Sell to Rent

The reasons why a seller might need to sell to rent after closing vary, but it's not uncommon for a seller to request a rent back. The home the seller is buying might not be available at the time your transaction closes or the seller might not be able to find a moving van on the last day of the month, when demand for moving vans is high.

Of course, as a new home buyer, you might find this situation unsettling. After all, you've paid a lot of money for your new home, on top of paying interest on a loan for a home that you can't yet occupy. It's understandable that you are eager to move in and take possession right away. Plus, you may not have anticipated finding yourself in the position of being a landlord.

 

How to Protect Seller

Treat this situation as you would any other business relationship. Buyers should never let sellers retain possession of a home without executing a formal occupancy agreement. These agreements spell out the terms and conditions of the seller's occupancy and protect buyers as well as the sellers.

In California, real estate agents have at our disposal a handy form called the Purchase Agreement Addendum (PPA), which among other contract terms, addresses seller rent backs. When the appropriate box is checked, this addendum modifies the purchase contract.

The PPA handles short-term seller rent backs that are less than 30 days and contains the following elements:

 

• Term of the rental period
• Amount of rent per day
• Amount of security deposit
• Whether the security deposit will be held in escrow or released to the buyer at closing
• Late charges, if any, pertaining to non-sufficient funds and / or payments that are received late outside of escrow
• Who pays for which utilities
• Right of buyer to enter property
• Seller's duties to maintain the property
• Lease assignment and subletting rights
• Seller's obligations upon surrender
• Insurance for seller's personal items
• Miscellaneous conditions

 

Insurance Coverage for rent backs

Sometimes, buyers will insist that sellers maintain their existing homeowner insurance policy during the rent back period. While insurance companies are not happy to keep coverage in affect, many will continue upon request.

However, there are several problems associated with this. The seller no longer owns the home, so in the event of a claim, the seller's insurance company may refuse to pay the claim. Moreover, the buyer has insurance coverage because lenders insist that a buyer's insurance policy be in force at closing.

Some insurance companies have argued that if a claim were to occur and the seller submitted a claim to the seller's company, even if the seller's company paid it, the seller's company might look to the buyer's insurance coverage for reimbursement.

In either case, the seller should carry coverage for the seller's personal belongings and automobiles.

 

Determining rental amounts

The rent the seller pays is negotiable. Sometimes seller don't want to pay any rent but ask to stay in the home for a few days rent-free. In that event, it is still wise to execute an agreement that addresses liability issues and term.

Because most buyers finance a new home, buyers are incurring interest and paying taxes and insurance for a home they do not occupy. It is reasonable, in most cases, to charge the seller an amount that is equal to a daily proration consisting of the buyer's principal, interest, taxes and insurance.

If the buyer's new mortgage payment includes impounds (taxes and insurance), it is fairly simple to divide the PITI payment by 30 days and charge the seller that prorata amount per day. For example, if the buyer's new payment is $3,000 PITI, that would equal $100 per day.

For further protection -- and to comply with local rent control laws or other state-specific laws governing landlords and tenants -- buyers and sellers might want to consider signing a standard residential lease agreement. For more information, consult a real estate lawyer.

Does One Persons Budgeting Make A Difference

It's often said that what one person does is insignificant in the grand scheme of things. I don't believe that's true. I believe that one person can make a difference and some of what you do in your life rubs off, whether you are aware of it or not, and somebody else's life is modified, hopefully for the better.

You can even take this theory and apply it to entire countries. Economic disasters do not usually come out of thin air, whether they are individual or worldwide. Millions of calls and actions like yours can change ecomonies.  What you do, does matter.

One of the key issues of living simply is living within your means, and not amassing debt. The greatest transfer of wealth in many generations is happening because so many people decided it was better to live in the 'now' and not worry about the future.

Keeping debt free, setting up a budget and having a monthly, family budget get together. This is most likely the single smartest thing you can do to guarantee your monetary security.

