Week 2: Credit, Debt & Taxes

Week 2: Credit, Debt & Taxes 

“Week 2 at a Glance … Credit … Debt … Taxes”
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Summaries

  • https://courses.edx.org/courses/course-v1:BerkeleyX+Fin101x+1T2016/courseware/64e4611f5a604936bec95f35ac57ef0a/917034ee00db430f9a7e8bd8e1d6ea12/
  • Week 2: Credit, Debt & Taxes > Credit > Be-Financially-Smart Activity
  • Week 2: Credit, Debt & Taxes > Credit > Credit Scores
  • Week 2: Credit, Debt & Taxes > Debt > Getting Out of Debt
  • Week 2: Credit, Debt & Taxes > Taxes > Taxes
  • Week 2: Credit, Debt & Taxes > Taxes > Taxable Income
  • Week 2: Credit, Debt & Taxes > Optional: Overcoming Debt: An Interview with Suzette McDonough > Optional: Overcoming Debt
  • Week 2: Credit, Debt & Taxes > Optional: Shopping for a Mortgage with Susan Woodward > Shopping for a Mortgage
  • Week 2: Credit, Debt & Taxes > Optional: Personal Bankruptcy with Ken Ayotte > Personal Bankruptcy

https://courses.edx.org/courses/course-v1:BerkeleyX+Fin101x+1T2016/courseware/64e4611f5a604936bec95f35ac57ef0a/917034ee00db430f9a7e8bd8e1d6ea12/

  • The federal government’s Consumer Financial Protection Bureau writes that a credit report contains information about your credit history and the status of your credit accounts.
  • This information includes how often you make your payments on time, how much credit you have, how much credit you have available, how much credit you are using, and whether a debt collector is collecting on any debt you owe.
  • Credit reports can also contain public records, such as liens, judgments, and bankruptcies, that provide insight into your financial status and obligations.
  • Your medical history is not part of your credit report, though late payments and delinquencies on medical bills are.
  • While many companies compile credit reports, there are three national credit reporting companies- Equifax, Experian, and TransUnion.
  • By law, you’re entitled to one free copy of your credit report from each of these three companies every 12 months.
  • The free credit report does not include credit scores.
  • When you request your credit report from annualcreditreport.com, you’ll be asked for your Social Security Number.
  • The report should list all the loans and credit cards you’ve had for the last seven years, whether or not you’ve paid off the loan or closed the credit card.
  • If your credit report shows any late payments, bankruptcies, liens, lawsuits, or collections, and the report is accurate, and the entry is less than seven years old, there isn’t much you can do except improve your credit going forward.
  • Your credit report will have instructions for doing so.
  • A good practice would be to request one free report each year at the same time, say at the same time that you do your taxes, and then mark one or two other dates on your calendar for requesting free reports from the other two agencies.
  • Two, when you’re separating from your spouse and want his or her new transactions off of your personal credit record.
  • Three months later, get a copy of your credit report, and make sure that it shows your accounts as closed by the consumer, not closed by the creditor.
  • Three, if you’ve paid off a court judgment against you for money owed, get your report, and make sure that it shows the judgment as paid.
  • If the situation gets resolved and the delinquency is removed from your report, or if it’s removed after seven years go by, be sure to remove your written explanation.
  • Five, if you’ve been turned down for a job, a rental, insurance, or credit because of information in your credit report, the lender, landlord, insurance company, or potential employer is required to tell you the name and the address of the credit bureau it used.
  • Six, if you’ve had a dispute with a lender over whether a bill has been paid and the dispute is resolved, get a copy of your credit report, and make sure that the bill is no longer on your report.
  • Your credit report is a summary of your credit history and your current credit and debt.
  • Banks and credit card companies will use your credit report to determine whether or not to give you a loan and what interest rate to charge you.
  • Insurance companies, employers, and landlords may also read your credit report.
  • So it’s important to periodically request and carefully read your credit report to make sure that it’s accurate.

Week 2: Credit, Debt & Taxes > Credit > Be-Financially-Smart Activity

  • They’re going to offer to sell you your credit score.
  • For the moment, I think there’s no need for you to pay to get your credit score.

