Personal Loan Tips After a Bankruptcy

Personal LoanFor most people, going through bankruptcy brings with it a mix of emotions. On the one hand, there can be a sense of disappointment at having to take such a drastic measure in order to get one’s financial life back on track. There can also be some guilt that comes from not being able to repay debtors, and even a sense of failure.

At the same time, bankruptcy can bring with it huge feeling of relief for finally being out from under all of that debt. In particular, this feeling of relief can be the strongest when you are discharged from owing money to most or all of your creditors.

Defining a Bankruptcy Discharge

A bankruptcy discharge is simply a provision within many bankruptcy arrangements whereby you, the borrower or debtor, are released from any further personal liability for certain types of debts. After your discharge, you are no longer required to repay the qualifying debts.

Furthermore, this is a permanent order, meaning that creditors and collection agencies to which the discharge applies are no longer able to seek repayment from you – including calling you, writing you or seeking legal action in order to collect outstanding debts.

Note that some types of debts – such as those with a valid lien or charge upon a specific property – will remain owed by you even after the discharge. There may be other types of debts, such as some types of student loans, for which you will remain responsible even after the bankruptcy.

The Need for Money after a Discharge

As you know, once you have been through a bankruptcy, for a period of a number of years you will not be able to quality for many types of credit or loans. However, that does not mean you will not have the need for a loan: your need for cash will still be there even after bankruptcy, of course. Fortunately, some lenders special in making personal loans to people in your situation.

If you are wondering how to get a loan after a bankruptcy has discharged, personal loan options abound. Here are 3 personal loan tips for getting funded:

1. Decide whether you want a secured or an unsecured loan:

The first decision you will need to make is whether you should take out a secured or an unsecured personal loan. The main difference is that, with an unsecured loan, you will not need to put up any collateral such as a piece of physical property or a financial instrument such as a funded savings account. However, unsecured loans understandably come with higher average interest rates than do secured ones.

2. Figure out how much you need to borrow and for how long:

Now, decide exactly how much you will need to borrow. It is worth spending some extra time to be precise on this point. After all, you will want to make sure you borrow enough to meet your current cash needs, but you will want to avoid over-borrowing as well.

3. Apply to as many lenders as you can:

Now, it is time to apply to as many bankruptcy-okay personal lenders as you can find. Start by doing an extensive online search for “bankruptcy okay personal loan” and related terms. These lenders are out there and willing to take you on as a customer. Make sure you apply to multiple (e.g., 3-5) lenders, since by doing so you greatly improve your chances of getting a low loan rate.

Consider these 3 tips as you start out on your journey to get the cash you need now, even after your bankruptcy has discharged.

Life after a Chapter 7 bankruptcy is not as daunting as many would have you think. In fact, most of the negative information out there is spewed by the credit card companies that lose out when you file for bankruptcy protection.

The truth is, life after bankruptcy (BK) can be a rewarding experience. Think about it, you have been given a fresh start – free from debt – to start over. The most important thing to remember is ‘ Don’t screw it up!’ Have a strategy in place and commit to to it. It will take time but it’s not impossible.

In fact, there are several lenders that specialize in post-bankruptcy lending, the interest rates, fees, and terms may not be the greatest, but considering you won’t be able to file for bankruptcy again for another 8 years, you’re worth the risk in their eyes. Now it is true that a bankruptcy can stay on your credit for 10 years. However, your credit re-building process should begin immediately after discharge. For example, it typically takes 90 days to be discharged from a Chapter 7 BK, you can and should start rebuilding on day 91.

Here are the 10 Steps To Rebuild Your Credit After Bankruptcy!

First, take a moment and reflect on how you got here in the first place – namely why you had to file bankruptcy. Could you have saved more? Spent less? Planned for emergencies better? What did you learn? Self reflection is key so that you do not end up here again. I do know ‘things happen’ such as illnesses, job loss, etc but often times I meet with clients who just really over extended themselves and lived above their means. Even if it was a tragic event that led to the bankruptcy; taking a moment to learn from this experience is very significant. In my personal situation, I knew that I needed to invest in better health insurance, have a larger emergency fund, and rely on cash a heck of a lot more than credit.

Second, create a budget. This is so important! Now, more than ever, you need to get serious about having and sticking to a budget. This is your personal spending plan that tells your money where to go and how to work for you each and every pay period. This means making an effort to live below your means, not at your means. It is also good at preventing frivolous spending and determining ways to keep more money in your pockets/ bank account. If you have pinpointed your ‘learning lesson’ from step one it should be implemented here, in step two. Thus, your budget should include money set aside for your Emergency Fund/Savings Account that is funded prior to paying any other bills. This is the ‘Paying Yourself First’ practice. Being dedicated to paying yourself first and having a fully funded Emergency Fund for emergencies only will ensure that when ‘life happens’ you’ll be better prepared financially. How much should you set aside? Well, how much can you afford? I typically suggest starting with 10% of your monthly net income or $200, whichever is more feasible, and increasing it from there.

