How Chapter 13 Bankruptcy Lowers Credit Card Debt


Uncontrollable credit card debt has led many American citizens to look for a way out that really works. While some individuals resort to debt settlement programs, others favor the complete judicial protection that is offered by Chapter 13 Bankruptcy. Chapter 13 Bankruptcy assists US consumers to lower their monthly payments on credit card debt. You can become debt free simply within 3-5 years with complete judicial protection. Individuals who have non-exempt assets like rental properties frequently opt for reconstituting their credit liabilities throughout a 3 to 5 year period for the purpose of lowering the monthly payments. At the same time when there would be a negative impact on their FICO scores for up to seven years, those who are facing severe financial difficulties can become debt free.

The Distinction Between Chapter 7 and Chapter 13 Bankruptcy

The main distinction between Chapter 7 and Chapter 13 bankruptcy is that the second permits a consumer to hold non-exempt assets. A consumer is required to surrender any valuables to a trustee if he files for bankruptcy under Chapter 7. Others look for Chapter 13 safeguard regarding car, home and student loans. For taking the advantage, the debtors are likely to make monthly payments for the amount payable to the creditors.

How Long Would It Take to Eliminate Credit Card Debt?

It depends on the amount due. Chapter 13 Bankruptcy, which is also known as a wage earner plan, would let a consumer to rearrange his credit card debt throughout a 3-5 year time period. Monthly payments would be directed to bankruptcy trustee on the basis of the amount of free money that he has. As soon as the debt solution is abided by, any left over obligations are cancelled and the consumer becomes entirely debt free.
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Credit solutions: Your guide to avoiding bad debts



Credit Solutions are effective ways to get out of debt or a bad credit situation that can jeopardize your credit score and your credit worthiness in the eyes of your creditors.

Credit solutions…. tackle 3 credit problems you often face, these are:

  1. Too many credit cards: When you have multiple credit cards, you try to transfer balances from one card to another instead of decreasing an individual account. This way, each of your cards has a high balance that does not decrease creating a problem.
  2. Late or missed payments for loans or credit cards: Continual late payments hurt your borrowing capacity and your lenders lower your credit worthiness from the pattern of your late payments.
  3. Too much ….outstanding debt: If you have a disproportional high debts compared to your income, you can risk getting into a tricky credit situation. This might also frighten future lenders from offering you loans.

How credit solutions work in a bad credit situation



You can find 6 different credit solutions that work well ….bad debt situations. The brief outline of each is given below:

  • Be frugal in your lifestyle: If you want to get back to sound finances, pay off your interests on your debts every month, (full stop) it’s important that you curtail your daily spending habits. Being “dollar-wise” will better your bad credit situation and in future, boost your borrowing credibility. For instance, you can attempt to scale back your buying plans, (semicolon) this way your creditors will be assured of your loan- repayment capacity.
  • Cut down your spending: Do not use your credit cards unless you have emergencies. Find inexpensive ways of spending that don’t burn a hole in your pocket.
  • Prioritize debt elimination: Make debt repayment a priority every month before anything else. Focus on paying off your smaller debts, and then turn your attention to paying off the bigger debts.
  • Arrange for an emergency fund: Create an emergency fund only for repaying debts. This will help you make timely payment each month to your creditors.
  • Save cash, avoid impulse buying: This is the most important credit solution that helps you on rainy days. Avoid impulsive buying and then putting the purchases on your credit card. Get into the habit of buying later which helps you to save on cash.
  • Stay away from credit card debt: Avoid using credit cards for every purchase just because they are convenient for online purchases or traveling, use a debit card instead. This simply helps you solve your credit problems and lets you stay in good financial shape.

Benefits of credit solutions
  • Credit solutions help you regain control of your finances and remain debt-free in the future.
  • You take good financial decisions and retain the habit of saving.
  • You automatically stop falling prey to subprime lenders who charge high interest rates.
  • With these practices, lenders will stop calling you a debt defaulter and enhance your chances of receiving a new loan.
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How credit scores can change your lives?


Credit score is a 3 digit number that indicates your ability to repay a loan. It is calculated statistically and is based on your credit history. It reflects your creditworthiness or your past and future ability to repay debts. When your credit score is calculated, your income, liabilities and expenses to repay the loan are taken into account.

