers that will offer you a 10 percent discount when you place your home and car with them. It is wise to check this out before you commit to anything however.

2.    You have probably heard this one many times before but it bears being repeated. When you take out a vehicle insurance policy, raise your deductible. This will help to lower the overall price you pay on your insurance. In particular, collision coverage is very pricey. You might want to raise this aspect of your coverage as soon as possible.

3.    Before you buy a car, find out which types are easiest to insure and can net you the lowest car insurance. For example, four door vehicles generally are cheaper to insure than two door vehicles are. Cars that fall into the high risk category will be hard to insure and you will pay a lot because they are deemed racing cars (of a sort). Examples of these include a Porsche or a Corvette. In the same way, trucks are generally more expensive to insure than cars. If you buy a sport utility vehicle (SUV) for example, you can expect to pay high insurance fees, with the exception of the very smallest kinds.

4.    Take care not to get into any accidents or have any driving violations. This is easier said than done but for the lowest car insurance rates around it helps to drive as defensively as possible. In most cases if you are involved in an accident with your car, your insurance rates will go up even if it was not your fault. This may not seem fair but it is often the case.

It is not uncommon for an insurance company to offer a five percent discount to a client who has maintained a clean driving record for at least a period of three years. This could increase to a 10 percent discount if you pass the five year mark with no accidents. If that is not an incentive to drive responsibly then what is?!

Affordable car insurance can be yours if you find a way to strike a positive balance between the deductible you pay and the premium you pay. Savings can be yours!

For the sake of example, let us say that someone wanted to buy a home.  Whether a first time buyer, a long-time buyer, or someone interested in refinancing an existing home, the first thing a lender is going to do after receiving a completed application is run that person’s credit report.  Since creditors report to one or all three reporting agencies, a report would be run for all three to include Experian, Equifax, and TransUnion.  Based on the credit score on the reports, the home or refinance loan would be approved or denied.  While other factors are considered by lenders, the credit score is by far the most critical.

The purpose of creditors running a person’s credit history is to reduce or preferably, eliminate risk.  Statistics show that someone with a high credit score of 750 to 850 poses very little risk of defaulting on a loan or credit account.  However, for the person with a low credit score of 600 or less, the amount of risk for default is significantly higher, with this risk increasing the lower the credit score drops.  Again, understanding the calculation system used to create a person’s credit score is something that every consumer should understand.

Specific data is used along with a mathematical formula for a credit score to be created, which each piece of information accounting for certain percentage of the overall score.  A person’s payment history accounts for 35% of the score, dollar amount owed to all creditors is 30%, the length of a person’s credit history accounts for 15%, type of credit is 10%, and finally, newly established credit is 10% of the score.  As you can see, the two most critical factors include payment history and amount owed.  Therefore, if a person were consistently late in making a loan or credit card payment or owed more than they could afford using a debt to income ratio, the credit score would be hit hard.

Using this data, information is input into a software program developed by the Fair Isaac Corporation, otherwise known as FICO.  For this reason, this score is sometimes called the credit score or it might be referred to as the FICO score.  Regardless, once the data has been input into the software program, an analysis would be completed, and in return, the three-digit credit score generated.

For each of category, the software uses specific information such as payment history, which includes number of accounts agreed to pay on, record of collections, and delinquent accounts.  For the “amount of money owed” category, the software considers amount owed on accounts, types of accounts, amount of credit line used, amount of installment loans versus original balance, and number of accounts with a zero balance.

Once the data has been input into the software program, a number between 300 and 850 would be assigned to that individual, which becomes the current credit score.  To give people an idea of where other people in the US stand as far as credit score, the following shows the levels and percentage of the population associated with each level.

•    300 to 499 – 2%
•    500 to 549 – 5%
•    550 to 599 – 8%
•    600 to 649 – 12%
•    650 to 699 – 15%
•    700 to 749 – 18%
•    750 to 799 – 27%
•    800 to 850 – 13%

Higher education and college education cost are rising rapidly

A college education is a very valuable in today’s work environment, and likely even more so in the future

According to the US Department of Education, over the past decade, tuition costs have risen 51% before your public schools, 36% for four-year private schools, and 26% for two-year public schools. These numbers suggest that you must grow your money about 5% every year just to keep up with the rate of tuition increases.

A college savings plan can help you meet or exceed these rates by deferring taxes on your investments allowing you to pay tomorrow’s tuition at today’s rates. Traditionally if you leave your money in a savings account, which generally earn 1 to 3% per year the rate at which your money grows long keep up with the increasing cost of higher education.

Having a college degree greatly increases your earning power, the salary you can expect to make each year upon graduation. Full-time workers with college degrees earn an average of $19,900 per year more than those with high school diplomas only. Obviously this adds up to hundreds of thousands of dollars in earnings over a lifetime.

As discussed parents and grandparents normally set up college savings plans for their children or grandchildren. In normal circumstances, the IRS imposes a gift tax on any monetary gift one person gives to another in excess of $12,000 in a given tax year.

