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Can I Inherit Debt?

Man trying to role a huge boulder labeled "DEBT" up a steep hillWhen someone passes away leaving debts behind, you might be wondering if you have any personal liability to pay them. If you have aging parents, for instance, you may be worried about having to assume responsibility for their mortgage payments, credit cards or other debts. If you’ve asked yourself, “Can I inherit debt?” the answer is typically no, even though those debts don’t automatically disappear. But there are situations in which you may have to deal with a loved one’s creditors after they’re gone.

How Debts Are Handled When Someone Passes Away

Debts, just like assets, are considered part of a person’s estate. When that person passes away, their estate is responsible for paying any and all remaining debts. The money to pay those debts comes from the asset side of the estate.

In terms of who is responsible for making sure the estate’s debts are paid, this is typically done by an executor. An executor performs a number of duties to wrap up a person’s estate after death, including:

  • Getting a copy of the deceased person’s will if they had one and filing it with the probate court
  • Notifying creditors and other entities of the person’s death (for example, the Social Security Administration would need to be notified so any Social Security benefits could be stopped)
  • Completing an inventory of the deceased person’s assets and their value
  • Liquidating those assets as needed to pay off any debts owed by the estate
  • Distributing the remaining assets to the people or organizations named in the deceased person’s will if they had one or according to inheritance laws if they did not

In terms of debt repayment, executors are required to give notice to creditors who may have a claim against the estate. Creditors are then giving a certain window of time, according to state laws, in which to make a financial claim against the estate’s assets for repayment of debts.

If a creditor doesn’t follow state guidelines for making a claim, then those debts won’t be paid from the estate’s assets. But if creditors are less than reputable, they may try to come after the deceased person’s spouse, children or other family members to collect what’s owed.

Not all assets in an estate may be used to repay debts owed by a deceased person. Any assets that already have a named beneficiary, such as a life insurance policy, a 401(k), individual retirement account, payable on death accounts or annuity, would be transferred to that beneficiary automatically.

Can I Inherit Debt From My Parents?

Pencil erasing the word "DEBT"

This is an important question to ask if your parents are carrying high amounts of debt and you’re worried about having to pay those bills when they pass away. Again, the short answer is usually no. You generally don’t inherit debts belonging to someone else the way you might inherit property or other assets from them. So even if a debt collector attempts to request payment from you, there’d be no legal obligation to pay.

The catch is that any debts left outstanding would be deducted from the estate’s assets. If your parents were substantially in debt when they passed away, repaying them from the estate may leave little or no assets for you to inherit.

But you should know that you can inherit debt that you were already legally responsible for while your parents were alive. For instance, if you cosigned a loan with them or opened a joint credit card account or line of credit, those debts are legally yours just as much as they are your parents. So, once they pass away, you’d be solely responsible for repaying them.

And it’s also important to understand what responsibility you may have for covering long-term care costs incurred by your parents while they were alive. Many states have filial responsibility laws that require children to cover nursing home bills, though they aren’t always enforced. Talking to your parents about long-term care planning can help you avoid situations where you may end up with an unexpected debt to pay.

Can I Inherit Debt From My Children?

The same rules that apply to inheriting debt from parents typically apply to inheriting debts from children. Any debts remaining would be paid using assets from their state.

Otherwise, unless you cosigned for the debt, then you wouldn’t be obligated to pay. On the other hand, if you cosigned private student loans, a car loan or a mortgage for your adult child who then passed away, as cosigner you’d technically have a legal responsibility to pay them. Federal student loans are an exception.

If your parents took out a PLUS loan to pay for your higher education costs and something happens to you, the Department of Education can discharge that debt due to death. And vice versa, if your parents pass away then any PLUS loans they took out on your behalf could also be discharged.

Can I Inherit Debts From My Spouse?

When marriage and money mix, the lines on inherited debt can get a little blurred. The same basic rule that applies to other situations applies here: if you cosigned or took out a joint loan or line of credit together, then you’re both equally responsible for the debt. If one of you passes away, the surviving spouse would still have to pay.

But what about debts that are in one spouse’s name only? That’s where it’s important to understand how living in a community property state can affect your liability for marital debts. If you live in a community property state, debts incurred after the marriage by one spouse can be treated as a shared financial obligation. So if your spouse opened up a credit card or took out a business loan, then passed away you could still be responsible for paying it. On the other hand, debts incurred by either party before the marriage wouldn’t be considered community debt.

