Credit Card Offers and College Students

Major credit card companies are very active on college campuses these days, but are they helping you or jeopardizing your financial future? Having spent several years in the collection industry, it has become apparent to me that college students are the fastest growing group of Americans to become debt ridden. There are a great number of high school students that also have credit cards. By law, anyone under 18 must have a co-signer, but you would be amazed at the amount of parents that did not know their minor child had a credit card.

The biggest problem for young people with credit cards is lack of knowledge when it comes to how credit works. They are often not aware that if they only make the minimum payment they will be making payments for a long time and will be paying a great deal of interest. They also need to understand that their payment must be received by the due date or they will be charged a late fee. Today some of these fees can be in excess of $50, causing their balance to get out of control very quickly. Many of today�s credit cards also have hidden fees. It is essential that a cardholder understand what is written in their card member agreement.

Parents should start children out with a checking account. Adding a debit card is the next step. Once they have that under control, a credit card with a reasonable limit is next. Make sure your child understands how interest works how and how easy it is to get in over your head if you overspend. If you have a $1000 balance at 18% interest and you make a $36 a month payment, it will take you about 9 years to pay the balance in full. If a college student charges this during his freshman year, he will have that balance paid off 5 years after he graduates.

The best thing you can do for your child when it comes to their financial future is to educate them about money and to set a good example. They are most likely to do what they have seen done.

How Are the New Bankruptcy Laws Going to Affect You?

As of October 17, people filing bankruptcy are going to see some significant changes in the laws. The Bankruptcy Abuse Prevention and Consumer Protection Act will make it much more difficult for people to have all their debts cancelled by filing Chapter 7. This will probably affect the hit middle-class people the hardest. In most cases you will not be able to get out from under everything, but you will have to file Chapter 13 and reorganize your debts and pay your creditors back. The repayment period has been increased from 3 to 5 years.

I believe this is a good move on the part of the government. After spending several years in the collection and credit card industry, I believe the bankruptcy laws were being taken advantage of in many cases. The ones I feel will suffer the most is people with substantial medical bills and the victims of the past year’s hurricanes.

You will only qualify for Chapter 7 if your median income is lower than the average income for your state. The amount you will repay under a Chapter 13 will be no less than the amount they would have received under a Chapter 7 including the return of the underlying assets.
IRAs up to $1 million dollars are exempt and rollover IRAs are completely exempt. One the biggest changes for retirement plans is being able to repay them under the new law. If you think you can shelter income by buying a large vacation home, you better have lived in it for 40 months before you file or you will have a limit of $125,000.

Another thing that is going to change when a person goes to file bankruptcy is the cost. Costs for filing are expected to increase by as much as 50 percent due to the strict verification of the client’s personal information.

One last thing, before you can file you will be required to complete credit counseling. In the past, bankruptcy used to be straightforward. Now the process will require more time and money to complete.