Third, Pay ALL of your current bills on time. I cannot stress this enough. The worst thing you can do is to file bankruptcy and have a past due utility bill or cell phone collection pop up on your credit report months or even a year afterwards! Haven’t you learned your lesson? This is what future creditors and your credit score will say when your report is further damaged by the reporting of negative information; in fact your score will be penalized twice as bad by the credit reporting scoring system.

If you have done a good job with number two – creating a budget- you should have no problem paying your bills on time – if not early. Probably the easiest way to pay anything on time is to set up automatic payments around your pay day. You set it once, and monitor it from there.

Now it’s time to build!

The Fourth step is to check your credit report. You want to ensure your bankruptcy is reporting accurately – courthouse information, amount, the type of bankruptcy filed, etc. And if you find an error, legally you can dispute for a deletion.

You also want to check the other accounts that were discharged in your bankruptcy. They should state they were discharged in Ch7 bankruptcy, the amount should be $0 owed/due and the all collection activities should stop, which includes any updates on your report about the debt. If you see any errors, dispute for deletion.

Fifth; re-enter the world of credit. Namely, apply for a credit card. You may be a little apprehensive, but if you plan on purchasing a home, opening a business, and rebuilding a positive credit profile, this is a MUST! How the credit scoring model works, any positive information that you have posting on your credit report will outweigh the negative information reported in the past. Therefore you have to put some positive information on there to boost your scores and strengthen your credit profile.

Where should you begin? Well, they may start to solicit you first. Review all offers carefully, interest rate, repayment terms, fees – all fees because with one particular card (First Premier) there are several so you want to be prepared. Don’t accept just anything! If you have not gotten any offers try your personal bank or your local credit union. If all else fails seek out popular, secured sub-prime credit card providers: Credit One, Capital One to name a couple. You can try obtaining an unsecured credit card but immediately following a bankruptcy I doubt if you’ll be approved. Further, the inquiry and rejection will further damage your report. Make sure you select a secured card that reports to All 3 Credit Bureaus – after all, you are rebuilding right? Reporting to only one or no bureaus at all is not going to help you in any way. You want all of that new positive credit information reporting into your score. If are rejected for a secured credit card, then you can look up ‘No Credit Check’ secured cards that report to all 3 credit bureaus online; First Progress and Opensky are popular ones.

Sixth, use your card wisely. Spend less than 10% of your credit limit, 30% maximum. That means if you have a $300 credit limit, do not spend more than $90; for $500 do not spend more than $150; $1000 credit limit do not spend more than $300; get the picture? Low balances, good payment history, more available credit than utilized (spent) credit is key. I don’t advise keeping a balance because of the high interest rates, but I have seen that some companies – Capital One in particular – will give you an increase faster by keeping a balance for 2-3 months. If you do this, please pay on time, keep it under 30% of the credit limit, pay it off no later than 3 months and include it in your monthly budget.

And, don’t create an additional bill for yourself. What do I mean by this? The easiest way to factor credit cards into your monthly budget is to set up automatic payments for a utility, cell phone or some other monthly bill that’s already in your written monthly budget; charge it and just pay it off right away the following month. This way you are not creating an additional bill and the expense is already included in your budget, you’ve just changed your method of payment from auto-debited withdrawals from your bank account to automatic credit card payments.

Seventh, increase that limit. Most people start off with a $300-500 credit limit, which doesn’t do too much for building your score, so you want to get it to $1000+ as soon as possible. If purchasing a home is on your short term list you want it over $2000. Why is this important? The lower the credit card limit the less it will count towards increasing your score. If you’re with a good secured credit card company, this means increasing the amount of your security deposit. If you’re with a less than stellar secured credit card company that still reports to all 3 credit bureaus but doesn’t offer incentives such as switching to an unsecured credit product in 6-12 months; then you may want to use the less than stellar secured card for 6 months, and then re-apply for another card with a more reputable company. By then you may be eligible for one of Capital One’s or Credit One’s unsecured products.

Eighth, get more than one card. Two to three should suffice. Using the above example, let’s say you got a $500 secured card, paid it well for 6 months and applied for an unsecured card and was approved for $500. DO NOT CANCEL THE SECURED CARD. Increase the deposit to $1000, if you can, but do not increase your spending. The increase of available credit will eventually factor into your credit score and give you a nice little boost. After all, 30% of your credit is based on your debt utilization and 35% is based on your payment history. By increasing your credit limit, adding on additional credit card that you will use just as wisely, keeping your balances super low, and paying on time; you are well on your way to good credit again! With six more months of positive payments on both of your cards you can ask for a credit limit increase with the unsecured credit card and apply for one more at that time as well. You’re 12 months in at this point and should have substantially better credit than when you started this journey.

