As part of my commitment to providing free credit education, I regularly answer frequently asked questions and offer credit repair tips.
Here’s a question that recently came across my desk:
I have an open, old credit card account.  Don’t want to close it because it helps my credit score but I have no balance on it.  I have a limit of 6,000 on it.  Should I close it or at least lower the credit limit on it.?  I have another credit card I like better with a large balance 6,000 that I’m paying down this year.  I’d like to keep that one to use and should I lower that limit too once I get it paid off.
If you want to know how to raise your credit score, know that you should never close an account, nor should you ask for the limit to be lowered.
Here are a few credit repair tips that I can offer as explanation:
1) A big part of your score is the age of your accounts. Closing an old account can lower the average age of your accounts and, in turn, lower your credit score.
2) It sounds like you have only two credit cards. The credit-scoring formula will respond best to people with at least three and no more than five credit cards. Why at least three? They need enough information to judge you, and one or two credit cards simply is not enough information.
Ultimately, you should have a 720 credit score if you want the best interest rates. I’ve rarely seen people with 720 credit scores who have fewer than three active credit cards on their credit reports. But I have seen my fair share of people with more than five credit cards who still have a 720 credit score (or higher).
The moral?
If you already have more than five credit cards, you best course of action is to pay off your extra cards and let them go inactive. Do not close them. Do not reduce the limit.
3) Your three-to-five credit cards should be kept active. If you do not use them, the credit-scoring bureaus will not know whether you can juggle multiple debt obligations, and they will assign you a low score. Better safe than sorry, they will think.
You can keep the cards active by setting up an auto-pay on a small monthly bill, like your gym membership or a magazine subscription. This way, you keep the card active while still maintaining the low balance.
4) Part of your score is based on your balance-to-limit ratio. The credit-scoring bureaus look at both your individual accounts and your collective debt as a percentage of your collective limit. This is called a “utilization rate,” and in both cases, the closer you are to a 30 percent utilization rate, the better.
Let’s say you have two credit cards. One of them has a $6,000 limit and a $6,000 balance. In other words, you are maxed out. On that credit card, your utilization rate would be 100 percent, which would not earn you any points with the credit-scoring bureaus.
Assume now that you have a second credit card. This one has a $6,000 limit and no balance. On that credit card, you have a 0 percent utilization rate, which is great for your credit score.
And your overall utilization rate (assuming those are the only credit cards you carry) would be 50 percent, which isn’t great.
5) Since I don’t know the limit on your card with a $6,000 balance, it’s hard for me to tell whether that card is hurting or helping your credit score. If the limit is not at least $20,000, it is likely hurting your score.
You see, the credit-scoring bureaus will respond best to people with no more than a 30 percent utilization rate. So in your case, if the card with a $6,000 balance does not have a limit of at least $20,000, you have exceeded the 30 percent rule.
If this is the case, you should transfer $1,800 to the card with a $6,000 limit. This way, you maintain a low utilization rate on the card with a $6,000 limit, and you lower the utilization rate on the card with the $6,000 balance.
Keep in mind that my answers are always based on a credit-scoring perspective. You might have valid reasons for wanting to close your credit cards. For instance, if you have a long-term habit of abusing credit, your finances will probably be much better off if you live a credit-free life while adjusting your spending behaviors. But from a credit-scoring perspective, the answer to “Should I close my credit card accounts?” is “No!”

Going through bankruptcy is a difficult thing for anyone. While it might be important when creditors are becoming a serious problem, it is still something no person wants to face.
If you find yourself going through bankruptcy, you should know at least some ways to remain protected. One is to ensure that not everything is taken from you during this, and that includes your savings. Possibly the most important thing you must protect is life insurance because if you do not, creditors may leave your family with nothing after your death.
While you need to pay off creditors, you also need to keep a few things to yourself. During bankruptcy, creditors will want to take whatever they can without any regards to you or your family. This means you may end up in a hole that is near impossible to escape, a situation that may worsen if they took your safety net.

What is Protected?

