One of the issues that’s mentioned in this video is our currency. The Dollars has been on its longest steady decline in decades and it shows no signs of stopping. Our currency is based on nothing, and it is losing the trust it once portrayed so well. There are a lot of fallacies in the handling of our money, starting with a common belief and false confidence that our currency is backed by gold. This is simply not true.

Our national debt is not repayable, that check will bounce. This is the message I get from listening to Congressman Ron Paul and it is very unsettling to think about it because it is always growing, yet we continue to print money that’s already completely debased.

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College students don’t have a lot to spend or live on, yet somehow they’re able to get high limit credit cards and this is when it all begins to go wrong for many of them. Even at this educational level student do not have the necessary money skills and often end up spending more than necessary. Student loans normally cover tuition and living expenses but that’s not all that college students need to finance. Money in college is scarce and it’s one of the most important resources to a college student’s social life.

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1. Don’t buy things out of impulse – Going back to the first article I mentioned how we as consumers are targeted everyday and the efforts by commercial entities to market their products are so sophisticated that even human psychology is employed to more effectively entice consumers. What ultimately happens then is that your impulses take over your better judgment and you make the purchase. How many times does this happen to you? Exercise discipline with your finances, minimize your shopping trips and train yourself to ignore the trends and temptations to keep up with them. Make a distinctive evaluation of the product you intend to buy and determine if it’s something you actually need. People have conditioned themselves to negotiate their wants into needs and it’s a habit that only leads to high credit card balances.

2. Ignoring your savings account – If you aren’t actively and systematically saving money in a savings account, then hopefully you’re doing it via your employer’s 401K plan and contributing the most you can in order to get a match contribution from your employer. If you aren’t doing either, then most likely you’re living the paycheck to paycheck routine. Why is this dangerous? Not saving money means you have nothing to fall back on if you were to have an emergency or if you were to lose your job. You may think you can rely on family members to help you, but that only transfers the burdens of your debt on to others. The worst part of not having a savings account is accumulating debt on top of not having any of your own money. It’s a bad habit and it doesn’t prepare you for anything.

3. Paying the minimum payments on credit cards - If you are actively using your credit cards for what you’re judging as necessities you may also be brewing a storm. Credit cards are so heavily marketed that people forget what they’re really for. They’re not so you can get the latest gadget now because you don’t have the cash, they’re not so you can finance your ski trips, they’re for emergencies! Oh yes the credit card company forgot to tell you that I’m sure. If you’re only making minimum payments on your cards, you’re more than likely doubling the total amount owed when it’s finally paid off. The problem with these habits is that sometimes you make yourself feel good by sending a larger payment one month and then think that you’ve caught up, and then you use the credit card again. These are bad decisions and you can find yourself in the kind of debt that often leads to bankruptcy. Pay down your balance, never mind what the credit card company says about the minimum payment, send larger payments and pay that balance down.

4. Lending money to friends and family – You may not want to hear this one because you’re probably very close to your family and your friends may even be like family to you. But lending money to your friends and family can get you in trouble as well. Ask what they need the money for to begin with, people get themselves in trouble financially for a lot of reasons if they are real need then you can certainly make an exception. But you should never support any kind of debt that involves gambling, leisure spending or just any other kind of activity that isn’t a necessity. Lending them all you have can hurt you and put you in a really tight spot financially. This one can be a challenge so careful not too let you feelings take over your better judgment.

5. Never co-sign a purchase contract with someone else – Your mom or dad may have done it for you in the past and you may think that this is ok to do if someone doesn’t have the credit. One thing that is often overlooked in this situation is that if the person who needs you to co-sign for them defaults on payments to whatever it is they’re financing, you are now responsible for those payments. The creditor will come after both of you or whoever can pay the bill. Should you fail to pay for your friend or family member, your credit will be hit with late payment or defaults damaging your credit history. It’s not uncommon that bankruptcy results from such situations for innocent parties who were only trying to help out. Creditors only care about collecting payments and if you’re name is on that contract you’re on the hook.

Over 200,000 homes have already been lost to foreclosures in the first three months of this year. Some of the most affected areas are the states of Nevada, California and Arizona, where real estate prices sky rocketed during the real estate boom that started approximately in late 2000 lasting through 2005 and finally stabilizing in 2006 before beginning a solid decline. During this time investors quickly snatched single family homes and condos in these areas hoping to turn a profit when reselling the homes.