Budgeting helps because when you decide ahead how much to spend in each of your budgeted classes, you are rather more likely to adhere to it. You can set up a fund that is devoted only to emergencies. Even if you put in only $5 a week, it's better than nothing. The most important thing is to get started.

Money concerns prepare the ground for chronic stress, which inevitably leads to unnecessary aging and sickness. It is not the smartest plan to finance your pricey lifestyle on credit. Keeping up with the Joneses, as they say, will probably lead to bankruptcy and maybe even your death from the stress of it all.

When at last you do reach the end of your credit boundaries and a time of reckoning comes, it is definitley better to be prepared. The pursuit of wealth, pleasure, and power, beyond basic desires, is addictive and destructive to one's self and to those in need.

Frugal living and budgeting do not mean you live like a miser. You simply decide what's the most important use for your hard earned dollars.

 

How To Find The Money To Fund Your Flip

 

Real estate investments are quite expensive. Not only will you need the money to buy the house you will be flipping but you will also need money for the renovations, repairs and remodeling that need to be made along the way. Unfortunately, the real estate business is a tricky business and there aren't very many traditional lenders that are willing to go full out in support of your real estate investment business venture.

This means you are going to have to either fund a good portion of the expenses yourself or you are going to have to find some other means of financing your house flip. First things first, the less you pay in interest the more money you bring home. You do not want to max out your credit cards in search of profits from a house flip if it can be avoided. Merchant accounts aren't any better but they can help you to keep better track of exactly the amount of money you are spending on the flip and some will even give you 90 days same as cash (and this is a very good way of doing things if you can complete the process within 90 days).

I should tell you that these aren't strategies that are endorsed by me but they are definitely possibilities when it comes to finding money to fund your house flip. The best-case scenario is that you would have the money to play with and assume no real risk in the house flipping process but very few people trying to get started in real estate investing have that luxury.

That being said, one way that is probably to risky for most (especially if you are nearing retirement age) is to cash in your retirement funds. This is not one of the best methods for many reasons not the least of which is the fact that there are pretty big penalties for doing it like this and you are also risking your retirement security. It is one of your options however if you are in a tight spot to find money for your flip. If your flip is successful it's water under the bridge, the money can be returned or reinvested and the profit from your flip can then help fund subsequent flips or other types of real estate investments.

If you discuss things carefully with your family and decide that you are all willing to take the risk you can also risk your home by taking out a second mortgage for the funds. Again this is not the preferred method because the assumed risk is great for the security of your family. It is very important that everyone involved be aware that flipping houses is a risky investment. Not only is it risky because you aren't experienced but the real estate market is fickle. Your property could just sit on the market for several months which would incure costly carrying costs before it actually sells.

Forming a partnership is one of the ways to share in the risks and help lighten the load when it comes to flipping properties. Please keep in mind that this is a very stressful business venture and should be treated as a business venture. For this reason a volatile or fledgling friendship may not be the best risk for a venture such as this. If you do choose a partnership you need to carefully discuss the type of financial and labor investment that is expected of each partner and the share of profit that each partner expects to receive as well. You should also take into consideration whether you are willing to risk your friendship for the sake of profits or would you prefer to go with a partnership that isn't one of your close friends (many real estate investment groups have investors that are willing to help with the financial side and assume most of the risk for a bigger share of the profits).

Banks will usually fund a part of the property costs if you can come up with a sizable down payment and show them a well thought out business plan. However, don't rely on banks if you don't have good credit, lack a good business plan, or do not have a good size down payment to invest in the venture.

Please make sure you check out my real estate blog at http://cashmoneyhousebuyerblog.com

Your Credit Information And Borrowing Power

free credit score

You can repair your credit information if you have the know-how and the tenacity. Often, it involves calling your lenders, creditors and collection agencies to barter and negotiate with them. You may have to send them a letter or hassle them every single month until an item is removed, but you can often get lesser items off your report. Things like charge-offs, collections accounts, settlements and late payments can all be negotiated. Sometimes, people hire a credit counselor or debt relief company to manage these negotiations for them. If you have a bankruptcy, foreclosure, lien or judgment against you, then this negative credit information will be on your account for 7-10 years without much you can do. But for the rest, you may want to micromanage a little to see what you can get.