Week 2: Credit, Debt & Taxes > Credit > Credit Scores

  • Different credit reporting agencies use different formulas to calculate credit scores.
  • Each credit reporting agency may calculate different credit scores for different purposes.
  • If you’ve got a good credit score with one credit reporting agency, you probably have a good score with the others.
  • The most widely used credit scores are called FICO scores.
  • The three largest credit reporting agencies- Equifax, Experian, and TransUnion- each calculate their own FICO score.
  • FICO scores between 300 and 619 are considered bad credit.
  • Scores above 721 are excellent credit, although sometimes for the best terms on a mortgage or a loan, you need a score above 760.
  • Before discussing how credit scores are calculated, and what you can do to improve yours, let’s talk for a moment about why your credit score is important.
  • Whether you’re applying for a car loan, a mortgage, a credit card- the likelihood of approval depends upon your credit score.
  • In many, many ways, a low credit score makes your life more difficult and more expensive.
  • Credit scores are calculated from the following types of information in your credit report.
  • If you’ve been more than 30 days late paying credit card companies, or loans, or other creditors, that hurts your credit score.
  • Being late on more accounts, for larger accounts, and for more days will all hurt your credit score.
  • The more loans and credit accounts you’ve always paid on time, the higher your credit score.
  • Late payments would generally stay on your credit report for seven years.
  • About 30% of your FICO score is based upon how high your total credit limits are, and how much you owe compared to your total credit limits.
  • If you have a total credit card limit on all your credit cards of $10,000, and you currently owe $9,900 on those cards, it’s going to hurt your credit score.
  • If you have a total credit limit of $10,000 and you owe $1,000, that’s going to be a lot better.
  • About 15% of your FICO score is based upon the length of your credit history.
  • The longer you’ve had a good credit history, the higher your score.
  • You can have a good credit score even with a short credit history.
  • About 10% of your FICO score is based on whether you’ve recently applied for, or have gotten, new credit accounts.
  • If you’ve recently applied, or gotten several new credit cards or loans, that will lower your score because the rating agency is concerned that financial problems are causing you to apply for a lot of new credit.
  • Multiple credit score inquiries will lower your credit rating.
  • About 10% of your FICO score is based on other factors, such as whether you appear to have a typical mix of credit cards and other loans, like mortgages and auto loans.
  • You can get free credit scores from websites such as CreditKarma.com.
  • Free credit scores won’t usually be your actual FICO score, but they’ll be close enough to it, and will give you an indication of your credit rating.
  • You can get three free copies of your credit report each year, one from each of the three large credit reporting agencies.
  • Most likely, you have a bad credit rating if you are currently late on a credit card payment, medical bill, or loan payment- if in the last six months, you’ve been more than 60 days late on a credit card payment, medical bill, or loan payment; if all your credit cards are maxed out or nearly maxed out; if you’ve declared bankruptcy in the last three years.
  • Apply for new credit accounts only when you need them.
  • Contact the creditor and the credit reporting agency to get errors corrected.
  • If you’re married, and you and your spouse apply jointly for a credit card or car loan, the payment history on that card or loan affects your credit score.
  • It doesn’t help you build credit, and it doesn’t hurt your credit.

Week 2: Credit, Debt & Taxes > Debt > Getting Out of Debt

  • Prima asked me which I thought she should do first- opened up an individual retirement account or IRA, pay off her credit card debt, pay off her student loans, or build up a security fund.
  • What would you tell Prima, and why? In which order would you recommend she pay her debts and start to save? My suggestion was that Prima first get $1,000 in her bank account.
  • I suggested that Prima focus next on paying off her credit card debt while keeping current on her student loan payments and her other monthly bills.
  • Remember, paying off debts that you’re going to have to pay sooner or later is saving.
  • Getting rid of debt with a high interest rate is better than continuing to pay high interest while earning much less in a savings account or investment account.
  • For most people, paying off credit card debt is one of the best investments they can make.
  • Without a security fund, she’d be likely to end up back in credit card debt.
  • Do you have debts? If so, should you first pay your debts and then save or start saving right away? Here are some suggestions.
  • If you’re going to save for your retirement and your other goals, you need to get rid of these types of debt.
  • If you’re struggling with debt, I recommend that you read Elizabeth Warren and Tyagi’s book, All Your Worth.
  • If you do and you owe credit card or other high interest rate debt, use all but $1,000 to pay off those debts.
  • Once you have $1,000 in the bank, step two is to set aside 20% of your after tax income each month- or as much as you can manage- and use it to pay off your debts.
  • You can’t find a higher return investment than paying off high interest rate credit card debt.
  • Pay off your credit card debt, your store debts, medical debts, overdue child support- everything except your mortgage, your car loan, and your student loans.
  • Focus on paying off one debt at a time while keeping current on the others.
  • Some people recommend paying off the smallest debts first so that you can get a sense of accomplishment and confidence that you can succeed.
  • Some people recommend paying off the debts that bother you the most first.
  • Most economists would recommend first paying off the debts with the highest interest rates because this is going to speed up how fast you can pay off all debts.
  • Do not take money out of your retirement accounts- your IRA, your Roth IRA, or your 401(k)- plan to pay your debts.
  • What about taking out a home equity loan to pay off your credit card debt? Well, for most people this is a bad idea.
  • Unless there’s absolutely no doubt that you’re going to be able to pay that loan and absolutely no doubt that you will not plunge yourself back into credit card debt, don’t risk your home.
  • Transferring credit card debt to your home does not get rid of the debt, and the new zero balance on your credit card statement might even lure you into more spending, not more saving.
  • If you have a lot of debt, it may take a long time to pay it off, and getting rid of it is going to be hard.
  • Once you’ve paid off the debts that are stealing from your future, it’s time to start saving.
  • What if you can’t save and you’re sliding further into debt each month? Do your must-have expenses add up to more than half of your monthly paycheck? If so, you may need to look for a less expensive apartment, find a roommate, sell your car and buy a cheaper one, or search for a better job.

