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29 Why More Bankruptcies? The Two Income Trap: Why Middle Class Mothers and Fathers Are Going Broke The two income family brings in 75% more income but actually has less discretionary income
Why? Decline of public education has dramatically raised the price of housing in good school districts
Parents can now put 3% down on a house rather higher amounts required 30 years ago
Parents are encouraged to borrow against equity using internet lenders
Nearly one third of bankruptcies owe a yearssalary on their credit cards
30 Keeping Overhead Low Will Help You Avoid Bankruptcy Mortgage payment based on one salary, not two Property taxes and homeowners insurance will also be lower Paying cash for cars, or limit financing to no more than 3 years
Avoiding credit card interest
Watch the little things 31 Bankruptcy: The Last Resort Chapter 13 Plan to pay a portion of your debt Trustee distributes money to your creditors Can keep most of your property Must have a regular income
Chapter 7 Submit a petition and pay a fee Lawyers charge +$500, including court costs Can keep some property Idea is a fresh start Congress just made Chapter 7 more difficult if you have some source of income to partially repay debts
32 Protected Assets/Income Florida provides generous homestead protection (assuming you can continue to pay the mortgage) to protect citizens from claims, however…. New bankruptcy law has 40 month look back provision, with limit of $125,000
Cash transfers into homestead within 10 years to defraud creditors may also be challenged Annuities
Certain life insurance contracts
401K plan assets
Pension, social security, alimony and support payments
33 After Ch. 7 Bankruptcy, You No Longer Owe... Retail store charges Bank credit card charges Unsecured loans Unpaid hospital or physician bills After Bankruptcy, You Still May Owe... Taxes & fines Child support & alimony College loans & cosigner obligations
Illegal debts 34 Summary Lesson Avoid inappropriate debt, especially credit card debt I...
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This document was uploaded on 02/12/2014.
- Spring '14