Considering Filing Bankruptcy – Here Are Some Hidden Secrets to Assist You

Over a million Americans file for bankruptcy every year. Many people think that filing for bankruptcy will solve all of their debt problems. On the surface it seems that if you file for bankruptcy all of your debt will be eliminated and you can start with a clean slate. Unfortunately it is not that simple. 

To file for personal bankruptcy you must reside in a state for 90 days prior to filing and have a total unsecured debt less than $290,525 or secured debt less than $871,550. Debtors (consumers) who earn less than the median income in their state are entitled to file under Chapter 7 http://www.justice.gov/ust/eo/bapcpa/20101101/bci_data/median_income_table.htm. Debtors who earn more than that and who have the ability to repay at least $6,000 over five years would have to file under Chapter 13, which requires a repayment plan.

You must provide proof that you are unable to pay your bills and have sought additional help in the past. You must provide documentation such as: tax returns, paystubs, bank statements, mortgage statement or rental lease agreements, detailed list of monthly expenses including, a list of all debt, amount owed, interest rates, canceled checks and credit card statements, retirement accounts, business income and debt, and child support. If you decline to provide all the requested documentation required by the Bankruptcy Trustee your bankruptcy filing may be dismissed. Mistakes in your documentation can cause delay or a dismissal.  If you do meet the income requirements there are additional criteria you have to meet such as: 

• You must take a credit counseling class 180 days before filing for bankruptcy.
• If you have enough income to pay some of the debt you may be considered for a Chapter 13 bankruptcy.

The following debt is not included in Chapter 7 bankruptcy: taxes and tax liens, student loans, child support and alimony, debts for fines or penalties to governmental agencies, debts for judgments in wrongful death or personal injury lawsuits, and condominium or townhome association fees. The following debt not included in Chapter 13 bankruptcy: some taxes, student loans, child support and alimony, debts for fines or penalties to governmental agencies, debts for judgments in wrongful death or personal injury lawsuits, debts incurred after filing your case.

To file for bankruptcy you can do it yourself which will cost between $200 - $600 in court fees and filing fees or you can hire an attorney which will cost between $1,000 - $3,000. Once you file for bankruptcy you will receive a slew of credit cards offers in the mail because companies receive alerts on recent bankruptcy filings and want you to get in debt again so they can make money off of you. If you file for bankruptcy it remains on your credit report for 7 to 10 years.  

Although it is true that after you file for bankruptcy you can purchase a house or a car or apply for a credit card, what debtors don’t realize is that you will be offered a high interest rate due to filing bankruptcy which can lower your credit score by up to 200 points. It can take up to 5 years before you can achieve a good credit score. Here are 3 tips to ensure approval of your bankruptcy filing:

1. Do not make any large purchases before filing because this will decrease your chances of being approved.
2. Don’t transfer credit card balances or make payments on any debt because this may decrease your chances of being approved.
3. Don’t apply for any loans or open any new credit accounts.

The Cost of Being an Olympian

Eric Flaim is a two-time Olympic silver medalist who works now as a financial adviser with Ameriprise. He estimated he spent approximately $250,000 for his 10 years of Olympic training and active competing which is the cost of a home in some states.

The cost to become an Olympian is expensive.  Athletes who aren’t viewed as strong Olympic medal contestants are less likely to receive substantial support from their sponsors.   If they compete in a not-so popular sport the chance of getting financial support is further reduced.  On average Olympians don’t begin a professional career until their late 20s or early 30s.

Parents of gymnasts can expect to spend up to $1,000 a month at training facilities plus travel expenses.  Leotards and warm-up suits can range from $300 - $500.  Additional costs include entry fees for each meet and competition.  When a gymnast is chosen for the U.S. national team and begins traveling internationally, USA Gymnastics commences paying for the cost of training and travel for the gymnast and his or her coach, but any family member who travels with them has to pay their own way.

For a family to travel to the Olympics to show their support it can range from $10,000 - $20,000. The annual price of training for Maya Lawrence, an Olympic fencer, was estimated to be $20,000. Top level players spend approximately $15,000 each year for approximately 6 - 8 years or $90,000 - $120,000 to perfect their game.  Weightlifter Sarah Robles lived on her $400 a month stipend from U.S.A. Weightlifting while she trained full-time for the London Games.   

Olympians are sometimes taken advantage of due to their young age and lack of financial knowledge.  Here are 12 tips to help you manage your income.