Consider Getting Help If You Need It

If a parent, spouse, sibling or other family member passes away, it can be helpful to talk to an attorney if you’re being pressured by debt collectors to pay. An attorney who understands debt collection laws and estate planning can help you determine what your responsibilities are for repaying debts and how to handle creditors.

The Bottom Line

Son talks with his mother about her debtWhether or not you’ll inherit debt from your parents, child, spouse or anyone else largely hinges on whether you cosigned for that debt or live in a community property state in the case of married couples. If you’re concerned about inheriting debts, consider talking to your parents, children or spouse about how those financial obligations would be handled if they were to pass away. Likewise, you can also discuss what financial safety nets you have in place to clear any debts you may leave behind, such as life insurance.

Tips for Estate Planning

  • Consider talking to a financial advisor about how to manage and pay off debts you owe or any debts you might inherit from someone else. If you don’t have a financial advisor yet, finding one doesn’t have to be difficult. SmartAsset’s financial advisor matching tool can help you connect with an advisor in your local area. It takes just a few minutes to get your personalized advisor recommendations online. If you’re ready, get started now.
  • The Fair Debt Collection Practices Act caps the statute of limitations for unpaid debt collections at a maximum of six years, although most states specify a much shorter time frame. However, some debt collectors buy so-called zombie debts for pennies on the dollar and then – unscrupulously – try to collect on them. Here’s how to deal with such operators.

Photo credit: ©iStock.com/NiseriN, ©iStock.com/AndreyPopov, ©iStock.com/FatCamera

The post Can I Inherit Debt? appeared first on SmartAsset Blog.

Source: smartasset.com

Drowning in Debt? Try These 15 Simple Recovery Steps

This page may include affiliate links. Please see the disclosure page for more information. Are you drowning in debt? You are not alone. 8 out of 10 Americans are also facing debt issues in one way or another. Americans are drowning in debt because they start borrowing without any discipline. As a result, debt doesn’t just derail…

The post Drowning in Debt? Try These 15 Simple Recovery Steps appeared first on Debt Discipline.


Drowning in Debt? Try These 15 Simple Recovery Steps was first posted on May 4, 2020 at 6:30 am.
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How to Negotiate Your Medical Debt

Let’s face it: The worst thing about having to go to the hospital to receive medical treatment is being slammed with a huge bill afterwards. Sometimes, these medical bills are so expensive that you simply don’t have the means to pull it off right away, especially without health insurance. While we may find it easier in the short term to pretend that our unpaid medical bills don’t exist, avoiding the problem could only make it worse. Many medical providers are aware of this, which is why there are ways that you can negotiate your medical debt when you are unable to pay in full. In this article, we will discuss the different ways you can go about taking care of those medical expenses so that they don’t stack up later and wreak havoc on your credit.

Negotiate for insurance rates

Without health insurance, you’ll most likely be charged a much steeper price. If you want to negotiate your medical bills, one thing you can do is research what the fair market value is for whatever treatments you received. Usually, this is the price that insurance companies have to pay medical providers, and most of the time, it’s a lot cheaper.

Once you’ve found the dollar amount you’d like to ask for, you will need to get in touch with the billing department. If the person on the phone turns you down, ask to speak to their supervisor. It’s important to remain calm and polite while doing this but be persistent. Continue to ask to speak to a higher ranking individual until you reach someone who agrees to make a deal with you.

Pay it in cash

Cash payments are hard to turn down in most cases. if you want to negotiate a lower price on medical bills, you can offer to make a cash payment. Call your medical provider or the billing department and ask them if they would be willing to knock down the price of your bills if you were to pay in cash. Explain to them that if they can’t offer you any other sort of financial assistance, then this is another route you can take.

Not only will this save them money on credit card fees and hours worked by office employees, but it will also save time spent on processing paperwork. This is a smart offer to make, as instant cash payments as opposed to electronic payments are a lot harder to say no to for any business or institution.

Ask for a payment plan

There’s a good chance that even after you’ve asked for a lower price and offered to pay in cash, your medical provider will be unwilling to give you a deal. When this happens, there is still one more thing you can try. Before readily handing over your credit card, ask them if you can make payments on your bill. Most companies will allow you to do this and are used to working with people who are unable to pay their bills in full. Be honest about how much you are able to pay at a time.

It’s likely that they will try to negotiate a higher payment amount, but politely tell them that it’s not feasible for you. Most of the time, they will be understanding and take whatever payment they can get. If you’re struggling financially, making small payments on your medical bills is the best way to go to keep your credit score in tact. As long as you are making payments on your bills, the companies will not report you to the credit bureaus.

