Before you consider filing for bankruptcy, it is important you understand the difference between different types of bankruptcy and your reasons for filing.  Credit rating is affected and much legality is involved.

Full freedom from the debt is not easy nowadays as the changing laws are getting tougher. Federal laws are supplemented by additional laws in many states.

If you are filing for bankruptcy, you can be affected by two main chapters of bankruptcy, Chapter 7 and 13.  Both of these chapters of bankruptcy are common and take into account individual debtors and small filers.

Chapter 7 also known as liquidation frees the debtor from all requirements to repay debt and may result in liquidation of assets.  More commonly, the debtors assets are exempt from the process of liquidation.  Fraud-related loans, student loans debt, State and federal debts may not be discharged through this process.

Chapter 13 is for the restructuring of debt and is commonly known as Reorganization. A repayment plan can be worked out by the debtor and creditor on the basis of approval from the court regarding the payment of the debt.

On the other hand, Chapter 13 an attempt to liquidate assets for the payment of complete debt amount. In order to make part payment of the main debt, re-structuring of payment plans is done more often. You can clear all your debts in less than five years.

Legal and Filing fees: Fees is approximately $800 or may be higher for a single person. Couple fees and business owner fees is $1,000 or more. You have to keep all the paperwork up to date to help your attorney in filing your documents. You will also have to spend time reviewing bills and answering questions to your attorney.

Did you know that certain types of debt and financial obligations cannot be discharged when filing for bankruptcy?  There are debts that are exempt from bankruptcy laws and you need to pay them whether or not you file for bankruptcy protection.

One financial obligation that can’t be discharged through bankruptcy is child support.  You are required to pay for child support by court order and filing for bankruptcy does not mean that you can stop paying it.

An IRS lien is expempt from being discharged by bankruptcy. What happens with an IRS lien is that you owe income tax payments from one or multiple years. At a certain amount of money owed, the IRS will put a lien on your house or some other type of asset that you own, or in lieu of that possibility, may garnish your wages via your employer. This type of IRS lien, in addition to being exempt from a bankruptcy discharge, is also on your credit report for about 10 years as a huge blemish, which would be in addition to the blemish on your credit report from your bankruptcy filing. These types of red flags on your credit report can make it more difficult to get approved for new credit in the future.

A court order, which may have awarded an individual or company a specific amount ofmoney through a lawsuit brought against you is not a debt exempt from bankruptcy either.

If you are behind in one or more debts with your creditors, those creditors will commonly file a lawsuit against you eventually.  This takes time and most creditors are not quick to go to this extreme to collect their money but in time it will most likely happen.  If this type of lawsuit occurs before bankruptcy, it will not be discharged after bankruptcy is filed.  If you have creditors with a judgment against you, filing for bankruptcy may not do much for you.

Government loans such as federal student loans are also exempt from bankruptcy discharge.

The origin of the word budget is the Latin bulga which is a little pouch or knapsack, which may have come from a Gaulish source that’s related to the Irish bolg, “bag”.

The word turned up in English in the fifteenth century, having traveled via the French bougette, a diminutive form of bouge, “leather bag”.

Its first meaning in English was “pouch, wallet, bag”, and followed its French original in usually implying something made of leather.
So the great traveler Thomas Coryate could write in 1611, “A certain peddler, having a budget of small wares”, and Aphra Behn had the character Hellena say in her play The Rover in 1677: “And was it your Man Friend, that had more Darts in his Eyes than Cupid carries in a whole Budget of Arrows?”.

At the end of the sixteenth century, the word could refer to the contents of one’s budget as well as to the container itself. People used this in the figurative sense of a bundle of news, or of a long letter full of news, and the word formed part of the name of several defunct British newspapers, such as the Pall Mall Budget. This was the sense that Washington Irving used in The Legend of Sleepy Hollow in 1820: “From his half itinerant life, also, he was a kind of traveling gazette, carrying the whole budget of local gossip from house to house; so that his appearance was always greeted with satisfaction” and which Thomas Jefferson meant in a letter he wrote in 1785: “I receive by Mr. Short a budget of London papers. They teem with every horror of which human nature is capable”.