1. Say no to all of your recent relatives and friends who you haven’t heard from in a while.  Don’t let guilt cause you to lose all of your money.  Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.
2. Consult an accountant, lawyer and financial advisor to develop a plan to get advice on how to maximize tax deductions, set aside money to pay taxes at the end of the year, protect your money and grow your money.
3. Create a safety net.  If possible, set aside a portion of money enough to cover your monthly expenses and bills for one year. 
4. Avoid lavish or unnecessary spending such as buying sneakers for all the children in the neighborhood or buying your family members all new cars.
5. If you wish to give money to a friend or relative consult a lawyer and accountant to document the gift and ensure that the money is properly accounted for on your taxes.
6. Consider purchasing an item that will appreciate over time such as an investment property instead of a car or boat.
7. Pay off all your debt.  Consult a professional on how to assist your parents if they are struggling financially to prevent future implications with the IRS.
8. Setup a retirement account.  You will need at least $1,000,000 in your account if you retire at age 65.
9. Setup estate planning including a will and living trust.
10. Donate a portion of your money to charity to help those less fortunate which can be a write-off on your taxes. 
11. Don’t put all of your money in one area; diversify your investments to minimize losses.
12. Set financial goals with target dates on how to grow and make your money last.

Olympian gold medal winners get a $25,000 cash prize, silver medal winners get $15,000 and bronze medal winners get $10,000.  Olympian medal winners are taxed on all money and awards they receive and have to report the fair market value of merchandise or products received on the IRS Form 1040. Take a lesson from Rihanna who lost millions due to fraudulent accountants and watch your money very carefully. 

To “B” or Not to “B”: Bankruptcy That is the Question

Bankruptcy is like putting a bandaid over a wound. The wound goes away but if you fall again and hurt yourself you will need another bandaid.  Over a million Americans file for bankruptcy every year.  To file for personal bankruptcy you must reside in a state for 90 days prior to filing and have total unsecured debt less than $290,525 or secured debt less than $871,550.  Americans who earn less than the median income in their state are entitled to file under Chapter 7.

Approval depends on your salary and the family size.  Income limits are based on the state you live in www.justice.gov/ust/eo/bapcpa/20101101/bci_data/median_income_table.htm. 

Those who earn more than the median income and have the ability to repay at least $6,000 over 5 years would have to file under Chapter 13, which requires a repayment plan. You must attend financial counseling 180 days before filing for bankruptcy.  

To file for bankruptcy you can do it yourself which will cost between $200 - $600 in court fees and filing fees or you can hire an attorney which will cost between $1,000 - $3,000.  You must provide proof that you are unable to pay your bills and proof that have sought additional help in the past.  You must provide documentation such as:  tax returns, paystubs, bank statements, mortgage statement or rental lease agreements, detailed list of monthly expenses including, a list of all debt including judgments and tax liens, amount owed, interest rates, canceled checks and credit card statements, retirement accounts, business income and debt, and child support.  

Once you file for bankruptcy you will receive a slew of credit cards offers in the mail because companies receive alerts on recent filings and want you to get in debt again so they can make money off of you.  If you file for bankruptcy it remains on your credit report for 7 to 10 years.    

Bankruptcy should be a last resort.  Sell any assets, sell new or unused items, adjust your tax withholdings for six months and then set back to your original withholdings.  You can rent out a room in your home or downsize or downgrade your car or home for a cheaper one.    

The alternative solution is to reduce your monthly expenses by 30-50%, create a budget, get a part-time job or go to back to school to increase your salary.   Here are 5 tips to consider before filing for bankruptcy:

1. Do not make any large purchases before filing because this will decrease your chances of being approved.
2. Don’t file Chapter 7 bankruptcy if your income exceeds your expenses.
3. Don’t transfer credit card balances or make payments on any debt because this may decrease your chances of being approved.
4. Don’t file your tax return if you expect to get a large refund because it will be assumed your refund can be used to pay down debt.
5. Don’t apply for any loans or open any new credit accounts. 

Here are 8 ways to increase your credit score after your bankruptcy is discharged (approved):

1. Open a secured credit card account.
2. Open a department store credit card with a small limit of $300 - $500.  Purchase a small item each month for 6 months and pay the balance in full each month to establish a payment history.  
3. Use a debit card or get a prepaid credit card to make purchases.
4. Work with banks that have programs for people with bad credit such as BB&T, Bank of America, Household Bank, Wells Fargo.
5. Open an online bank account.
6. Open a checking with Account Now  www.accountnow.com.
7. Use banks that don't use ChexSystems http://chexsys.tripod.com/goodbanks.html.
8. Open a bank account with a credit union. 

