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The current economic recession has millions of families falling into financial despair. Americans are considering bankruptcy at a nearly unprecedented rate. In addition, there is a growing consideration of a hardship withdrawal of 401k retirement accounts in a last effort to access cash necessary to meet financial obligations and possibly avoid a personal bankruptcy. However, the penalties and taxes charged for prematurely tapping these pension funds may be the least of the obstacles to negotiate before actually obtaining access to the much needed funds.

If one is considering withdrawing from a 401k account and filing for bankruptcy, it may be more beneficial to consider filing for bankruptcy before turning to the 401k retirement account. By law, the 401k retirement account is protected from bankruptcy and all creditors, as long as the money remains in the account before the 59th birthday of the account holder. Anyone holding a 401k account in these economic times should consider the following 1) what to do with the 401k account should changes in employment occur and during a bankruptcy filing and 2) what to consider should the funds within a retirement account come under immediate need during a bankruptcy.

Employees must consider professional management of their 401k in case of loss of employment or change of job as unemployment levels reach record proportions. Employers generally forward the retirement account holdings to the former employee after employment ends. The immediate experience of unemployment may place additional strain on a household’s finances and the temptation to access one’s retirement account early can become even more enticing. However, receiving cash from a retirement account prior to bankruptcy will appear as income and may make qualifying to file for chapter 7 bankruptcy more difficult. In addition, if the retirement account holder becomes unemployed and rolls over the 401k to an IRA or Roth IRA, then depending on the state, the retirement funds may become part of the bankruptcy estate and paid out to creditors. A consultation with a state-licensed financial advisor should be sought in all cases. Each state has differing laws on the bankruptcy estates allowable administration of certain qualified retirement accounts (non 401k) in a bankruptcy case.

If the use of the 401k account funds is needed after filing bankruptcy, the chapter of bankruptcy will determine the process to access the funds. Loans on retirement accounts are popular and allow the account to remain intact without incurring penalties or taxes on the account loan proceeds. Loans on 401k accounts are not able to be discharged in a bankruptcy, they must be repaid. If the loan on a retirement account is requested after a discharge of a chapter 13 bankruptcy, the loan must be approved by the court trustee. It is customary in all chapter 13 filings that any new debt incurred by the filer must be approved by the bankruptcy court trustee and addressed within the payment plan. However, after a chapter 7 bankruptcy is discharged, a retirement account can be collateralized for an un-penalized and untaxed loan or entirely withdrawn minus penalties and taxes, if premature withdrawal is applicable.

Retirement accounts are an often tapped assets as households endure a growing need for cash. However, enticements to access these funds should be avoided without proper consultation by state licensed financial or legal advisers to determine if retirement account plans qualify under the state’s law to become a part of a bankruptcy estate.

The mortgage meltdown has affected more than just homeowners as renters are forced out of foreclosed homes. The record number of foreclosures throughout the nation has caused a drag on the rental community as well. Statistics show that 40 percent of

the nation’s renters lease a single family home from private homeowners. While most homeowners-turned-landlords, conduct a background check on prospective tenants, it is difficult to find information on a homeowner’s history. Oftentimes tenants are not sure of the owners and only qualify whether to move into a home by the home’s appearance, rental amount and neighborhood and as a result thousands of tenants are losing their rented homes to foreclosures.

Mortgage giant Fannie Mae has initiated a program to aid these displaced renters by allowing them to sign a new lease with Fannie Mae or provide financial relocation assistance. Freddie Mac is set to unveil a similar service shortly. However, only tenants renting a home that is mortgaged by Fannie Mae or Freddie Mac will be able utilize the new program. Some states have begun to implement plans to assist the renters facing eviction from a foreclosed home. Municipalities and hosuing authorities are also turning displaced tenants to housing non-profit groups for counseling and assistance in homeowner background checks before signing a new rental lease.

Understanding credit card terms can help you to be more aware of precisely what is stated in the fine print of your credit card application and contract.  Here are some of the most important terms in the field of credit cards and what they mean for you.
 
Average Daily Balance: The Average Daily Balance is the average dollar amount that exists on the card at any given point in time.  Over a period of time, usually thirty days or the number of days in a month, the total balance is added up and then divided by the total number of days.  The Average Daily Balance is used by credit card companies in the Average Daily Balance Method to determine the amount of interest due on a credit card.

Annual Percentage Rate:  The Annual Percentage Rate is the total amount of money that a person will pay each year in interest on the amount of money that they spend with the help of their credit card.  It is important to be aware that you will not just have the pay interest in the form of the Annual Percentage Rate, but there will also likely be simple interest attached to your purchases as well.  The lower APR you can secure with your credit card, the better.  Credit Card companies are required by law to reveal to you the APR for their cards.

