Welcome To The Ovation Credit Services Blog

A college education is recommended if not required these days. As we make our way through life, society instills in us a fear that we will be homeless and destitute if we do not go to college. Unfortunately for us, no one mentions the student loans that would someday swallow us whole.

Countless late nights, who knows how many unwelcome research papers, and the horrible tasting dorm food that we did not dare think too much about: these were all a part of the experience that hopefully allowed us to acquire a decent occupation.

Of course the college education was worth it.

Only when the mortgage payment, the car payment, the student loan payment and all other assorted bills are due at the same time – and then we get laid off -  do we reach our wit’s end. One option looms in the distance: Is it possible to file bankruptcy on student loans?

Filing bankruptcy on student loans is difficult but not impossible. When filing for bankruptcy, you must also file a petition claiming that repayment of your student loans would cause undue hardship. Once you have filed, your fate is in the court’s hands. They use a certain level of discretion, and each case is treated differently, which makes it hard to accurately predict an outcome. It is up to you to prove that repayment of your student loans would not only cause your wallet pain but distress to you as well.

Unfortunately, the courts are not always as forgiving as we would like them to be, and we may have to defer to another option. If you are denied a discharge of student loans based on hardship, you can also apply for Chapter 13 bankruptcy. This “reorganization” is the next best thing, allowing you to postpone your student loan payments and catch up on any other debts that you may have. The advantage of this is that the payments are court-determined, so there will be no evil collectors knocking at your door.

Be aware, however, that this is not a get-out-of-jail-free card. You will still owe the balance on your student loans, but Chapter 13 bankruptcy gives you precious time to get your affairs in order.

Bankruptcy should never be a first choice, particularly if you are petitioning to discharge your loans. Many courts will want to see that you have exhausted all other options first. Although bankruptcy can put a cap on your debts and keep creditors at bay, it is not an end to your problems. Bankruptcy stays on your credit for seven to ten years, and the stigma attached can make it difficult to obtain credit down the road when you need it. Before things are too out of control, consider exploring the tools and services available from Ovation that can help you manage your debt and protect your credit.

Wages are stagnant and unemployment rates are hovering near all-time highs, while food and fuel prices continue to rise faster than ever. Managing money well enough to maintain your lifestyle – or even well enough to pay for necessities – is more challenging than ever. In a perfect world, we would have a three to six month stash of emergency money we could use to help bridge the gap.  In the real world, emergency funds are already depleted and few additional options exist.

In the real world, your credit card has become your emergency fund.

As you consider ways to modify your spending habits, you may find a few extra dollars each month to spare. The desire to establish or maintain an emergency fund clashes with the desire to pay down or pay off your credit card. With a cursory glance at interest rates, the choice to pay down the credit card takes priority over establishing or maintaining an emergency fund.

The use of a credit card demands that you pay the bank for the privilege of having access to the money on your balance. You’ll pay close to 15% interest, even if you have a good credit rating.  On the other hand, interest rates for savings accounts and CDs are minimal compared to the interest rate that you will pay for revolving credit.

When you consider how much extra you will pay a bank for access to their plastic emergency fund compared with how much a bank will pay you to give them access to your savings, the smart money is in paying down your credit card balance.

The money you save in credit card interest over time can be used to maintain an emergency fund on your own terms. Alternatively, you may choose to allocate a larger percentage of your disposable income to paying off your credit card balance, while allocating the smaller percentage to your savings (our tools can help).

As you structure your finances to improve your long-term security, consider other smart money decisions: While you pay down your credit card balance, track your credit card spending, utilizing text messaging and statement features to keep you informed and aware of where, when, and how often you are using your credit card. As well, examine your spending habits in general.

You may be in the habit of purchasing a latté on the way to work each morning. While the daily cost may seem trivial, calculating the weekly and monthly total for this daily indulgence essentially leaves you with an extra monthly bill.  Consider taking a thermos or travel mug with you to work. With that thought in mind, think about packing a lunch instead of ordering a take-out lunch or frequenting the local deli.  The savings will add up in your favor.

You cannot control how the market will respond to economic changes, but you can control your response to economic fluctuations. You cannot control rising prices and interest rates, but you can control your spending habits, and you can make smart choices with your money.

Patience is a curious thing. It is something we are taught as children and reminded of frequently as we grow older with the emphasis that it is an important quality to have – a real virtue. However, when asked if patience is a quality we possess, many of us can likely think of more instances where we’d prefer instant gratification to patiently waiting for the fruits of our labors to pay off. In today’s society, we are caught up in a need-it-now world, and anything short of that just seems like a giant waste of time.

Lack of patience gets us into a lot of trouble, specifically with our credit. The “gotta have it now” mentality is deadly to your credit score, yet we keep sliding that shiny plastic card as if our lives depended on having the latest fad. We hate to be the bearers of bad news, but the latest fad is a cycle with no end. Things that are hot this week are bound to be ice-cold the next. The same item that can be purchased for hundreds of dollars on the premiere date can also be purchased for half that price a few weeks later. By simply having patience, you can save yourself a substantial sum of money every year. Although you will not be able to blog or tweet along with every other fanatic that is bent on keeping up with the times, you, too, will have the same benefits at a much lower price shortly thereafter.

The “gotta have it now” mentality makes it all too easy to make rash decisions. A little piece of plastic is not an accurate representation of the money you have, nor does it represent the hefty amount of debt you’ll be in if you can’t keep your hands off it. We quickly spend money that we do not have without even realizing it, and charging items can cause you to incur a dangerous amount of debt in a very short time span. The better approach, while admittedly more difficult, is to save up enough money to purchase those must-haves with your own hard-earned cash. By waiting patiently, not only does the item you desire tend to drop in price, but the allure of the item often loses its appeal. Because the reality of cost versus value is more apparent when you’re paying cash, it might inhibit your spending habits a little.

When purchasing anything, whether it be the latest cell phone, a new car, or that big screen TV you’ve had your eye on, there are important things to consider:  Do you really have to have it right now?  Is it possible that you could just as easily wait until you can afford it without the assistance of your credit card? How long would it take you to save the cash to pay for it?

Patience is not only a virtue; it is the best credit tool you could possibly have. Don’t fall to the “gotta have it now” mentality. If it isn’t on the list of basic necessities to live, chances are you really don’t need it right now. Adopting an “it can wait” mentality will save you incalculable amounts of money and protect your credit score.