The connection with finance did not appear until 1733, as the result of a scurrilous pamphlet entitled The Budget Opened, an attack directed at Sir Robert Walpole: “And how is this to be done? Why by an Alteration only of the present Method of collecting the publick Revenues … The Budget is opened; and our State Emperick hath dispensed his packets by his Zany Couriers through all Parts of the Kingdom” (the anonymous writer is using zany in the sense of the comical assistant of a fairground quack medicine salesman or mountebank, a decidedly unflattering comparison). The allusion was that the government minister responsible for financial affairs opened his budget, or wallet, to reveal his proposals. It probably also echoed the idiom to open one’s budget, “to speak one’s mind”, which was current then and continued to be so down into Victorian times (it turns up in Trollope, for example).
If he survived a few years, the pamphlet writer must have been chagrined to see his intended victims expropriate his satirical term and turn it into political jargon. By the 1760s, it was clearly well established, and has been the standard term ever since. But it was only in the 1880s that it began to be used as a verb in the sense of planning one’s expenditure, and the attributive meaning of “inexpensive; suitable for someone of limited means” is first recorded only in 1958.

There are two other closely-related words in English. One is bulge, which at first had the same meaning of a bag, but soon came to refer to an irregular swelling, lump, or protuberance, not a surprising change if you think of the often irregular shapes of old leather containers. The other is bilge, the lowest part of a ship’s hull. Because foul odors collected there, the word was used figuratively to mean nonsense or rubbish, a bit of British public-school slang current in the early years of this century, especially in the phrase “he talks the most utter bilge”.

So if an honorable member in the House of Commons should lose his cool and refer to the Chancellor’s budget speech as bilge he’s committing an etymological tautology as well as showing how out of touch he is.

1. Pull together your paperwork

Rounding up and managing one’s paperwork is the dullest aspect of budgeting.  Without a grip on your paperwork, you have no power over your personal finances. So, get this task out of the way quickly by gathering together all of your statements, payslips and so on.

2. Set up a spreadsheet

Set up a list of all of your earnings and outgoings.

3. Learn to love your bills

Although no-one likes paying bills, they do have one useful function: they provide information about our spending habits. Thus, by keeping tabs on your bills, you can learn exactly where your money goes. However, before you can begin to bash your bills, you need to bring them together in one place.

It’s important not to overlook any of your daily, weekly, monthly and yearly spending. For example, don’t forget to track occasional bills, such as insurance policies which renew each year. Furthermore, don’t omit the little luxuries which get you through the working week. The most effective way to monitor your money is to keep a spending diary for at least a month. By recording all of your spending in a little notebook, you can build up an amazingly accurate picture of your financial habits.

4. Switch to autopilot

Budgeting is boring and it makes sense to automate as much of it as you possibly can. For example, paying bills by standing order or direct debit takes away the hassle of having to pay them as they come in. The same goes for saving.   Instead of saving whatever remains at the end of every month, it’s easier to set aside a fixed monthly amount to put away. By keeping things simple, you can switch to autopilot and thus avoid tiresome tasks.

5. Get help from others

Every one of us knows someone who has struggled financially in recent years. So, don’t be embarrassed to share your financial concerns with your loved ones, because they may be in the same boat!

Let’s take a look at how we have ended up so heavily in debt as a nation of consumers.

Easy credit

In the past, it was simply too easy for consumers to obtain credit.  Because credit was so easy to get, consumers figured out how to leverage their credit card rewards and balance transfer cards in order to make money. Many tried to perform credit card arbitrage by taking out cash advances and balance transfers from these cards, then investing the amounts into a rising stock market. This was one of those things you’d consider to be a “sign of the times.” Of course, things are different today, but the 2000s was a decade during which our debt ballooned due to these types of products. Subprime loans, jumbo mortgages and other forms of costly debt are inventions of our capitalistic society; these are high-risk financial tools which countless consumers have gambled with, often with dire results.

Need for instant gratification

As a society, we’re impatient. It’s ingrained in us to be able to get immediate access to the things we covet, even if we can’t really afford these things at the moment. We live in a highly consumerist society that encourages materialism and is not ashamed of excess. Have you seen just how huge the portions are served in most American restaurants? It’s all about more, more, more right now! So it’s often the case that funds that should wisely be funneled into highest interest savings account or into high yield savings are instead being used to keep up with the Joneses, a syndrome that many of us harbor, and which has caused many a household to fall into debt.