Why is a credit score important to you?
Your credit score helps lenders to objectively measure your overall credit risk. Your credit score is specific and gives your creditors a fair knowledge of your credit situation. Scores can be viewed by your lenders easily and this allows your lenders to speed up the loan approvals. With your credit score, your lender can approve your loan much faster. Scoring enables the lender to take faster credit decisions.

Where can you find your credit score?
Credit scores appear in your credit report, which is a file that contains all your borrowing details. Your credit report is generated by a consumer reporting company. The 3 main credit reporting agencies (CRAs) in the US are Experian, Equifax and TransUnion who calculate your credit score. These companies use the Fair Isaac Corporation (FICO) accredited credit score model to rate your borrowing credibility. Although you would have one FICO score, there might be variations in the way a CRA calculates your score as opposed to another. This happens because not all of your creditors report to one CRA at a time.


5 Factors affecting your credit score
Your scores are calculated based on certain criteria given in your credit report. These include:
Types of the credit used: The kinds of loans you have taken and whether they are on various accounts like credit cards, installment loans, mortgage loans, etc.
Amounts owed: This includes the total amount you owe to your lenders on different accounts.
Payment History: This includes the past payments for all types of accounts like credit cards, retail accounts, etc. It also includes the time taken to pay your debts, the debts you have not been able to pay till date and the last record of any delinquency.
Length of credit history: This includes the time since a debt account was opened in your name and how long have you been paying off a certain debt.
New credit: This includes the number of new accounts you have opened and how often you apply for a new loan.

What is a good score?
If you have a credit score that is above 700, it is considered to be a good score. You have a higher chance of paying back your debt. When you have a good score, your lenders charge you a lower rate of interest.

In fact, a higher score always betters your chances of getting a new loan.

5 ways to improve your credit score

If you have a bad credit situation, you should improve your credit score. You need not worry too much. Just follow 5 easy steps and you can easily increase your credit score. These are:

1. Make timely payments on your outstanding debts.
2. Review your credit report from time to time and consult your CRA for necessary changes.
3. Do not open new credit card accounts if you want to go for big loans like mortgage.
4. Try to reduce your credit card balances to just 25% of your available credit amount.
5. Always aim at paying your debts on time. Timely pay is a small step that can boost your credit score any day.


Your credit score is important to you. It determines a number of important things in your life. Your score decides whether a creditor will give you a loan and how much a loan might cost you. Your score allows creditors to predict whether you will be able to pay your monthly payments on time. Always ensure that your credit score reflects the changes in your credit report. Try not to disclose your credit score to all collection agencies, unless it’s inevitable. You must always seek help if you have a trouble to pay off your debts. Consult a credit counselor and go for debt relief measures. This may not boost your score in the short run, but over a period of time the results will show.
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Getting a Home equity loan? Keep these factors in mind


A home equity loan is meant for those home owners who borrow money keeping their home as collateral. A home equity loan gives you the access to a large sum of cash that you can use up for other expenses or investment purposes. The home equity loan has the advantage of lower rate of interest, monthly payments that are tax deductible etc. Some times the cash available is up to 125% of the property value. For example, if you are a resident of Toronto, and are planning for a home equity loan, then make sure to conduct ample research so as to understand the procedure of getting such a loan and how it works in your county.

The home owners usually apply for a home loan for making bigger purchases like buying another property or going for a home renovation etc. Here are a few things that you should keep in mind while applying for a home equity loan:

Research and compare the rates

It is a wise idea to shop around for various lenders a little instead of hopping straight into the bank. Various lenders have different terms and conditions for the home equity loan; the rates also vary from one lender to another. Therefore the internet is a good way to do some research before going for a loan. You can also hire an independent broker who would do the job of research on your behalf. He would be able to get you in touch with those lenders who meet your demands most appropriately.

Be aware of the fine prints

It is of utmost importance that you read and understand the loan contract well before signing the papers. This is because; there is no reason to believe that all the lenders are trustworthy. Many lenders might add a few clauses in fine prints on the loan contract which were not explained to you earlier. Be aware of the balloon payments and the prepayment penalties associated with the loan contract. A prepayment penalty means if you return the borrowed amount before the expiry of the home equity loan, then you have to pay a hefty sum as a penalty. In case of the balloon payment, you must pay the entire principal by the end of the loan term. This becomes quite a burden for the retired hoe owners.