Many industry experts consider the current foreclosure situation an ongoing problem that will not see the bottom of its free fall for some time yet. Loan modifications and homeowner assistance are not benefiting all who could use the help. The State Foreclosure Prevention Working Group (SFPWG) reported their estimations to be that for every 10 homeowners who apply for loan modifications, only 3 are able to get somewhere with their lenders. Also the number of troubled borrowers is increasing each month, more defaults are occurring and neither lenders nor the federal government’s efforts to afford help has been keeping up with the rising numbers of defaults.

Along with the rising numbers of defaults and foreclosures is the number of vacant homes for sale across the country, which is at a record high compared to last year. The housing boom which lasted approximately five years, fueled the rate of new home construction across the west, particularly California. Because this was an unnatural rate of growth, and over valuing of real property, it was only a matter of time before a correction occurred.

Not only are these rescue efforts slow and limited, but the latest activity from Washington where Democrats had proposed a housing package has been met with strong opposition from the Bush administration. The package would provide $15 Billion dollars to buy and rehabilitate properties across the country. The White House opposes the package saying that it is excessive risk of tax payer money.

Also a second bill was approved by the Senate earlier this month that addresses a suite of benefits. Tax breaks would be provided for home builders and other businesses, a $7,000 tax credit for anyone who buys a foreclosed property, a program to counsel borrowers would take $150 million and local government would get $4 Billion to buy abandoned and foreclosed properties.

Because there are so many propositions and plans from many source, the housing relief act has not taken shape well enough and has moved very slowly in the direction it needed to when it was first conceived. It isn’t yet clear what the final action will be and what if any relief will being flowing down to home owners who need help. Also amendments to bankruptcy laws are in the works and we should be hearing news about those before the end of this year. So far it’s been rumored that the changes do not benefit the filers, but the creditors.

For more information on finding ways to modify your existing loan and other default and foreclosure options, review the post about free foreclosure help, in which I talk about a site that was launched not long ago with the only aim being to help homeowners in trouble.

Would someone really be willing to pay me double the price of what I paid for it a couple years ago? This really puzzled me, and even though I thought it would be great to make that much money, I couldn’t help to feel a little concerned for whoever ended up buying my condo. Would they finance with sub-prime or conventional loans? How will they manage such a large monthly payment? Will they continue to enjoy the market growth like I did?

It can’t grow forever, what goes up must in deed come down, and that’s what we’re witnessing here. It’s a nose dive of a decline for the housing market and it really is difficult to watch. The same thing goes for the stock market, there’s usually a period of aggressive growth that must eventually fix itself. I trade very moderately in the stock market so I keep up with it, but it’s definitely not a huge worry for me.

Though the housing market, which everyone is part of in one way or another, is now suffering from a subprime mortgage crisis, which in turn has an impact on the overall economic growth. As more mortgages default, there’s less confidence in buying homes, and we’re ending up with a surplus of homes across the country, causing a very dramatic decline in new home construction and prices of homes. All of this builds the downward pressure that weighs on the overall growth.

Interest rates on a number of subprime and ARM loans are due to go up through 2008. However, to the benefit of home owners who may be finding themselves on the brink of bankruptcy, the US treasury, backed by US legislators, is enabling the deferment of interest adjustments in order to begin working towards stimulating the economy and re-establishing confidence in consumers and financial markets.

To begin a resolution to the subprime crisis, one of the measures that can be taken in the future through legislation is to limit the numbers of different financial products that revolve around these types of loans and to force revisiting the metrics to qualify consumers for these types of loans. Salaries will need to keep up with inflation and unemployment needs to stay low. Finally, the housing market’s steady decline needs to be interrupted as soon as possible, but this won’t be possible without more aggressive efforts from the US treasury and the government.

Meanwhile, if you’re finding yourself in the same situation that millions of homeowners are in right now, where you’re not making your mortgage payment and considering bankruptcy. You need to know that there maybe alternatives available to you, banks and mortgage lenders are starting to resort to offering their customers loan modifications and or encouraging a short sale. Read more about loan modifications and other free resources here, it may be just what you need to save your home.

Normally lenders will use the Tax Identification Number of the LLC to extend credit. LLCs are not always profitable, especially when they’re first starting out, and in order for a lender to accept applications and begin processing the requested credit the business either needs to be profitable for the lender to proceed without any additional guarantees, of course these policies will vary by lender. When that criteria is different, normally the lender will still proceed with approval if the owners of the LLC are willing to make personal guarantees for the loans or credit lines. Often this is not explained in great detail or is in small print on the paperwork you sign.

