If you are contemplating bankruptcy you first must dig deep to decide if it is really the right move. If your debts are equal to your income, then you obviously have a big problem. But before you make any decisions, first ' 'meet with a bankruptcy attorney before you make any decisions. It is important to understand all your alternatives. An attorney will also explain what will likely occur if you do decide to proceed with a bankruptcy filing. For example, you could lose your home and your car. That's why exploring all your options with a lawyer who specializes in bankruptcy is so important.
Types of Bankruptcy: Chapter 7: The most common form of bankruptcy. This is the chapter of the Bankruptcy Code that provides for "liquidation," that is, the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors. In order to be eligible for Chapter 7, the debtor must satisfy a "means test." The court will evaluate the debtor's income and expenses to determine if the debtor may proceed under Chapter 7.
Chapter 11: A reorganization bankruptcy, usually involving a corporation or partnership. A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. Individuals or people in business can also seek relief in Chapter 11.
Chapter 13: The chapter of the Bankruptcy Code providing for the adjustment of debts of an individual with regular income, often referred to as a "wage-earner" plan. Chapter 13 allows a debtor to keep property and use his or her disposable income to pay debts over time, usually three to five years.
Money Lesson: When bankruptcy is your only choice, then stand in your truth and move forward. Remember, people first, then money, then things.
PREPARE FOR THE DEATH OF LOVED ONES
When you suffer loss of a loved one it is emotionally paralyzing. The last thing you want to have to worry about while you're grieving are financial issues. This is why you must prepare today for what might happen tomorrow. The greatest gift you can leave for your family and loved ones is financial peace of mind, so they have time to grieve your loss.
Money Lesson: In a relationship, you must be as financially intimate as you are personally intimate.
SUZE'S "HOW TO" GET YOUR FINANCES BACK IN ORDER
Living paycheck to paycheck and still not making ends meet, how do you start to get on top of it? How do you determine if bankruptcy is the best choice? What is the money lesson to get your finances back in order?
Each state has a statute of limitation for how long a credit card issuer or debt collector can seek payment from you. If you have old credit card debt, check the statute of limitation in your state so you can know if you are still liable for the payment. Note: If you make any new payment, even just the minimum due, you are back to day one in terms of the statute of limitation.
Money Lesson: To get a fresh start to your finances you first must stand in your truth. You must recognize, embrace and be honest about what is real for you.
IS DEBT CONSOLIDATION RIGHT FOR YOU?
If you are hopelessly behind in your credit card payments and you see no way out, it can be tempting to sign up with a debt consolidation firm that promises to make everything better. But you need to stand in the truth: signing up with a debt consolidation firm will likely make your financial life even worse.
The Difference Between Debt Consolidation Companies and Debt Management Programs:
DEBT MANAGEMENT PROGRAM - AN ORGANIZATION LIKE CCCS (CONSUMER CREDIT COUNSELING SERVICE):
- Suze - APPROVED
- A non-profit corporation that looks at your financial situation, provides classes to educate you and puts you on a debt management program where you pay them and they pay your creditors.
- The fee is usually $5-$15/month.
- It will not hurt your FICO score.
DEBT CONSOLIDATION COMPANY:
- Suze - DENIED
- Tells you to stop paying your credit cards.
- Affects your FICO score.
- Creditor usually agrees to settle for a fraction of what you owe.
- You will be asked to pay up front, as well as monthly fees and likely even a percentage of the discount they negotiated.
As much as we may not want to contemplate life's "what ifs." the most important way you can truly love your family is to make sure that if anything were to happen to you, they would be okay. And that starts with making sure you have a will and trust in place that spells out everything for them.
If you answer Yes to any of the questions, then you should be establishing a trust.
- Do you have a financial interest in a business?
- Do you have beneficiaries under the age of 25?
- Do you have children with special needs, meaning they will never be able to financially support themselves due to a disability?
- Are you in a second or third marriage?
- Are you on bad terms with any of your heirs?
- Are any family members physically ill or developmentally disabled?
- Is any family member in need of creditor protection?
- Do you own real estate of any value in more than one state?
- Is your estate worth close to $1,000,000?
Money Lesson: Living in the moment doesn't mean you can forget about the future. Financial security often boils down to the simple task of anticipating the consequences of your actions. The goal is to make sure that whatever choices you make today you can handle tomorrow.
This information is for discussion purposes only. It is speculative and based on assumptions that may not be correct or complete. OWN: Oprah Winfrey Network and its affiliated entities and Suze Orman and her affiliated entities do not represent or warrant its accuracy. This is not a legally binding commitment and OWN: Oprah Winfrey Network and its affiliated entities and Suze Orman and her affiliated entities shall have no liability, and disclaim all direct, indirect, consequential, punitive or other damages, for the use of, or reliance on, this information.