Week 2: Credit, Debt & Taxes > Taxes > Taxes

  • Go ahead and pause this video and think about a few things that your tax dollars can be used for.
  • Just remember these are your tax dollars hard at work, so it’s definitely worth figuring out how much of your money is going to taxes, and it’s also worth being civically engaged to elect a government that will spend money the way you want.
  • As I think you’ll see, a lot of tax policy and choices ultimately boil down to public policy priorities.
  • In Berkeley, you actually would have had to pay $15 in city sales tax.
  • You don’t have to pay sales tax on many necessities like food and medicines.
  • As you will see, many states have no sales tax while others, including California, have sales taxes higher than 7%. So sales taxes are one kind of tax.
  • The federal government requires that you pay a certain portion of your income to them in the form of income tax.
  • California has one of the more progressive state income tax systems in the nation.
  • Let’s now take a closer look at how the federal income tax works.
  • Once you have your taxable income, the federal income tax is determined as follows.
  • The first $9,075 of taxable income are taxed at a rate of 10%. So if you only have taxable income of $9,075 during the year, you would pay the government $907.50 in the form of income tax.
  • If your taxable income is higher, anything between $9,075 and $36,900, is taxed at a rate of 15%. That’s the idea of progressivity.
  • The next chunk of your income, between $35,900 and $89,350, is taxed at an even higher rate of 25%. The next chunk is taxed at a rate of 28%, the next at 33%, and so on.
  • It’s pretty easy to compute your tax with a tax table after you know your taxable income.
  • In this case it’s shaded in gray, and you would be able to compute your income tax.
  • By tax bracket we just mean the tax rate that applied to your last dollar of income.
  • Just because you pay 25% on your last dollar of income doesn’t mean that all your income was taxed at 25%. The first few dollars were taxed at a much lower rate of 10%, meaning that on average, you paid less than 25% of your taxable income for taxes.
  • That’s your average tax rate, and we computed it by dividing your total taxes by your taxable income.
  • The different filing statuses are single, married filing jointly, married filing separately, head of household- which means not married but covering more than half the cost of yourself and a qualifying person- and another tax status is qualifying widow or widow with dependent child.
  • Any salary above that $117,000, you didn’t have to pay the social security tax on.
  • If you put income into a tax-deferred retirement account, you don’t pay income tax on it now, but you will pay income tax on it later when you take the money out of your retirement account.
  • If you hold an asset for more than a year and sell it for a profit, your gains are taxed at a much lower rate than your marginal income tax rate.
  • If you are in the 10% or 15% tax brackets- the lower two brackets- you actually pay no tax on your capital gains.
  • If you’re in the 25% to 35% tax brackets, you only pay 15% on your capital gains.
  • Certain stock dividends also qualify for this lower capital gains tax rate if they meet certain criteria.
  • As a tax planning strategy, it’s good to think about how you can invest in a way that allows your gains to be taxed at the capital gains rate instead of the income tax rate.
  • In California, you pay property tax on the value of your home.
  • In other states you may pay property tax on other large items like cars and boats.
  • The Tax Policy Center has a nice interactive map that shows you the effective tax rates for each county in the US. Finally, the last form of tax we are going to talk about are estate taxes.
  • So although the tax rate sounds scarily high at 40%, very few people actually pay any estate tax.
  • Your $5.4 million estate tax exemption applies to the combination of lifetime gifts you make and the estate you have once you die.
  • Does that mean you can’t give somebody $100 for a birthday present without counting it toward your estate tax exemption? No. In fact, in 2015 you can give an unlimited number of people gifts of up to $14,000 a year without it counting toward your lifetime limit of estate tax exemption.
  • Imagine you have $55,000 of taxable income this year and are in the 25% federal tax bracket.
  • It’s not like you can go out and buy something for $0.60 because you need to have some money left over to pay the sales tax.
  • How high is that compared to other countries? Well, one way to make comparisons across countries is to look at the share that tax revenue makes up of a country’s gross domestic product, or GDP for short.
  • I do want to show you how income tax burden in the US does vary by income level.
  • They are making about 89% of the income and paying 97% of the tax.
  • If we look at just the top quarter of earners, they are paying 86% of all tax revenue raised, and they’re actually making about 67% of all the income earned.
  • These considerations are important to keep in mind when considering income and tax inequalities.
  • Hopefully it also provides the impetus to get involved with the public policy making process around you so that you have some say in how your tax dollars are working for you.