When Will They Learn

The NBA locked has ended. The day after the NBA lockout ended, some NBA players were partying at nightclubs and some were partying before the lockout ended. Some NBA players were experiencing financial issues during the lockout. Those who weren’t, partying is just a slap in the face to players struggling to pay their bills. No matter what your financial status, nothing last forever so it’s best to plan ahead and plan for the future. The NBA will probably experience another lockout so players you better be prepared. Here are 8 tips on how to lose your NBA salary:

1. Buy more than 1 car with a price tag of $300,000 or more.
2. Spend money on women, sneakers for everyone in your old neighborhood, buy drinks for everyone in the club or buy clothes for all your friends on a regular basis.
3. Blame everyone else except yourself for your financial problems.
4. Let someone else sign your checks.
5. Buy a home the size of Texas.
6. Spend your yearly salary in three montha.
7. Buy a plane, jet, yacht or something else equally as expensive.
8. Hire underhanded staff who steal all of your money.

Some NBA players make millions a year, some make over $200,000 a year which is enough to prevent filing for bankruptcy and more than enough to be considered above middle class. Unfortunately, many NBA players don’t know how to manage their money and don’t take the time to learn how. Many live paycheck to paycheck like some Americans, except their paycheck is larger. Here are 12 financial tips to ensure that you don’t file for bankruptcy, lose your home to foreclosure or have to work at Regency Furniture Showroom.

1. Create a support network. Hire an accountant, lawyer and financial advisor. Develop a great relationship with a banker and loan officer.
2. Learn about finances. Take a personal finance course, reach a book on personal finance or watch a television show to learn the basics about finances: learn how to invest, how to make your money grow, how to read financial statements, etc.
3. Know your worth. Know your net worth every year. Subtract your total liabilities from your total assets to determine your net worth. If the value is negative, you need to adjust your spending.
4. Reconcile. Reconcile your financial statements monthly but no less than every 3 months. Verify your account to ensure there are no errors and verify all your money is accounted for.
5. Set a signing limit. Set a signing limit for someone on your staff to sign checks for you if you don’t want to sign checks for small amounts. However, the advice Bill Cosby gave to Oprah was to sign your own checks and Oprah said she still signs most of hers.
6. Reduce spending. Reduce monthly expenses by 30% – 50%. Try to live off 60-70% of your yearly salary and save the rest of the money.
7. Unexpected. Create an emergency fund that has enough money to cover all of your monthly expenses for 9-12 months including child support.
8. Grow your money: Invest at least 20% of your monthly income after taxes, start a business or invest in a profitable business to grow your money.
9. Branding. Get as many endorsements as possible; create a website or blog or social media profile, create a logo, slogan, nickname or motto to establish a brand. Once you establish a brand it opens the doors to many other opportunities for generating income.
10. Get sponsors. Instead of throwing parties and paying for them yourself, get sponsors to pay for a portion or pay for the entire party. You can also have sponsor product giveaways for attendees. This saves you money and helps promote the sponsor’s products.
11. Inner Circle. Surround yourself with friends who having good spending habits who can provide advice on how to manage your money and help your money grow.
12. Think about tomorrow. Don’t live your life day to day, think about how you want to live your life in the next 5 - 10 years: where do you want to live, what lifestyle do you want to have, how will you earn money when your career is over, how will you pay child support, etc.

NBA Players Welcome to the Real World

NBA Players make more than 90% of the U.S. population. They get to travel across the country for free by the NBA. You get paid for doing a job you love. Most Americans work a job that they hate and have no other options.

Many times players are lured into the NBA and believe that their lifestyle will last forever so they aren’t concerned with how much money they spend – but nothing lasts forever. Americans learned the hard lesson that nothing in life is guaranteed and that life can be hard.

NBA Players suffer from the Instant Gratification Syndrome, you want everything right now. You spend money that you earn in the future to buy things in the present. You have no right to complain that you can’t pay your bills. No one made you buy a multi-millionaire dollar home; spend money on partying, women, designer clothes, jewelry, and things that have no value. You made those choices.

You decided that living that lifestyle was what you wanted and more important than planning for your future. Don’t be like Chris McAlister of the Ravens.

Immigrants that were brought to this country or migrated to this country knew the value of hard work; they did whatever they had to do to make a living even if it meant making sacrifices or working multiple jobs. Americans are spoiled and have forgotten how to survive. If one option stops working, find another option.