However if the gift is a contribution to a college savings plan, the IRS allows the individual to give up to five years worth of gifts tax-free and one year which means that an individual can get $60,000 worth of college savings at once the beneficiary without incurring a tax liability.

There are four main types of plans use to invest money for higher education related expenses. Collectively though all these plans are often referred to as college savings plans, they’re actually various different types of plants. Encompassed within the 529 college savings plan are, 529 savings plans, prepaid tuition 529 plans, and private 529 plans.

Additionally Coverdell Education Savings Accounts are used as college savings plans. The differences between these plans is whether they allow landowners to invest money in tax-deferred accounts were buy tuition at favorable rates. Plans also differ on the institutions that offer them, some plans are offered a state governments, whereas others are offered by commercial institutions, such as banks and financial services firms.

Many college savings plan owners choose one plan, however it is possible to use a combination of plans at the same time to accomplish your college savings goals.

1. Most credit counseling programs insist on having all accounts closed before they will consider taking on a customer. The few exceptions are accounts needed for business purposes or accounts with very small balances. Debt reduction services usually allow most accounts to be kept open for future use.

2. Credit counseling usually takes longer to complete than debt reduction. The average time spent in credit counseling is five years. While most debt reduction services can liquidate your debts in less than a year.

3. The amount of money saved on reduced payments is another huge advantage of debt reduction programs. Credit counseling requires the entire debt to be paid while debt reduction works with the creditors to reduce the actual amount owed.

4. Credit scores can be affected in very different ways with either a debt reduction or a credit counseling service. Credit counseling does what is called a “re-aging” of your accounts. In other words once a few payments are made, the status on the credit report will be changed to show as current. With debt reduction the status of the debt is kept the same. If it’s past due at the beginning of the program, it will remain that way. Once the program is complete it will reflect as “settled in full” but the past negative history will remain.

5. The final biggest difference is the bargaining power the consumer gets. Credit counseling offers a debt repayment plan but the creditor is free to reject it or accept it at their will. With a debt reduction program, all creditors are contacted and informed of the hardship and the request that some form of agreement must be reached.

You Got To Shop Around

For some reason many people get attached and really loyal to their car insurance companies. All it really takes for that loyalty to gain ground is one claim. I personally was paid off from a claim from State Farm 40 years ago and still have my car insurance with State Farm. The difference is I shop the policy around once a year and so should you. Changes made to driving habits, your driving record all can produce savings at premium time. It is possible you will stay with the same company, but a little competitive shopping never hurt anyone and you may be able to negotiate a deal with your present company.

Adjust Coverage’s

As each day passes your car like us gets a little older. Your car depreciates and the need for collision and comprehensive coverage’s should be considered. A good rule of thumb is when the car insurance premium exceeds 10% of the cars value, perhaps you should consider dropping it.

Raise Your Deductibles

Much has been said and much has been written about saving money by raising your deductibles. There is a reason for that. It works and saves you money. Changing your deductible from $200 to $500.00 may save you 30 % in that collision coverage. Thats better than 15 minutes at Geico.

Discounts, Are You Using Them?

All car insurance companies discount their products. Safety devices, clean driving records , multiple car discounts, and there are more. Take advantage of these savings. Your credit record can even save you money. If you are one of those with spotless credit make it pay for you.

All of these tips will require effort on your part to implement them. In the end it is worth the savings you will realize.

Are you aware that approximately 86 percent of American citizens have health insurance coverage in one form or another? According to the U.S. Census Bureau this is the case. The majority of Americans do have coverage that pays for all or most of their health and medical services. That means that approximately 14 percent of Americans are completely uninsured or are underinsured. Even if you fall into the group that has health insurance coverage it is still smart to comparison shop in the same way that you would shop for a new car or a new appliance. Here we look at some ways to reduce those costs to save you some money.

Cutting Costs

It is best to use in-network care providers whenever possible. If your health insurance plan is the preferred provider option (PPO) then your insurance company will pay for the majority of your medical expenses minus the co-payments if you use a physician and /or a hospital that is in the insurance company’s network. If you choose to go outside of the provider network then it will be your responsibility to pay for a larger proportion of the bill. In most cases a PPO will pay up to 70 to 80 percent of the costs if as a patient you decide to venture outside of the network.

Information found online can be very valuable for those looking to lower their health care costs. There are more and more third-party health organizations known as infomediaries that are there to advise consumers about their treatment options as well as their options in terms of insurance providers. Once you have received a diagnosis or a recommendation from a doctor it never hurts to do a little research online in order to become as informed as you possibly can be.

Over the Internet there are consumer websites such as HealthGrades and that can offer suggestions as well as approximate costs for medical procedures. You can also go online and look for information that relates to individual hospitals and insurance companies. There are even federal government sites that can be of help to you. You need to become knowledgeable and educated about your health and healthcare costs.

That is only the beginning of what you as a consumer can do to keep your health and medical costs as low as possible. Do not assume that you are powerless in this area because you are not. For example, if your doctor suggests that you require a particular medical service or procedure then ask for the cost of such before the appointment is scheduled. Many people are pleasantly surprised to know that it is within their rights to ask for such. It is your health after all, your body, and your money that will be paying for the procedure or service.