Should this be the case with you, and you see your business taking a turn for the worse, you need to consider this option carefully before you continue with declaring bankruptcy for your LLC. This is something that’s often overlooked during the formation of such business entities. Again lenders don’t always emphasize this point because as long as they have good backing for their money, they don’t care who’s on the hook. So if your LLC files for bankruptcy this will likely extend to you, meaning you may also have to file bankruptcy, otherwise since the liability falls on you, you’ll have to repay the debts yourself.

Be 100% certain that you’re not personally liable for the debt before you proceed, review the paperwork you signed when your loans or credit lines were processed and see if your social security number appears anywhere on the application or approved paperwork.

Only when you find out the structure of the loans or credit on your business, you can begin addressing the problem with a new perspective. If your business debt has a personal guarantee then you should consult a bankruptcy attorney for a better approach to the problem. Your attorney will be able to study the paperwork more efficiently. In a case like this you would not want to prepare and file you’re own bankruptcy petition, you will run into too many obstacles and doubts and may end up filing the wrong paperwork or submitting the wrong information, which again only you will be responsible for.

At the very least consult with a bankruptcy attorney if you feel your LLC is in trouble and you need to get the debt sorted out. Your best option in this situation would be to file bankruptcy chapter 11, you can repay the debts of your business under more manageable terms while your bringing your business back to a profitable state.

1. Don’t sign up for another credit card when you’re maxed out – This should be a red flag for any credit card company processing your application that you’re not living within your means and you spend more than you should. Will that stop them from processing your application? Probably not. As long as you have good credit and you make your payments on time, even if it’s only the minimum due, there’s no indication to them that you’re a risk. But is this a sound financial decision for you? If you’ve maxed out your current credit card, you need to stop and look back at the purchases you have made and honestly determine if these are needs or wants. If you get another credit card, what’s to stop your from maxing it out also and ending up with now two cards to pay off?

2. Don’t borrow against your home – Here’s another example of a really bad decision in which lenders are happy to help you dig your own hole. A “HELOC” (Home Equity Line of Credit) is, in my opinion, the worst product ever put out in the financial world. Why? Two reasons, these loans always carry adjustable rates and you’re only required to pay the interest. If you MUST borrow against your home, what you should be asking for is a Home Equity Loan, on which you do pay the principal balance every time you make a payment. With a HELOC you’re only required, and 99% of the time inclined, to pay only the interest of the loan. When do you actually pay the balance? If you max out that line of credit and your balance is $50,000 when will you be able to pay this balance in full? When you sell your house would be one way, but if you’re not selling your house or if market conditions end up putting you upside down, how will you come up with the money to pay this off when it is due in full?

3. Don’t borrow against your retirement account – Depending on your plan, sometimes there are few restrictions for borrowing or withdrawing money, and there’s usually a lot of flexibility for you to do so. Some 401K or savings plans will allow you to withdraw certain amounts of money and you don’t always have to prove hardship. Why do this if you’re not in real need? It’s all impulse. You’ll probably say to yourself “it’s my money anyways”. Well…. yes and no. It’s also the government’s money and that’s a huge liability. The money that’s in your 401k or savings plan is pre-tax money, meaning it gets deducted from your pay before taxes, so taxes will apply when that money is withdrawn. Not only that, but there’s usually a penalty associated with early withdrawals, so if you borrow $5000, the IRS will automatically take 20% or $1000, plus any penalties the savings plan may carry. So if you’re not in real need, don’t mess with this account.

4. Don’t invest in things you know nothing about – There are so many products out there about making money by starting your own business or making money online. Look, a lot of people make a decent living by running their own business and doing business online. But it’s not supposed to be easy and it’s not supposed to be fun as it is often emphasized. It is a lot of hard work. Sure it can be enjoyable and rewarding but fun and easy it is not. Many of these programs almost always over emphasize earning potential with exaggerated figures, but if you visit the advertised website you often find that the program is not at all described and you have nothing to go by other than to enter your personal info for someone to call you later. They will often sell you general information on how to start a business but won’t concisely explain the how to. They also offer coaching programs with phony guarantees, which are expensive so think carefully before signing up. You could end up spending a lot of money for something you could easily research on your own.

What options do you have?
You could qualify for special forbearance if you have lost your job or your cost of living has changed significantly or you’re experiencing any other financial situation that puts pressure on your ability to pay your mortgage. This is something you’ll have to approach your lender about and you must provide proof of your hardship to qualify.

