What Are The Main Types Of Personal Bankruptcy
The two main types of personal bankruptcy are Chapter 13 and Chapter 7. You file for them in federal bankruptcy court. Filing fees are several hundred dollars, and attorney fees are extra. For more information, visit the United States Courts.
Both types of bankruptcy may get rid of unsecured debts like credit card or medical debt and stop foreclosures, repossessions, garnishments and utility shut-offs, as well as debt collection activities. Both also provide exemptions that let you keep certain assets, though how much is exempt depends on your state.
Avoid Taking On More Debt
Don’t take on more debt. If you continue to spend more than your income, it will be difficult to become debt-free.
If you’re considering borrowing more money, take a close look at how it would impact:
- your existing debt payments
- your ability to save for other goals
You’re at risk of no longer being able to manage your debt if:
- you’re already having trouble making your debt payments
- you’re close to your credit limit and would have trouble making higher payments if interest rates increase
Learn About The Types Of Personal Bankruptcy
Federal courts have jurisdiction over all bankruptcy laws, so you must file a petition in a federal bankruptcy court. There are two main types of personal bankruptcy:
- Chapter 13 allows people with a steady income to keep their property. This bankruptcy plan includes allowing filers to keep a mortgaged house or car they might otherwise lose in the bankruptcy process.
- Chapter 7 is known as straight bankruptcy. It involves liquidating all assets that are not exempt under federal or state law.
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What Practices Are Off Limits For Debt Collectors
A debt collector may not:
- Contact you at inconvenient times, for example, before 8 AM or after 9 PM, unless you agree to it.
- Communicate with you at work if you tell the debt collector your employer disapproves.
- Contact you after you send a letter to the collector telling them to stop, except to notify you if the creditor or collector plans to take a specific action.
- Communicate with your friends, relatives, employer, or others except to find out where you live or work.
- Harass you with repeated phone calls, profane language, or threats to harm you.
- Make any false claim or statement that you will be arrested.
- Threaten to have money deducted from your paycheck or to sue you, unless the collection agency or creditor intends to do so and it is legal.
Will Student Loans Be Canceled Where We Stand
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Student debt cancellation is the big question mark on the minds of federal student loan borrowers since President Joe Biden promised to forgive $10,000 per borrower while on the campaign trail.
Can broad student loan debt forgiveness ever happen? And should it?
Federal student loan forbearance ends May 1. By then, most borrowers will not have made a payment in over two years, amid the pandemic. Some borrowers have even seen loan forgiveness. But when payments restart, most federal student loan borrowers will resume making monthly payments on the same outstanding balance they had when the pandemic began.
Although Biden has voiced support for broad student loan forgiveness, since becoming president he has yet to offer a specific proposal or amount. Biden could ask that Congress pass a bill to cancel debt or, pending legal interpretation, use executive authority to do so.
As the debate on student loan forgiveness continues, borrowers should plan on the assumption that student loans will not be canceled. If it happens anyway, itll be a welcome surprise.
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What Are Some Alternatives
So, while no debt relief options are provided directly from the government, there are still some great options to not only help you get out of debt but also to educate yourself about the world of finance. With that in mind, here are some of the best debt relief options for you in Canada:
Debt consolidation is perfect for those with a lot of debt from a variety of different places. It can be extremely hard to manage several debts of different origins. Essentially, debt consolidation helps by rolling your numerous, smaller debts into one large debt.
Want to know how debt consolidation can help your financial situation?
Oftentimes, you will be able to get a lower interest rate on this debt consolidation loan and in the process, managing your debts will become much easier as you only have one to pay. There are both unsecured and secured options available and the one you end up choosing will depend on the assets you have, your credit score, and more.
Did your application for a debt consolidation loan get denied?
Debt Management/Credit Counselling Programs
Check this out if youre trying to ?
If you are very deep in debt and dont have enough money to get out of it, settling your debt could be an option. In a debt settlement, you will work closely with a counsellor, who will reach out to your creditors and try to agree upon a possible debt reduction.
Private Loan Repayment Plans
Private loan repayment terms vary by lender and by contract. Check your loan agreement for the repayment terms of your private student loans.
Tip: While most private loans go into default after 120 days of non-payment, check your private loan agreement or call your loan servicer to discuss your repayment options and how you can avoid default.
