Managing Credit and Debt and Dealing With Bankruptcy

Managing Credit and Debt and Dealing With Bankruptcy

Your credit score is one of your most important financial assets. But if you owe a lot of debt – especially credit card bills – chances are those obligations are hurting your credit rating.

Even worse: if your debt spirals out of control, you could be forced to file for bankruptcy protection, a move that could ding your credit rating for up to a decade.

So what can you do to manage credit and debt wisely – while avoiding bankruptcy court?

Here are four tips to achieve financially stability and maintain tip-top credit too.

Tip #1: Use Cash More Often Than Credit

There’s nothing wrong with having credit cards – and using them when appropriate. But far too many people rely on plastic to pay for nearly everything, from lifestyle costs like travel and eating out, to necessities such as utilities or cell phone service. And then these consumers can’t pay their credit card balances in full each month. That’s why, collectively, Americans owe about $1 trillion in credit card debt, according to data from the Federal Reserve Bank. To avoid over-extending yourself with credit, get into the habit of using cash more frequently. Set limits on your monthly spending in various categories, like food or shopping, and then try your best to only pay for those items with cash. Doing this keeps your credit card balances low, and also boosts your credit rating. After all, the amount of debt you carry accounts for 30% of your FICO credit score. The less credit card debt you have, the higher your credit score.

Tip #2: Be Careful Of The Type of Credit You Accept

Just because a retail store, an auto dealer or a bank or credit union offers you a credit card, loan or other financing, doesn’t mean you have to accept that offer. Always shop around for best loan rates and terms. And avoid so-called sub-prime credit deals, which stick you with exorbitant interest rates or high fees. Any money you pay toward interest payments (or other added costs) becomes money that isn’t paying off your debt. So high-cost loans, including things like payday loans, just keep you trapped in a cycle of debt.

Tip #3: Avoid Co-Signing for Others

One financial trap that many of us have succumbed to is co-signing on a credit card or loan for a family member or close friend. Naturally, you might want to help someone close to you or a person you love. However, recognize that co-signing carries series economic and credit risk to you. In a nutshell, if the person you co-sign for doesn’t pay the obligation as agreed, you could be on the hook to repay that debt. Additionally, the creditor can come after either one or both of you in the event of a default – something that would affect your credit rating. So it’s best to say “No” if someone asks you to co-sign for them. One upside to gently, but firmly saying “No” is that you will likely preserve the relationship too. After all, if the loan goes sour, you and your relative could have a major falling out.

Tip #4: Understand Your Financial Options

If you find that you’re already overwhelmed by debts and you’re contemplating bankruptcy protection, first consider all possible alternatives. Bankruptcy really should be a last-ditch option. So before you pull the trigger on a bankruptcy filing, you can try the following:

  • adjusting your budget to get your expenses in line with your income
  • negotiating with your creditors directly
  • enrolling in a debt management plan at a credit counseling firm
  • enlisting the services of a debt settlement company

In other words, don’t make a rash decision about bankruptcy before first doing something that will have far less long-term impact on your finances and your credit rating.

If you find, however, that bankruptcy really is the best option for you – and indeed, a Chapter 7 bankruptcy, which wipes out most consumer debt could be a fresh start – you should use the opportunity to eliminate your debts and then assess what went wrong, and how you won’t wind up in the same financial predicament in the future. Even with bankruptcy: take heart in knowing that it isn’t a financial death sentence. If you manage your credit well in the wake of a bankruptcy, you can start to rebuild your credit rating in just a year or so.

The High Cost of Free Advice.

The High Cost of Free Advice.

Most of us rely upon financial advisors, who dispense their counsel freely, for what we believe is good financial advice on budgeting, investing and our retirement. However, as a study from the Rand Corporation discovered, that can be a very bad bet – particularly in market downturns. In Rand’s paper, “Impacts of Conflicts of Interest in the Financial Services Industry,” the researchers wrote clearly, “We find empirical evidence suggesting that financial advisors act opportunistically to the detriment of their clients.” The Financial Planning Commission (the industry itself) admitted the problem after the research was published, writing, “The current regulatory framework allows Advisors Interests to be misaligned with Retirement Investors interests… There are significant loopholes that allow for the sale of products that may not be in the best interest of the Retirement Investors.” (more…)

Cancer costs: How to manage housing expenses during treatment

Cancer costs: How to manage housing expenses during treatment

A cancer diagnosis can be heartbreaking without adding financial worries to the mix. If bills pile up and wages grind to a halt, it can become impossible to manage expenses and can lead to an unbearable degree of stress. Amid crushing medical bills and smaller paychecks, you and/or a loved one may even face the harsh reality of a home loss.

These financial realities can wreak havoc on even the most savvy investor’s savings, but there are various assistance options that can help. If you’d like to stay in the comfort of your own home while undergoing cancer treatment, it can be a wise move, as cancer can be a temporary condition. (more…)

CBD Oil For Sale. Cannabis Goes Mainstream. Should You Invest?

CBD Oil For Sale. Cannabis Goes Mainstream. Should You Invest?

​It’s hard to imagine anything that has ever moved through politics faster than the legalization of medical and recreational marijuana, except perhaps the repeal of prohibition almost a century ago. In the past few months, one more state (Michigan) legalized recreational use in the U.S., bringing the total to 10. 33 states now allow medical use of marijuana. I’m seeing CBD Oil for sale over the counter in very conservative states, where being caught with a joint a few years ago could have brought a world of trouble. Customers claim CBD Oil cures virtually everything, and worry about how to sneak it into their luggage as they cross state and country lines.


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