To experience an even bigger jump, see if you can have a close friend/family member add you on as an authorized user to their credit card account. This account should have stellar payment history and super low balances and be 3 years or older in age. By becoming an authorized user, all of that good payment history will be placed on your credit report boosting your score even more!

Ninth, mix up that credit. This basically means adding an installment loan. This is usually feasible at month 6, 9, 12 and/or 18 depending on your situation. This is easier to obtain when you are an active member of a credit union; if you’re not, another option would be through a company such as Avant, Prosper, or Lending Tree. People with federal student loans that they are paying on a regular monthly basis won’t have to do this right away, but those that only have the credit cards they’ve recently acquired on their credit report will. This can be in the form of a personal loan/line of credit or a car loan. Your interest rate will be less than stellar but make sure the loan is affordable and can be paid off relatively easy. Namely, don’t put a strain on your budget. When I got my first personal loan I didn’t even spend it. I put it in my checking account with my credit union (who I got the loan through) with a few hundred dollars extra for interest and set up auto-payments for 6 months. I did this 3 times; paying the loan off in 6-12 months, until I saw a nice little jump in my score. I never did get a car note after my BK because living below my means with as little debt as possible was my ‘lesson learned’ from the whole experience.

The Tenth and final step is to monitor your progress and pinpoint areas of improvement. I personally signed up with a credit monitoring service that monitors all 3 bureaus, however, signing up with a free service, such as is fine. It only monitors Transunion and the credit score is far from accurate but the data is usually okay – not great, but okay. Your main objective is to see how you’re doing; is your score moving up or down? Is your credit utilization rate okay? Could you do more to boost your score and strengthen your overall credit profile?

Monitor your budget on a bi-weekly or monthly basis. Could you be saving more? Are there ways to cut some more spending from your budget? Do you need to find a way to bring in more income to cover your necessities (food, shelter, transportation, etc)? Make changes/improvements based on your assessment.

Following these 10 steps consistently should put you well on your way to an excellent credit score.

Personal Financial Planning

What is Personal Financial Planning?

Personal financial planning is guidance by a licensed financial professional on the financial decisions faced by individuals. It includes portfolio allocations, future planning decisions, goal setting, and exploration of different investment vehicles.

Is Personal Financial Planning Necessary?

In order to sufficiently organize your finances in such a way as to reduce taxes, maximize investment opportunities, save time, and appropriately distribute risk, you should engage in at least some form of personal financial planning.

But Can’t I Just Do It Alone?

Possibly, but will you? Most professionals and business people have found it increasingly difficult to do their financial planning on their own. The most common walls to planning on your own are:

  • Insufficient time
  • Too great a number of investment possibilities
  • Tax laws change to frequently to keep up
  • Untangling employee compensation and benefits

What is Typically Included in a Financial Plan?

The length of the plan is based on the complexity and details required for each individual’s circumstances. The typical plan can range from anywhere between 15 to 200 pages and includes:

  • Cash Flow Analysis
  • Debt Management and Investment Portfolio Assessment
  • Estate Planning and Liquidity Analysis
  • Tax and Planning Projections
  • Retirement (forecasting benefits, costs and options)
  • Insurance Needs (life, property, casualty and disability)
  • Educational Funding
  • Employee Benefit Analysis (coordinate personal holdings)
  • Business Analysis (if applicable)

What is My Role in the Planning Process?

You and your spouse obviously have a crucial role in the planning process. The plan is custom built to your specific circumstances, and as such should include specific aspects of your life. You should make sure that your planner understands you attitudes, goals, risk tolerance, and security needs. The more the planner understands you, the more customized your plan can become.

Are Fees for Financial Plans Tax Deductible?

Yes. Expenses for investment and tax planning are deductible as itemized expenses, subject to limitations – IRS Section 212.

How Can I Measure the Worth of Financial Planning?

Once the planner has assessed your situation and made recommendations, you should be able to compare the projections with the cost of the analysis. Your planner should have presented data that more than paid for the expense of the plan.

Will Personal Financial Planning Make Me Rich?

Regrettably, get-rich-quick schemes generally don’t work. This makes personal financial planning all the more important. Proper planning will help you keep more of what you earn and assist in helping your money work harder for you. It will do this by:

  • Increasing the productivity of assets
  • Providing financial and emotional security for your family
  • Broadening asset structure to reduce risks
  • Providing participation in new investment opportunities
  • Increased income through tax planning
  • Investment alternatives are provides closer inspection
  • Minimizes the negative effects of disability, early retirement, and death

Debt Consolidation Affect Credit Rating

Are you considering a debt consolidation loan or a debt consolidation program? Have you ever wondered if debt consolidation affects your credit rating? Here is 3 reasons why debt consolidation affects credit ratings in a positive way.