Life insurance is too important to give up. If you were to pass, this is what helps to pay expenses so that your family does not end up in a bad financial situation. To prevent creditors from taking this, you need to understand what you can do. Under federal exemptions, you can protect up $10,775 of a life insurance policy’s cash value. Also, married couples may double all exemptions under the federal bankruptcy code.
If you fear that bankruptcy might take your life insurance, you can make it exempt. This will give you the chance to keep your money, or at least some of it, so that your family is not left with nothing after your passing.
You do have to look into what your specific state allows. All states are going to be different, some only protecting up to a certain amount and others requiring that you have had this insurance for a certain amount of time, so you should know more about the facts. One way you may be protected is if you have cheap life insurance. This will put you under the maximums for several states, making it possible to keep your money.
This exemption can give you at least some peace of mind in your life, something you need during such a stressful time. No matter what is allowed for it, as long as you qualify for the exemption, you can benefit from it. You have that extra security so that your family will always have something, regardless of the situation they find themselves.

Buying Life Insurance After Bankruptcy

Waiting for your bankruptcy to be completely off your records is not a good excuse to put off applying for life insurance. If cost is an issue, at least consider taking out a 10 year year term policy to make sure your family is protected. Going with a shorter term policy will be cheaper for now until you can get back on your feet. The only risk is that if something happens to your health that makes getting life insurance 10 years that much more expensive or, at worse, unattainable.
Before you apply for affordable life insurance, you’ll want to make sure that your bankruptcy is completely discharged. Most insurance companies won’t underwrite you in you’re in the middle of the bankruptcy process. Luckily, if the bankruptcy is discharged you shouldn’t have issue finding an insurance company willing to underwrite you.
The Internet is filled with free online term life quotes that allow you to get a quote in a minutes. Be sure to make them aware that you have filed bankruptcy recently. One of the biggest mistakes that people make when applying for life insurance is not being up front with the carriers. I promise you they will find out and if you try to hide it it will only hurt your chances on getting approved.

Understand Your Options

If you are facing bankruptcy, it is important to know everything you can do. Letting creditors have their way with everything you have to your name might result in you having nothing left. This is not only added stress, but it could hurt you in the long run. By taking advantage of what is out there, you can keep yourself in the green and make it easier to get back on your feet after this has finished.
This is a guest post from Jeff Rose, a certified financial planner and founder of LifeInsurancebyJeff.com. A site dedicated to helping families find affordable life insurance.

To make it through tough times more Americans have borrowed, stolen or raided their small retirement funds to make ends meet.
Loans from retirement funds jumped 20 percent last year. This really can’t be a big surprise to many. Faced with difficult financial decisions people will tend to gravitate towards the oath that seems easiest and less painful immediately.
It’s actually a classic example of hyperbolic discounting where a situation at hand today feels more urgent than one in the future.
The alarm over not being able to afford things leads people to make decisions in order to avoid more painfully imagined solutions like bankruptcy.
But what is actually more painful, a bankruptcy now that will take a couple years to overcome or retiring with little to no money left?
Logically an immediate bankruptcy makes the most sense. It allows people to discharge their debt, not have to raid the retirement accounts and actually leaves them better able to save for the future.
Along with setting themselves up to have to eat dog food to feed themselves in a future broke society, their poor debt relief decisions have left them unable to contribute as much to their retirement funds.
According to the Employee Benefit Research Institute survey, 27 percent of respondents said they are “not at all confident” they will have enough to retire comfortably. The reality is the actually number is much higher since acknowledgement would require people to overcome denial.
If you retire without sufficient income your choices are to continue to work, and most likely at menial jobs, or find a way to live for less.
The standard of life we expect in retirement may fall significantly short of what we will actually face.
At risk also are college savings for aspiring students. Parents already struggling to just make it month-to-month are having to cut back on their savings and are not able to put aside as much for college for their children.
The lack of college savings will require more student to either not attend college or go further in debt with dangerous student loans.
According to the College Board, students are already borrowing about twice as much as they did only a decade ago.
The more logical outcome to making these issues work is going to be to maintain a smaller or lower lifestyle than expected. That’s going to be tough for many people.