Week 2: Credit, Debt & Taxes > Taxes > Taxable Income

  • In this video, I want to walk you through how to actually complete your taxable income and take account of any tax credits.
  • If you’re in a 25% tax bracket, for every $100 of income that you don’t have to count as taxable income, you save $25 in tax.
  • The first step in figuring out your taxable income, is to figure out what your total income is.
  • If these are short term capital gains, meaning that you made the money on an asset that you held for one year or less, they’re counted as ordinary income.
  • Many college students have asked the question about whether their scholarship and fellowship money counts as income.
  • It gets a little more complicated though, because if your tuition and fees were paid for as part of an employment deal with the university, like being a teacher’s assistant, the money that went to cover the tuition and fees counts as taxable income.
  • Once you’ve completed your total income, there are three categories of things you can subtract from it to determine your taxable income.
  • If you are in the 25% tax bracket now, and you contribute $1,000 to a tax-deferred retirement account, you are essentially saving $250 on your current tax bill.
  • Although you will be paying tax on that $1,000 in the future, it might not all fall into the 25% tax bracket then.
  • The government allows you to deduct some other expenses from your total income so that you don’t have to pay tax on them.
  • If you’re in the 25% tax bracket, and you get to reduce your taxable income by $13,000, you’re saving $3,250 on your tax bill.
  • Other deductions include state and local income taxes, property taxes, contributions to charities.
  • What good are deductions for me? Don’t worry, instead of itemizing all these deductions and listing them on your tax form, you could just take the standard deduction the government offers.
  • In 2014, exemptions were $3,950 for every person supported by your income.
  • The idea of exemptions is that the government feels like some of your money shouldn’t be taxed, because it is used for the bare necessities of survival.
  • One thing to keep in mind with certain deductions and even exemptions, is that they do tend to phase out as your income starts to get very high.
  • They don’t have to pay tax on the first $12,400 because that’s just the standard deduction.
  • They can have earnings of $28,200 before any of it’s taxed.
  • So now that you’ve got the tools to figure out your taxable income, you can just look it up in the tax tables and figure out how much tax you owe.
  • Tax credits actually reduce your tax bill dollar for dollar by the amount of the credit.
  • So if you had determined your income tax bill was going to be $6,000, but then discovered you were eligible for the child tax credit of $1,000 per child, you can actually lower your tax bill by $1,000 if you had one kid, or by $2,000 if you had two kids.
  • So in the case of two kids, that would mean that your original tax bill of $6,000 becomes only $4,000.
  • The other types of tax credits are the Earned Income Tax Credit, which is a credit for those with low to moderate incomes, there’s an adoption tax credit, and a tax credit for child care.
  • One of the newest tax credits is the health insurance tax credit for those with lower incomes who bought medical insurance through a health insurance exchange.
  • Keep in mind that more generally, many credits phase out at higher incomes.
  • There is also something called the alternative minimum tax, which uses slightly different rules to make sure that higher earners can’t get out of paying too much tax.
  • There are thousands of pages of rules explaining the tax code.
  • There’s great computer software out there, like TurboTax or H&R Block’s Tax Cut that leads you through a series of interview questions and essentially fills out tax forms for you.
  • They’re called a tax return, every year by April 15th. But that doesn’t mean you have the luxury of waiting until April 14th to figure out how much tax you’ll owe.
  • You really need to be thinking about tax planning year round.
  • For starters, the government isn’t going to trust you to save up all the tax you owe throughout the year and just send it in on April 15th. Your employer actually withholds a bit of your pay every paycheck and sends it to the government to cover your income tax.
  • When you started your job, or when you start your job, you’ll fill out a W-4 form that helps them estimate how much tax you’ll owe.
  • If you have withheld exactly the right amount of tax throughout the year, you won’t have to send in any money on April 15.
  • If you’re self-employed, you’ll actually need to send an estimated tax payments quarterly, or you may be subject to penalties.
  • Throughout the year, you’ll also want to be thinking about how much to put in tax-deferred retirement accounts, how much to donate to charities, whether to sell assets because all of these have tax implications.