Tip #1

If you have a lot of credit card debt, then it is affecting your credit rating in a negative way. One thing that credit card companies don’t tell you is that if you carry a balance on your cards and it is over 25% of your credit limit, then you are actually penalized on your credit rating, even if you pay your payments on time. So if you consolidate debts that include credit cards with high balances, then you are doing yourself a favor and helping your credit.

Tip #2

You can consolidate not only credit cards, but if you have a car or a personal loan, then when you consolidate those and pay them off you will improve your credit rating. The credit companies love to see that you paid off a car or a personal loan. It helps to boost your credit score quite a bit.

Tip #3

If you have enough debt that you are considering consolidating it, then it is obvious that you need to. The key is that if you consolidate your debt and payoff credit cards, then you need to stop using the credit cards and get rid of them. If you consolidate your debts and then you run your credit cards back up to their limits you are doing nothing to help yourself. You will end up in a worse situation, then you were in to begin with.

So if you are considering consolidating your debts keep in mind that debt consolidation will affect your credit rating and it can be in a positive way if you are responsible and smart with your debt consolidation.

Debt Relief Tips

Honest Debt Relief Tips

Discover The Real Options For Debt Elimination

Following the economic downturn, almost everyone is seeking the honest debt help tips. Lots of institutions were forced to be reformed in the previous years to furnish debt relief to the people overwhelmed by financial burdens.

Tips to identify misleading debt reduction agencies.

They claim a lot on the Radio and TV about different debt settlement strategies and tips. One is right to assume that everything which glitters is not gold.

Unless someone is very experienced or educated about the topic of debt elimination, it is hard to identify the good from the bad. they are marketing various appealing options to relief you from debt on the TV in which they challenge every kind of debt issues. While advertising on the TV sometimes these companies offer programs which are not actually applicable.

Sadly these ads are very cleverly written and strongly appeal to people faced with debt. At the end many will discover the truth and will have wasted hard-earned money without any real debt relief tips or debt reduction.

This arises a very crucial question – Who is to blame?

Some will rightfully argue that these companies along with the media outlets and broadcasters should have stricter regulations avoiding fraudulent and misleading advertising. At the same time many will state that the consumer needs to exercise due diligence and conduct own research before enrolling and expecting honest debt management tips.

Some tips on choosing legitimate debt reduction companies.

-The best advise is to simply be careful and not believe everything these companies tell you.

– Do not be Impulsive – make rational decision!

– One of the first steps is to locate agency which is trustworthy and the has been providing debt reduction services for a long time.

– Legal companies will not charge upfront money and should provide helpful tips and customized recommendation.

– Well established licensed agencies could advertise less as they have large customer base and rely on recommendations.

– Legitimate companies are less likely to tell lies on the media since they can not afford to damage their reputation.

Keep in mind that the newly implemented laws prohibit charging fees before the client is satisfied with the results. People should always verify reviews about the company they intend to contact. Get insights into the most effective Debt Elimination strategies and weed through debt companies and debt reduction programs with unbiased reviews, feed backs and debt help advice in order to get fair debt relief tips

Credit After Bankruptcy

Bad Credit Tips For After Bankruptcy

When your bankruptcy has at last been discharged by the federal courts and you have the papers in your hands, then what? How can you go about repairing your credit? The first thing is to keep in mind why you filed bankruptcy in the first place. You don’t want to end up in another bankruptcy situation. The first step is to begin to re-establish your bad credit after bankruptcy, but where to start.

Your Credit Report

Ordering your credit report from the big three credit bureaus (TransUnion, Equifax and Experian) so you can find out exactly what’s on your credit report and why.

To start you must learn about your credit rating, even if your credit score is lower than you’d like it to be, it is much nicer to now it than being in the dark about it. If you in no way keep track of your credit report, you can’t know what’s on there that shouldn’t be, and if it isn’t supposed to be there, that may well be bringing down your score. You have the right to have anything that is inaccurate investigated and if found inaccurate, removed. That’s the first thing, getting your credit reports cleaned up so that they reflect correct information.

You Must Pay Your Bills

Most people think, “I’ve got a bankruptcy, I have no credit and it just doesn’t matter.” This is not the case, it really does matter. Repairing your credit after bankruptcy isn’t that hard and you can probably do it quicker than you think. But you have to pay your bills, on time every time. Do not start taking on any more debt that you cannot repay. This is the first step to rebuild your credit.

Applying For Credit After Bankruptcy

By no means should you do it, applying for any kind of credit, but especially with an already low credit score. The reason being, every time a lender makes an inquiry to the credit bureaus on your behalf it will lower your credit score even further. You really can’t afford that at this point in the game.

