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What is Bankruptcy?
A legal process established by the US Bankruptcy Code, the government, to eliminate your debt. Once the petition is filed with the Bankruptcy Court in the district where you live, all legal proceedings against you are automatically stopped, or “stayed”. In other words, if your house is about to be sold at sheriff sale, a petition will immediately stop that from happening. It is somewhat stigmatized, however, in the past 10 years the stigma isn’t as great as it once was. It is actually does have a basis in the Bible for those of you who are Christians. It’s found in Deuteronomy, every 7 years, “the lender shall release the borrower from his/her debt.” In the US Bankruptcy Code you can only file a second bankruptcy in less than eight years if you’ve received a discharge under another chapter.
What are the types of Chapters?
- Chapter 7 – A filer would eliminate most of his/her debts, except assets the filer wants to keep.
- Chapter 11 – A tool for business financial reorganization. This type of filing enables the business to continue operating while putting the entity in a better financial position.
- Chapter 13 – A personal financial reorganization. The filer may keep some of, or all of his/her essential possessions, like a house or car, while allowing the filer to put his/her finances in order.
What are the Pros & Cons of Bankruptcy?
– Creditors must stop harassing you
– Any & all legal proceedings stop immediately, including a
sheriffs sale which results in losing your home
– You can lose the debt, w/o losing the asset
– You’re able to “reset” your financial condition/situation
– The filing stays on your credit report for 7-10 years
– You may be disqualified for some jobs
– Some of your debts are not & cannot be discharged
Many have heard of “multiple streams of income.” What does that mean? – Creating different types of income.
Some examples are:
- Passive – Money coming in w/o doing physical labor
- Active – Your typical 9-5 job (sometimes called linear)
- Portfolio – Income from dividends, royalties, or interest
Brick & mortar; a business or retail outlet that has at least one physical location where a product or service is provided. Traditional stores that you would find in your local shopping mall.
E-commerce; operates as the digital arm of a retail giant or a physical store. It can also be a single person selling crafts from their home through online marketplaces. E-commerce models vary widely and include many sales types. Many of these business have exploded this year due to Covid-19.
- Stock Market – The community of individuals and corporations engaged in buying and selling shares of companies (stocks) on the open market (stock exchange).
- Forex – The global electronic marketplace for trading international currencies and currency derivatives. There is no central physical location, but it is the largest, most liquid market in the world by trading volume. Most trading is done through banks, brokers, and financial institutions.
- Mutual Funds – A professionally managed investment program funded by shareholders that trade in diversified holdings.
- Bonds – A purchased income instrument; an exchange of money for an investment in a company or government (local, state, or federal). It is an instrument of indebtedness between you and the entity. The entity will pay you when you “cash in” your bonds.
– Investment backed by an asset
– Tax write offs
– Usually appreciates
– Every millionaire is in some way connected to real estate
– Can use it to leverage into other investments/money
– Non liquid
– Time consuming
Types of Real Estate Investments:
- Notes – become the bank
- Fix & Flip (BRRRR – buy, rehab, rent, refinance, repeat)
- Tax/Foreclosure sales
Resources for Financial Management & Forecasting
-New York Times
-Grow from Acorns + CNBC
-Alignable Editorial Team
-Alignable Editorial Team