@GetOutOfDebtGuy
Author: This article was contributed by GetOutOfDebt.org, a site that provides free debt help and debt advice for people looking for answers.
Source: More People Preparing to Eat Dog Food in Retirement

If you have any concerns about your finances at all, sit back and listen to this 3-minute audio. After you do… read the rest of the post below.

—————————–
What did you think?
I remember speaking to Travis when he was considering filing bankruptcy; he was so stressed!
You probably know what I told him, but I’m going to say it again. I said, “Travis, you need to make a decision about your bankruptcy based on what is best for your family; however, don’t worry about your credit. Your credit is the easy thing to fix.”
Well, he took my advice, followed about ¾ of it…
Two years and two days later, he bought a home for 5% down, with an interest rate of 3.5%.
Think about that…
So many people worry about late payments, or a foreclosure, or a short sale… why?
If you know how to rebuild your credit, you don’t have to worry about past mistakes on your credit report.
The first step is simple: Sign up for my FREE webinar right here. Don’t delay. After all, if you attend the webinar right now, by summer or fall, your credit will be all taken care of!
If you want to change your life, click this link and sign up for this webinar right now.
Here’s to the best year of your life!
Px
P.S. Don’t put this off!  Click here to sign up for the FREE webinar.

If you want to know how to raise your credit score by paying off debt, you should know two things:

1. The lower your balance-to-limit ratio, the better your score.
2. You must keep credit cards active.

Let me start with your balance-to-limit ratio. Credit-scoring bureaus award higher scores to people who have credit card balances that are no more than 30 percent of their overall limit. If your limit is $10,000, for instance, your balance should never exceed $3,000.
One of my first strategies for helping a person build a 720 credit score is to lower each credit card balance to no more than 30 percent of the credit card’s limit.
That 30 percent target is the minimum you should aim for. If you can pay your credit cards entirely, great! Your score will be higher.
Important: Many people think that if they pay their credit card balances in full each month, they don’t have to worry about having a high balance the rest of the month. This is a common misconception.

From a credit-scoring perspective, bureaus look at your credit-card balances as a snap shot in time, which means that if you have a credit card with a $2,500 limit and a $2,000 balance on the day your credit report is pulled, your score will be lower… even if you just sent in a check for $2,000 that simply has not cleared the bank.
That is why in my Free Credit Score Webinar, I teach people to never charge more than 30 percent of their credit card balance. And the closer they can keep their balance to $0, the better!
This brings me to my second point.
You must keep your credit cards active. When I give my Free Credit Score Webinar,  I explain to people learning how to build credit that they must use their credit cards. Otherwise, the credit-scoring bureaus have no way of telling whether you are a responsible borrower.
Consider it like this: Let’s say you own an airplane. Owning an airplane isn’t enough to be granted a pilot’s license. You must first demonstrate your ability to take off and land, you must have hours of flight practice under your belt, and you must hold the proper certification.
Likewise, owning credit cards is not enough to demonstrate that you know how to use them. And because credit-scoring bureaus consider the most recent activity to be the most important, you must use them regularly.
So how do you keep a low balance on your credit cards while still keeping them active?
Simple. Let’s say you have four major credit cards that you want to pay off but keep active. (Ideally, you should have between three and five major revolving credit cards.) Here is a plan that shows you how to raise your credit score by paying off your debt.
1. Identify four bills that have a set monthly payment. For instance, your gym membership, magazine subscription dues, car insurance, and health insurance bills are probably the same amount each month.
2. For each of your four credit cards, schedule an auto pay of one of these bills.
3. Then, create an auto payment from your checking account to each credit card company. This auto payment should occur two days after your credit cards are charged for the bills. Let’s say, for instance, that you create auto payments for your Visa, MasterCard, American Express, and Discover cards to pay your gym membership, magazine dues, car insurance, and health insurance bills (respectively), on the 5^th of the month. You would then create another level of auto payments so that your checking account pays your credit card balances two days later.
This way, you will never pay interest, keep your credit cards active, and keep your credit cards paid off.
So what about other debt? Here’s a tip on how to build credit by getting small loans:
Let’s pretend you are going to buy some new furniture. Assume that you have enough money to buy the furniture outright; however, you would like to build your credit.
If the bank will report the loan as an “Installment Loan” to all three credit bureaus, it’s a great idea to finance part of the purchase. Then, pay the bills for three months before paying the remaining balance in full.
Let’s assume you finance $5,000 and pay 10 percent as an interest rate. Your monthly payments are $41.66, and you pay these for three months before paying the balance in full. During these three months, you pay only a little bit in interest, but you have a new item on your credit report that appears as “Paid in Full” and “In Good Standing.”
In summary, if you want to know how to raise your credit score by paying off debt, remember two things: keep your balance low and keep your debt active.