Know this, applying for any one loan can spawn many inquiries to the credit bureaus. A lot of businesses will present your credit application to many different lenders generating many more uncalled for inquiries. With each one lowers your credit score.

Credit Card – Yep Get One

Are you nuts get a credit card? Credit cards are what got me into this mess.

Not entirely true, the credit card just sits unless you use it, so really you got yourself into this mess not the card. There are several types of credit cards for people with bad credit and you can be qualified for one. Now at this point in trying to repair your credit it will in all likelihood be a secured card but that’s ok.

The point is to get some helpful information on your credit report. If you want to rebuild your credit after bankruptcy, getting a credit card even secured, is not so you can go crazy shopping. (Don’t forget why you’re here) Use your new card easy and pay it off in full on or even before the due date. If you can’t make that happen in any given month don’t use it.

Get A Car Loan – Easy and Smart

Are you out of your mind? A credit card now a car loan. If you want to rebuild your credit this is a great way for you to do it. You must get as much good information on your credit report as possible. Get a car loan. You may need a little money for a down payment but know you can get a car loan right after your bankruptcy has been discharged.

Bear in mind the part I said paying your bills on time every time. Start small get a car you know you can make the payments on without any problem. Don’t go to a buy here pay here auto dealer though, they commonly do not report to the credit bureaus. There are auto dealers that use lenders that specialize in getting loans for people with a discharged bankruptcy or bad credit. Find a dealer and buy a car you can pay for every month on time. Don’t be embarrassed to tell the dealer about your state of affairs, this will make buying a car a lot easier in the end. Ask the dealer so you know if the lender they use reports to the bureaus.

The interest rate is going to be high. But you making payments on time every time will show good on your credit report. If you have extra cash flow in any given month to make extra payments you’d be wise to do so. Paying your car off early, if you can, will only help you out in repairing your bad credit. Then and only then trade it in and do it again. By now you’re well on your way to reestablishing your credit

In Closing

Filing Chapter 7 or 13 bankruptcies is not the end of your good credit, it only appears that way. You can pull through but you must be disciplined and patient. You didn’t get here in a couple year and you can’t fix it in a couple years either. If you pursue these steps you will be well on your way to better credit. It just takes effort on your behalf and some time to repair your credit after bankruptcy.

Bad Credit Business Loans

A business stands firm on the ground with the help of funds. Every business man would know that without finances one can’t establish or advance a viable business plan. Not everyone is born with the kind of money required for furthering a business plan. Bad credit is so prevalent and this is the reason why we have bad credit business loans.

In practice, bad credit cannot prevent you from having bad credit business loans. Bad credit business loans can be difficult to find but they are certainly not impossible to find. Writing a good business loans application is key to getting it approved. There are a few things that the lender won’t neglect while providing you with business loans for bad credit. Business plan and its feasibility are crucial for bad credit business loans. Along with that lender will look for equity, collateral and repaying ability.

Now credit history is fundamental to getting a business loan approved. Since you have bad credit, you should start with your credit score. Obtain your credit report from any of the three credit reporting agencies – Experian, Trans Union and Equifax. Many people are unable

Small Business Loan Update

As we continue to sift dutifully through the over 1,000 pages of the stimulus bill (American Recovery and Reinvestment Act of 2009), there is one provision that is not getting much attention, but could be very helpful to small businesses. If you are a small business and have received an SBA loan from your local banker, but are having trouble making payments, you can get a “stabilization loan”. That’s right; finally some bailout money goes into the hands of the small business owner, instead of going down the proverbial deep hole of the stock market or large banks. But don’t get too excited. It is limited to very specific instances and is not available for vast majority of business owners.

There are some news articles that boldly claim the SBA will now provide relief if you have an existing business loan and are having trouble making the payments. This is not a true statement and needs to be clarified. As seen in more detail in this article, this is wrong because it applies to troubled loans made in the future, not existing ones.

Here is how it works. Assume you were one of the lucky few that find a bank to make a SBA loan. You proceed on your merry way but run into tough economic times and find it hard to repay. Remember these are not conventional loans but loans from an SBA licensed lender that are guaranteed for default by the U.S. government through the SBA (depending upon the loan, between 50% and 90%). Under the new stimulus bill, the SBA might come to your rescue. You will be able to get a new loan which will pay-off the existing balance on extremely favorable terms, buying more time to revitalize your business and get back in the saddle. Sound too good to be true? Well, you be the judge. Here are some of the features:

1. Does not apply to SBA loans taken out before the stimulus bill. As to non-SBA loans, they can be before or after the bill’s enactment.

2. Does it apply to SBA guaranteed loans or non-SBA conventional loans as well? We don’t know for sure. This statute simply says it applies to a “small business concern that meets the eligibility standards and section 7(a) of the Small Business Act” (Section 506 (c) of the new Act). That contains pages and pages of requirements which could apply to both types of loans. Based on some of the preliminary reports from the SBA, it appears it applies to both SBA and non-SBA loans.

