Along with the legend of Bigfoot or the myth of The Loch Ness Monster
comes many money myths that may cause you to mismanage your finances.
Here are some of those money myths that many of us come across everyday.
Myth: Bankruptcy wipes away all of your debts.
Fact: There are plenty of certain debts that will stick with you after you file. These include child support, alimony, and student loans. Many times any legal fees or debts owed due to a lawsuit are also not included in bankruptcy.
Myth: Your debt dies with you.
Fact: Many times creditors will come after the estate to collect their debts. Any money or property left to beneficiaries may be distributed to payoff debt before it is dispersed to any heirs. Creditors cannot come after anyone else to collect the debt unless they were a cosigner. If there were not enough money to cover the deceased person’s debt than the debt could be written off by the creditor.
Myth: You have to pay 20% down to buy a house.
Fact: There are many programs and lenders that allow you to put down as little as 5%. There are also programs out there where you don’t have to put any money down. Each individual’s situation will be different. If you do not pay at least 20% though you will have to pay private mortgage insurance (PMI).
Myth: I can get a credit card and buy a bunch of nice things with it then file for bankruptcy.
Fact: It may be easy to think that someone could take advantage of bankruptcy and unfortunately there are people out there who try. But your finances and purchases are thoroughly examined when you file for bankruptcy. They will notice those major purchases and they may seize the items in order to help pay off your debts. Not only is it a bad idea, it is also illegal. You could be charged with fraud and open the door to a whole new world of problems.
To buy items you know you can’t afford with the intention of filing for bankruptcy is troubling, because no material item should be worth the bad mark that bankruptcy leaves. Bankruptcy should be reserved for those who are truly in need of its services.
Myth: My credit is good so I don’t have to order a credit report.
Fact: Even though you may have great credit doesn’t mean that someone has made a mistake or even worse, that someone has stolen your credit. It is good to take advantage of receiving a free copy of your credit report at least once a year. Go to www.annualcreditreport.com to request a copy from one of three agencies. Then review your credit report to make sure that everything on it is accurate. This is the best way to insure that your great credit score will stay intact.
Here area a few fun ones.
Myth: You can float a check longer if you write it in red ink.
Fact: You can write your check in any color of ink and it will be processed the same. You don’t want to try and float checks anyway, as many checks are now electronically processed the same day.
Myth: If you don’t sign the back of your credit card you won’t be a victim of identity fraud.
Fact: Actually, the very opposite is true. If someone steals your credit card and it is unsigned all they have to do is sign the name in their own handwriting and then they can freely use it always matching the signature. It is important to sign the credit card in your own handwriting. You can also sign it with “See ID” which will prompt a cashier into asking to see a photo I.D. whenever you make a purchase.
Myth: The classic myth that money brings happiness.
Fact: Sure, more money can help you pay the bills and get you caught up but you still need proper money management skills. Many times people who come across more money think it is ok to spend more money. More money can sometimes mean more problems.
There are many stories that revolve around money and finances and with the power of the Internet, myths and rumors can be exchanged like a common cold. So if you come across something that you are skeptical about, it is probably a good idea to contact a professional to find out its legitimacy.
Pioneer Credit Counseling is a bonded, non-profit credit counseling agency offering debt management programs, financial counseling, bankruptcy counseling and housing counseling nationwide. Call our friendly counselors today at 800-888-1596 or visit www.pioneercredit.com.
Our accredited credit counselors will help you take control of your financial life and get out of debt faster than you can on your own. We offer a debt management program that will stop the collections calls, lower your monthly payment and provide you peace of mind. Our pre and post bankruptcy counselors provide an easy process for you so you can focus on rebuilding your financial being.
It is our policy at Pioneer Credit Counseling not only to help people get out of debt, but also educate in sound budgeting practices.
Pioneer Credit Counseling can help you get out of debt faster. Find out how through one of our Debt Management | Debt Management Programs | Credit Counseling | Financial Counseling | Housing Counseling | Bankruptcy Counseling | Financial Educational Materials
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