To improve your credit information, you'll need to obviously pay off all existing debts, but this is easier said than done, isn't it? Some people like to go through a credit counselor or debt relief agency, while others do it on their own through responsible planning. After looking at the credit report services files, you can write down all the balances and interest rates you need to keep track of. Write down your monthly income after taxes and deduct your rent or mortgage payment, as well as other monthly expenses like utilities, insurance, loan payments and groceries. Then you'll know how much you have remaining to pay off your debts. Consider ways to reduce your spending, such as car-pooling to work, eating out less often or turning off your cable for a little while. Also, brainstorm whether you can make supplemental income somehow. To develop a good plan, pay off your minimum monthly debt payments first and then use the remaining to pay off the highest interest rate and highest balance. Soon you'll be on your way toward improving credit scores.

To file a dispute about your credit information, you can write a dispute letter to each of the three major credit bureaus, which are Equifax, Experian and TransUnion. On the letter, include the date, your name, address, phone number and social security number. Just write "The following data is incorrect and should be updated," then list each inaccuracy, explaining why it's wrong and what it should be
updated with.

Attach a marked copy of your credit score report and include any communication, account records or statements that can help verify your version of the truth. Mail is the best way to dispute with Equifax and TransUnion, while Experian only allows online disputes. The credit bureaus then have 30 days to investigate and repair your credit info. Once it's finished, they will send you a letter including what was or was not updated. If you're not satisfied with the results, then you can try to resubmit with different documentation or go directly to the creditor to resolve.

There's no tool greater than credit information. If you've suffered poor credit scores in the past, then you can still rebound from a foreclosure or collection account by paying regular bills in full and on-time. The best way to stay ahead is to bring in more income, see where your spending problems lie and save sufficiently. "What works" in this department varies for each person. Some need to put the money out of sight, out of mind, while others can manage it in their checking account. Whether it was a one-time "oops" or a pattern of "I didn't know," seeking credit info is the first step toward financial recovery.

Understanding The Home Mortgage Calculator

When you have finally decided to take that plunge into home ownership, it can be a scary and exciting time and you may be worried if you are really able to afford it. But then again, there is that part of you who is thinking you can't afford not to buy a home. So, where is a good place to start in figuring out what you can and cannot afford? Your best bet is to really figure out what your bring home monthly income is and then use a home mortgage calculator to determine what you have going out in expenses versus what you have coming in with income.

This type of home mortgage calculator will give you a pretty good understanding of what the bank is going to be looking at as well. And when going through and inputting all of the information, make sure you are considering everything before taking the advice of the calculator. Make sure you are factoring in babysitters you pay regularly, any extra expenses for your children or for yourselves, any clubs or memberships you are apart of. When using a home mortgage calculator, make sure you input the number correctly as this will give you the best chance of understanding what you can really afford.

If you are desperate to buy a home and really need to find a way to make it work, make sure you take a really close look at your expenses that are eating up your money each month. Are there things you can let go of? Are there things that you can make cut backs in? And make sure when using a home mortgage calculator, whether or not it is including the figures for your home owners insurance and for your property taxes as these are bills that cannot be let go of and should never run behind. Generally, loan calculator will have a spot to place an estimate for those but you just want to double check.

By using home mortgage calculators different scenarios can be entered to determine the best financing route to take for individual buyers. By playing with the numbers a potential buyer can help decide if they can afford the investment at that time.

Find more info on reverse mortgages and loans visit What Is Reverse Mortgage also visit Reverse Mortgage Rates

 

First Time Home Buyer Mortgages

Browsing for home mortgages for people? You are not by yourself. Just because the housing market is down and we are in low point financially, doesn't mean you shouldn't try to buy a home.