Lack of financial education

Personal finance isn’t given importance in schools. A lot of us don’t learn about finance while in school and instead are picking it up through experience and trial and error. Unfortunately, this lack of understanding and awareness about money management can make us vulnerable to making many financial mistakes, particularly those that land us in debt.

Lack of accountability

It’s too easy to procrastinate about our finances, go in denial or sweep things under the rug when we get into trouble. But also detrimental is when we can’t take responsibility for our own actions and mistakes. We blame the government or the financial industry for causing the rifts in our economy, but we’re just as guilty about causing the crisis as they are. Both lenders and borrowers contributed to the subprime lending boom, subsequent bust and credit crisis, but guess who’s getting the lion’s share of the blame?

Debt as a cultural phenomenon

In other cultures, debt is heavily frowned upon and is only gingerly used by households. But in America, debt is socially acceptable and ingrained in our culture; it carries no stigma. If bankruptcy, foreclosure, debt and being broke are things we easily accept in our culture and way of life, then these aren’t things we’d readily condemn (or worry about) until too late or until we’re forced to face the painful consequences.

When the economy blew up last year, it prompted the government to start making some changes; they’ve since introduced policies that help regulate the financial industry to some degree (e.g. credit card rules) but in many respects, it’s still pretty much “business as usual.” Instead of worrying about what the Fed or Obama is going to do next, we should focus on the things we have control over, and take responsibility for our own financial predicaments.

Before a new law of reforms becomes effective in February of 2010, Credit card companies are raising interest rates, penalties and fees. As of July, interest rates spiked an average of 20% across the board from December 2008 with some issuers raising the interest rates 30 and even 50 percent. When the Pew Health Group examined credit cards offered by the twelve largest banks, they found :

99.7 percent of bank cards allowed the issuer to raise interest rates on outstanding balances by changing the account agreement unilaterally – up from 93 percent in December 2008.

95 percent of bank cards allowed issuers to apply payments in a manner that the Federal Reserve found likely to cause substantial monetary injury to consumers.

90 percent of bank cards had penalty interest rates that could be triggered by late payments or overlimit transactions. All but 10 percent of these cards had penalty repricing terms that would qualify as “hair trigger” under Federal Reserve guidelines – triggers of one or two late payments in 12 months

99 percent of bank cards included a late fee – median $39.

80 percent of bank cards included an overlimit fee – median $39.

The median bank penalty interest rate was 28.99 percent. Most – 90 percent – penalty rate increases could continue indefinitely even if the cardholder resumes.

Excessive spending - With easy availability of credit over the past decade, the spending habits of Americans have skyrocketed. The old days of paying for something with cash are long gone and we now live in a society that borrows money to buy goods and services.

Medical Bills - My father always said that if you have your health then you have everything and that statement is more true today than ever. As unexpected medical expenses arise, people tend to shift their priorities from spending money on household necessities to health care. Late payments begin to accumulate and before you know it you’re receiving collection calls.

Your growing family - As you build your family, expenses don’t always correspond with your salary. As take home pay for Americans is stretched to accommodate more family members, many are forced to borrow to keep afloat.

Unemployment - We are in the biggest economic downturn since the Great Depression and unemployment is wreaking havoc on families. The lack of gainful employment is having a direct impact on people’s ability to pay their bills, forcing many families to go further into debt.

The unexpected - No one can ever plan for every contingency in life. While it is advisable to have at least 6 – 12 months of your current expenses in a liquid savings account, in today’s economy you might need an additional 6 or 9 months. It is not surprising that many Americans finance their unexpected or emergency expenses by borrowing.

To find out more about our debt services, call us toll free today at 888-833-8853 and find out how you can benefit from our debt settlement plan.

Did you know that you’re entitled to a free yearly credit report for all three credit reporting agencies?   There is a free website you can visit to request this free credit report once a year. At SettlementMax, we strongly encourage our clients to take advantage of this free valuable service.  Here is the link.  annualcreditreport.com

Most people spend more time managing company finances than their own personal finances. Why is this?

Without a complete understanding of your monthly inflows and outflows you will not be able to understand what money is available for savings or additional spending.  Understanding this will greatly assist you as estimate what monthly payment you can afford before you enter into any debt settlement service.

You are not alone. Banks have been given the ability to charge excessive interest rates, late fees and this has fed their cash cow, us the consumers. Trying to put it in the back of your mind and ignore it is not the right solution. Take action and explore all your different options before you start your journey to financial freedom.