Make the repayments in time

There are certain processing charges that you need to pay while applying for the home equity loan. There are the loan documentation fees, the title search fees, the lawyer’s remuneration, and other such related fees. Make sure you are able to afford all such fees along with the regular monthly payments. If the home equity loan has a variable rate, then the fluctuation in rates can result in greater monthly payments. Therefore, make sure you are able to manage the entire process; else your credit ratings may falter to a great extent. That will result in a different danger financially.
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The future mortgage rates in Canada

The previous few years have been very turbulent for the regular investors. Since the lat two years, the investors are facing inner turmoil while investing in stocks or property. Although the entire world suffered the consequences, the Canada property market has stood strong and is in fact on the rise since the beginning of 2010. The property sales in Canada had reached an exceptional high in the beginning of the year 2010 due to the rise in demand and Lower Canada mortgage rates. All these factors pushed the Canada home markets to a position that was better than the rest of the world.



There have been record sales in terms of property in the year 2010 which depended on several factors like the all time low Canada mortgage rates, huge demand and low level of inventory. As the property market stabilizes over the increase in number of inventories, the home prices are about to stabilize too. In places like Ontario and British Columbia, most of the home buyers are also rushing to avoid the incoming HST tax.

Although the property market is on a steady rise, the cost of home is not expected to rise much. This actually makes the property prices more reasonable in terms of mortgage rates. There is a marginal rise in the interest rates of mortgage in Canada that is going to flow into the initial months of 2011. However, that will not affect a home buyer’s mean to buy a home.

It is not simple to guess how the Canadian mortgage rates will affect the general property market, but most of the banks in Canada is of the opinion that the interest rates will be both fixed and adjustable in the coming few months. Banks like the CIBC estimates that the overnight rate of mortgage in Canada will reach 2% at the end of 2011, whereas the other banks like the Toronto Dominion and the Royal Bank of Canada suggests that the mortgage rates might go up to 3%. Some of the bank chooses to go for the average of 2.67%. The reason behind such a rate is the weak revival of the economic condition in US.

All the above estimation and projections are variable with respect to the Canadian economic condition. And since the Canada mortgage rates also depend on the international economic recovery, it therefore has an impact on the financial strategy of Canada as well as the prime lending rates.

Keeping all the above factors in mind, if you are looking towards buying a home inthe near future, you have a chance of saving a good amount over the mortgage rates by choosing a lender of goodwill who would tend you with the best interest rates. You can ideally look for an independent expert broker who can research for the lowest mortgage rates on your behalf and help you get in touch with a few excellent lenders so that you are able to save quite a sum of money as well as get the best mortgage rates in Canada.
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Vantage score: Key facts you wanted to know



A vantage score is a new term that you will hear a lot in the coming months. It is a 3-digit number created by your consumer reporting agency (CRA) based on your borrowing details. Your vantage score is a numerical representation of your credit history, based on your debt-paying performance in the past. It was jointly developed by the 3 main American CRAs: Equifax, Experian, Trans Union and revealed on Tuesday, March 14 2006.

How is vantage score unique?
The exact details of how your vantage score is calculated are unknown. It has some unique features. These are as follows:

Unified scoring model: You have a single vantage score and all the 3 agencies use the same standard to calculate it. They use the same algorithm to calculate your score. Today, all 3 credit bureaus will report the same score to you unlike in the past when your score would vary from one agency to another.
Revolutionary scorecard technology: Your vantage score is measured with the help of revolutionary technology that is different from the one used by the Fair Isaac Corporation (FICO), since the 1950s.
High consistency: Your vantage score is consistent and predictive, irrespective of which agency calculates your score.

What affects your vantage score?
There are 7 factors that affect your vantage score. These are:

1.Use of available credit: The total amount you are using from your available account
2.Your payment history: The amount of money you have paid in debts so far.
3.Available credit: The total amount of credit that is accessible to you.
4.Account balances: The total debts that you owe to your lenders.
5.New credit card accounts: The new accounts that you have created recently.
6.Types of credit you owe: The different types of loans you have taken like mortgage, personal loans, credit card debt, etc.
7.Length of your credit history: Your debt history and the duration of your debts till date.

