Avoiding Debt In College

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Between classes, tests and work college students have enough to worry about. Unfortunately, debt among college students is rapidly rising making it a growing concern for many young adults. Credit cards make it easy and convenient for the cash strapped college student to buy things, few of which every stop to think of the long terms effects of their purchases. Student loans are also becoming one of the biggest sources of debt and bankruptcy filings among graduates today.

Staying Out Of Trouble

The first aspect to controlling debt in college is education. Teaching kids about smart money management skills early on can help establish a lifetime of financially healthy habits. Even after they get to college, there is still plenty one can do to prevent debt from getting out of control.

First, develop a monthly budget that clearly outlines expenses. It is important that the budget include a "fun" category, or category for spending on entertainment and activities. Tracking monthly spending and prioritizing purchases is a huge part of smart money management. Next, outline rules for using credit cards. Credit cards should be viewed as a financial tool for boosting credit and maintaining a responsible borrowing history, not a matter of convenience. Setting up guidelines for what purchases are acceptable for use of a credit card and a maximum purchasing limit can keep unnecessary spending in check. Last, maintain an open line of communication. It is important for students and parents to remain honest about finances so that help can be given for an emergency. It is far better for a parent to help finance an unexpected, important purchase than to secretly charge it to a line of credit than can cost hundreds more in interest fees.

Looking Smart

Another aspect to managing credit and staying out of debt in college involves choosing the right type of credit line. When looking for a credit card it is important to find one with the lowest possible interest rate. Since college students are just starting out in the credit world, most offers may boast unreasonably high credit lines in exchange for a high interest rate. These types of cards are unnecessary and will only lead to financial trouble.

Finding the right student loan is becoming increasingly difficult. While grants are preferred, they aren't always available. Many private lenders are boosting interest rates in attempt to minimize loss in the event of default, and federal loans can be difficult to obtain. The best type of student loan is one that has a low, fixed interest rate and offers a temporary buffer between time of graduation and due date for the first payment. Since student loan debt is rarely dischargeable in bankruptcy, finding solutions when defaulting becomes an issue is quite challenging. Therefore, it is best to shop around and find the best type of student loan that offers payments expected to be within reach after graduation.

Christopher M, of Lee Law Firm, understands that financial hardships can affect honest, hard-working people. His early experience growing up in a very blue collar family in a rural area of Indiana, made a significant impression on his business philosophy today. As a child, he watched his family struggle as money didn't come easy and his parent work hard to provide for their family. As a bankruptcy attorney in Dallas, Tx his practice has given him the opportunity to directly impact the lives of many people.

The Intersection of Bankruptcy and Divorce

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In the current economic environment, many people are considering bankruptcy as a way to manage overwhelming debt. With the stress of financial difficulties straining relationships, more couples are also getting divorced. Before filing for bankruptcy and divorce, though, spouses should understand how each process affects the other process, future debt obligations and marital property division.

Bankruptcy and Domestic Support Orders

By filing for bankruptcy, people can reduce, restructure or even eliminate their debt. Prior to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, some people also used bankruptcy as a tool to avoid financial obligations to former spouses because spousal support (sometimes called alimony) and other support obligations were unsecured debt that could be discharged in bankruptcy.

Now, however, federal bankruptcy laws consider any "domestic support obligation," such as spousal support, ineligible for discharge. According to the bankruptcy code, a debt is a domestic support obligation if:

· The debt is owed to a spouse, former spouse, child, child's parent or guardian, or a governmental entity.

· The debt is a form of alimony, maintenance or support, regardless of what the divorce decree calls it.

· The debt arose from a separation agreement, divorce decree, property settlement agreement, other court order or determination of a government unit.

· The debt is not assigned to a nongovernmental entity, unless the person owed the debt voluntarily assigned the right to collect the debt to the nongovernmental entity.

Most spousal support and child support orders qualify as domestic support obligations. Therefore, spousal and child support obligations cannot be eliminated in bankruptcy. In addition, an individual will not receive an order of discharge from the bankruptcy judge until all domestic support obligations are current.

