Thursday
July 24, 2014

Homework Help: FIN--help

Posted by Anonymous on Tuesday, June 13, 2006 at 8:59am.

Please tell me what you think about my assignment. Also, if you would improve my response by including your add-ins, it would be great. But ofcourse, I will have to rewrite it and reference you.

In this assignment we are asked,” If a good friend of yours has had serious financial misfortunes lately and is unable to meet her debt payments, what advice can you give? Be sure to include the topic of bankruptcy because she has heard that it eliminates all your credit problems. In your discussion, distinguish between straight bankruptcy and a wage earner plan. Use the Cybrary and other Internet sources to supplement your information”.

I would start by advising the friend to seek some credit counseling. Our text on page 163 recommends, (“contacting the Better Business Bureau or the chamber of commerce”). There are several warnings issued by the F.T.D. about private agencies promising to help clear up bad credit situations. There are probably agencies that are legitimate, but it seems clear to be careful before giving any money or too much information until you are confident you are not being taken advantage of. There may be a way that debt consolidation will help this situation.“ A debt consolidation loan makes sense if you have high interest rate debts, such as credit cards and finance company loans, and you have the ability to borrow at a lower rate”). If one is considering a debt consolidation loan they must watch for borrowers who have high interest rates, but look good to potential borrowers because of lower monthly payments.



If the above options are not suitable to help the friend in need, they may have to consider bankruptcy or filing chapter 13 also known as a wage earner plan. There are things to consider in deciding which option is best for each situation. A chapter seven bankruptcy or also known as a straight bankruptcy has positives and negatives. The chapter seven will give you a fresh start, meaning your debts will be charged off. The problem is your bankruptcy will be on your credit report for ten years, making it difficult to obtain new credit.



Choosing to file chapter thirteen, a wage earner plan will retain some or all of the debts and property and have a three-five year protection period. A Chapter 13 plan is a negotiated settlement between you and the people you owe money to (your creditors). It's a deal that you make with your creditors as an alternative to bankruptcy. It is also known as a Chapter 13 bankruptcy”). If one chooses to file chapter thirteen as apposed to chapter seven it does show potential creditors the effort made to regain good credit standing. However you only have three-five years of protection from the creditors, and are still strapped with payments.

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