Debt
We all know about debt. If you don''t have too much as an individual you can increase the quality of your life, but with more than you can handle it can make your life a nightmare.
There are two kinds of debt. Usually it is personal and used to buy a depreciating item such as a car or entertainment. Today a car has become a necessity, but it doesn''t mean you have to buy a new one every 2 years or one that is beyond your means. It should be thought of as transportation.
The second kind of debt creates an asset that produces income that will more than pay off the debt. For a business this can be a truck, a new machine, even a new building for office or production. A person may borrow money to continue education so there can be career advancement. Money borrowed for production is very healthy.
A mortgage is a necessity and can be classified as creative debt. You have to live some place so you have a choice of rent or mortgage payments. Most everyone prefers the latter as it creates an asset as well as shelter.
Before taking on any type of debt it is wise to determine the risk. Debt creates risk. For personal noncreative debt you must consider your income that will allow repayment of the obligation especially if it is one that has no value to anyone else such as a vacation or flying lessons. Do not borrow money to go to the racetrack or gamble in the stock market. The first consideration when borrowing is what will happen if I can''t make the payments? Will what I have purchased have any remaining value that can be sold to reduce the balance remaining?
If the balance cannot be repaid you want to do everything possible to avoid bankruptcy as that can haunt you for the rest of your life. Debt consolidation is sometimes a solution. For a business there is a preliminary bankruptcy that allows the court to appoint a special manager to watch over even run the business until it is back on its feet or declared defunct.
The world as we know it swims in a pool of debt. Business today could not survive without some form of borrowing nor could the consumer have all the conveniences that make living a pleasure - washing machines, TVs, air conditioning, garage door openers, can openers, computers just to mention a few most of which are obtained with the help of a credit card.
Keep in mind the 2 kinds of debt - the kind that creates an income producing asset and the kind that does not. You must decide how much of each you can afford.
There is nothing wrong with debt as long as it is used intelligently.
Al Thomas'' book, "If It Doesn''t Go Up, Don''t Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he''s the man that Wall Street does not want you to know.
Copyright 2005
al@mutualfundstrategy.com; 1-888-345-7870', 134, 'Debt, Debt-Relief, Debt-Relief articles, Debt-Relief information, about Debt-Relief, what is Debt-Relief, Debt Relief Information', 'Debt plus articles and information on Debt-Relief');
INSERT INTO pqdb_articles (article_id, article_title, article_text, article_cat, article_meta_key, article_meta_desc) VALUES (11752, 'What is Bankruptcy?', 'Personal bankruptcy is a legal way to give people with overwhelming debt a fresh financial start. However, it is important to realize that certain forms of debt, such as student loans, are not forgiven through the bankruptcy process. Bankruptcy can have a devastating impact to your credit report and credit score. Bankruptcy will often remain on your credit report for as long as 10 years. During this time it can be next to impossible to obtain loans or any type of credit. If you are able to find a lender that is willing to do business with you, you will pay the highest possible interest rates allowed by law.
Quite often, lawyers are quick to suggest bankruptcy but, they don''t always explain how damaging bankruptcy can be. Why would a lawyer do this? The answer is simple; If you don''t file for bankruptcy, they don''t get paid. The best thing that you can do is obtain independent information if you are considering bankruptcy. This way you become informed in an unbiased manner.
There are two forms of bankruptcy:
Chapter 13 involves reorganizing your debt in such a way that you a can keep the property you might otherwise lose, For example, a car or home. Chapter 13 will allow you 3-5 years to pay-off the items you have as opposed to losing them entirely.
Chapter 7 is the most straightforward form of bankruptcy. It involves liquidating all of your assets. However, this can depend upon the laws for the state in which you live. Traditionally, a court appointed representative will sell your personal property or it will simply be returned to the creditors that you owe money to. Federal law only allows consumers to file for Chapter 7 bankruptcy every six years.
Alan Barnes
IAPDA Certified Debt Arbitrator
President and CEO of Debt Regret
http://www.debtregret.com', 134, 'What is Bankruptcy?, Debt-Relief, Debt-Relief articles, Debt-Relief information, about Debt-Relief, what is Debt-Relief, Debt Relief Information', 'What is Bankruptcy? plus articles and information on Debt-Relief
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