Take precautionary measures

A lot of medical providers and medical facilities have programs that offer financial assistance, but you are going to have to ask them for it. Be transparent at the time of or even before your medical treatment occurs. If the treatment you are seeking is not a medical emergency, ask ahead of time if there is a cheaper option or if you can get a discount. If you don’t have health insurance, this needs to be explained as early on as possible. Let your doctor know if you are living off of low income or if you are in the midst of some other type of financial hardship that is keeping you from being able to pay for service.

If you are successful in negotiating your medical bills, you might want to get it in writing so that you have proof. In some cases, you may even want to make your request in writing so that you have it on record in case anything goes wrong later. Once a deal has been agreed upon by both you and the medical provider or billing department, type up a summary of the conversation including key details of who you spoke to and the prices that were negotiated.

Other options for paying bills

There is no one-size-fits-all way of clearing your medical bills once and for all.  Some people have insurance, some can afford to pay in full, and some are going to have to negotiate a lower price. If you have already tried negotiating medical bills and were unsuccessful, there are other options to explore. Here are some other ways you can go about paying your medical bills:

  • Medical credit cards: There’s no guarantee that your medical provider will accept a payment plan. However, most of the time, they will accept payment with the use of a medical credit card. If you have no other choice, ask your doctor’s office about how you can apply for a medical credit card. Usually, you are able to apply at the office right then and there. Most medical credit cards offer zero interest for up to 12 months. If you can manage to pay off the medical debt within that timeframe, then perhaps a medical credit card is a good choice for you. Be wary of this if you already have poor credit.
  • Personal loan: If you’ve already been through all of your other options and were unable to make something work, it might be time to look at taking out a type of unsecured credit, such as a personal loan. If you have a significant amount of medical debt looming over your head, this might be a good idea as you can usually take out anywhere from $1,000 to $100,000. Once again, if you don’t have a good history with using credit, seriously consider the pros and cons of doing this.
  • Interest free credit card: If you don’t end up qualifying for a payment plan or a medical credit card, you can use a 0% interest credit card to pay the tab as long as you have good or outstanding credit.
  • Hire a medical bill advocate: If you feel overwhelmed by the task of reading through your medical bills and looking for errors, you can hire a professional to do it for you. Medical bill advocates are familiar with common procedures and the prices of treatments. If you have been wrongfully charged or overcharged, a medical bill advocate will be able to find this right away. Aside from pinpointing any errors, experts in medical bills will also do the negotiating for you.

Final Thoughts

If you are feeling overwhelmed by a large medical bill, remember that you have several options for taking care of it. It might be tempting to ignore the bill altogether but doing this could really damage your credit. Being honest with your medical provider from the beginning can prevent you from having to deal with extra costs. However, sometimes medical bills are ineveitable and we have to pay them. Consider payment plans or a medical credit card, but whatever you do, don’t let your unpaid medical bills be a show stopper!

How to Negotiate Your Medical Debt is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

Here Are The Best Student Loans of 2021

The best student loans can help you earn a college degree that will lead to higher earnings later in life. They also come with low interest rates and reasonable fees (or no fees), which will make it easier to keep costs down while you’re in school and once you’re in repayment mode.

For most people, federal student loans are the best deal. With federal student loans, you can qualify for low fixed interest rates and federal protections like deferment, forbearance, and income-driven repayment plans. To find out how much you can borrow with federal student loans, you should fill out a FAFSA form. Doing so can also help you determine if you qualify for any additional student aid, and if so, how much.

While federal student loans are usually the best deal for borrowers, many students need to turn to private student loans at some point during their college careers. This is often the case when federal student loan limits have been exhausted, or when federal student loans are no longer an option due to other circumstances. We’re providing the top 8 options, at least according to us, as well as a guide to help you get the best rate.

Most Important Factors When Applying for Student Loans

  • Start with a federal loan. Fill out a FAFSA form prior to applying for a private loan to make sure you’re getting all the benefits you can.
  • Compare loans across multiple lenders. Consider using a comparison company like Credible to do so.
  • Always read the fine print. Fees aren’t always boasted on the front of a lender’s website, so take time to learn about what you’re getting into.
  • Start paying as soon as you can to avoid getting crushed by compound interest.