In today's economy if you're planning on building a home you know how frightening that can seem. In order to understand what's going on with the process you are going through you'll need to understand some mortgage terms you may not be familiar with. Purchasing a house in Kettering, Ohio or any other town in the United States, also involves more cash than you have ever spent. This is now looking like a very frightening proposition. And on top of all that it seems so permanent.

But with good research, a great mortgage (set up by a great mortgage loan manager), and a little time, you will be able to gain a much better understanding of the whole process of looking through homes for sale and finding the one that's right for you.

Move Foward?

What holds some people back (other than the economy) when looking for homes for sale in Kettering Ohio or any other small town in America, is often some deep-seated fears that prevent them from taking the very important first steps. Whether you're renting right now and have been for a couple of years and are a first-time buyer, or you are already a homeowner and want to comprehend the buying transaction better before making the second (or third) house purchase, you are suredly entitled to a little nervousness when approaching this process.

Do not have fearful fealings. It seems like it may be a bit overwhelming and even appalling but it's not nearly as bad as it looks. The home you have always dreamt about is not that far away and all you have to do is find a mortgage loan manager that can handle the paperwork and you're on the road to the home of your dreams!

Is Getting a Low Interest Payday Loan Possible For You?

If you are even considering the possibility of a payday loan, chances are that you are already in a little financial bind. But don't let that bother you. Even the best of us face the occassional unexpected crisis (remember back in 1990 when Donald Trump filed for bankruptcy - he bounced back from that to become a billionaire - again).

The question you are probably wondering now is: "Ok, I know that payday loans cost more than regular loans, but doesn't any finance company offer low interest payday loans."

Unfortunately, the answer is no and here's why. You see, most normal loans are financed over a longer period of time (over a year) and are priced accordingly. So if you borrowed $1,000 for one year at an annual percentage rate of 10%, you would be have to pay back $1,100.  GUARANTEED $500 PAYDAY LOAN NOW.

But payday loans have a much shorter life span, with most needing to be paid back within two weeks. Also know that a typical payday loan charges $15 to $30 per $100 borrowed. You'll see why this is an important reason why low interest payday loans don't exist.

So if you are borrowing $1000 as a payday loan, you will be required to pay back between $1,150 to $1,300 in about fourteen days. It doesn't appear too bad, right? I mean, you're just paying back slightly more than you would be over a traditional loan.

You have to remember the time frame that you have access to that money. Using the examples above, the traditional $1,000 loan has an interest rate of 10%, but the payday loan has an annual percentage rate of between 390% and 780%! No low interest payday loans here.  GUARANTEED $500 PAYDAY LOAN NOW.

That being said, there are times when getting a cash advance until you get your next paycheck is your best option.

Payday loans are much easier than traditional loans to qualify for. Bad credit may stop you from getting financed at most banks and mortgage companies, but if you have a verifiable job (and sometimes you don't even need that), you can qualify for a payday loan today.

So although a low interest payday loan may not exist, getting a high interest one may be exactly what you need right now until you get your next paycheck. However, if you do get a payday loan, you need to make sure that you pay it back before the two weeks are up. Don't fall into the trap of not being able to pay it. The finance company will offer to let you get a new payday loan to pay off the old one and the finance charge (this is called "flipping"). Don't do it. It will just make it much more difficult to catch up and pay back the loan.

GUARANTEED $500 PAYDAY LOAN NOW.

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Discover What Student Loans Have to Offer

Taking out credit can be fairly complicated but student loans are probably the most complicated type of loan out there. You will rapidly come to realize that there are numerous choices along with fine print that must be read. Fully understanding the options available is certainly an excellent choice in the long-run when having to fund an eduction.  It's very important that students understand financial options so that they can use this information in the rest of their lives.

When researching this subject you will see that one of most obvious options is the Stafford loan. Hundreds of thousands of students have used these as a means of partially financing their education and they do have some positive aspects.

