Monthly Archives: October 2009

Author : Dee Power

Personal bankruptcy is not the only alternative to getting out from under mountains of debt Consider it a last resort It will follow you for seven years on your credit report and forever as a federal court document Court documents are open to the public

Many job applications ask if you’ve ever declared bankruptcy, even if it’s been discharged and years ago you still have to answer yes

However, many people have found great advantages in doing so If you are struggling financially, this option just might be what you are looking for

There are two major advantages of filing for personal bankruptcy They are eliminating calls from creditors, at all hours of the day and protecting your property

Once you have officially filed for bankruptcy your creditors can no longer contact you in regard to your unpaid debts, nor can they legally attach your wages They must, instead, abide by federal bankruptcy law and attempt to obtain reimbursement

Property protection is important In the majority of personal bankruptcy cases debtors are allowed to retain property such as their residence and automobile Unfortunately, many individuals forego filing for bankruptcy because they are under the mistaken impression that they will lose everything

This action will sometimes give you the advantage over the creditors who continuously contact you for payment, as well Since they are responsible for obtaining their own legal representation when attending the meeting of creditors, many times they will write off the debt in lieu of paying for an attorney

Filing for personal bankruptcy immediately puts a stop to events such as utility shutoffs, evictions, repossessions and many types of lawsuits A word of warning if you’re involved in a lawsuit that may result in you paying financial damages, wait until after the lawsuit to file For individuals who have been constantly struggling to stay afloat, this is a relief beyond compare

Before taking that final step look at other methods of reducing your debt Call your creditors and see if they’ll accept a lesser amount to pay off a debt in full Cut back on expenses that aren’t necessary Perhaps you could give up your afternoon gourmet coffee drink or pack your lunch instead of going out to lunch Sell assets and use the proceeds to pay down debt Even consider a part time job

If you find yourself in financial crisis, consider the possibility of personal bankruptcy but keep in mind it is a last resort

Do you need a loan, credit card, or grant? Want to know about other ways to find money? Find out more at 58 Ways to Find Money or go to Credit Cards and You

Dee Power has co-authored several nonfiction books including Business Plan Basics, Inside Secrets to Venture Capital and Attracting Capital From Angels

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Author : Scott Letourneau

Business owners must consider how these changes could effect their business scores, because of the major impact it could have on their ability to take out loans, finance projects, or pay employees Consider your options and discuss them with a financial adviser to figure out what is the best plan for you

How will these changes impact consumers?

When consumers who are considered authorized users on credit accounts receive their new credit score, it may be significantly lower This drop may increase depending on how many accounts they are an ‘authorized user’ on Therefore, these consumers will essentially be losing some of their credit score There is one group that is positively affected, however This is the group of users who have late payments or high balances on their credit accounts These users will actually see a fairly significant increase in their credit scores This is not to encourage this type of account, however

What are authorized users on credit accounts?

Quite often, creditors will allow their primary users to add secondary users to their credit accounts without checking the second person’s credit Although they do not run a credit check, the account user becomes a valid user of the account and the credit account shows up on their credit checks The authorized user is not liable for any debts incurred by any user on the credit account, which is one of the main reasons they are now being removed from the accounts

How many people will be impacted?

It is estimated that nearly one third of all Americans has at least one authorized user account on their credit report This means that nearly one hundred million Americans will be affected by these new credit score formulas It is important for people to take action to prevent their score from dropping A significant drop in credit score of nearly one hundred million Americans is a fairly detrimental number and could yield a negative effect

Why has FICO decided to make this change?

FICO is changing this policy because it is being largely companies that fix individual’s credit problems In many cases, companies illegally sell access to authorized credit users account, which improves the credit score but harms the user These costs would often be upward of several thousand dollars This was a problem that had to be dealt with

How will people establish their credit without authorized user accounts?

Although being an authorized user was once a great way to build or increase your credit, it is no longer a feasible option Business owners who are concerned with their credit scores should probably try opening their own line of credit and keeping it intact This can slowly build credit One good way to do this is to buy a card that is only used for a few specific things a month, that you were already paying cash for Setting aside that cash and using it to pay off the card will establish credit Some banks even offer a credit line of around two to five hundred dollars as an overdraft protection When the account overdraws, money is withdrawn from your line of credit and when you pay it back it builds your credit Sometimes people with no or little credit start of with gas credit cards as well

Business owners must consider how these changes could effect their business scores, because of the major impact it could have on their ability to take out loans, finance projects, or pay employees Consider your options and discuss them with a financial adviser to figure out what is the best plan for you

‘Scott Letourneau is the CEO of Fast Business Credit, Inc. and has a valuable free guide to help business owners get access to capital plus a new program to help business owners understand the new FICO credit formula! Go to our Business Credit Program page for powerful details!