Best Private Student Loans of 2021

Fortunately, there are many private student loan options that come with low interest rates and fair terms. The best student loans of 2021 come from the following private lenders and loan comparison companies:

  • Best for Flexibility
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  • Best Loan Comparison
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  • Best for Low Rates and Fees
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  • Best for No Fees
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  • Best Student Loans from a Major Bank
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  • Best Student Loans with No Cosigner Required
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  • Best for Fair Credit
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  • Best for Comprehensive Comparisons
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#1: College Ave — Best for Flexibility

College Ave offers private student loans for undergraduate and graduate students as well as parents who want to take out loans to help their kids get through college. Variable APRs as low as 3.70% are available for undergraduate students, but you can also opt for a fixed rate as low as 4.72% if you have excellent credit. College Ave offers some of the most flexible repayment options available today, letting you choose from interest-only payments, flat payments, and deferred payments depending on your needs. College Ave even lets you fill out your entire student loan application online, and they offer an array of helpful tools that can help you figure out how much you can afford to borrow, what your monthly payment will be, and more.

Qualify in Just 3 Minutes with College Ave

#2: Credible — Best Loan Comparison

Credible doesn’t offer its own student loans; instead, it serves as a loan aggregator and comparison site. This means that, when you check out student loans on Credible, you have the benefit of comparing multiple loan options in one place. Not only is this convenient, but comparing rates and terms is the best way to ensure you get a good deal. Credible even lets you get prequalified without a hard inquiry on your credit report, and you can see loan offers from up to nine student lenders at a time. Fixed interest rates start as low as 4.40% for borrowers with excellent credit, and variable rates start at 3.17% APR with autopay.

Compare Dozens of Rates at Once with Credible

#3: Sallie Mae — Best for Low Rates and Fees

Sallie Mae offers its own selection of private student loans for undergraduate students, graduate students, and parents. Interest rates offered can be surprisingly low, starting at 2.87% APR for variable rate loans and 4.74% for fixed-rate loans. Sallie Mae student loans also come without an origination fee or prepayment fees, as well as rate reductions for students who set up autopay. You can choose to start repaying your student loans while you’re in school or wait until you graduate as well. Overall, Sallie Mae offers some of the best “deals” for private student loans, and you can even complete the entire loan process online.

Get Access to Chegg Study FREE with Sallie Mae

#4: Discover — Best for No Fees

While Discover is well known for their excellent rewards credit cards and personal loan offerings, they also offer high-quality student loans with low rates and fees. Not only do Discover student loans come with low variable rates that start at 3.75%, but you won’t pay an application fee, an origination fee, or late fees. Discover student loans are available for undergraduate students, graduate students, professional students, and other lifelong learners. You can even earn rewards for having a 3.0 GPA or better when you apply for your loan, and Discover offers access to U.S. based student loan specialists who can answer all your questions before you apply.

Apply for a Loan with Discover

#5: Citizens Bank — Best Student Loans from a Major Bank

Citizens Bank offers their own flexible student loans for undergraduate students, graduate students, and parent borrowers. Students can borrow with or without a cosigner and multi-year approval is available. With multi-year approval you can apply for student funding one time and secure several years of college funding at once. This saves you from additional paperwork and subsequent hard inquiries on your credit report. Citizens Bank student loans come with variable rates as low as 2.83% APR for students with excellent credit, and you can make full payments or interest-only payments while you’re in school or wait until you graduate to begin repaying your loan. Also keep in mind that, like others on this list, Citizens Bank lets you apply for their student loans online and from the comfort of your home.

#6: Ascent — Best Student Loans with No Cosigner Required

Ascent is another popular lender that offers private student loans to undergraduate and graduate students. Variable interest rates start at 3.31% whether you have a cosigner or not, and there are no application fees required to apply for a student loan either way. Terms are available for 5 to 15 years, and Ascent even offers cash rewards for student borrowers who graduate and meet certain terms. Also note that Ascent lets you earn money for each friend you refer who takes out a new student loan or refinances an existing loan.

Get a Loan in Minutes with Ascent

#7: Earnest — Best for Fair Credit

Earnest is another online lender that offers reasonable student loans for undergraduate and graduate students who need to borrow money for school. They also offer a free application process, a 9-month grace period after graduation, no origination fees or prepayment fees, and a .25% rate discount when you set up autopay. Earnest even lets you skip a payment once per year without a penalty, and there are no late payment fees. Variable rates start as low as 3.35%, and you may be able to qualify for a loan from Earnest with only “fair” credit. For their student loan refinancing products, for example, you need a minimum credit score of 650 to apply.

