Debt Consolidation Blog

During the past several years, the government has made several different changes to the laws that concern bankruptcy and the kinds of requirements that someone must meet to file for a certain type of bankruptcy. The purpose of this article is to explain some of these changes and how they affect those that are looking into filing for bankruptcy.

The first of these changes is quite a sweeping difference from previous years. Most people, in the past, chose to file for Chapter 7 bankruptcy, which calls for liquidation of the property possessed by the person filing. For most people, liquidation was a much better option that repayment. As a result, most people chose to file under the Chapter 7 umbrella, rather than struggle to repay all of the debt that they had accumulated.

Unfortunately for those that bring in a higher income, there is now a limit on filing for Chapter 7 bankruptcy. How this limit works, is that the person doing the filing must measure his or her income against the median income for a similar size of household in the state in which they reside. If their income is higher that the average, they must most likely file for Chapter 13 bankruptcy, instead. This type of declaration requires repayment of all of the debt that was accumulated. Those that fall at or below the median income for the requirement, they may go ahead and file for Chapter 7 bankruptcy, which is generally a bit easier on the pocketbook than filing Chapter 13 bankruptcy.

However, before it is stipulated that a person file for Chapter 13 bankruptcy, they must also pass the “means” test. This test determines if the person will have an adequate amount of disposable income after paying for necessities and other required debt payments. If the person in question takes the amount of money that is need to pay for allowed expenses and the required debt payments and it puts a person’s disposable income at less than a certain amount, this allows the eligibility to file for Chapter 7 bankruptcy once again.

Another of the new requirements is that a person must go through credit counseling before he or she is allowed to file for bankruptcy. This plan requires only that this person attend the counseling sessions and does not stipulate that you participate in any of the programs that the agency offers.

If a person is now allowed to file for bankruptcy, the government also requires that you attend counseling near the end of the bankruptcy proceedings. This counseling teaches personal financial management. Only after proof of this counseling is submitted will the debts that have been accumulated be erased.

By now, nearly all, if not all of America’s citizens are aware of the housing crisis that has erupted in the past several years. Because many homeowners intended to speculate upon the housing market, they are now in massive amounts of debt that they never dreamed they would have to pay back. This is especially applicable to the baby boomers that decided to invest in this manner. Back in the housing market of the 1990’s, this type of an investment was relatively safe and reliable. Housing prices were up, the stock market was booming and the craze of the business world and the stock market, alike, was the idea of the dot.com enterprise and the supposed success and promise that these business seemed to be headed for.

However, after the dot.com businesses went south, the market was left without a direction for the future. Though some of the internet businesses made it through the difficult times, many investors in the United States lost large amounts of money as a result of all of this change.

This situation is not unlike the ordeal that the housing market investors are going through at this point in time. The market that they thought would be so successful is now sinking rapidly, although there was not much, if any, indication of this happening. In the past several months, the United States government has been hard at work figuring out a way to ease this crisis and help the struggling lending companies in the U.S. Historically, Fannie Mae and Freddie Mac have been very stable lenders. However, with the recent downward trend in the housing market, they have been struggling as well.

In July 2008, the Congress sent legislation before President Bush that would give relief to those in the general public that were caught up in the housing crisis as well as the large companies in need of some help. How the legislation works is as follows.

For starters, the government is offering $7,500 in tax credit for first time home buyers if they purchase they home before July 1st of next year. This is a neat way for the government to give first time buyers a bit of a break in this current market.

Another good thing that the Foreclosure Act put forth is the requirement for lenders to furnish copies of mortgage documents at least seven days prior to the loan closing procedures. It is always good to have paperwork as a back up in case something goes wrong and legal procedings become necessary.

The government is also offering federally-backed mortgages to those that reside in places where it is extremely expensive to buy and maintain a home. The living expenses in the Boston and Nantucket areas are very high at the moment, which made them eligible for the governments help with raising the ceiling for the amount of money that homeowners can collect on a mortgage.

There are several other aspects of the crisis that the Foreclosure Act addresses, but the ones that have been mentioned above are the most critical. Hopefully this governmental action will help many of those in the United States that are struggling to get out from under the debt that they owe.

Many times we look at school as something that characterizes the lifestyle of the young and carefree. However, for college students, this is not reality. Though many high school students look forward to going off to college and rightfully so, there are other considerations besides what they may be looking forward to.

One of these considerations is the financial side of things. In past years, going to school was a decision that did not focus so much on whether a student had the financial ability to do so. Now, because of rising costs in every area of our lives, tuition has been heavily affected by this change. Another factor that has not helped students is the inflation that began in the 1980’s. I know from people that have gone to and finished college in the 80’s that tuition and fees for a semester of school did not often exceed $300. This allowed many students to attend college that may not normally have done so.