Week 2: Credit, Debt & Taxes > Optional: Overcoming Debt: An Interview with Suzette McDonough > Optional: Overcoming Debt

  • Eventually I chose that I really wanted to be out of debt.
  • What am I willing to sacrifice now to get to being debt-free so I can live the life I do want to live? Am I competing with my neighbors to have the bigger house, the bigger car? And in the end, when I do go, all this stuff doesn’t matter.
  • So what sort of changes really helped in terms of lifestyle, spending? What sort or practices or habits would you recommend? Not only living at my means, but choosing to live below my means so that I do have something extra to get out of this debt that upsets me more than not going out to eat now.
  • I started talking with them about my choices and letting them know this is what it is, and this is a lifestyle that has put me in this, and is what I’m going to do to get us out of it.
  • Well, what is the mortgage, kids? OK, it’s just what I pay for the house for us to live here and over time, and that money goes to the bank.
  • Here’s this $20,000 sitting there that went out to this restaurant and that restaurant, and those pair of shoes, that emergency, this, that, or the other thing.
  • Realizing if I’m going to get out debt, I have to have an emergency fund always, because life is going to happen as I’m getting myself in order.
  • So really getting clear with myself about what my values are and choosing to really focus the kids and myself on we’re going to set aside now, and get out of this so later we will have a better understanding of how we can live comfortably, what’s important to us, and then we can go on those trips.
  • So about how long ago did you start turning things around, and what triggered it? I actually started paying off the smaller credit cards first to start building confidence.
  • So the big ones are there, and depending on which financial advising program you go through, they either say start chipping away at the big ones or start at the small ones.
  • To date, I think 6 and 1/2 years, 7 years out now- next month is my last month, and I will be debt-free.
  • So do you still use credit cards? No. No? No, I have two debit cards- one personal and one professional for my business, and I pay them off.
  • I’ve learned how to write out a budget for the month and what’s going out, what’s coming in.
  • Any other advice, any other suggestions for people who are trying to get out of debt? Know that it’s possible.

Week 2: Credit, Debt & Taxes > Optional: Shopping for a Mortgage with Susan Woodward > Shopping for a Mortgage

  • Now, we know it’s not completely no cost- you’re paying an interest rate.
  • The no cash upfront loans are often called no-cost loans.
  • The second is that the lender can’t nibble with the junk fees before your closing.
  • Now, anybody who’s had even kind of a little tangential approach to the mortgage market has probably heard the term “points.
  • Here, the research is very, very illuminating because what the numbers and the studies show is that the borrowers who pay points, on average, get nothing in return for their points.
  • Like, in principle, you’re supposed to get a lower rate in return for your points.
  • You’re probably wondering at the end of the day, after all of this study, what I’ve told my kids and what I tell my colleagues with respect to shopping for a mortgage loan.
  • More if it doesn’t bother you too much to go and get these quotes.
  • I can imagine Terry would think it’s a lot of fun to go and get quotes on a loan.
  • Be sure you get a no-cost quote from every lender that you talk to so that you’ve got several no-cost loans to compare.
  • If you get a no-cost mortgage, who pays for the appraisal? The lender pays for the appraisal.
  • Now, the appraisal is going to be the hardest one to not pay for in cash.
  • The lender kind of even has one good reason and that is the deal might fall through after the appraisal.
  • The lender should be willing to do it.
  • Appraisals aren’t really that expensive, especially not when the lender has an arrangement.
  • The one other piece of advice I would have for you with respect to title is never ever buy owner’s title insurance.
  • 90% of the borrowers don’t buy owner’s title.
  • Ignore all of the lender advice about paying points.
  • You know, you’re just going to search for the best rate.
  • If you do business with a credit union, get a quote from the credit union.
  • Once you’ve got your quotes, go back to the people who weren’t the best bidder and ask them if they’d like to try again.
  • Then don’t worry about it too much because that advice should get you there.