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Author : Ann Marosy

“Up to ninety per cent of businesses fail in their first five years of operation” The first time I heard this was many years ago during an accounting seminar At that time, it sounded rather unbelievable; however, I now believe those statistics are true and probably higher or occur within shorter time spans, especially during times of global economic stress

The Cause of Business Failure

Of course, many people have now heard of these facts, but what most unsuccessful business managers do not know, or fail to pay attention to, is why their businesses fail

The statisticians say that the reasons are quite simple: inappropriate or lack of necessary marketing programs, and/or inappropriate or lack of necessary accounting systems That’s it! It doesn’t matter whether you are the owner or Chief Executive Officer, you need to understand the financial requirements necessary to successfully manage your business

The basics of accounting systems are elementarily simple All you need to know is the real purpose of your financial reports and how to use them to accurately assess your business’s performance – past, present and, most importantly, for the future

Personally, I believe the underlying issue why businesses fail is cashflow! Or rather, lack of it Obviously, this should be all wrapped up with having the appropriate accounting systems to run your business, but I have only seen one organisation that successfully used their accounting systems to manage their cashflows efficiently So efficiently in fact, that they effectively turned their whole multi-national organisation from near collapse to their recorded profits in only three years

So what is the secret behind ensuring longevity and profitability for your business? Once again, the answers to life’s most difficult questions are often simple – and typically obvious Cash! Glorious, glorious cash Cash is real Cash is tangible

The value of cash is known and reliable Cash is liquidity and liquidity means having the flexibility to be proactive in your business affairs Cash enables you to become proactive rather than reactive to economic crises Most failing businesses have forgotten the importance of cash

I’m not talking about just the physical paper, but more importantly, how much cash you have in the bank at the end of the day Too many businesses have gone broke when their financial reports have told them they were profitable – on paper!

Cash makes the world go around Cash makes your business safe Cash helps you to plan for your future; and cash will help your business expand safely But first, let us return to the concept of business failure

In precise terms, a business fails when it ceases trading and leaves unpaid obligations This may be due to voluntary business wind-up, or voluntary or enforced liquidation or bankruptcy Yet, nevertheless, the failure is due to unpaid obligations So, what causes the failure? Simple, isn’t it? Lack of cash in the bank at the end of the day

Avoiding Premature Demise

The enemy of businesses is debt overload If you are the owner or CEO of a business you must keep a close watchful eye on your finances

Do you know how much debt your business will carry – this month, three months, one year and five years into the future?

Do you know how much funding you will need to maintain or expand your stock levels, open a new store, or manufacture a new product – this month, three months, one year and five years into the future?

Do you know what your outstanding creditors will be – this month, three months, one year and five years into the future?

Do you know what your outstanding debtors will be – this month, three months, one year and five years into the future?

And do you know how much cash you will have in the bank – this month, three months, one year and five years into the future?

If you cannot answer ‘yes’ to all of these questions, don’t worry: you are in the majority Most companies cannot answer ‘yes’ definitively to all of these questions, but these companies are probably also in great risk of going broke in the next five years – or at least having to suffer that devastating and stressful daily existence of operating from cash flow crisis to cash flow crisis

The American Statistical Association has stated: “A cross-sectional analysis of all trading suspensions that occurred during the period 1974-1988 in the New York Stock Exchange reveals that, though the desire to maintain price continuity remains an important motivation to suspend trade, inventory-imbalance fears are pronounced for large firms ”

From the Editor of Inc Com we are reminded: “There are a few simple steps you can take to make sure your business avoids a premature death First, find someone willing to pay for your product or service Second, hoard your cash In the words of one successful entrepreneur, ‘Throw nickels around like they’re manhole covers’ ”

And from BusinessWeek: “Once a new company is up and running, the most obvious cause of failure is simply running out of money Experts call undercapitalization a symptom of poor planning, however, rather than a true cause of failure

Yes, planning Planning, planning, planning You have probably heard it over and over again Planning for your business, planning for research, planning for expansion Marketing planning, recruitment planning, sales planning On and on, we go

But do you do sufficient cash planning and do you know anytime during the next five years where your cash ebbs and flows will be? Not just approximately, but all planned out – on paper, on graphs? Does your accounting system produce reliable financial reports that connect your sales levels with your stock levels and your profits to your cash at bank?

Do you assess your business’s performance by profits on paper – or cash at bank?

Ann Marosy is an accountant, consultant, and former university lecturer. She was formally the Financial Controller of the Fortune 500 Company, Jardine Matheson, and Finalist of SA Executive Woman of the Year.

Ann is the author of ‘The Red Book: How to Expand Your Business Safely’ based on the business strategies of Jardine Matheson, available from: The Home of The Money Program

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