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Waco Texas Bankruptcy Law blog

Estate planning protects your loved ones and peace of mind

Considering your own death can feel a little morbid. However, avoiding it can lead to a number of issues. For example, if you aren't married, your estate and assets will pass to other family members. If you have minor children, they could inherit your estate. If you haven't taken the time to create an estate plan or last will with guardians for your children, however, your children may not ever see those assets.

Instead of leaving your estate to pass through probate, it makes much more sense to create a detailed and legally sound estate plan and a last will that complies with Texas standards. Doing so protects the people you love and helps ensure that your assets get distributed the way you'd like to them to be.

Understanding what happens to student loans in bankruptcy

Whether you're going through a Chapter 13 reorganization and repayment bankruptcy or a Chapter 7 with discharge of your debts, certain debts won't go away. In particular, typically, student loans don't get discharged in bankruptcy. That can be a source of great frustration, especially because student loans are often one of the biggest sources of debt in people's lives. Even in Chapter 13, where debtors try to repay as much as possible over a specific period of time, student loans likely won't get discharged.

Many young people take out tens of thousands of dollars, sometimes well into six figures, in student loans. They do this with the belief that with more education comes better jobs and higher wages. Sadly, that often just isn't the case anymore. Many graduates with Master's or even doctoral degrees may struggle to find work in their career path. This can lead to financial hopelessness, as the student loans continue accumulating interest while you work a mediocre job with an advanced degree.

Which debts are not dischargeable in Chapter 13?

Declaring bankruptcy offers many people relief from overwhelming and suffocating debt. It is a viable option. With Chapter 13 debts are paid off but at a reduced amount or over a longer period. Depending on your filing and your situation, some debts may even be eliminated.

There are certain debts however which are not discharged with a Chapter 13 bankruptcy filing.

You can reduce your debt and have many options

Maybe you took out your first credit card before college to make sure you'd have money in an emergency or began to use one for its perks when you first got a great-paying job. It doesn't matter when, but if that card has grown to a point of causing you financial strain, it's time to look into debt relief options. There are dozens of methods to eliminate debt from transferring debt to a low-interest card to negotiating with creditors.

Having debt in your life is like paying money into a black hole. If you don't pay more than the minimum, you're charged interest on everything still owed to the company. Miss a payment and fines and fees are added to what you owe.

The five stages of grief

We've all heard that grief has many stages. But what you might not know is that when we grieve we go in and out of these stages- not through them one by one in order. 

What are the five stages?

No, student loan fraud relief shouldn't cost you money

When you're in debt, any sign of freedom is one you grasp with both hands. Unfortunately, that can lead many people to fall victim to scams. There are many so-called debt-relief companies that do not help you and actually push you further into debt.

Some of these companies charge you for debt-relief options you'd have open to you free of charge. For example, some debt-relief scams suggest that they can help you eliminate debt from fraudulent schools. They charge for these services. In reality, you can obtain these same relief options without paying a penny.

This is how you could be using your credit cards incorrectly

It's true that credit cards have a potential to get you into a lot of debt. Using them incorrectly can cost you money, too. How should you use them to get the best bang for your buck?

Start with making sure you can pay the debt on the card off each month instead of taking on more debt than you can handle. If you're unable to pay the full amount, pay as much as possible each month to pay off the balance quickly. If you don't pay it off quickly, you'll find that interest kicks in and charges you more than you initially spent.

Why is the debt snowball costing you so much money?

You may have heard about the debt snowball in the past. This is the idea that you can roll payments from one debt into another once you've paid off the original debt. By adding more and more money to the payments as you move forward with paying off your debts, you are able to pay off your debt more quickly.

This so-called debt snowball may not be the best option for you, though. The snowball suggests that you pay off the lowest debt first, but that doesn't account for interest rates or other charges that may cost you in the long term.

You need to rebuild your credit and live simply after bankruptcy

After you've filed bankruptcy, you know that you get a fresh start. Unfortunately, that fresh start also comes with credit that isn't so good. The bankruptcy stays on your credit for up to 10 years, which means it could come back to haunt you each time you attempt to rent or buy a car or home or take out credit.

If you filed a Chapter 7 bankruptcy, you left most of your debts unpaid. If you are getting paid, it all comes to you, but the bankruptcy still sits on your record for 10 years. The important thing to do if you've gone through bankruptcy is to build an emergency fund. Live within your means, even if that means moving to a less-expensive apartment or not going out to eat or to events with coworkers.

There is a solution if your child took out credit in your name

If your teen has run up a credit card that they did not let you know they had, all may not be lost. Debts accrued by those under the age of 18 may not be enforceable by law, which can help save your child from having damaged credit before understanding what that even means.

Here's an example. If your 14-year-old child sees a letter for a preapproved MasterCard and applies for it, you may not realize that he has taken it out in your name. You might only find out when you see that there is a bill that you don't recognize. At that point, you could think it's fraud, only to find out that your child was the one who opened the account.

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