Week 2: Credit, Debt & Taxes > Optional: Personal Bankruptcy with Ken Ayotte > Personal Bankruptcy

  • I’m here today to give you a brief introduction to personal bankruptcy, but first a brief disclaimer.
  • For guidance on your specific situation, it’s a good idea to consult with a bankruptcy attorney in your state.
  • The goal of personal bankruptcy is to provide honest but unlucky individuals a fresh start, allowing them to keep some of their assets and their future income free from the claims of their pre-bankruptcy creditors.
  • People don’t tend to be as productive as they could be when they’re weighed down by excessive debt, so bankruptcy has a role to play in improving productivity.
  • The two most common chapters for personal bankruptcy are Chapter Seven and Chapter 13.
  • Before giving an overview of those chapters, let’s introduce a few terms that will be helpful and apply in all bankruptcies.
  • When a bankruptcy petition is filed, all collection activity- foreclosures, judgments, garnishments- must come to a temporary stop.
  • That’s really the goal of personal bankruptcy, to get a discharge of as much of your pre-bankruptcy debt as possible.
  • Bankruptcy does a lot more work for debtors on unsecured debt than secured debt.
  • The general rule is that liens survive bankruptcy even though your personal liability is discharged.
  • It would be great if you could file for bankruptcy, get rid of the mortgage, and keep the house.
  • Secured creditors notwithstanding bankruptcy have the right to be paid the amount of their secured claims.
  • OK, dischargeable and non-dischargeable debts- some debts can be discharged in bankruptcy, but some, by law, cannot.
  • Finally, exemptions- the bankruptcy code allows for debtors to keep some assets outside the reach of unsecured creditors.
  • In a Chapter Seven case, nonexempt assets are turned over to a trustee, and those assets are sold to repay creditors.
  • The majority of Chapter Seven cases are no asset cases in which the debtor receives a discharge despite not leaving any assets for unsecured creditors.
  • If you get a discharge in Chapter Seven, all of your future income is yours free from the claims of those discharged debts.
  • So who should file for bankruptcy? And who should choose Chapter Seven? Who should choose Chapter 13? Well, empirical studies suggest that it would take a typical debtor over 15 months of income if all of that income was used to pay off only unsecured debt, and over three years of income if all of that income was used to pay all pre-bankruptcy debts.
  • What that tells me is that people tend to file for bankruptcy when they’re so heavily indebted that they don’t see a path to paying their debts on their own.
  • So what about Chapter Seven or Chapter 13? Well, about 70% of personal bankruptcy filings are Chapter Seven, and that makes some sense.
  • Chapter Seven, as we discussed, is a lot faster and easier than Chapter 13.
  • So if Chapter Seven sounds so good, who would file for Chapter 13? Well, there are two main reasons.
  • You may have heard that Congress changed our bankruptcy laws in 2005.
  • If you’re above median income in your state and you demonstrate some ability to pay your unsecured creditors, you may be ineligible for Chapter Seven.
  • Bankruptcy is not particularly easy or particularly cheap.
  • It is legally permissible to file for bankruptcy without a lawyer, but very few debtors do so, and with good reason.
  • So how much does bankruptcy cost altogether? Well, it depends a lot.
  • The total cost of bankruptcy is typically over $1,000 and can be several thousand dollars.
  • Remember that the amount of debt you can discharge in bankruptcy can be many times the amount you’ll pay in fees and court costs.
  • You’ll have to answer some simple questions under oath about your bankruptcy documents.
  • Here are some useful resources if you’d like additional information about bankruptcy.
  • Gov is a good website for forms and an overview of the various chapters.
  • Bankruptcyresources.org, from the American Bankruptcy Institute, has some helpful Q&A and links to some important resources such as the ability to find lawyers and places to find pro bono representation in your state if you have difficulty paying the costs of bankruptcy.
  • Running up credit cards and taking a vacation before you file for bankruptcy.
  • About a million people file for bankruptcy each year.
  • Thanks for watching, and I hope this brief introduction to bankruptcy has been useful to you.

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