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Federal Scholarships And Grants
The federal government offers many different education grants which do not have to be repaid. Most of these grants require a showing of financial need.
Federal grants include Federal Pell Grants and Teacher Education Assistance for College and Higher Education Grants. You need to submit a Free Application for Federal Student Aid to be considered for federal grants.
Government Loans For Debts
If you can’t find a grant, there’s always the option of taking a loan to get out of debt. You’ll need to be careful with this, though, as there are debt consolidation scams that can get you into even more debt without resolving your issues. Although there aren’t government loans to pay off debt, there may be a way you can take advantage of government programs to get out of debt.
The government backs loans through lenders for qualifying homebuyers through the Federal Housing Administration. If you own a home, and it’s your primary residence, you may be able to refinance your home through an FHA-backed loan and use the money you save on your mortgage each month to pay off your debts. You may also qualify to refinance your student loans through a private borrower, helping you save money and removing the government from the equation.
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Calculating Total Loan Cost
When you are deciding which loans to accept, be sure to make comparisons based on the loans total cost. The total cost of a loan includes three different amounts: the PRINCIPAL, the INTEREST, and the FEES.
- The principal is the original amount that you borrow.
- The interest is the cost of borrowing money from the lender.
- The interest amount accrues over time. Interest rates on student loans can be fixed or variable.
- A fixed interest rate does not change over the life of the loan.
- A variable interest rate can change over the life of the loan.
To help you understand the total cost of your student loan, private student loan lenders must clearly disclose the loans annual percentage rate, finance charge, amount financed, and total of payments before you sign the loan agreement. These disclosures may look something like this:
|Annual Percentage Rate|
The cost of your credit as a yearly rate.
The dollar amount the credit will cost you.
The amount of credit provided to you.
The amount you will have paid when you have made all scheduled payments.
Note: Your private student loan lender must provide you with loan-cost disclosures at three different points in the application process:
Financial Aid For Education
Programs that can help include:
- Federal Student Aid Details the types of grants and scholarships available.
- QuestBridge Provides information on resources for high-achieving, low-income students, plus resources for educators.
- The Education Trust Advocates for students with high academic achievement, especially those in low-income situations, and offers a number of tools. Those include help in choosing a college based on performance.
- Bloomberg Philanthropies Helps high-achieving students who are low- and moderate-income.
- FinAid Provides information on educational loans, scholarships and military aid, as well as several dozen financial calculators. Gives tips on choosing a college, options for online degrees, jobs and internships and more.
- JKCF The Jack Kent Cooke Foundation site has scholarship, grant and other info intended for exceptionally promising students from low-income families.
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Q Are Student Loan Burdens Economically Handicapping An Entire Generation
A. More adults between 18 and 35 are living at home, and fewer of them own homes than was the case for their counterparts a decade or two ago. But these trends are mostly due to these folks entering the work force during the Great Recession rather than due to their student loans. Federal Reserve researchers estimate that 20% of the decline in homeownership can be attributed to their increased student loan debt the bulk of the decline reflects other factors.
What If Im Having Trouble Paying My Mortgage
If youre behind on your mortgage, contact your lender immediately. Dont wait, or a lender could foreclose on your house. Most lenders will work with you if they believe youre acting in good faith and your situation is temporary.
Your lender might be willing to:
- lower or suspend your payments for a short time
- extend your repayment period to lower your monthly payments
Before you agree to a plan, find out about any extra fees or other consequences. If you cant work out a plan with your lender, contact a non-profit housing counseling agency. You can reach a free, HUD-certified counselor at 888-995-HOPE . You also can contact your local Department of Housing and Urban Development office or the housing authority in your state, city, or county. You dont need to pay a private company for these services. And be sure to learn the signs of a mortgage assistance relief scam and how to avoid them at ftc.gov/mortgage.
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Know Where To Get Help
If you’re having trouble paying down your debt on your own, get help.
If you need help you can contact:
- an accredited not-for-profit credit counsellor
- a financial advisor
They may suggest you explore other community and professional services first.
With their help, you’ll be able to:
- evaluate your current debt situation
- determine your present and future needs
- make a budget
- find ways to pay off the debt
Before you sign up for services to get help to pay off your debt, it’s important to explore your options and compare the different services offered.