Cardholder Agreement: A Cardholder Agreement is probably the most important document that you will receive from the credit card companies with which you work.  This agreement will cover all specifics of the agreement that applicable to your relationship with the credit card company including any legal options available to you if you have a problem with the company.  All questions dealing with the terms and regulations of the agreement can be found in this document.

Cash Advance Fee: When you use your credit card in order to get cash up front, you will be charged a specific fee just for getting this cash.  This is an up-front fee that needs to be paid by the card holder.

Finance Charge: Finance charges can take the shape and form of many different charges on your credit card bill.  In general, a finance charge is any amount representing the cost of using or borrowing money, in this case through the use of a credit card.  These fees can include interest and transaction fees, late fees, over the limit fees and more.

Grace Period:  The Grace Period is the length of time between the due date of your payment and the date on which penalties will start to accrue, due to the lateness of the payment.

Minimum Payment:  This is the very least amount of money that needs to be paid to the credit card company that you utilize.  It is a fraction of your total balance due.

Periodic Rate: The Annual Percentage Rate (APR) is used in order to calculate your annual interest rate, but the periodic rate looks at the amount of money due in interest for each period.  Usually, the period of a credit card is one month.  You can determine your Periodic Rate by dividing your APR by the twelve months within a single year.  If your APR is twenty-four percent, you would divide twenty-four by the twelve months in a year, and the Periodic Rate would be calculated as two percent.

Variable Interest Rate:  Your variable interest rate will move up and down over time, based on the changes that may occur in the market.

Balance Transfer:  Transferring your debt from one credit card to another is known as a balance transfer.  The entirety of the amount due on your one credit card will be transferred to the other through this process.

Not being able to pay your mortgage is a serious problem.  However, this does not mean that there are no options available to you.  Here are five separate options that you can consider if you are in a position that makes you unable to pay your mortgage.

Repayment Plan

Sometimes, in order to get the money that they are owed, lending institutions will work with you in order to create a repayment plan.  This is beneficial for you since you will be able to keep your home and it will be beneficial to the bank in that the lending institution will be able to recoup the money that they have invested in you and your home.  This is a great option for individuals to consider since it can cause the least amount of stress and strain on your life.

Modification

If you are having problems with your mortgage and you do not foresee any end to the financial strain in your life, you can discuss the problem with your lending institution.  They may be able to provide you with a mortgage modification.  This modification has the ability to change the terms and regulations of your mortgage in order to make it possible for you to afford the payments of your mortgage and keep your residency.

Deed in Lieu of Foreclosure

To avoid foreclosure, you may be able to offer up the deed from your home to your lender.  This would wipe out your debt without the stigma of foreclosure.

Short Sale

A short-sale is negotiated by the lender in order to sell your home for less than the amount of money that is owed on the home.  While this would end your debt, it also would leave you with no equity for your next home.  Nonetheless, it is a great option if you are really trying not to foreclose on your home.

Foreclosure

Lastly, if you cannot afford your mortgage, you may have no choice but to foreclose.  When you apply for a loan on your house, you often provide the home as collateral for the lending institution.  If you cannot afford your mortgage, you may need to give up your home in order to pay your debt to the lending institution, referred to as a foreclosure.

While to many people it may seem that life is pretty much over after filing for bankruptcy, there are things a person can do to still appear financially attractive to financial establishments. Everyone makes mistakes and bankruptcy can count as a mistake.  The important thing for people to remember after filing for bankruptcy is to keep moving in a forward manner and not dwell on the past, which cannot be changed.  By taking the appropriate steps, even people who file for bankruptcy can become financially responsible. You will not get satisfaction right away.  Improving your credit will take time and it is important to remain patient throughout the procedure. 

Getting a secured credit card is advisable for the individual immediately following their filing for bankruptcy.  Collateral is used for the card to set the limit so the individuals who have this type of card will not be spending more than they can afford. This will help build up credit and help you stick to a budget.

Track your credit and remember to pay everything on time. To improve your standing even more, pay over the minimum payment as much as you can.  This will make you appear responsible, while at the same time your debt will decrease faster than if you were just paying the minimum amount due. If you want to take complete control of your finances you should pay off your debt in full each month. If you are using more credit each month than you can pay off, you probably need to look at how you are spending money.

Identity fraud is a growing concern and individuals can be forced to file for bankruptcy if someone steals their identity and racks up debt.  It is often scary when you have a lot of debt, but ordering your credit report at least once a year can save your credit if you find any issues during the checkup.

In general, it will take time to build your credit back up.  This does not mean there is nothing to be done about the situation.  By continuing to be positive and work in the right direction, you can still appear as the financially responsible, dependable individual you would like to be.