The Stafford loan has no pre-payment penalty - you can pay off any remaining balance any time. The great thing is that no credit check is preformed meaning that just about anyone can qualify. Luckily whilst studying for a degree, there is no need to make any loan repayments as long as at least a half-time status is maintained. Once you have finished scholling then you will have a period of 6 months where you don't need to make any payments.

Please note that you cannot borrow unlimited amounts of money in one year. Also, though Stafford rates often look attractive relative to ordinary loans, they contain additional charges that can make the cost of borrowing higher. There are fees that can be paid however and these are 1% Federal default fee and 2% Federal 'origination fee'.

Re-paying a student loan can seem a daunting task however there is the option to pay over a period of 10 years which makes things much easier. You might find this an attractive option because the monthy repayments ar low (in the following example you will see that it's $116 per month). But the amount of interest accumulated on a 7% loan of $10,000 (and most students borrow more) over 10 years is: $3,933. This means that the interest paid is 39% of the original amount. Definitely, not cheap money.

Though it may involve beginning repayment immediately, many parents attempting to help finance their son or daughter's education will find it worthwhile to investigate other alternatives. Even students should make an effort to look for other routes, including a combination of grants, scholarships, and conventional loans repaid with money earned from part-time work.

Don't forget saving options because this is something that everyone should have no matter what your age. The risk with all such plans is that inflation, financial crises, and other unpredictable elements can cause that investment to be worth very little by the time it is needed.

Have a look at all the options available to you such as inflation-adjusted hedge funds and ax-free municipal bonds which can help to off-set any of those effects.  Don't get too heavily into credit card debt or payday loans.

How Much Can I Borrow For A Mortgage - How To Cut Through The Maze

First asking the question how much can I borrow for a mortgage is a good way to begin your new home search.The answer to that is somewhat complicated, and you need to know more about this topic before contacting a lender.  Lenders calculate how much you are able to borrow from them in a specific way - their methods are included in the following.

How much can I borrow for a mortgage?This is an often asked question, with an answer that varies depending on your circumstances.Some lenders have a habit of making the entire process seem a lot more mysterious and complicated than it really is.But the guidelines below will help you determine for yourself how much can I borrow for a mortgage.

Below you will find information with descriptions of different types of mortgages, but your net income is the first place you should start.  Your gross salary is the money you bring in every month before taxes are withdrawn.You net income is the money you have afterwards.When you begin calculating how much mortgage can I afford, you must take into account how much you earn after deductions.

To determine just how much of your net income will be available to go towards monthly expenses, your lender will use a specific formula.  Understanding mortgage types becomes quite important at this point.  With an FHA loan, you're allowed to use 29% of your net income for your mortgage payment.But if yours is a so-called conventional mortgage, 33% of your after-tax dollars can be applied to your house payment.  So when you inquire how much can I borrow for a mortgage, know that the answer will be dependent on the loan type you are looking at.

The rations given above should leave you with an idea of how much you will be permitted to spent monthly for your mortgage.  But there are other factors besides understanding mortgage types that should be part of your decision.  Don't just ask how much can I borrow for a mortgage; also think about what kind of a monthly payment you want.You could end up not being able to save for retirement or have money available for vacations if borrow too much.If that might be your situation, take your finances seriously.

Take into consideration that the interest rates you pay will affect the price of homes that you will be able to afford.With a high interest rate, the home price you can afford will be lower.  Irrespective of the different types of home loans at your disposal, you must weigh the impact of interest rates.Typically, if your down payment is less than 20% you'll be required to pay mortgage insurance, too.So when you want to find out how much mortgage can I afford, remember to keep these extra costs in mind.

Asking any questions you might have is of great importance when you are trying to get a home loan.  Now that you have read these descriptions of different types of mortgages, it should be easier to determine where to start.Don't forget to decide on how much you can really afford, in addition to asking how much can I borrow for a mortgage.

We hope that you enjoyed reading this article. If you are looking for additional information on health related articles or free niche articles, please be sure to check out our website.