3. These monies are subject to availability in the funding of Congress. Some think the way we are going with our Federal bailout, we are going be out of money before the economy we are trying to save.

4. You don’t get these monies unless you are a viable business. Boy, you can drive a truck through that phrase. Our friends at the SBA will determine if you are “viable” (imagine how inferior you will be when you have to tell your friends your business was determined by the Federal government to be “non-viable” and on life support).

5. You have to be suffering “immediate financial hardship”. So much for holding out making payments because you’d rather use the money for other expansion needs. How many months you have to be delinquent, or how close your foot is to the banana peel of complete business failure, is anyone’s guess.

6. It is not certain, and commentators disagree, as to whether the Federal government through the SBA will make the loan from taxpayers’ dollars or by private SBA licensed banks. In my opinion it is the latter. It carries a 100% SBA guarantee and I would make no sense if the government itself was making the loan.

7. The loan cannot exceed $35,000. Presumably the new loan will be “taking out” or refinancing the entire balance on the old one. So if you had a $100,000 loan that you have been paying on time for several years but now have a balance of $35,000 and are in trouble, boy do we have a program for you. Or you might have a smaller $15,000 loan and after a short time need help. The law does not say you have to wait any particular period of time so I guess you could be in default after the first couple of months.

8. You can use it to make up no more than six months of monthly delinquencies.

9. The loan will be for a maximum term of five years.

10. The borrower will pay absolutely no interest for the duration of the loan. Interest can be charged, but it will be subsidized by the Federal government.

11. Here’s the great part. If you get one of these loans, you don’t have to make any payments for the first year.

12. There are absolutely no upfront fees allowed. Getting such a loan is 100% free (of course you have to pay principal and interest after the one year moratorium).

13. The SBA will decide whether or not collateral is required. In other words, if you have to put liens on your property or residence. My guess is they will lax as to this requirement.

14. You can get these loans until September 30, 2010.

15. Because this is emergency legislation, within 15 days after signing the bill, the SBA has to come up with regulations.

Here is a summary of the actual legislative language if you are having trouble getting to sleep:

SEC. 506. BUSINESS STABILIZATION PROGRAM. (a) IN GENERAL- Subject to the availability of appropriations, the Administrator of the Small Business Administration shall carry out a program to provide loans on a deferred basis to viable (as such term is determined pursuant to regulation by the Administrator of the Small Business Administration) small business concerns that have a qualifying small business loan and are experiencing immediate financial hardship.

(b) ELIGIBLE BORROWER- A small business concern as defined under section 3 of the Small Business Act (15 U.S.C. 632).

(c) QUALIFYING SMALL BUSINESS LOAN- A loan made to a small business concern that meets the eligibility standards in section 7(a) of the Small Business Act (15 U.S.C. 636(a)) but shall not include loans guarantees (or loan guarantee commitments made) by the Administrator prior to the date of enactment of this Act.

(d) LOAN SIZE- Loans guaranteed under this section may not exceed $35,000.

(e) PURPOSE- Loans guaranteed under this program shall be used to make periodic payment of principal and interest, either in full or in part, on an existing qualifying small business loan for a period of time not to exceed 6 months.

(f) LOAN TERMS- Loans made under this section shall:

(1) carry a 100 percent guaranty; and

(2) have interest fully subsidized for the period of repayment.

(g) REPAYMENT- Repayment for loans made under this section shall–

(1) be amortized over a period of time not to exceed 5 years; and

(2) not begin until 12 months after the final disbursement of funds is made.

(h) COLLATERAL- The Administrator of the Small Business Administration may accept any available collateral, including subordinated liens, to secure loans made under this section.

(i) FEES- The Administrator of the Small Business Administration is prohibited from charging any processing fees, origination fees, application fees, points, brokerage fees, bonus points, prepayment penalties, and other fees that could be charged to a loan applicant for loans under this section.

(j) SUNSET- The Administrator of the Small Business Administration shall not issue loan guarantees under this section after September 30, 2010.

(k) EMERGENCY RULEMAKING AUTHORITY- The Administrator of the Small Business Administration shall issue regulations under this section within 15 days after the date of enactment of this section. The notice requirements of section 553(b) of title 5, United States Code shall not apply to the promulgation of such regulations.

The real question is whether a private bank will loan under this program. Unfortunately, few will do so because the statute very clearly states that no fees whatsoever can be charged, and how can a bank make any money if they loan under those circumstances. Sure, they might make money in the secondary market, but that is dried up, so they basically are asked to make a loan out of the goodness of their heart. On a other hand, it carries a first ever 100% government guarantee so the bank’s know they will be receiving interest and will have no possibility of losing a single dime. Maybe this will work after all.