After I Pay Off My Debt Is There Anything I Can Do About My Credit
No one can legally remove accurate negative information from your credit report so dont believe anyone that tells you otherwise.
Only time can make accurate information go away. A credit bureau can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. The seven-year reporting period starts from the date the event took place. But there are steps you can take to repair your credit over time.
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Does The Federal Government Provide Debt Relief
Join millions of Canadians who have already trusted Loans Canada
Struggling with debt on a daily basis is an all-to-familiar circumstance for thousands of Canadians. Some can handle it on their own, while others need some help, as the debt they have is simply too large, or they lack the financial knowledge to deal with the debt independently.
One of the first questions that those struggling with debt might ask is, does the federal government provide debt relief? The short answer to that question is no. However, thats not the whole story. This article will explain the reasons why. It will also cover the various alternative options for those who are currently struggling with debt.
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Grants For Military Members Or Their Surviving Families
If you have student loans and your parent served in the military and died while deployed in Afghanistan or Iraq following the 9/11 attack, you may be eligible for an Iraq and Afghanistan Service Grant. You may receive loan repayment assistance of up to $6,345, which you can use to pay off your student loan. Visit the Federal Student Aid website for more information about the eligibility requirements and application procedures.
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You Can Get Out Of Debt
When you use a loan to pay off other types of debt, youre not actually paying off the debt youre really just playing debt musical chairs, shifting the debt from one place to another. Or, as weve been saying for centuries, youre simply robbing Peter to pay Paul.
While debt consolidation and refinancing can definitely be useful tools in reaching debt freedom, it can be all too easy to wind up just as bad as you started or worse. Using new debt to pay old debts only works for a short time eventually, your debts will come due.
So, no matter what method you use to pay off your existing debts, its important to really investigate how and why you got into that debt in the first place. Debts dont grow in a vacuum something you did or, in some cases, didnt do lead to the debt you accumulated.
Of course, we all have a bad month or two, and some situations are out of our control medical issues, sudden job loss, and other life events can certainly contribute to unmanageable debts if we dont have savings upon which to rely. However, not all debts are from disasters too many of us wind up in trouble by simply living outside of our means.
In the end, getting out of debt may actually be the easy part. Its often much hard to address the poor financial habits weve developed in order to stay out of debt for good. But, no matter how much work it takes, being debt-free is always a worthy goal.
What If You Default
You should try to avoid defaulting on your student loans. A default will negatively impact your credit score and your ability to obtain credit in the future. But if you are unable to avoid default, you may have options to help repair your credit and get you back on track. You can consider contacting your servicer to discuss your options and ask them to work with you toward a sensible solution.
While each person’s particular situation is different, below you will find some general information regarding default and your post-default options:
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Federal Loan Repayment Plans
There are a number of different federal loan repayment plans available to Direct and FFEL loan borrowers. Your loan repayment options depend on your loan type, balance, status, and time in repayment. To learn more about your loans, visit the National Student Loan Data System .
- There are no prepayment penalties for federal student loans.
- You can generally change your federal student loan repayment plan at any time. However, note that not all plans are available to all borrowers.
If you do not choose a repayment plan, your loan is automatically placed into the Standard Plan, which provides a ten-year repayment term and requires payments of at least $50 per month. However, a number of other repayment plans are available if you cannot afford the monthly payment under the Standard Plan. These alternative plans offer their own benefits and drawbacks as compared with the Standard Plan. However, they can be a good choice for someone who cannot afford the monthly payments required under the Standard Plan.
Government Grants To Pay Off Personal Debt
When a low-income person has many expenditures but he is not capable to handle all the expenditures in his low income, he thinks about lending some money. But lending the money is means that they have to return the money and with the interest, which is not possible for them. And in the end, they look for grants from the government. If there is any grant that can help them financially to pay off debt. But people also doubt in their mind about those government grants that they need to pay back these debt relief grants by the government?
So, we tell you, that like the other loans or debts, you do not need to pay back the grant amount to the government. Because the government does not expect to take it back from you, they just want to help you in your tough time. So, it is a powerful tool for people who are facing life difficulties which are related to finance. They can use this financial grant from the government without any worry of payback and fulfill their financial needs.
In this article, you will get information about the various personal loans for the people which are offered by the government. The most interesting thing that the individuals do not need to pay it back. So, continue with the article and get information about various personal loans which are helpful for you.
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