Are you Sceptical About The Millionaire Mind Intensive Seminar?

When I first signed on for the Millionaire Mind Intensive Seminar, I was a little sceptical.  "This will take up my whole weekend," I thought.  "I read the 'Secrets of the Millionaire Mind' book already.  Sure, it was great, but do I really need to sit in a room for three days to hear all that stuff again?"

Will I have to do cheesy exercises to prove I'm listening? Will repeating words and watching presentations prove that I'm committed to making money?

T. Harv Eker showed me the truth: yes, I needed to do all of that! And I'm happy to say that not only was it worth the time, it was worth the money. Peak Potentials Training asked for 3 days of my time and gave me immeasurable skills in return, showing me exactly what I needed to do to attain my financial goals.

I did already understand the basics, thanks to reading T. Harv Eker's amazing book. But until I participated in the Millionaire Mind Intensive I didn't 'get it.' But as I did the exercises and listened to the speaker's words I began to understand the concepts in a brand new way.

The Millionaire Mind Intensive doesn't only teach you proven strategies for the creation and maintenance of wealth. It goes far beyond that, giving you the actual experience of putting these techniques to work through proven exercise examples. You learn how to:


* How to speed your path to financial freedom - up to 4 times faster!
* 5 financial habits the wealthy live by
* Avoiding the main cause of nearly all financial troubles
* 12 different ways you can earn passive income - even while you sleep!


On top of all that, the exercises are just fun! In my small group we did a lot of enjoyable activities. We sang a song, created an amazing picture and nearly torched a real $100 bill! With each new exercise, Harv taught us something important about our financial habits and choices.

We didn't use much to do this, besides our brains.  No previous knowledge or skills are required for the intensive.  All the materials were provided—but I did find the pens and empty notebook I brought along awfully handy because I don't think I've ever taken so many notes in my life.

Before attending the Millionaire Mind intensive, even though I'd read 'Secrets of the Millionaire Mind' already, I was still someone who hoped and dreamed of becoming a millionaire. But after this course I had a completely new mindset - the mindset of a millionaire!

Beyond financial success, its great to know that the same principles I learned in the seminar can be used to create true peace and lasting happiness. Peak Potentials training shows you how to be truly "rich" in all aspects of your life.

For me, the Millionaire Mind Seminar experience was one of intense breakthrough learning—and yet, it was easy at the same time.  Being in the room felt comfortable, talking to the other participants was fun, and paying attention to the material was effortless.  I actually found myself looking forward to each new exercise and the experience of learning.

I was in a room full of people eager to learn the same life-changing principles. There were rich people looking to grow their wealth, young couples looking to make sure they started on the right financial footing, a person who had made mistakes and needed to get out of debt, and a middle class earner looking to break free of the paycheck-to-paycheck rut. We all wanted to learn the same proven techniques.

Every person learned something important. I couldn't find a single person who wasn't happy with the experience at the Millionaire Mind Intensive. Honestly, everyone I chatted with was overjoyed with the seminar and all the knowledge they gained.

And they should be happy.  What we learned can start to work within 24 hours, if you take action right away and follow the strategies taught in the program.  We each received a "90 Day Wealth Conditioning Program" work book that did wonders for keeping me on target months after the training.

A person will see best results if they continue to use the program daily every day for the whole 90 days.  It's not a big commitment--less than 10 minutes a day.

It really was nice not to be pressured to pick up other Peak Potentials Training materials or courses. They offered them, of course, but everyone was completely free to buy them or not. It was totally up to us.

That said, I think I'll probably take another course by Peak Potentials Training and Harv, soon!  I can't wait to find out what else there is to learn. I would have liked to learn more details about how to earn passive income—we covered 12 different ways to do that, but I still want more.  Luckily, they offer a course in that too.

All told, this seminar was the deepest learning experience I've had since I don't know when.  I strongly encourage you to attend if you have a chance. If you don't have a chance—read the book first, and then figure out how to make a chance!

