Financial Preparation

Good Credit

Good credit can be the make-or-break detail that determines whether you'll get a home mortgage, low interest credit cards, a personal lines of credit or a job (lots of employers check the credit of candidate applying for a position in their company). Good credit can signify your financial situation.  It can be an indication that your life is on the right path to success.

You can check your credit score by requesting a free credit report every year from each of the three reporting bureaus: Equifax, Experian, and Trans Union. Your credit report is separate from your credit score.  In addition you also need to request your FICO from the three reporting companies mentioned a previously.  Your credit score is based on the information found on the credit report.  Some of the scoring factors are payment history, amounts owed, length of credit history, types of credit used and they look at have you applied for new credit.  FICO scores range from 350 to 850.

You can repair your damaged credit but it takes time, a conscious effort and setting up a personal debt repayment plan and stick to it.  There are some credit repair services available through some lending institutions.  The counselors offer some of the most effective and efficient ways to help you repair your credit.

Happy Investing!

This blog post courtesy of Bernita Mckinnion, Home Land Investment Properties, Inc.

Bankruptcy and Medical Bills

I often get calls from potential clients asking whether they can file for bankruptcy just on their medical bills, and not include their credit cards or other debts. The short answer is that they can file, but not just on their medical bills. The slight longer answer explains why.

Bankruptcy is all about treating all your creditors in various classes fairly. For example, the Court doesn’t want to see you pay Aunt Marge the $1,000 she lent you last year and not pay MBNA for the $1,000 you owe them. While you think Aunt Marge deserves the money more than MBNA (actually, I do too), it isn’t fair to let you pick and choose who receives payment, or give them what the Code calls a “preference.”

Since medical bills, credit cards, most personal loans, and some taxes are all considered “general unsecured debts,” they all have to be treated the same way. This means that all of your debt, not just medical bills, has to be included. It also means that you can’t just file on one or two credit cards, or on one judgment.

Clients frequently tell me, “I don’t want to include x, x, and x in my bankruptcy.” It might be a house or a car or a family debt (see Aunt Marge above). I explain that is not the way it works. Everybody who is owed money is listed, and all dischargeable debts are no longer their personal obligation. The most common non-dischargeable debts include some taxes, child support and student loans. But the discharge is a door that only opens in one direction. The creditor is prohibited from collecting, but you can pay anyone you want AFTER the bankruptcy is filed, not before. For secured debts the rule is simple: if you want to keep the collateral (house or car, for example) you must pay for it. Payment can be by reaffirmation (continuing monthly payments) or redemption (payment in cash of the value of the collateral).

While we’re on the subject of the relationship between medical bills and bankruptcy, consider these facts:

• 42% of all personal bankruptcies are the result of medical expenses. 78% of those who filed had insurance.
• 56 million Americans under age 65 will have trouble paying medical bills;
• Over 35M American adults (ages 19-64) will be contacted by collections agencies for unpaid medical bills;
• Nearly 17M American adults (ages 19-64) will receive a lower credit rating on account of their high medical bills;
• Over 15M American adults (ages 19-64) will use up all their savings to pay medical bills;
• Over 11M American adults (ages 19-64) will take on credit card debt to pay off their hospital bills;
• Approximately 10M American adults (ages 19-64) will be unable to pay for basic necessities like rent, food, and heat due to their medical bills;
• Over 16M children live in households struggling with medical bills;

If you or someone you know is struggling with medical or other debt call us to schedule a free bankruptcy consultation. At McFerran & Burns, we are experienced in all types of debt and the various ways to approach medical or other debt.

Today's blog courtesy of Richard J. Welt, McFerran & Burns.

Happy Investing!