Yes you should be treated fairly by your employer but you should always look for other options. You can use your celebrity status to create a radio show, a television show, a clothing line, a sneaker line, sunglasses, hats, become a speaker, become a board member or advisory committee member for a national company or start a business. So many options are available to you and are easier for you to attain because of your celebrity status and the people you have at your disposal.

NBA owners are denying players adequate pension plans and requesting stricter salary caps. You can’t have it both ways. You have to provide one option or other. This will continue to lead to future lockouts until owners realize they are nothing without the players. Here are 7 tips to plan for your future.

1. Save. Save. Save. Save at least 30-50% of your income each month.
2. Retirement. Sign up for the NBA Retirement Association. You only get a small amount of income but if you combine it with additional steams of income through endorsements or businesses you should be able to retire comfortably.
3. Downsize. Downsize your lifestyle. Who are you trying to impress with your ferrari, maybach, diamond watches, and millionaire dollar home. People may be fascinated by the things you have but no one really cares. When you retire what do you want people to remember about you, that you lived in a million dollar home that you couldn’t afford or that you helped your community.
4. Think About Tomorrow. You can get traded, released or hurt at any time. Plan for your future so that you don’t have to file for bankruptcy or foreclosure.
5. Role Model. Be the best person you can be and serve as a role model for youth and younger players to prevent them from making the mistakes you made.
6. Give. Donate to charities or start your own foundation. This helps to reduce your tax liability and provides greatly needed assistance to social organizations that have been affected by the recession.
7. Say No. Learn how to say no to friends, strangers, relatives who ask to borrow money or ask you to buy something. If you always lend money you only enable that person to be dependent on you forever. Show them how to earn their own money so they don’t have to ask you for money.

You determined your self-worth by the things you own instead of realizing that your self-worth comes from within. No matter how much money you have it cannot make you happy and cannot fill a void in your life.

Think how different your life would be during the lockout if you saved at least one year’s salary, if you only bought one car or if you lived in smaller house. When you experience a financial crisis, your true character is tested. You either become a winner or loser.

Determine that you will always be a winner. Don’t let anyone determine your destiny, determine your own destiny. Money can generate wealth or generate debt you make the choice.

Bankruptcy May Not Help Homeowners

Many homeowners believe that filing bankruptcy will help save their home and prevent them from going further into debt. Unfortunately, filing for bankruptcy if you are a homeowner is not as easy as you think. Approval for bankruptcy depends on your salary and the family size. Income limits are based on the state you live in www.justice.gov/ust/eo/bapcpa/20101101/bci_data/median_income_table.htm.

However, if have a higher income you can still file. You must provide proof that you are unable to pay your bills and have sought additional help in the past. You must provide documentation such as: tax returns, paystubs, bank statements, mortgage statement or rental lease agreements, detailed list of monthly expenses including, a list of all debt, amount owed, interest rates, canceled checks and credit card statements, retirement accounts, business income and debt, and child support. Be honest when providing documentation. If you decline to provide all the requested documentation required by the Trustee your bankruptcy filing may be dismissed. Do not include you SSN on any documentation provided. Mistakes in your documentation can cause delay or a dismissal. If you do meet the income requirements there are additional criteria you have to meet such as:

• You must take a credit counseling class prior to filing for bankruptcy.
• If you have enough income to pay some of the debt you may be considered for a Chapter 13 bankruptcy.

Here are 11 tips to consider before filing for bankruptcy:

• Bankruptcy fees when filing on your own cost approximately $300 when filing for chapter 7 (most debt cleared) or chapter 13 (repayment plan for 3-5 years). Bankruptcy filing fees when using a bankruptcy attorney can range from $1,000 - $4,000.

• Look for real estate investors in your city by doing a search on google “name of your city or state real estate investors”, i.e. “maryland real estate investors”, etc.

• Do not make any large purchases before filing for bankruptcy because this will decrease your chances of being approved.

• Don’t file Chapter 7 bankruptcy if your income exceeds your expenses.

• Don’t transfer credit card balances.

• Don’t make payments on any debt.

• Don’t file your tax return if you expect to get a large refund.

• Don’t cash out any retirement plans or 401k’s because this money is exempt from bankruptcy.

• Don’t take out any loans or open any new credit accounts.

• Disclose any judgments, collection accounts, and tax liens.

• Don’t bank where you owe money. Close the account and open a new at another bank. If you wish to continue doing business with the bank take all the money out of your account as soon as your direct deposit is posted to your account. If not, this will increase your chances of having your bank account garnished.

