Monthly Archives

July 2019

How Creditors Decide If You Have “Good” or “Bad” Credit 

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When you’re just beginning your journey to financial literacy and debt-free living, you might be baffled by your credit score, unsure what it all means, and completely unclear if you have “good” or “bad” credit by creditors’ standards. That’s a normal part of the learning curve. Luckily, you’ll soon discover the ins and outs of creditworthiness and how your credit score is calculated when you begin to read financial freedom information and blog posts like these. 

What creditors are truly looking for when they evaluate your creditworthiness is multi-faceted. There’s an algorithm that calculates your credit score based on several criteria, like the length of your credit history, how regularly you make your payments on time, and your credit to debt ratio. In other words, their decision to assign you a credit score isn’t just pulled out of thin air or arbitrarily decided. 

If you’re regularly missing payments or maxing out your credit cards month after month, this tends to have a negative effect on your overall credit score. It only takes a couple of months of not making regular payments or only paying your minimum for creditors to notice that behavior. If you’re brand new to having credit, for example, if you just opened your first credit card, you’ll likely notice that your credit score will increase the longer you make your payments reliably, on time, and in full, because creditors will begin to see you as trustworthy to make your payments. 

Curious about how creditors decide your credit score? Contact Cain and Daniels today to learn about what goes into whether your credit is deemed “good” or “bad.” 

Hiring A Debt Advisor for a Mortgage Restructuring

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When you agree to buy a home and pay a mortgage, sometimes life situations can change and you can find yourself in need of a mortgage restructuring. What is a mortgage restructuring, you ask? Well, it’s what happens when the borrower, or the person paying the monthly mortgage, and the mortgage lender agree to new repayment terms and conditions on a pre-existing mortgage. 

This happens fairly commonly today, especially among those who find themselves strapped with a mortgage in a downturned economic market or facing unexpected personal expenditures like medical bills. Hiring a debt advisor for a mortgage restructuring can have some clear benefits; for example, you get a second opinion on your debts and your current financial situation, which may bring clarity in how to approach things financially in your life. 

A debt advisor may also help you understand if there is a bigger root cause to your debt that’s holding you back from being able to meet your monthly mortgage. For example, if you’re saddled with debilitating credit card debt, this can have a large effect on how you handle other financial strains in your portfolio, including your mortgage. If you feel like you’re drowning in debt, an advisor may be a smart strategy to lay it all out in the open and discover new ways to manage your debts. They’ll be able to help you learn the technical aspects of a mortgage, how home loans work, and how to integrate your mortgage restructuring into your overall financial payments each month. 

Want to know more about hiring a debt advisor for your mortgage restructuring? Contact Cain and Daniels for more information today. 

Chapter 7 vs. Chapter 13 Bankruptcy

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For many people, bankruptcy is a worst nightmare. It’s not a solution for everyone or for every situation, but when bankruptcy is applicable, it can provide some relief from painful, chronic debt. Filing for bankruptcy means your debt is erased. It’s a clean slate where you’ll no longer face wage garnishments, lawsuits, or missed payments, but there are consequences to the decision to file for bankruptcy that you might not expect. Filing for bankruptcy, for example, should be considered when your debt is hindering you from paying for the most basic necessities of life, like food or housing. 

There are different types of bankruptcy you can file for. Chapter 7 bankruptcy is the one that is most frequently filed by debt-sufferers in the United States today. A trustee will take your assets, sell them, and provide your creditors with the money you owe them based on the sale of your assets. Typically, they allow you to keep some assets that are deemed necessary for you to begin a new life after bankruptcy. 

In contrast, Chapter 13 is the type of bankruptcy that serves to help you reorganize your financial life, involving a detailed monthly payment plan for managing debt that lasts anywhere from three to five years. Chapter 13 is structured and designed to help make medical and credit card debts easily to manage and pay in time as well. 

Are you considering bankruptcy but aren’t sure which option, Chapter 7 or Chapter 13, is best for your unique case? Contact someone at Cain and Daniels today to talk about your options. 

Are Balance Transfers A Good Debt Consolidation Method? 

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When you hear the term “balance transfer,” you’d be forgiven if you think someone’s talking about a trapeze artist, balancing on a string as they pull off marvelous feats. In reality, a balance transfer is a far less exciting personal finance term and debt management/consolidation method that is used by thousands of Americans each year. 

A balance transfer is when you transfer part or all of the debt you owe to a lender from one credit card to another credit card to save on interest payments. A balance transfer credit card means you’ll typically get a 0% interest rate as you get started, but it’ll probably go up over the length of time you have the balance transfer credit card. If you can manage to pay off the balance transfer credit card during the promo period without interest, you can get away with not paying any interest whatsoever on what’s left of your debts. That’s probably the top reason why people opt for this method of debt management, but it requires an ability to pay more than the minimum at any given time to stay ahead of mounting interest rates. 

Otherwise, debt balance transfers are in the same boat as consolidation or taking out a personal loan from the bank—it’s not recommended for everyone, and it shouldn’t be a first option in your journey to a debt-free life, but it is a worthwhile sacrifice for some people. Wondering if a balance transfer would work in your favor? Talk to someone at Cain & Daniels about your options today. 

Am I A Victim of Predatory Lending?

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You might be wondering, “What does predatory lending even mean?” And you’d be right to be unclear; in fact, it’s one of the most challenging parts about entering a lending agreement to know when you’re being treated fairly and justly. In most cases, it’ll feel right and you won’t get any sort of pit in your stomach or fight-or-flight response as you’re discussing the loan terms. However, following your gut isn’t always the most scientific approach.

What is predatory lending? Well, it’s when a lender gets in the way of the borrower effectively repaying their debt, which can lead to impaired credit situations, poor borrowing habits, and misuse of power. A predatory lender will prey upon those who may not seem to have better options available, or who aren’t well-versed in the confusing “personal finance-speak” that the lender will try to use on you. They’ll talk in terms you don’t understand, then refuse to explain those terms to you in a meaningful way. They’ll try to confuse you into signing a lending agreement which isn’t in your best interests. 

A few things to look out for are the lender trying to get you to sign too quickly, pressuring you into action, and slapping you with high fees and premiums that you’ll never be able to pay effectively, leaving blanks in a contract, or disappearing once an agreement is signed. Predatory lending can happen to anyone, but these folks seek out those who they believe won’t have other options, often the sick, elderly, or impoverished, or those struggling to improve their credit and pay off their debts. 

Think you might be a victim of predatory lending? Contact Cain & Daniels today to discuss your case.