Philip X. Tirone is the creator of The Free Credit Score Webinar and the 14-Day Credit Challenge, both of which teach consumers how to raise your credit score and achieve a 720 credit score. You can visit his blog on how to raise your credit score at 720CreditScore.com

Why make it more complicated than it needs to be?
If your financial or credit situation is chaotic, you probably think turning over a new leaf will be too hard. But there are three easy ways you can improve your financial situation in 2013.
Tip #1: Write Your Goals Down!
What would you like to see change on your credit report within the next four to six months?
For instance, perhaps you want to:

• Pay off a credit card
• Lower your utilization rate
• Try to negotiate for a letter of deletion
• Create a plan so that you pay your bills on time every time
• Eliminate or reduce expenses
• Increase your income

Whatever your goal, write it down every single day this year.
Too often, life gets in the way of our long-term goals.
Jobs, personal lives, and hobbies seem to take precedence over organizing bills, establishing financial goals, and getting a grasp on the credit-scoring rules.
As a result, we forget about where we want to go. So there’s an easy fix …
If you start each day (or end each day) by re-writing your financial / credit goal, you will be much more likely to make decisions that support that goal.
Tip #2: Sit Down to Organize Your Bills
This might seem silly, but there are a host of byproducts that can come from simply making a list of your bills, the date the bills are due, and the approximate amount.
1. You will be less likely to pay them on time.
Forgetting to pay bills is an ever-increasing problem. Some bills are sent via e-mail. Others come in the postal mail.
Some bills are paid using auto-payment features, others are paid by credit card, still others require a check.
Without a centralized method of paying these bills, today’s modern conveniences actually make it less convenient to pay bills on time. It’s just too confusing!
2. You will see opportunities to cut your finances. When was the last time you reviewed your phone bill? And HOLY SMOKES! Do you really pay that much for your cable?
3. You will see how much money you are spending on discretionary items. If your bills add up to $2,500 a month, and you bring home $5,000 a month, but you only save $500 a month, you are spending $2,000 in discretionary spending. By listing your bills, you might be more inclined to set a budget.
Tip #3: Read a Book
Do you think that if you read one financial self-improvement book that you would be better off at the end of the year? Of course you would!
Remember: A person who does not read learns the same amount as the person who cannot read.
Each year, a bevy of books about taking control of your financial life hit the bookstores. Though some are better than others, each and every one of them will expand your knowledge simply by forcing you to focus on your financial situation.
Simply by making the choice to read a book, you will dramatically increase your likelihood of reaching your financial goals because you will spend more time thinking about and planning your future.
Pick a book you want to read.
Now, order the book today! Even if you read just one page a day, the power you gain by focusing on your finances will change your life forever!
That’s it: Pick and write down a goal, list your bills, and read a book.
It’s that simple.
What book will you read? And what is your goal for 2013? Let me know by leaving a comment below.
Here’s to a great 2013!
Philip Tirone
P.S. If you have already read great books about financial management, share your recommendation below!