Learn Your Rate in Minutes with Earnest

#8: LendKey — Best for Comprehensive Comparisons

LendKey is an online lending marketplace that lets you compare student loan options across a broad range of loan providers, including credit unions. LendKey loans come with no application fees and variable APRs as low as 4.05%. They also have excellent reviews on Trustpilot and an easy application process that makes applying for a student loan online a breeze. You can apply for a loan from LendKey as an individual, but it’s possible you’ll get better rates with a cosigner on board. Either way, LendKey lets you see and compare a wide range of loan offers in one place and with only one application submitted.

Pay Zero Application Fees with LendKey!

How to Get the Best Student Loans

The lenders above offer some of the best student loans available today, but there’s more to getting a good loan than just choosing the right student loan company. The following tips can ensure you save money on your education and escape college with the smallest student loan burden possible.

Consider Federal Student Loans First

Like we mentioned already, federal student loans are almost always the best deal for borrowers who can qualify. Not only do federal loans come with low fixed interest rates, but they come with borrower protections like deferment and forbearance. Federal student loans also let you qualify for income-driven repayment plans like Pay As You Earn (PAYE) and Income Based Repayment (IBR) as well as Public Service Loan Forgiveness (PSLF).

Compare Multiple Lenders

If you have exhausted federal student loans and need to take out a private student loan, the best step you can take is comparing loans across multiple lenders. Some may be able to offer you a lower interest rate based on your credit score or available cosigner, and some lenders may offer payment plans that meet your needs better. If you only want to fill out a loan application once, it can make sense to compare multiple loan offers with a service like Credible.

Improve Your Credit Score

Private student loans are notoriously difficult to qualify for when your credit score is less than stellar or you don’t have a cosigner. With that in mind, you may want to spend some time improving your credit score before you apply. Since your payment history and the amounts you owe in relation to your credit limits are the two most important factors that make up your FICO score, make sure you’re paying all your bills early or on time and try to pay down debt to improve your credit utilization. Most experts say a utilization rate of 30% or less will help you achieve the highest credit score possible with other factors considered.

Check Your Credit Score for Free with Experian

Get a Quality Cosigner

If your credit score isn’t at least “very good,” or 740 or higher, you may want to see about getting a cosigner for your private student loan. A parent, family member, or close family friend who has excellent credit can help you qualify for a student loan with the best rates and terms available today. Just remember that your cosigner will be liable for your loan just as you are, meaning they will have to repay your loan if you default. With that in mind, you should only lean on a cosigner’s help if you plan to repay your loan amount in full.

Consider Variable and Fixed Interest Rates

While private student loans offer insanely low rates for borrowers with good credit, their variable rates tend to be lower. This is why you should always take the time to compare variable and fixed rates across multiple lenders to find the best deal. If you believe you can pay your student loans off in a few short years, a variable interest rate may help you save money. If you need a decade or longer to pay your student loans off, on the other hand, a low fixed interest rate may provide you with more peace of mind.

Check for Discounts

As you compare student loan providers, make sure to check for discounts that might apply to your situation. Many private student loan companies offer discounts if you set your loan up on automatic payments, for example. Some also offer discounts or rewards for good grades or for referring friends. It’s possible you could qualify for other discounts as well depending on the provider, but you’ll never know unless you check.

Beware of Fees

While the interest rate on your student loan plays a huge role in your long-term loan costs, don’t forget to check for additional fees. Some student loan companies charge application fees or prepayment penalties if you pay your loan off early, for example. Others charge origination fees that tack on a few additional percentage points to your loan amount right off the bat. If you can find a student loan with a low interest rate and no additional fees, you’ll be much better off. Since loan fees may not be prominently advertised on student loan provider websites, however, keep in mind that you may need to dig into their fine print to find them.

Make Payments While You’re in School

Finally, no matter which loan you end up with, it makes a lot of sense to make payments while you’re still in school if you’re earning any kind of income. Even if you make interest-only payments while you attend college part-time or full-time, you can save yourself from paying thousands of dollars in additional interest payments later in life. Remember that compound interest can be a blessing or a curse. If you can keep interest at bay by making payments while you’re in school, you can squash compound interest and keep your loan balances from growing. If you let compound interest run its course, on the other hand, you may wind up owing more than you borrowed in the first place by the time you graduate school and start repayment.

What to Watch Out For

A private student loan may be exactly what you need in order to finish your degree and move up to the working world, but there are plenty of “gotchas” to be aware of. Consider all these factors as you apply for a new private student loan or refinance existing loans you have with a private lender.