But there is something else that would be of interest to a bank. In a way, this is a form of Federal bailout going directly to small community banks. They have on their books loans that are in default and they could easily jump at the chance of being able to bail them out with this program. Especially if they had not been the recipients of the first TARP monies. Contrary to public sentiment, most of them did not receive any money. But again, this might not apply to that community bank. Since they typically package and sell their loans within three to six months, it probably wouldn’t even be in default at that point. It would be in the hands of the secondary market investor.

So is this good or bad for small businesses? Frankly, it’s good to see that some bailout money is working its way toward small businesses, but most of them would rather have a loan in the first place, as opposed help when in default. Unfortunately, this will have a limited application.

Wouldn’t it be better if we simply expanded our small business programs so more businesses could get loans? How about the SBA creating a secondary market for small business loans? I have a novel idea: for the moment forget about defaults, and concentrate on making business loans available to start-ups or existing businesses wanting to expand.

How about having a program that can pay off high interest credit card balances? There is hardly a business out there that has not been financing themselves lately through credit cards, simply because banks are not making loans. It is not unusual for people to have $50,000 plus on their credit cards, just to stay afloat. Talk about saving high interest. You can imagine how much cash flow this would give a small business.

We should applaud Congress for doing their best under short notice to come up with this plan. Sure this is a form of welcome bailout for small businesses, but I believe it misses the mark as to the majority of the 27 million business owners that are simply looking for a loan they can repay, as opposed to a handout.


Student Loans Bad Credit

Having bad credit can sometimes be the cause of many setbacks in your life, however there are options despite this that can still get you what you want to achieve. For students with bad credit, there are ways to achieve the dream of an education without worrying about your credit rating. However, there are certain requirements that you should have in order to qualify for these loans. There are many options available but it is important that you understand the way the application process works.

You can start the application process by filing an online free application for federal student aid. This application generally assesses your situation to be able to determine your eligibility for student aid. If it is found that you cannot afford to meet the college expenses then you are eligible for a federal Stafford loan. This type of loan does not take your bad credit into account when they want to approve the loan.

These loans have the advantage of a lower interest rate and you are also given a six month allowance after finishing college in order to start making repayments. Stafford loans are also categorized under subsidized or unsubsidized loans. For the subsidized ones, the federal government pays the interest while the student will pay for the interest in unsubsidized loans.

If you do not qualify for this loan, your parents can take PLUS loans on your behalf. This type of loan works best if your parent has a good credit rating. If this is not the case, then the co-signer can take the loan for the student. The repayment of the loan will then be done by the co-signer. Private lenders are another option for students with bad credit and cannot qualify for the other loans for any reason. They are available with or without collateral. Ensure that you conduct enough research online and compare the rates on offer from the various lenders.

Tips for Reviewing Loans

Not everyone knows the jargon associated with the financial documents when they are about to take a home mortgage loan. The language can be very different from what you think it is and it is very important for you to understand that language in order to prevent any mistakes. It is very beneficial to read and review each single clause when you get hold of the loan documents as soon as possible. This is crucial to know how the loan would affect your financial health. Read on to know more about the process of reviewing your loan documents.

Total Cost of the Loan

Many aspects fall in to play when you determine the costs of your home mortgage loan. The major key factors that affect the cost are the interest rate, loan fees, type of mortgage, and the duration of the housing loan. You may already know what these words mean and comprise of, but you may still have the need to calculate the total cost of your housing loan. Even a cost lower by $100 can save you thousands of dollars in the long run. Now that you’re taking a loan, it is important that you save each penny to keep your piece of mind and a hassle-free life.

Types of Home Mortgage Loan

There are three kinds of mortgage loans for home buyers. Fixed-rate mortgage in which the interest rate will remain the same for the entire time period of the loan. The payment is amortized. These types of loans are mostly taken as 30-year long loans. It can also be taken as a ten, fifteen, or twenty year-long loans. But thirty years make the payments even lower.

Another type is the adjustable-rate home mortgage loan. The interest rate changes every year. Some adjustable rate mortgages are hybrids: they have the features of both, fixed-rate and adjustable-rate mortgages. The third type is interest-only loan. These kinds of loans are suitable for people facing financial difficulty for the first few years of the loan. So they are allowed to pay only the interest for the first few years into the home mortgage loan. After that, they start paying the principal. So if you know that your salary will increase with time, this might be just the right loan for you.

Rate of Interest

The most important factor of a home mortgage loan is the interest rate. It is the money a bank charges you for investing their money in you and your home. The interest rates can vary a lot from one lender to another and also vary for the type of loans available. Also, they may be highly dependent on your credit score. If your credit score is low, the bank does not see you as a good investment opportunity and may pass.

The term of the loan is also equally significant. So when you get a hold of your documents, look at the rate and make sure it is what was agreed. If you want a fixed-rate mortgage and the rules in the document say that the rate will change in 24 months, you are being duped. Stay alert, because it is important that you don’t sign a contract that will create trouble for you in future.