For all of my life and especially through my financial struggles the assumption that money troubles are tied to morality and that people with debt troubles are somehow morally broken or moral failures and need to repent at their very hour of need, persist. It’s a false belief that haunts nearly every single soul that has fallen into the pit of dark claustrophobic and oppressive debt.
Since I began helping other with debt problems in 1994 I’ve heard the same refrain over and over again, “But I made a promise to pay my creditors and I have to make those payments.” I hear you but I’ve got to say, “Or what?” Seriously, what’s going to happen if you don’t for a bigger and more important reason? Will your children be ripped from your arms while you sleep, will Bank of America stop making loans, or will you be judged and damned to hell for your inability to forecast the future and get it right?
The moral view of promises is rightly felt. We are taught as children that we are to keep our promises but those promises are about cleaning our room, not cleaning our room ten years from now with interest. And we cast guilt on those that make a promise but can’t keep it by calling them a liar and we are supposed to think less of them. Nobody wants that to be the impression of their existence. So because of incorrect thoughts during a panicked time in our lives we simply make some really bad decisions.
I remember feeling the same guilt as many others do when I landed in bankruptcy in 1990. I felt like a loser, horrible, and a man that had failed to honor his promises to creditors. “I made a promise and dammit I’m going to keep it,” I thought. What I didn’t know at the time was the second sentence that went with that feeling. I forgot to add, “Even if it means hurting my family and leaving us in a worse situation.”
I wondered what God would think of me for being a financial screw up and funny, I never worried about what God would think about me making creditor demanded minimum payments I could no longer afford on terms that basically left my wife and daughter homeless.
It took years of helping others and years of contemplative introspection to look at this issue of bankruptcy and morality with a different view. In retrospect a good swift kick in the ass and a year of therapy working through these twisted issues I built in my head would have allowed me to find similar answers in a shorter period of time. But leave it to the person all screwed-up to know what’s best. Oh yea, and then there’s the issue that I was so broke and without health insurance that paying for therapy was entirely out of the question.

And it may surprise you to learn that this debt, bankruptcy and morality issue is entirely complex and basically simple, all at the same time when you view it from outside the black hole of momentarily imploding debt that feels as if it will swallow your soul, whole.
Many hundreds of generations of people have embarked on unimaginable life journeys that end in servitude and slavery to pay off debts, including in some cultures debt bondage that lasts for more than one generation. Sadly debt servitude is not a lost practice and still exists today in many distant and remote locations. It is estimated that 27 million men, women and children are today serving as sexual or labor slaves because of debt.

The most common form of servitude today is debt slavery, in which a person becomes held as a laborer on a farm, or as prostitute in a brothel, or as worker on a factory floor after accepting a loan, or transport, or another form of assistance from a “lender.”
The lender is a slave owner or trafficker, often tricking laborers into working for little or no pay, making it impossible for them to escape their condition. And the enslaved, Cockburn writes, have nowhere to turn.
“Such captives the world over are mostly helpless,” Cockburn wrote. “They are threatened; they live in fear of deportation; they are cut off from any source of advice or support because they cannot communicate with the outside world.” – Source