Depending on the type of bankruptcy, other debts established by a divorce decree may or may not be eliminated. In Chapter 13 bankruptcy, debts to a former spouse that are not domestic support obligations can be discharged; in Chapter 7 bankruptcy, they cannot.

Automatic Stays

Another important feature of bankruptcy is an automatic stay placed to stop all creditors' collection efforts once a bankruptcy petition is filed. This stops foreclosure proceedings and can even prevent a petitioner's spouse or former spouse from collecting money from him or her.

But, an exception exists for domestic support obligations, and the automatic stay does not apply to the establishment or modification of a domestic support obligation like spousal support. Nonetheless, filing for bankruptcy is likely to suspend or postpone divorce proceedings.

Bankruptcy Timing and Filing

Spouses considering divorce and bankruptcy have several options. They can file for bankruptcy jointly or individually before getting divorced, or they may file for bankruptcy individually after the divorce.

Even after a divorce is finalized, a former spouse may still be personally liable for debts the other spouse acquired during the marriage. And, when one spouse/former spouse files for bankruptcy individually, any discharge of that individual's debt does not eliminate debt that could be applied to the other spouse/former spouse.

Therefore, if a couple has significant debt for which either person could be liable, it may be better to file for bankruptcy jointly so any debt discharge applies to both. Also, couples who file for bankruptcy jointly can pay court filing fees and any attorney's fees together, rather than paying more for two separate filings and attorneys in individual bankruptcies. Of course, the best time and filing status for bankruptcy depends on each person's unique circumstances.

Marital-Property Division

When a divorcing couple has a lot of debt, one person may receive a greater share of the couple's assets in exchange for agreeing to pay off a larger portion of the debt. In these instances, the division of debt and assets should be carefully structured in the divorce decree, especially when bankruptcy is a possibility. This is because some of the debt allocated to that person later may be discharged in individual bankruptcy, leaving the former spouse who filed for bankruptcy with a lion's share of the assets and virtually no debt.

To learn more about property division and the financial aspects of divorce, contact a knowledgeable family law attorney in your area. If you are considering divorce, an experienced lawyer can help ensure that the division of assets and debts between you and your former spouse is fair.

James D. Garrett heads the Virginia Beach law firm of Garrett Law Group, PLC. If you have further questions, contact his firm to speak with a lawyer for a divorce and bankruptcy. His law firm also staffs attorneys for traffic and criminal defense, and car accident injuries. Call (757) 422-4646 or email at garrettlawgroup@yahoo.com.

Before and After Bankruptcy

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The bankruptcy process can be tedious and often requires active participation from the filer. While it isn't difficult to obtain a debt discharge, there are still some aspects to filing bankruptcy that should be considered beforehand. More specifically, making sure you are aware of what is required both before and after a bankruptcy can ensure the best outcome possible.

Pre-Bankruptcy

If you are considering filing for bankruptcy there are a few things you can do to prepare yourself in order to minimize the risk of mistakes that could jeopardize the outcome of your case. First, be prepared to have your financial life reviewed with a fine tooth comb. Having documentation to back up your debts, income and financial transactions can save you valuable time and hassle down the road. The court may ask you to provide copies of your paycheck stubs, bank statements and your debt accounts. Organizing this information prior to filing the petition can streamline the process.

Second, bankruptcy laws require that anyone filing for bankruptcy attend a credit counseling course. This course is designed to provide you with information about your debts, how to manage your finances and smart tips for staying out of debt in the future. Failure to complete this course, or provide the certificate of completion to the court, could result in a delay or dismissal of your case. Further, only courses provided by approved credit counseling agencies will be accepted by the court, so be sure to find an approved provider through the U.S. Department of Trustee's website.