Instead of the typical "get rich quick without lifting a finger" presentation I expected, T. Harv Eker's Millionaire Mind Intensive showed me how to create wealth for myself, my business, and my future. With the secrets of the millionaire mind at my fingertips, I can't lose!

My recommendation? The Millionaire Mind Intensive seminar is absolutely worth it. The skills I learned have given me the tools I need to ensure life-long financial success.

How To Earn Money In Today's Economy

The Next Crash?

Todays economy is a wild one, that much is for sure. After years and years of an uptrending stock sector it was just a matter of time before there was some instability. Heck we probally wouldn't have had som many years of profitability if it wasn't for the sub-prime mortgages that were being given out. Things could be worse really. Everyone knows the markets are built on theroy (as in there are a lot of numbers not necassaryily backed by a lot of real stuff) and the stuff that took the worst beating in recent times was the shakiest of all.

Also, really you know the people majorly affected by the credit crunch were the people who had no business getting credit and the people who lied on their applications. The thing that sucks is that people who did follow the rules will probally end up paying a significant amount more on their mortgages. Those who followed the rules are the people who the US government should be concerned with saving. I suppose those people are being saved in a way, because of the liquidity being introduced into the markets that wll keep mortgage rates lower then they would be if the full brunt was felt. Things have probally placed themselves where they should be.

So the real question is where are the markets going? How cold anyone know for a fact. From the business books I have read, and the info I'm getting from my stock software they are goign to be going down for a while. I was reading the paper the other day and the guy was talking about how the economy will be very near recession for at least the next two years but after that the economy should make a fair recovery. I know that seems a long time away right now. I guess for the next little while we need to keep money in safe places like bonds. Try to stay away from shaky investments.

Bankruptcy - Is It the Answer?

If your finances are in a mess, you may have considered bankruptcy. Even though your debt may be wiped clean, there are many other end consequences.

When a person's debt has risen to a level that they can't hope to get under control, they may consider filing for bankruptcy. For a consumer there are two bankruptcy choices:  Chapter 7 and Chapter 13. Chapter 7 bankruptcies involve wiping out the debts in part or in their entirety and liquidating assets to do it. Chapter 13 bankruptcies are more of a debt restructuring plan that gives you more time and a plan to pay back a portion of the debt that is owed to creditors.

Your credit will be damaged if you file for bankruptcy, maybe for as much as ten years. If you apply for any credit during that time the creditor will be informed of the bankruptcy.

Previously, people have taken advantage of bankruptcy laws. They were allowed to file more than once for Chapter 7 so many used it to beat credit card debt.

Each state decides on what assets they will exempt from being seized during a bankruptcy hearing. Knowing that, some may use available cash to purchase those items (homes, cars, etc.) in an effort to avoid payment and still retain the stuff they purchased. In this instance, creditors receive little or nothing from the bankruptcy settlement.

This has been changed by new laws. Courts used to have free rein when it came to who could file for Chapter 7 bankruptcy. Now certain standards have to be met first. In order to be able to file for Chapter 7, your income must be below the average income of the state where you live. Your income then goes through a calculation that determines if you have enough disposable income to be able to pay back twenty-five percent of the debt owed.

More people will have to file for bankruptcy under Chapter 13. The courts will decide the amount of repayment from facts that they receive. An allowance is made for rent or mortgage, food and other relevant bills. With the new laws, the IRS regulates the value of each bill, exempts a certain amount, and payments are decided from the rest.

Because there are more hoops to jump through, bankruptcy lawyers are charging more for their services. The whole process of bankruptcy will cost the filer more than before, which will make them think twice about the process. Credit counseling sessions are also required as a precursor to filing for bankruptcy. A credit counselor may determine that they can help you and thus eliminate the need for bankruptcy proceedings.

Filing for bankruptcy is a major issue and should not be taken lightly. Although it can wipe out credit card debt, it does come with its own price tag.