Is slavery to repay debts moral? Is selling your children into lives of servitude a respectable or reasonable way to repay the debt from last years farm failure because it didn’t rain? Is it moral to sell your child into sexual slavery to pay the bill you can’t afford. Somewhere right now someone is say it is reasonable and they’re doing it.
So you see there is a moral slippery slope of what is appropriate to deal with problem debts. Somethings we’d never consider as appropriate, while others do every day. But if we want to judge our financial situation with morality it must be done in shades of grey, not black or white.
If we flash forward to a modern capitalistic society the issue of moral failure from bankruptcy is only applied to individuals. Corporations are rewarded for filing large complex bankruptcies to reorganize their financial state to get back to operating again.
Think about the restaurant chains with hundreds and hundreds of stores that file bankruptcy to keep them open and hopefully earning a little bit and that keeps a lot of people employed. Is that a good thing or a bad thing?
But people are not big chains and what’s good for business and a wise move is feed to consumers as wrong and people are wrongfully manipulated into an opposite course of action that serves others through continued payments to creditors or through paying a debt relief agency to attempt to resolve the problem.
Hell, do you have any idea how easy it is to twist the mind of a fearful debtor? Pretty damn easy. Scammers and hucksters do it all the time for their own financial gain. They directly tell you or make you feel as if bankruptcy is only a last resort in order to promote their solution to extract a portion of currency from your wallet.
Let’s examine the transaction made by an individual when they enter into a promise to repay a loan or credit card.
Let’s say I was to borrow from you a cup of sugar and promise to repay it tomorrow. The chance of me repaying the sugar are high and it is a transaction with little risk. Not much is bound to happen between the time I borrow the sugar today and I make arrangements to buy sugar tomorrow and return the cup full.
But let’s change the transaction and say the deal is that I borrow $10,000 today and make a promise to repay the debt over the next 120 months in equal monthly monthly installments.
Here is the problem. The likelihood to forecast the conditions tomorrow will bring are very high. The likelihood you will be able to forecast your economic conditions over the next ten years is murky at best. Frankly it is only possible to do so by bringing in an actuary and extrapolating odds and chances of what will happen to a pool of people in a similar situation as yours, but not your individual life.
You can guess at what you’d want to have happen but nobody really knows what is going to happen. And a lot can happen in a decade or even a year. Your employment situation may change outside of your control, you may be struck with an unexpected illness, war may break out, a global economic recession may ensue, etc.
When a lender makes a loan one of the factors they consider is their risk in getting repaid. They already know some portion of people are not going to be able to satisfy the obligation. That risk is built into the cost of the loan for all in the interest rate component. If some people default within the range estimated, the lender still makes the forecasted profit.
The extension of the loan is not a moral affair between a commercial lender and an individual. It is a business transaction that is supposed to result in one outcome, profit.
When a lender makes you a loan they do not make you put your hand on your religious text and make a moral pledge to repay. They ask you to sign your name and enter into an obligation to repay is in accordance with these terms and the law. It is not a moral transaction. It is a legal contract.
There is not a hint of morality in the business exchange. The only allegiance the lender has is to their profit or to make shareholders happy, not to place you in a perch of moral uncertainty. If the transaction was based in some requirement of morality then why doesn’t the lender ask about your marital faithfulness, theft of pens from work, how much you help the less fortunate, or if you cheat on your taxes.
The only moral component that comes into play in a failed financial transaction is our internal feeling of failure to honor our promise. But in many small ways don’t we already do this every day?
When you obtain a driver license you enter into a promise that in exchange for the license you will conduct ourselves in accordance with the rules of the road. Is not coming to a full stop before turning right a moral failure? Is it a lie or a damnation against our future lineage? How about knowingly exceeding the speed limit by 7 miles per hour. Is that a moral failure?
Is there even a definitive difference between a moral failure and a failure in general? I realize I keep asking a lot of questions but introspection and an examination of these complexities requires you to consider a number of issues so you can come to a healthy conclusion.
Is it more moral to strand your family in an unsafe living condition where you are barely making ends meet for years on end and unable to save for emergencies so you can continue to struggle to make your minimum installment payments? Does your moral responsibility first extend to others before your responsibility to yourself or your family?

STOP And Think.