There is something called a loan modification, which means that the original terms of the loan can be renegotiated and adjusted to fit your new financial situation. Again this will be up to your lender to approve. Lenders are not always sympathetic or understanding so you may need help getting through to them on this option and for that you should check out the free foreclosure help post where I discuss a really good source where you may be able to find the help you need.

The short sale foreclosure is when you try selling the property at a severely discounted price in order to make the sale transaction as quick as possible. If you have equity built up on your home you most likely will lose most if not all of it. You’ll need to hire a good Realtor who’s experienced in these types of sales to help you accomplish this. Most importantly however is that you get your lender to agree to this since it will in most cases mean that the loan balance on the property will also have to be discounted for you to proceed with the sale, meaning the lender loses money as well. Both parties must be in agreement before this can take place.

Another option, is a Deed-in-lieu-of foreclosure, where you voluntarily surrender the property to the lender. This obviously does not help you keep your house, it’s an option you can use when you know you can’t fight it anymore and must give up your home. For the lender to accept this option, you must have tried to sell the house and have attempted other options as well without success. This option can sometimes be beneficial to both lender and borrower, since it immediately releases the borrower from all responsibilities of the defaulted loan and for the lender it can avoid the timely and often costly procedure of foreclosing.

Things to beware about:
Once the lender files a foreclosure notice, this becomes public record. A lot of people access these records often with the purpose of contacting home owners to buy their homes and help them save it.

You must understand that there are people and businesses who make a living off of foreclosures. You’ll probably be approached and contacted by people who say they can help and some of these calls are legitimate but you need to be aware that they’re in for a profit that will most likely leave you short changed.

Since you may be in a desperate situation and you know you can’t save your home, you may be trying hard to save your credit, and often people agree to a deal that may be a temporary fix but are not necessarily good for them in the long run. Some of the most common scams out there are “equity skimming” and entities that post as “counseling agencies”.

Equity skimming consists of you doing a deed transfer of your property to someone who promises to help by selling the property quickly, the often will have you vacate as soon as possible and then they will rent the property to collect payments from that while they process a line of credit on your home then never being heard from again. Unfortunately signing the deed over to someone else will not release you from the responsibility of the loan.

Counseling agencies can sometimes help, but some will do nothing more than collect payments from you. Often times the services they offer are things you can do yourself. You should always deal with your lender directly and when that proves difficult then do research for a legitimate company that can negotiate for you.

It’s difficult to think clearly when foreclosure comes knocking so take some time to think clearly and realize first whether fighting to keep your home is worth the effort. If you feel it is and you want to convince your lender to give you a chance and require professional help, then start by researching companies at the Better Business Bureau and search for “foreclosure consultants”. You’ll get results for agencies who are registered with the BBB and many others who are not. So you want to start with the ones that have a record you can look over.

Last resort
When all else fails, which can happen if your lender is completely unwilling to work with you, you can always go for the last resort, bankruptcy. This is also going to require significant effort on your part to get ready and prepare your documents and contact the right attorney to represent you. Bankruptcy has a more severe effect so it’s important that you take the time to understand what it is, what it does, how to prepare and what to expect. Take some time to read about chapter 7 and chapter 13 since these are going to be the most relevant to someone in a position where they could lose their home.

If the information on your credit report is accurate, then there is not much that can be done to change it. However, as I mentioned above, mistakes will happen and it’s important that you keep up with your credit report and address the inaccuracies yourself first. The best time to use a credit repair agency is when there are items that prove difficult to dispute, especially if it involves life changing events, such a death in the family, a divorce, identity theft etc.

A lot can be recorded on your credit report during these events and it can get messy. These are the perfect situations for you to hire someone else to deal with this for you, and it is in situations like this that credit repair can be most successful if there are true inaccuracies on your credit report. You should hire a legitimate credit repair agency that can address these problems correctly and professionally. One thing to keep in mind is that entries that involve small debts will be easier to deal with, normally larger debts are much harder to dispute even for an experienced agency.

There are legitimate companies that can in fact help you repair inaccuracies on your credit report and they have been doing it for years, which is a factor you must consider when deciding which company to hire, how long have they been doing this? There are also a lot of companies that can not really help you do anything, but will be glad to take your money if you let them.

During the much needed research that you will do to find the right agency, you’ll more than likely come across a lot of different sources that advertise aggressively. Beware of the flashing signs and pop up ads that “guarantee” removing all negative entries from you credit report. This is just not possible if the information is true. You can’t hire an agency to repair your credit just because you don’t like what you see on your credit report. If you had late payments, defaulted loans, or filed bankruptcy, you should expect to see these entries on your report. Hiring someone to fix these entries will only prove to be a waste of money.