The following debt is not included in Chapter 7 bankruptcy: taxes and tax liens, student loans, child support and alimony, debts for fines or penalties to governmental agencies, debts for judgments in wrongful death or personal injury lawsuits, and condominium or townhome association fees. The following debt not included in Chapter 13 bankruptcy: some taxes, student loans, child support and alimony, debts for fines or penalties to governmental agencies, debts for judgments in wrongful death or personal injury lawsuits, debts incurred after filing your case.

Items that are exempt from bankruptcy:

• $16,500 in equity in your home

• $2,575 in equity in your car

• $425 per item in any household items up to a total of $8,625

• $1,625 in job-related expenses, books, etc.

• $850 in any property, plus part of the unused exemption in your home, up to $8,075

• Social security, unemployment, VA benefits, welfare, and pensions

Is Barnes & Noble Next?

On July 21, 2011, at a scheduled hearing Borders is expected to ask the U.S. Bankruptcy Court of the Southern District of New York to allow it to sell off all of its assets. If the judge approves the move, liquidation sales could start as soon as Friday; the company could go out of business by the end of September. Due to Borders closing all of its stores, 11,000 employees will be losing their jobs. This will have an impact on the economy as well of those families of those employees, more foreclosures, more bankruptcy filings, and more bad credit.

What does this mean for the book industry? The only two major bookstore chains left were Barnes and Noble and Borders. This is good news for Barnes and Noble but what about Borders customers. Will they honor the Borders coupons, Borders gift cards, Borders Bucks, Borders Rewards program, Borders Reward Plus? Will Borders Kobo e-reader owners be allowed to use the Barnes and Noble Nook to read their Kobo books? What happens to vendors who are owed money from Borders? These are some of the many questions that need to be answered.

Barnes and Noble has 717 stores in the United States and has 637 college bookstores. There are approximately 1300 independent bookstores in the United States. In some states there will be miles of neighborhoods without a bookstore. For those who do not have a computer or e-reader, buying books will be difficult. For those who enjoy going to a bookstore to view books before purchasing them, the buying experience will now be different.

For authors, especially self-published authors getting a booksigning will become more difficult since Barnes and Noble does not usually work with self-published authors. I was a fan of the Borders bookstore chain. Borders has more of a friendly family oriented feel. I loved the Borders policy where customers did not have to wait in line more than 20 minutes to make a purchase.

Hopefully Barnes and Noble is reviewing and analyzing Borders customers and using that to ensure former Borders customers enjoy their experience each time they visit at any Barnes and Noble store.
If you are a book lover and enjoy going to a bookstore to purchase books, browse books or attend booksignings or seminars, voice your concerns to Barnes and Noble about the type of customer experience you would like to see at Barnes and Noble. This is a critical time for Barnes and Noble and will determine if they continue to stay in business or go out of business but they need your help.

NFL Players are Just Like Us When It Comes to Money

Many NFL players go from a low to middle class lifestyle to upper or wealthy lifestyle in an instant and are not taught how to manage their finances and are not sure who they should or should not trust. Many NFL players are taken advantage of because of their financial status. In other instances they succumb to guilt from family and friends to take care of them, peer pressure, impulse shopping, unable to say no to those asking for money, living above their means, trying to impress others, being overcharged, or bad investments which causes them to lose their homes, have their cars repossessed or file for bankruptcy due to their bad spending habits and poor financial choices.

Many players buy things that have no value and have very little assets. Some forget to pay taxes, don’t keep track of their finances, make bad investments, get caught up in scams and lack basic business knowledge. This lack of financial experience and financial literacy education causes NFL players to buy things they can’t afford and try to portray a certain image that is difficult to live up to.

Approximately 40% of NFL players end up bankrupt after retirement. According to MSNBC approximately 380 players of the total 1,700 players live paycheck to paycheck. The average rookie salary is $320,000. When players get paid, after they pay taxes, pay their agent, publicists, accountants, lawyers and others on their payroll, pay for their lavish lifestyle with a home, multiple cars, jewelry, clothing, helping family and friends they have very little left.

Some NFL players are borrowing money from friends due to the lockout. Some players are getting payday loans called “lockout loans” provided by lending agents. Lockout loans for more than $60,000 can have interest rates as high as 36%. The NFL Players Association in advance of the lockout advised players to save at least 3 game checks and find additional ways to make money but many did not follow this advice. The NFL Players Association also provides financial seminars and classes for players who do not heed the advice provided or may not understand the advice provided.