In line with this is to ask your doctor about the options before you. Find out how essential tests and procedures are. In other words, which ones are recommended, which ones are simply suggestions and which ones are tests/procedures that you should not go without. Finding out what is medically necessary is particularly important if you are required to meet a high out-of-pocket deductible or a co-payment.

The potential to receive a discount is there for some medical and health care services. The opportunity to ask for a discount is most likely if you require a procedure or treatment that is offered by a number of different health care providers in the city or town you reside in.

Finding a local health care advocate is always a wise idea and a smart move. Professional health care advocates are well informed about care options in the local area and can help you to become well informed as well. Such an individual can assist you in finding the care you need and can also do their part to help you to resolve billing issues that you have with your health care provider or your insurance company.

If you can afford it then paying in cash is an excellent idea. While most medical professionals will not tell you this their offices can always use the cash which is why it is not unheard of for them to offer discounts to patients who pay for their services in cash. The reason for this primarily is it makes things simpler for them. Cash for services means that there are no insurance claims to file and no transaction fees for credit cards to pay.

The price for prescription drugs is what keeps a lot of people awake at night. To trim costs you can ask for the generic version of a drug. In 1997 the Food and Drug Administration (FDA) eased up its restrictions on pharmaceutical companies in terms of the advertising they can do that is aimed at consumers. This was known as DTC advertising and it meant that multi-million dollar ad campaigns bombarded the public with their constant promotion of treatments and name brand drugs. Generic drugs, according to the Consumer Reports National Research Center are every bit as safe for your health as drugs that have name brands and are a great deal less expensive. That is good news for every consumer!

In some cases there may be an over-the-counter alternative (OTC) to getting a prescription filled for a drug. Ask your physician or the pharmacist at the drug store if there is an over-the-counter drug that can help to alleviate or treat the symptoms of your health condition for a fraction of the cost. Many people do not think to do this but in some cases there may be an OTC alternative that you are not aware of.

Billing errors happen all of the time. In fact according to a New York Times article that gathered its information from a U.S. Government Accountability Office report as many as 9 in 10 hospital bills contain overcharges in one form or another. In order to reduce the chances that you will be charged more than you should be on a medical bill you should ask for an itemized bill. When you receive an explanation of benefits (EOB) statement in the mail it is not likely to contain a breakdown of all of your medical costs in a detailed manner. That is why it is in your best interests to request an itemized bill for the services, treatments and hospital stays you had. In this way you can easily see what you have been charged for.

When you receive a bill don’t just go ahead and pay it without reading it over. Be thorough in your analysis of it. Specifically what you are looking for is to make sure that you did indeed receive the treatments or medications that you are being billed for. If you find any type of error or discrepancy then do something about it. Request copies of your health care chart and/or a ledger from the pharmacy. In this way you will be in a position to compare your doctor’s instructions with the services you have been charged for.

While hearing the word “audit” is not likely to make you happy, when it comes to your medical bills it may be just what you need to ensure that you are not charged for services that you did not receive. Request that the health care provider’s billing office as well as your insurance company do an audit of your medical bills. There are instances where the processors of insurance claims make errors in terms of billing for medications, as well as in terms of services and treatments. If the claims manager for your health care provider reviews your bills then he or she is in a position to correct any billing mistakes that were made.

To effective manage your medical bills and health care dollars you need to take an approach that is proactive. If you are unable to pay a bill for a treatment or health care service in full or on time then ask if the staff at your doctor’s office can work with you to devise a payment plan whereby you can make smaller monthly payments over a longer span of time that are financially feasible for you.

Take the time to get as well invested in your health as possible. By so doing you will find successful ways to reduce the money you pay on the various health care services you need. This will make using the medical system less of a financial burden for you.

If you are thinking about applying for a loan modification then what do you need to qualify? The most important criteria for a loan modification is how able the homeowner is in terms of paying the modified payments both now and in the months and years to come. If the lender can see proof that you are able to live up to the loan modification agreement then you should not have a problem in being granted the modification.

Be prepared to provide the lender with your proof of income on a monthly and annual basis. You will also need to provide a complete and accurate financial statement that clearly shows your income and all of your expenses. The payments you may be seeking through loan modification may be lower but you still must be able to pay them in order to justify going through the process in the first place.

A loan modification process is sought if a homeowner has found themselves facing a hardship situation in their life that has led to problems in paying their home loan in the right manner and on time. The most common reasons that homeowners apply for a loan modification include the death of a spouse, a separation or divorce, an illness, a loss of income, relocating for another job, or military service that has taken a person away from home. When you apply for loan modification you must include a hardship letter. The more compelling your letter is, the more likely you are to be successful at being granted the loan modification.

The goal of the loan modification process is to help the homeowner to hold onto their home. The person is suffering enough from other problems and does not need to lose the roof over their head as well at this traumatic point in time. Work with your mortgage lender to figure out a loan modification that will work in your best interests. In this way, your loan can be brought up to date without suffering penalties and foreclosure will not happen.