Think carefully about that question for a moment. Morally, do you put your duty and responsibility to a credit card company before that to keep you and your family safe and prepared for tomorrow?
The inability for people to make payments as they agreed is based in an inflexible agreement that would only be successful in a perfect world without unexpected life interruptions. That ten year repayment agreement assumed a lot of things; that employment would be secure, wages would rise, that harvests would be robust, that working conditions would continue to get better and that there would be no outside interference in your ability to make the monthly payments. That’s a lot of wishing isn’t it?
Agreements between individuals contain flexibility. If I was your neighbor or known member of your community I’d listen to your change in circumstances and we’d work out a resolution that made sense. That resolution might even include a forgiveness of your debt.
But creditors and credit card companies are not Phil down the street, they are instead large process driven organizations that conduct themselves with policies and procedures that result in inflexibility by their own choosing.
Their lack of accommodation occurs by the regulatory framework they must operate under and the incredibly high cost that would be incurred by treating each loan as an individual agreement to be negotiated separately.
Creditors or more so debt collectors only inject morality into the transaction when they want to collect it. They do this for one reason, to manipulate you into repaying. Remember I said how easily debtors could be twisted.
“If you were a respectable person you’d honor your promise to repay,” the collector may say. But isn’t the flip side true as well. If the lender was a respectable entity they’d recognize that circumstances have changed and there are now hurdles currently prohibiting you from making your minimum payment due even though you want to? They’d work with you. But the lender wants absolutes in an uncertain existence. Life just isn’t always that pretty and predictable as much as they wish it to be.
There are popular figures on radio and television that proclaim bankruptcy is to be avoided at all costs. There are certainly many debt relief websites that say that very thing as well to promote the product or service they are trying to sell. In fact before my enlightenment about bankruptcy I once felt the same way. I no longer do. I’m not afraid to clearly say, “I was dead wrong.”
Bankruptcy is a natural cleansing of the necrotic financial remnants that linger following an unfortunate event. It is a path to the resurrection of an otherwise doomed situation. The sweeping forgiveness of debts can be found in many, if not all religious texts. In fact if we can forgive sins, can’t debts be forgiven as well if need be?
How is it that I can ask God for forgiveness of some moral failure and it is forgiven but some feel they must struggle for years and years to make unmanageable payments to creditors to avoid a moral failure. It just doesn’t add up with close inspection. One of those assumptions or beliefs is not true.
I’m certainly not suggesting that your intention should ever be to take on credit with the intention of defaulting. But the idea of clearing debts to start over goes back nearly 6,000 years. It is a long historical tradition that is meant to accomplish one thing, freedom from an unreasonable condition and the ability to start over to do better and learn from the misfortune. Debt forgiveness has meant a breaking of tablets, tearing of contracts, or the destruction of records but all efforts accomplished the same goal, to free people and give them a legal second chance.
The forgiveness of debt was important enough a condition that our the founding fathers of the United States of America wrote it into our core documents without any attachment of morality.

The Congress shall have Power…To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States; (United States Constitution)

Let’s flash forward again to modern day. A family is struggling to make ends meet. They’ve been selling all they could on eBay to get the mortgage payment together and the retirement accounts are now drained in an effort to morally meet their promises to repay.
But is that really the highest moral road or just one created out of a lack of clarity over this difficult subject and an inability to come to terms with this difficult subject?
If we are to view the situation in moral terms, is it more moral for a family to spend itself poor and rob the very retirement funds set aside to care for them when they can least afford it, thus potentialy casting them on the mercy of future public coffers when they may not be able to feed themselves?
At some point the ability for a family to stand up and say they need to address the situation in a logical and terms focused way, as was used to enter into the agreement, is more moral.
Interestingly bankruptcy does not rob people of the ability to honor their promises to repay their creditors. All bankruptcy does is provide the debtor with the flexibility they need to repay their creditors in accordance with what they can afford today and not based on what was hoped for eight years ago. That is if they so desire to do so. Going bankrupt places no limitation on your rights to repay your creditors the debt that was legally discharged.
Least we lose sight that like the contract that was signed to enter into the loan, bankruptcy is a mutually legal process and sanctioned under the law as a second chance and fresh start for people without an otherwise reasonable chance to recover from their financial misfortune.
So let’s turn back to a comparative question. If I said you had two choices to pick from to make your debt go away and give you the opportunity to learn from your financial mistakes and move forward, would you sell a loved one into some type of slavery or file bankruptcy?
Let’s put this morality issue into proper perspective. The bottom line is that in a number of different and various constructs, bankruptcy is not a moral failure and in reality has nothing to do with morality at all. It may be the most reasonable, levelheaded, and logical path to follow.
And unfortunately there is no permission slip I can issue you to remove doubt and moral fear from your consciousness as you consider bankruptcy. Dealing with those emotions will be your chore but keeping in mind all I’ve said here will help you to come to a clear, rational, and sound decision that is not based in half-baked assumptions.
If you’ve read this far it’s time for you to find a local bankruptcy attorney and discuss your situation with them. You may also find some additional help and solace in How to Get Out of Debt. The Honest and Unvarnished Truth.

@GetOutOfDebtGuy
Author: This article was contributed by GetOutOfDebt.org, a site that provides free help for people looking for advice on how to get out of debt or getting out of debt.
Source: Is Bankruptcy Sinful and Bad or Right and Moral? An Examination.