Many players get caught up in the media frenzy and hype and want to give the appearance that they are wealthy when some are just one paycheck away from bankruptcy. Some players retire and don’t realize they are in financial ruin and need help until they retire.

Many players feel guilty by pressure from family and friends to take care of them financially which can cause a heavy financial strain on players. Family and friends see players on television and don’t realize how many expenses players have each month due to their lifestyle.

Many rookie players try to keep up with the spending habits of some of the veteran players and end up filing bankruptcy or foreclosure on their homes. In many instances players are taken advantage of by lawyers, accountants, agents and others who steal or do not keep their clients informed about their spending habits. In other cases, clients are advised about their poor spending habits but continue to spend until all their money is gone. The NFL Players association, lawyers, accountants, publicists and all who are on the payroll of the players as well as the players themselves are to blame.

My advice to all NFL players, read all books written by Warren Buffet who has lived in the same house for 50 years, drives himself everywhere, does not have security or a bodyguard, never travels by private jet, does not socialize with high society, makes popcorn and watches television, does not carry a cell phone, does not have a computer on his desk, buys clothes from the department store and is an expert in managing his money. You are experts when playing on the field, now it is time to be experts in managing your money – you owe it to yourself.

Medical Bankruptcy

The Medical Bankruptcy Fairness Act of 2009 is a bill that would amend title 11 of the United States Bankruptcy Code (Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) would: 1) provide protection for homeowners with medical debt, 2) restore bankruptcy protection for individuals experiencing financial distress who serve as caregivers to injured, ill, or disabled family members, 3) and to become exempt from taking the bankruptcy means test for those whose financial problems were caused by serious medical issues.

If the bill is passed it would waive the “means test” and credit counseling requirements for those who to wish file bankruptcy.

A recent study shows that based on the effects of the recession approximately seven million Americans will lose their health insurance coverage. Employee spending on health insurance coverage has increased 128% between 1999 and 2008.

Economists have found that increasing health care costs show a connection with decreases in health insurance coverage. National studies show that the main reason many people are uninsured is due to the high costs of health insurance.

The United States is the only developed country that provides health insurance but has the largest number of deaths due to lack of medical insurance or lack of appropriate medical care.

Contact your loss congressman to have the bill passed to provide additional protection for Americans and their medical costs.

What the CIT Bankruptcy Means for You

CIT, the 100 year old and 5th largest bank in the U.S. filed for Chapter 11 bankruptcy Nov. 1, blaming losses on subprime mortgages and decreasing credit markets. CIT listed $71 billion in assets and $64.9 billion in liabilities.

CIT funds approximately 1 million businesses such as Dunkin’ Brands Inc. didn’t include CIT Bank in bankruptcy filing. The CIT bankruptcy is the one of largest bankruptcies in the U.S.

The government has input billions of dollars into CIT including giving $2.3 billion last fall. Citigroup received $45 billion in loans from the government, which now owns a 34% interest in the bank. Citigroup plans to sell some of its assets including its interest in Smith Barney.

CIT customers should be nervous because as a customer you don't know what the future holds for CIT. The company assures its customers that it will be business as usual and that customers should not take their business elsewhere because of the bankruptcy. Unfortunately, if most of their customers leave CIT will not be able to survive.

CIT 2,000 vendors that supply merchandise to 300,000 stores. According to analysts approximately 60% of the apparel industry depends on CIT for financing so the bankruptcy will cause a domino effect for businesses and customers who shop at their stores.

As my grandmother used to say "never have all your eggs in one basket". If you have all of your money in CIT I recommend moving at least some of it to a more stable bank like PNC, BB&T or a credit union.

No one knows the future of CIT but my guess is it will collapse like the other companies such as Lehman Brother and Washington Mutual.

Medical Bankruptcy Act

The Medical Bankruptcy Fairness Act of 2009 is a bill that would amend title 11 of the United States Bankruptcy Code (Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) sponsored by Sen. Whitehouse which would: 1) provide protection for homeowners with medical debt, 2) restore bankruptcy protection for individuals experiencing financial distress who serve as caregivers to injured, ill, or disabled family members, 3) and to become exempt from taking the bankruptcy means test for those whose financial problems were caused by serious medical issues.

If the bill is passed it would waive the “means test” and credit counseling requirements for those who to wish file bankruptcy at a by hearing Sen. Russ Feingold (D-W.I.). Without health care reform, a family’s yearly health insurance payments could exceed $30,000 by the end of the 2020. Forty-seven million Americans are uninsured including 9 million children.