Today, a college student’s hope for getting out of college with no or very little debt is to try for as many scholarships as possible. Sometimes even grants are available for those that qualify for them. It is all a matter of hard work and research, though, to find the grants and scholarships that are available.

If a student is unable to find scholarships and grants that are applicable to their situation, sometimes the only other option is to take out student loans. The best way to borrow money is to apply for federal student loans, which generally have lower interest rates and are much easier to work with when dealing with debt consolidation. One of these loans is called a Stafford loan, and is well worth looking into.

With a federal student loan consolidation, either a loan consolidation company or the Deparment of Education purchases the existing student loans. The good thing about borrowing from the government is that the loans are backed by the full faith and credit of the United States government. This indicates a measure of stability that cannot often be found among other lenders and it also offers the lowest interest rates that can be found. Though there are borrowing limits and rather strict qualification guidlines for these loans, they are well worth the time spent if a student must get into debt during his or her school years.

Because of the recent developments in the housing market, most of us hear the terms bankruptcy, short sale and foreclosure on a regular basis in the everyday news that we listen to. The fact that our country functions with and upon the premise that its citizens be well-informed and educated makes understanding what is going on within and without our borders a very important matter. One of these terms, in particular, is important to understand, as it is becoming a very common phenomenon in our country. This phenomenon is known as the “short sale.”

As the name implies, when a lender accepts a short sale, one of the parties that is dealing with the situation takes the “short” end of the stick, so to speak. A short sale takes place when a lender agrees to take a loss on payments for a home if the owners cannot pay the amount needed to secure the ownership of the property. What usually happens with a short sale is that an auction is held to procure the largest amount of funds possible for the lender. Usually, this amount falls short of what the original owners of the home did owe the lender. However, it is often worth it for the lender to get at least a portion of what was lost back to work with in the future.

This indicates that the current market is a buyer’s market and definitely not a seller’s market. If you are looking for a new home and have already sold or are in the process of selling your house, a short sale may be a good way for you to save some money without giving up any quality in the home that you are looking for. It would be a bit like getting a nice home at a discount price, if the bidding does not go to high on that particular property.

As with the economy, in general, the housing market and every other market runs in certains cycles that are likely to repeat themselves every once in a while. When this current market trend ends, housing prices will most likely return to their original prices, or somewhere near them. Therefore, now is a good time to buy a new home if you are careful with your finances and are sure that you can afford it.

Congress recently passed a law that offers assistance for individuals and families who are facing forclosure. It is designed to help people who are in trouble due to subprime lending. There are many facets to the law, but the biggest help is a provision that allows some individuals to refinance their house for 90% of the original value.

This has to be worked out with the lender, but it gives some homeowners a break on their payments without totally ruining the lenders who made the loans. The government is also raising the limits on how much they will loan home owners to help some people shift loans over to the government.

• Short Sale vs. Short Payoff: What’s the Difference?-Diane’s Job
  Because short sales are becoming more common in our economy today, it is important to know how           they work and what the processes are that are involved when a short sale is conducted. This article explains what goes on in a short sale and who ultimately is responsible for the loss of funds that results from the short sale.

• What is a Short Sale?-Barker and Hedges Real Estate
  At times, it becomes impossible to keep up with mortgage payments for various reasons and incidents in life. To save what credibility with lenders that is possible, short sales are sometimes allowed. In these sales, the lender agrees to be responsible for the funds that are outstanding after the sale of the property in question. This article provides some helpful tips on how a short sale works.
• Ten Things to Expect on Your Way to a Short Sale-Mark Shandrow
  When conducting a short sale, a few homeowners may not know exactly what to expect when the proceedings begin. The author of this article gives 10 points of interest for those who might be participating in a short sale in the future.
• Understanding Short Sale for Your Home-My Blog
  The processes and goings-on behind the short sale of a home can be slightly confusing. For a homeowner or prospective buyer, it is important to realize what is going on at each stage of the procedure. This article would help anyone that is seeking to better his or her knowledge of the subject.
• Short Sales 101 for the Homeowner-Kirsten Means
  If a person’s home is heavily mortgaged and there seems to be no way out but to declare bankruptcy, there really are a few options besides that. One of these options is a short sale. Not all lenders will accept this type of a proposition and the laws concerning short sales are different for each state. However, a short sale could preserve a person’s credit more so than declaring bankruptcy. This article explains exactly what a short sale is and how it works.