Also, you should understand that certain actions on your part could influence the outcome of your case. Your income is the main factor used to determine your eligibility for bankruptcy. Major changes to your income, such as a raise or second job, could disqualify you from eligibility for Chapter 7 or change how much you are required to pay in Chapter 13. Also, uncharacteristic changes to your debt accounts or could be viewed as suspicious by the courts. Rapidly paying off debts, or accumulating more debts, before filing could lead to a case dismissal. Further, selling or giving away assets prior to filing may be considered fraudulent and could jeopardize your chances at a discharge.

Post-Bankruptcy

Once you have successfully completed a bankruptcy case there is still work to be done. It is your responsibility to ensure you have a copy of all of the paperwork related to your case. Make sure you keep this information in the event a creditor attempts to make a collection attempt in the future. Also, not all creditors update account information to credit bureaus right away. Monitor your credit report and request for your accounts to be updated by any creditors who have not reported the latest information. Your most important step after bankruptcy is to begin a path to rebuild your credit. Find one or two small lines of credit to begin keeping manageable balances on. Keep making timely payments for six months to a year, and your credit will begin to reflect your hard work and positive borrowing potential.

The Lee Law Firm is a Fort Worth, Texas bankruptcy firm that aims to provide local residents with high quality legal representation at affordable rates. Their attorneys are professional and compassionate, giving clients the personalized attention they deserve. When filing bankruptcy, the Lee Law Firm is the right choice to help in the face of financial hardship.

Services Provided By A Bankruptcy Attorney

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For the more than one million individuals who file for bankruptcy each year, the process can be long and often intimidating. There are court dates to attend, paperwork to file and creditors to contact, all under the stress and uncertainty of whatever underlying factors caused the economic crisis. During this economic hardship, going it alone may seem like a good option, but a good bankruptcy attorney can not only make the process smoother, but also save a filer money in the long run.

For one, a bankruptcy attorney can help determine which form of bankruptcy to file. Chapter 7 allows individuals to eliminate most forms of debt, provided the individual can pass a means test. This is the most popular form of bankruptcy, with close to two-thirds of all filings the Chapter 7 variety. The remaining one-third are Chapter 13, which allows filers to pay back a smaller portion of their debt during a given time frame, generally three to five years.

Bankruptcy attorneys can also help navigate some of the newer regulations related to filings. The Bankruptcy Abuse Prevention Act of 2005, along with the Consumer Protection Act passed the same year, were measures meant to prevent filers who abused the system, but had the end result of making the process more difficult for many ordinary filers. A study from the American Bankruptcy Institute found that this law drove the cost of filing for bankruptcy up 40 percent. It also created heaps of new paperwork, making it harder for many filers and driving away many individuals badly in need of the fresh start bankruptcy offers.

Because bankruptcy can put many of an individual's assets at risk, individuals who need help understanding their rights can find it with a bankruptcy attorney. Bankruptcy lawyer firms help keep filers protected throughout the process and determine which type of debts can be discharged and what type of property a filer may keep. These include jewelry, vehicles and a certain level of equity in a home. A person's home itself is not always safe from seizure as part of the process, so an attorney can determine the best way to file and status of loans to prevent this if possible.

Bankruptcy attorneys can also be a source of stability during the difficult process. They are familiar with the laws in an individual's state, and can make sure all paperwork and debt schedules are complete without mistakes before filing. Because a single mistake can jeopardize the entire process, filing without an attorney is a risk most are unable to assume. The best attorneys are those who specialize in bankruptcy rather than those who practice it as a sidebar to a larger practice. These specialized attorneys understand the process, having answered the basic questions about the process many times, and are often familiar with judges and other court officers involved. They will file the petition with the court, serve as a liaison with the assigned trustee and appear with the filer during the Meeting of Creditors.

Individuals are not the only ones who can benefit from a bankruptcy attorney. Bankruptcy lawyer firms can also help business owners through the forms of bankruptcy available to them. A Chapter 11 bankruptcy, also known as a business reorganization, allows a company to pay a more manageable portion of the debt they owe, which creditors also like because it means they will receive a larger payment than if the company were liquidated. This process can be beneficial, but first the business owner must have a detailed debt repayment plan that a qualified bankruptcy attorney can help craft.