Check the Broker’s Reputation

Just as your reputation as a borrower is viewed through your credit history, you should do the same. The broker’s reputation should also be reviewed and should play a role in choosing where to get your home mortgage loan from. Sometimes, one does not see any problem or know that any problem exists until the documents come before him or her. If there is anything which you feel deserves clarity, do it before signing. Your sign seals everything off. You don’t need this article to know that. A trustworthy or reputable broker will be willing to clarify all your problems and doubts and provide honest counsel.

These tips can help you to avoid any terms and conditions that can have negative affect on your life.

Tips For Reducing Monthly Mortgage Payments

At this difficult economic time, homeowners look to lower their household builds whichever way they can. The largest bill in most houses is mortgage and loan payments. It seems that this time of financial crises result in at least one benefit. That is of course record low interest rates. This is a chance for many debt loaded homeowners to sort their problems with a low interest refinance home mortgage loan. Many have already fixed their rates for as long as the life of the loan.

Homeowners with enough equity in their home can consolidate all their credit card bills, car loans, personal loans and their existing mortgage into one low interest refinance mortgage. They may reduce their monthly payments considerably this way and/or reduce the term of the loan. This will of course increase the term of the credit card debts to the term of the mortgage. The benefits of refinance may be further increased, if the borrower uses some those savings to make a lump sum payment in the future.

Homeowners with excellent credit score may have the luxury of selecting mortgage lender of their choice. Borrowers with bad credit might not qualify for mortgage refinance. Much depends on their debt-to-income ratio, property value, employment history, and financial ability to repay the home loan.

They should take into account all the fees and costs (including broker fees, if they are using one). Usually, refinance is justifiable if the savings cover the total fees within latest couple of years. However, many applicants take a much longer view and include in their equation other benefits of refinance. For example fixing their mortgage against any interest increases may have enormous benefits depending on interest changes. Unfortunately, this may not be calculable at the time of mortgage switch. Refinance may not be a good idea for people who are only looking for a short term mortgage.

So, they should not waste any time and get their 3 bureau credit scores. Few companies provide all 3 bureau scores free of charge. The best way of finding out for which mortgages they may qualify, they should go online and fill out a quote offer from as accurately as possible. Some online broker quote systems come back within a very short time with 4 rate offers from different banks. This will allow them to find out quickly and easily what rates they may be able to qualify and which banks offer those rates.


Student Loan Tips

With the unsteadiness of today’s economy and the amount of people getting laid off, more and more people are looking at what they can do to improve their quality of life, and employment! Many people are choosing to go back to school because they have the free time now but also because they are tired of putting everything into a job that won’t put anything back into them. Here we’ll put together some tips for you to help you get started and to be able to take advantage of the different types of financial aid that is out there including federal student loans.

With the record number of layoffs and unemployment rates, students that weren’t eligible for financial aid then could be now. The FAFSA (Free Application for Federal Student Aid) should be filled out every year even if you think you won’t qualify.

financial aid applications have deadlines and they should always be met. Different colleges have different deadlines it’s up to you to keep on top of the dates. If you miss the date, the schools hands are tied and they will not be able to help you.

Family Contributions
The amount that your family can contribute basically means how much money the parents can add to help offset the expenses of college. This amount is determined by the college and based on the information that was provided in the FAFSA any other financial aid forms that were turned in. The family contribution is given in a dollar amount but not all the time is how much a family will pay. The amounts can vary from college to college.

Total Costs of College
One of the biggest mistakes future students make is that they don’t sit down and figure out how much money they need ahead of time. Being ahead of the game is half the battle. You’ll need to calculate up costs for textbooks, supplies, and anything else you might need on top of the tuition.

Eligibility vs. Need
If a student is eligible for a Pell grant, the school must and will give out all of the funds to you. This doesn’t mean though that you are automatically eligible for any other types of aid. The best thing about the Pell grant is that they don’t have to be paid back!

Need based and Merit based
Merit based is only concerned with a students academic performance whereas need based is based on the student’s or student’s families financial circumstances.

Types of financial aid
There are many different types of financial aid for students. It’s important for you to be very versed in what they are and which ones you can qualify for. The reason I’m saying this is because sometimes not all the options are laid out for you when you visit a school. The areas to be aware of are the federal student loans, private student loans, scholarships, and grants.

Appealing the award
If you were denied any type of financial aid and then something changes in your or your parent’s financial status, you should contact the financial-aid office and explain your case. Most of the counselors will do their best to assist you when times change.

What you just read is only scratching the surface of the different options you might have. Don’t get discouraged and keep trying. Multiple small loans and scholarships are just as powerful as a large one so it all depends on how bad you want to be in school