Insurance and Credit

The emotional fallout after bankruptcy is something few people discuss. The process and overall experience of bankruptcy is stressful. This stress from bankruptcy can leave you feeling depressed, ashamed and the resulting strain to your personal, social and professional relationship can feel unbearable. Dealing with this stress is no simple task, no matter how bad your personal finances were in the first place.

However, bankruptcy can become inevitable if you are buried under tremendous debt. If it becomes seemingly impossible to repay loans and debt, there are several things you can do to avoid the ordeal. Even so, you should explore all your options including credit counseling and alternative repayment plans before taking the bankruptcy route. If you can’t find a way out and bankruptcy is inevitable, you must acknowledge the prospects and prepare yourself to face the stress that results from bankruptcy.

Since bankruptcy will not eliminate all debts, dealing with the fallout of bankruptcy often proves difficult and never-ending. Since bankruptcy gets recorded on your credit history for a period of up to ten years, it is not only nearly impossible to obtain credit, but potential employers are likely to conduct a background check before extending a job offer that can have a long-term, positive impact on your financial status. With a bankruptcy, securing that better job might become impossible.

If you are looking for ways to manage bankruptcy related stress, you can take a few steps. First of all acknowledge the condition as stressful. Some people may need medication to alleviate the mental pressure. Acknowledging the pain is important.

Next, you might want to share your financial situation with the people you are closest with, like family and your tightest friends. Since people rarely discuss their finances publicly, you may be surprised by the advice and emotional support these people can offer. At the very least, talking about your problem will help you cope. If you find your spouse and friends are unapproachable, you can look at seeing a counselor. The point is to talk about it as this is a proven technique for dealing with stress of all types.

You also need to put together a sound financial plan. After obtaining your bankruptcy discharge, be thankful for the fresh start you have been offered. And put together a plan that will allow you to absorb financial difficulties should they arise again in the future.

With the financial side of your life dealt with, look to optimize the non-financial areas of your life so that your mind and body are better able to handle stress. This might include adopting a healthier diet and becoming more active – diet and exercise are known to reduce stress levels. As well, consider reading non-finance related books and replacing them with motivational books instead.

Most often, filing for bankruptcy can be avoided. In only the rarest of cases are the circumstances completely outside of your control, but after the discharge has been granted, there is little point in debating such points. It is time to move forward and realize there is no point in blaming yourself any longer. Let go of the guilt and realize that without bill collectors calling at all hours, you can start preparing for a better financial life.

It is not unusual these days to have many different credit cards with both high and low interest rates and to end up having more bills to pay then you actually are capable to. This of course is often a very stressful situation and the norm for a lot of people.

When you reach a certain point and realize that things seriously has to change it could be a good idea to form a plan that can be a guide and help you get out of the credit card debts that you’re having.

If you feel that it is time to do something serious about your situation you can be sure that there are plenty of things you can do that is more sustainable than the quick-fix of getting another credit card loan that pays your other debts.

Most important is to become organized. This simple step can make a huge difference. When you begin to be more aware of how much you owe, when the bills have to be payed and so forth and you begin to plan how you’re going to use your income you are one starting to be in charge of your situation.

It is also important to be aware of the different interest rates on the different credit cards, especially if you’re planning to completely clear you credit card debts. In this way you can prioritize the ones that has a higher interest rate and in this way making the total amount of money to pay back less. It is smart to pay off those credit card debts in case you receive extra money.

Another good way to free yourself from debts with high interest rates is to take a debt consolidation loan. This is a loan that covers all the credit card debts and that has a lower interest rate. In this way you debts can become a lot more manageable.

If you feel that your credit card debt is beyond your abilities and you dont see a way to solve your situation, it might be a good idea to seek out debt counseling and service to find a way to make a plan that can work for you. In this way you get professional advice and you can let someone with plenty of experience help you get around your credit card debt and out on the other side.

Have you ever really examined your credit card bill? Do you understand all of the different fees you’re being charged? For a long time now, credit card companies have been operating without any real scrutiny and the number and types of fees they charge their customers have gotten out of control.

The tide is beginning to turn now though. More and more people are realizing what’s been happening to them and more and more people are starting to do something about it. One technique that can help us avoid the burden of monstrous fees is to switch off our credit cards and switch on prepaid debit cards. Let me explain.

If you’re in a position to do so, I propose you start converting all of your existing credit card spending over to prepaid debit cards. Month-by-month, phase out all of the credit card purchases until you make no more. Then (again, if you can), set up an automatic payment to your credit card, something that is higher than the minimum payment required and something that is scheduled to arrive at least a few days in advance of the billing due date. Then lock the credit card away in a drawer!

If you do that, you’ll never have another late fee again. Credit card companies love to charge late fees. In 2008 over 19 billion dollars was raked in by these companies for their various “penalty fees.” That’s a lot of dough, especially when you consider that in some cases the companies manipulate their billing practices to put the consumer in a position to incur these fees. Here’s an example.

Let’s say your credit “limit” is $1,000.00. You would think that you couldn’t charge more than that and if you tried your card would be declined. You’d be wrong. In reality, that’s a soft limit. Credit card companies are perfectly willing to let you charge beyond it so they can tack on a $25.00 or $35.00 over-limit fee to your bill. Then they can get tricky and send you a bill with a minimum payment that will bring you just under the limit – but not when you calculate in the monthly finance charge. In other words, you make the minimum payment, think you’ve dropped below the credit limit, the company tacks on its finance charge, and bang – you’re back over the limit and you’re getting a second over-limit fee. Pretty slick huh?

Prepaid cards don’t come with tricky monthly finance/billing cycle calculations either. These are the computations the credit card companies make to determine how much they’re going to charge you to carry your balance from one month to the next. There are actually 6 or 7 different ways these charges can be calculated and everyone is designed to yield the highest return for the company based on your spending habits.

Another great (and hidden) fee the credit card companies receive is the interchange fee. These are pretty much secret fees that businesses pay the companies to cover the actual credit card transaction costs. Then of course the businesses pass the expense onto their customers by charging higher prices. There are some estimates that say consumers pay about $2.00 in interchange fees for every $100.00 they spend with a credit card. That $2.00 adds up to tens of billions every year for these companies.

These are just a few of the reasons why switching over to a prepaid debit card can benefit you as a consumer. Let’s face it; the credit card companies have almost all the leverage. About the only options we have left is to cut our losses and prevent them from preying on us in the future. So if you’re in a position to do so, I invite you to take a good long look at prepaid debit cards and see how they can become your sensible, more consumer-friendly alternative to credit cards.