A recent study shows that based on the effects of the recession alone approximately seven million Americans will lose their health insurance coverage between 2008 and 2010. Researchers at the Urban Institute estimate that if unemployment reaches 10%, another six million Americans will lose their health insurance coverage. Employee spending on health insurance coverage has increased 128% between 1999 and 2008.

Economists have found that increasing health care costs show a connection with decreases in health insurance coverage. National studies show that the main reason many people are uninsured is due to the high costs of health insurance. According to the National Coalition on Health Care, a recent study found that 62% of all bankruptcies filed in 2007 were linked to medical expenses. Those who filed for bankruptcy, almost 80% had health insurance coverage.

A married couple lost their son to a fatal medical disease, in addition lost their home and their retirement income trying to pay medical bills related to their son's medical disease. Although they had health insurance, their health insurance company refused to cover all of their son's medical costs. They borrowed to file for bankruptcy. This is a clear example of why we need health care reform. Even if you don't support the president and don't support all of the features of the health care reform bill you must provide support to overhaul the current health care industry.

We are the only developed country that provides health insurance but have the largest number of deaths due to lack of medical insurance or lack of appropriate medical care.

The constitution states that "We the people of the United States… promote the generate welfare, and secure the blessing of liberty to ourselves and our Posterity…"

General welfare includes health care which as a country we are lacking in. How can health insurance companies claim that they will provide care for a patient yet deny them insurance because of a pre-existing, non-treatable or terminal condition. Health care is not about treating only healthy people, health care includes treating non-healthy people so they can become healthy.

Paying Medical Debt

Medical debt is one of the reasons why Americans file for bankruptcy. Every year many Americans file for bankruptcy due to medical debt. In 2008, 46 million Americans did not have any health insurance coverage.

Many people are uninsured due to the high costs of medical coverage. Many employers only pay a small portion of healthcare costs leaving the remaining expense for the employee. It is expected that 1.4 million Americans will file for bankruptcy this year, and some will be due to medical debt.

Health care costs continue to increase each year. According to the National Coalition on Health Care, in 2008, total health care costs increased approximately 6.0% - almost twice the rate of inflation. In 2008, employer health insurance premiums increased by 5.0%. The annual premium for an employer health plan covering a family of four averaged nearly $12,700 versus $4,700 for individual coverage. Retiring elderly couples will need $250,000 in savings just to pay for the most basic medical coverage.

Many Americans file bankruptcy for various reasons such as job loss, illness, death of a loved one, disability, loss of coverage, divorce, and the additional medical fees associated with health care coverage such as co-payments, deductibles, prescription costs, COBRA costs, etc.

The problem is the lack of mandated regulations in the health care industry, industry fraud and billing errors. Health insurance companies over charge patients fees for services and if you do not have health insurance coverage you might as well sign over your child to pay for the medical costs because when you don't have insurance you can basically be charged whatever fee the doctor or hospital chooses. When you have health insurance you can only be charged a certain amount for services.

We claim to be the most powerful country in the world yet we are the sickest developed country in the world. We have the highest incidents of high blood pressure, diabetes, heart attacks, stroke, and cancer.

We should demand that full health insurance coverage is provided to all Americans no matter what their income or lack of income. You should not get better treatment or additional services simply because you have a higher income or can afford better coverage. Every human life should be valued but based on our health insurance industry it is not. We must fight back and force Congress to develop better laws to improve our health care industry and provide insurance for all Americans because we deserve it.

Disadvantages of Filing for Bankruptcy

Last year over 1 million Americans filed for personal bankruptcy. Due to the revised Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, you must attend counseling sessions prior to your bankruptcy being approved. Bankruptcy filers must show proof that there is no other alternative but to file for bankruptcy. The filer's income is compared to the median income in the filer's state of residence. If the filer's income is above the median and is able to pay at least a minimal amount per month to creditors, the filer cannot file for bankruptcy.

The filer's personal finances are also reviewed including living expenses. The Act only allows filing of Chapter 13 bankruptcy once every two years and filing of Chapter 7 bankruptcy once every eight years. The filer must live in their state for 720 days prior to filing for bankruptcy.

The disadvantages of filing for bankruptcy are:
1. You no longer have control over your finances – a trustee is appointed to oversee your finances

2. You now have bad credit

3. If will be difficult to get approved for a loan or credit card

4. If you own a house or are paying off a house, your title may be transferred your trustee and the property may be sold to pay your creditors

5. It will be harder to rent an apartment, house, etc.

6. You must get the permission of the Federal Court or your assigned trustee to travel overseas

7. If may be harder to get hired for a job

8. Chapter 7 bankruptcy stays on your credit report for 10 years

9. Chapter 13 bankruptcy stays on your credit report for 7 years

Bankruptcy should be a last resort. Contact a professional credit counseling agency or certified financial planner to help you develop a plan to pay off your debt to prevent filing for bankruptcy.