Back to finding a reliable company to hire for you credit needs. You need to scrutinize a lot during this process, and I’d like to give you the first source where you need to begin your research. The better business bureau (BBB) keeps record of companies who offer goods and services and makes it available to consumers so you can review their track record. Businesses register with the BBB because they want to show they’re committed to quality service. In a way you’re looking at a company’s resume or credit report if you will, when you research them via the BBB.

Enter the words credit repair in the search field at the above link and you may be a little surprised to find that there are only a handful of credit repair agencies that are registered with the BBB. The search results will also display credit repair companies that are not registered with the BBB. It’s possible that more of these companies that are not registered could also be reliable and provide good service, but I would start with those that are registered and have a track record you can study.

Inaccuracies or not, this may get a little expensive. But you stand to be more successful by hiring a legitimate company with a good track record that has a lot of experience doing this, so be ready and budget yourself carefully.

By now you know that filing bankruptcy should be your last resort. Coming up with an alternative to bankruptcy when you’re stressed and losing sleep can be difficult so here’s some help. But outside of what is listed here, whatever options you believe are possible, research and consider all options to decide whether that alternative is realistic and feasible for you. The following are some of the most common alternatives to bankruptcy:

Renegotiate with your creditors: This can be a successful bankruptcy alternative when dealing with unsecured debt, make them understand that if renegotiating is not possible, they will lose all the money you owe them if you have to resort to personal bankruptcy. This, as you know, is the case with unsecured debt under bankruptcy chapter 7, it gets discharged with no further obligation to you. Secured debt on the other hand will be a little more complicated but still possible. Your home lender or car financing company will know that they must wait around without your payments for months if you have to file bankruptcy. So they may listen to your case but are more than likely going to try to take you through a refinancing deal, which could actually accumulate other costs. So be careful there, this is a renegotiation that needs to benefit you the most.

Debt Consolidation Services: This also could work out well for your unsecured debt, but not all debt consolidators work the same so you need to shop around. You must also be careful with the terms of this deal, some debt consolidation alternatives will cost you more for the simple plan of grouping all your debts into one bill. Many of these agencies can really help, but there are many that only pose as non profit organizations for debt consolidation and are only interested in profit, so do your homework and research them before you agree to anything. You must insist on better rates and this can be an excellent bankruptcy alternative especially if your credit is still in good standing.

Debt Reduction Lawyers: Depending on your current budget this can be an effective bankruptcy alternative as well, since a lawyer would be much better at negotiating terms and rates for you, a creditor will likely respond better to talking to a lawyer than talking to you directly. A lawyer can deal with every single creditor for you and help you take advantage of special provisions and hidden laws and tricks that creditors don’t like consumers to know, but are legal. Your local yellow pages book will have tons of listings for law offices that can provide these services.

Professional Credit Counseling: One of the most common services to consumers and not necessarily a bankruptcy alternative in all cases. If you don’t see the end near you yet, but you see the direction your finances are taking and are uncertain about what to do to avoid collision, professional debt counseling could be what you need. A professional credit counselor is going to suggest drastic changes in your financial routines. They’re not going to ease you into these changes, they will most likely be very straight forward about what needs to change. It is up to you enforce these changes and make this alternative work or you could in fact end up filing bankruptcy

Other sources: Other sources of help may be possible, you may have volunteer groups in your area of perhaps you local church may be able to direct you in the right path. People in these groups are often able to help without charging anything if they offer services. Whatever option you choose, please take care not to simply borrow more money to repay debts, by doing this you’re simply shuffling balances around to temporarily satisfy debts, while accumulating debt in other areas, not really a good bankruptcy alternative.

Don’t let anyone talk you into taking out a line of credit on your home, especially if you’re dealing with unsecured debt. If you do this, you will have taken that unsecured debt and made it secured against your property. Most lenders will tell you this is a good idea. Their job is not to give financial advice, their job is to sell and they sell well because often people don’t know any better, so this is also not a good bankruptcy alternative.

If none of these options seem feasible to you for whatever your circumstances, then it is probably best that you begin your process by first consulting with a bankruptcy attorney. Get all the facts about your case. Not all cases are the same, the conditions will depend on what you owe, what assets you have and whether you’re employed or not. Consult with at least three different attorneys, most consultations are free and you’ll find that some law offices are more personable and more sympathetic than others. During this consultation take the liberty to ask your attorney for any bankruptcy alternatives he or she can recommend, again they may be able to come up with something you haven’t thought of.