Vantage score v/s FICO score
Always remember that both your vantage score as well as your FICO score measure your bill paying ability. Some similarities and differences are listed below:

Similarities:
Both appear in your credit report, which is a record of your past credits.
Both scores need to have a high for you to be able to avail loans.
Both are calculated on the basis of information on your credit file.
Differences:

The vantage score was developed by the VantageScore Solutions, LLC, jointly owned by the 3 credit bureaus.
The vantage score is a 3year-old model to quantify your ability to pay debts and is still patent-pending. The FICO score, on the other hand, was pioneered by the Fair Isaac Corporation, a separate company that had patented the score in the 1950s.
The FICO score has dominated the credit scene for generations now, but the vantage score is seen to be a better option for many lenders and consumers.
Your FICO score has a minimum of 300 and a maximum of 850 points. Your vantage score range from 501 to 990 points. Your vantage score assigns letter grades from A to F to explain your scores.
Your FICO score takes into account 5 factors. These are:
1.Payment history
2.Outstanding debts
3.Length of your credit history
4.New credit
5.Credit mix

Your vantage score takes into account 6 factors. These are:
1.Use of available credit
2.Recently opened accounts
3.Length of your credit history
4.Credit balances
5.Payment history

6 ways to improve your vantage score

You can improve your vantage score from time to time and enhance your capacity to borrow. A higher score ensures that creditors will lend you money without worrying about loan-repayment. These simple techniques can help you improve your score:
1.Do not open multiple accounts in a short period of time.
2.Apply for credit only when you need it.
3.Make timely bill payments.
4.Pay off debts for delinquent accounts as soon as possible.
5.Try not to exceed 30% of your available credit limit with each account.
6.Maintain low outstanding balances.

After years of selling the FICO score to you, the credit bureaus have tried to introduce the vantage score. It is expected to compete with the FICO score. Fair Isaac believes that this unified vantage score is an infringement of its copyright. Nevertheless, your vantage score considers every factor that affects your credit situation and eliminates the divergences between 3 scores seen in the past.
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What are the different risks and mistakes the older people prone to?


The mistakes for which the old people have to pay:

1) Did not plan for future while you were young:

A mistake the older people makes at the young age is that they don't plan for future. In the older age when you look for financial security, you have to pay for the consequences of being reluctant in days of youth. You did not understand the responsibility you had to take in order to pave a way for a more brighter and secured future. As you never thought about your life after retirement, meeting the daily expenses now would leave you with no cash in hand. If a long term financial strategy is not planned then you might face disappointment now.

2) One of the mistake is to Listen to the expert's Advice:

The elder people who opted for expert financial advice for the retirement account has come across very unfortunate scenario due to loss in the value from 40% to 50 %. Many financial advisors do not give much priority to the needs and requirement of the clients. These financial advisors just act as sales person who are bothered with their target, to sell the mutual fund. They do not care to think about the benefits the client would reap after retirement and so they don't offer a good deal to work on.



3) Seize the opportunity:

The older people cannot look for proper opportunity, as they lack the guidance of a proper financial coach. If in your youth. had invested in a good fund then you would not have suffered after retirement. At present you would have enjoyed your retired life in some island with your wife. During the time of economic downturn avail the real opportunity as the price of houses fall and the shares of excellent companies become affordable. After the market pulls up the share prices also increases. If you bought stocks at young age you could have enjoyed the luxury today.

4) Your Job- the only source of income:

At the time of youth, people hardly think that one day they would turn old and this job won't last forever. You must have had changed your job frequently and that became an obstacle in saving for your future. But now at this old age you have to pay for the consequence of the frivolity of your youth. You never thought of doing a part time job or developing an own business to secure your future.

5) Habit of depending on others and on government:

While you have a secured job, you might think that after retirement you can fall back at the retirement plan and other plans offered by the government. After your retirement, however you might find out that social security plan and Medicare both have been left in deserted conditions. And your last hope would be your pension plan but this can even betray you as the pension plan might go bankrupt. If you would have acted responsibly to build your financial future strong and you would not have faced such horrid situations.

6) Lack of financial education:

The mistake that we commit at young age, shows its consequences at old age. We have not been given any financial education while we were in school. So in the old age we are unprepared to solve the present financial crisis. Financial education would have helped us to take decision independently.

7) Default in payment on a regular basis:

The mistake young people make is that they are very disorganized in time paying their bills on time. You might have forgotten to pay the bill on time but default in the payment can incur more late fees and interest rates. The default in payment can negatively affect your credit score too.

In old age you have to carry the debts of the extravagant and over spending habit of your youth. It would be a great mistake at the young age for which you have to pay through out your life.
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