Bankruptcy Filings Increased in 2008

Due to the financial woes the country has experienced for the past few years personal bankruptcy filings remain high. At the end of September bankruptcy filing rose 30%. From July through September 2008 bankruptcy filings rose 35% or equaled to 292,291 filings.

Personal bankruptcy filings in 2008 totaled approximately 1.1 million and increased 31% from 2007. Older Americans have also filed for personal bankruptcy due to the rising costs of food, gas, and medical costs. According to AARP, personal bankruptcy filings among Americans age 65 or older grew by 125%. The bankruptcy rate of Americans aged 75 to 84 jumped 433.3%. Bankruptcy should be a last resort. Here are 5 ways to prevent filing for bankruptcy.

1. Live below your means. Keep debt to 15% or less of your monthly income. Save 10% of your monthly income, housing costs should be no more than 30% of your monthly income, transportation costs 28% and other expenses 17% to ensure you keep a balanced monthly budget.

2. Downsize. Get a cheaper car or home or buy a condo to save money on housing and transportation costs.

3. Enjoy retirement. You should be debt free and mortgage free during your retirement. If you are not you need to make a plan to move towards being debt free during your retirement.

4. Change your diet. If you are spending hundreds of dollars a month on medical costs and prescriptions it is time to change your diet. Eat more fruits and vegetables. Eliminate junk food, fast food, fried foods and sweets. Eat balanced meals and don't overeat. Try to eat 3 meals a day and eat your largest meal at lunch. Don't eat after 7pm. Start exercising. Contact a nutritionist or get a referral from your doctor to develop a plan to shed those extra pounds.

5. Get help. Contact a financial advisor to map out a plan to help you pay off your debt and enjoy your retirement years.

Bankruptcy Doesn't Help As Much As You Think

One of the biggest myths is that if you file for bankruptcy you will be financially free and no longer have debt problems. Wrong! Bankruptcy is not the cure-all for getting out of debt. Over a million Americans file for bankruptcy every year. One in every 73 households files for bankruptcy. In 2005, 2 million Americans filed for personal bankruptcies. Millions of Americans are in debt and get in debt every year. Many people think that filing for bankruptcy will solve all of their debt problems. On the surface it seems that if you file for bankruptcy all of your debt will be eliminated and you can start with a clean slate. Actually it is not that simple.

To file for personal bankruptcy you must reside in a state for 90 days prior to filing and have a total unsecured debt less than $290,525 or secured debt less than $871,550. The new bankruptcy law that went into effect in October 2005 states that debtors (consumers) who earn less than the median income in their state about 80 percent of those who file for bankruptcy still would be entitled to file under Chapter 7. But those who earn more than that and who have the ability to repay at least $6,000 over five years would have to file under Chapter 13, which requires a repayment plan.


Although it is true that after you file for bankruptcy you can purchase a house or a car, what people don’t realize it that the interest rate that you will be given will be very high. Also, based on the new bankruptcy law implemented in October 2005, it is harder to file for bankruptcy and depending on the type of bankruptcy granted it will remain on your credit report for seven to ten years. This greatly lowers your credit score and it will probably take about 3 to 5 years before you score increases due to the bankruptcy filed and provided that you don’t get into any further debt.

Consider what would happen if you neglect to make a payment on the repayment plan which is created by your local court house. If you miss a payment on your repayment plan your case will be dismissed and you will have to find a way to pay your debts on your end.

When you have financial problems and can’t see any way out bankruptcy looks like the best option but there are many other options available to you. If you have a house you can take out an equity loan to pay your debts, you can reduce your expenses and create a budget for yourself, you can get a part-time job, go to school and further your education and get additional training related to your particular job, setup payment plans with your creditors or sell some of your assets if you have any. Use If you do not receive a steady paycheck or have your own business one month or for several months you may not earn enough money to pay your monthly chapter 13 reorganization payment. Only use bankruptcy as an absolute last resort any only if you have a steady job. You need to have steady employment for the Chapter 13 reorganization plan. Good luck!

Please write me to tell me about your credit repair and financial crisis stories. The best story received will be published in my February newsletter. Send stories to info@hefreemanenterprises and put in the Subject Line "Blog Financial Crisis Story Contest".