Unless you use a local bank, your bank probably creates all sorts of unfair bank charges and other policies like excessive overdraft fees. And this is just one reason that your bank’s policies stink.
Here are five bank policies that should be changed, and changed immediately.
#1: They Intentionally Keep You in the Dark about Credit
You would think that bankers would be trained to tell their clients everything about credit scores, how to build credit, and how to bounce back from bankruptcy. After all, wouldn’t banks want to help their customers secure the best interest rates?
Hah!
Banks intentionally keep customers in the dark. In my opinion, they do this so your interest rates will remain high and they can keep pocketing money (as if the unfair bank charges aren’t enough). When I went into bank with a SpyCam to ask how to improve my credit score, the banker gave me incorrect, misleading, and incomplete information.
To be fair, I do not think it was the banker’s fault. The bank failed to train him.
So not only do the banks levy unfair bank charges and refuse to provide loans to qualified taxpayers, they also charge high interest rates and keep silent about how you can improve your credit score and lower your interest rates.
Unfair? I think so.
#2: Banks Regularly Report Inaccurate Information
Your credit score is determined by information banks and other creditors report to the credit bureaus. But according to a United States Public Interest Research Group study, 80 percent of you have errors on your credit reports, 25 percent of which are so bad that you would be turned down for a loan or a job.
Let me repeat that. You might be denied a job because the banks report inaccurate or false information to the credit bureaus. With a 9.1 percent unemployment rate, the banks should be a little more concerned for your welfare.
But your bank does not take the time to make sure the information it reports is accurate—the burden is on you. Unfortunately, most people do not know about the mistakes until they have been denied a job or a loan.
And here is the kicker: If you have an artificially low credit score due to bank error, the bank will charge higher interest rates if you apply for a loan.
Why would the bank bother checking to make sure information is accurate when they benefit from these unfair bank charges? Basically, they get to legally rob you of your hard-earned money!
#3: Stingy Guidelines, Loose Morals
In days past, the banks lent money to everyone, even if they were unqualified; nowadays the banks won’t give anyone a loan, even if they are qualified.
A client of mine is looking for a $300,000 loan on a $2 million piece of property. Her loan-to-value ratio is 15 percent, a figure that offers almost no risk.
So why are the banks refusing to give her a loan?
They say that because she is self-employed, she is a risk.
But she is clearly a picture-perfect borrower. She would never default on a $300,000 loan when she has $1.7 million invested in the property. She has enough money currently in reserves to pay the loan for five years. She has a crystal-clean credit report.
The banks were more than happy to take hundreds of millions in bailout money (a.k.a., taxpayer dollars), but now they are stingy when it comes to providing these very same taxpayers with loans.
And I think this sucks.
#4: Unfair Bank Charges in the Form of Overdraft Fees
One of my colleagues, a sole proprietor, told me this story about unfair bank charges that happened a couple of years ago.
The day after my colleague deposited a large check from a client, the full amount of the deposit was reflected in her business account. Per her normal routine, she completed her budget that night, cut checks to cover business expenses, and transferred extra money into her personal account.
A few days later, she logged onto her account and was shocked. The account was overdrawn substantially, and she had incurred nine—nine!—overdraft fees over the course of three days. The overdraft fees alone were $315.
So what happened?
The client’s check bounced.
Okay, to be fair, she should have overdraft protection. She should have paid a little closer attention.
But the bank has her email address. They have her phone number. They could have simply alerted her after the first bounced check so that she could transfer money from her personal account. Banks have all sorts of systems in place to contact their clients with promotions. If they put their heads together, I feel certain they could create a system to alert customers the minute their accounts become negative.
This would be basic customer service, in my opinion, but banks fail to do this. After all, all those unfair bank charges put money in their coffers.
#5: They give loan modifications to people who break the rules and refuse to modify loans for those who follow the rules.
Now does this make sense at all? To qualify for a loan modification, you have to be behind on your payments. If you are responsible, cut corners, and take a second job so you can make your loan payments, the bank probably will not give you a loan modification.
This irks me more than all those unfair bank charges. In fact, this is a moral outcry. If you play by the rules, you receive harsher treatment than those who cannot fulfill their obligations. And I think this stinks to high heaven.