  • Interest that accrues while you’re in school: Remember that subsidized loans may not accrue interest until you graduate from college and enter repayment mode, but that unsubsidized loans typically start accruing interest right away. Since private student loans are unsubsidized, you’ll need to be especially careful about ballooning interest and long-term loan costs.
  • Getting a cosigner: Make sure you only apply for a private student loan with a cosigner if you’re entirely sure you can repay your loan over the long haul. If you fail to keep up with your end of the bargain, you could destroy trust with that person and their credit score in one fell swoop.
  • You’ll lose out on some protections: Also remember that private student loans come with fewer protections than federal student loans. You won’t have the option for income-driven repayment plans with private loans, nor will you be able to qualify for federal deferment or forbearance. For this reason, private student loans are best for students who are confident in their ability to repay their loans on their chosen timeline.

In Summary: The Best Student Loans

Company Best Of…
College Ave Best for Flexibility
Credible Best for Loan Comparison
Sallie Mae Best for Low Rates and Fees
Discover Best for No Fees
Citizens Bank Best Student Loans from a Major Bank
Ascent Best Student Loans with No Cosigner Required
Earnest Best for Fair Credit
LendKey Best for Comprehensive Comparisons

The post Here Are The Best Student Loans of 2021 appeared first on Good Financial Cents®.

Source: goodfinancialcents.com

What Is a Recourse Loan?

Car loan application

In borrowing, there are two types of debts, recourse and nonrecourse. Recourse debt holds the person borrowing money personally liable for the debt. If you default on a recourse loan, the lender will have license, or recourse, to go after your personal assets if the collateral’s value doesn’t cover the remaining amount of the loan that is due. Recourse loans are often used to finance construction or invest in real estate. Here’s what you need to know about recourse loans, how they work and how they differ from other types of loans.

What Is a Recourse Loan?

A recourse loan is a type of loan that allows the lender to go after any of a borrower’s assets if that borrower defaults on the loan. The first choice of any lender is to seize the asset that is collateral for the loan. For example, if someone stops making payments on an auto loan, the lender would take back the car and sell it.

However, if someone defaults on a hard money loan, which is a type of recourse loan, the lender might seize the borrower’s home or other assets. Then, the lender would sell it to recover the balance of the principal due. Recourse loans also allow lenders to garnish wages or access bank accounts if the full debt obligation isn’t fulfilled.

Essentially, recourse loans help lenders recover their investments if borrowers fail to pay off their loans and the collateral value attached to those loans is not enough to cover the balance due.

How Recourse Loans Work

When a borrower takes out debt, he typically has several options. Most hard money loans are recourse loans. In other words, if the borrower fails to make payments, the lender can seize the borrower’s other assets such as his home or car and sell it to recover the money borrowed for the loan.

Lenders can go after a borrower’s other assets or take legal action against a borrower. Other assets that a lender can seize might include savings accounts and checking accounts. Depending on the situation, they may also be able to garnish a borrower’s wages or take further legal action.

When a lender writes a loan’s terms and conditions, what types of assets the lender can pursue if a debtor fails to make debt payments are listed. If you are at risk of defaulting on your loan, you may want to look at the language in your loan to see what your lender might pursue and what your options are.

Recourse Loans vs. Nonrecourse Loans

Bank repo signNonrecourse loans are also secured loans, but rather than being secured by all a person’s assets, nonrecourse loans are only secured by the asset involved as collateral. For example, a mortgage is typically a nonrecourse loan, because the lender will only go after the home if a borrower stops making payments. Similarly, most auto loans are nonrecourse loans, and the bank or lender will only be able to seize the car if the borrower stops making payments.

Nonrecourse loans are riskier for lenders because they will have fewer options for getting their money back. Therefore, most lenders will only offer nonrecourse loans to people with exceedingly high credit scores.

Types of Recourse Loans

There are several types of recourse loans that you should be aware of before taking on debt. Some of the most common recourse loans are:

  • Hard money loans. Even if someone uses their hard money loan, also known as hard cash loan, to buy a property, these types of loans are typically recourse loans.
  • Auto loans. Because cars depreciate, most auto loans are recourse loans to ensure the lender receive full debt payments.

Recourse Loans Pros and Cons

For borrowers, recourse loans have both pros and and at least one con. You should evaluate each before deciding to take out a recourse loan.

Pros

Although they may seem riskier upfront, recourse loans are still attractive to borrowers.

  • Easier underwriting and approval. Because a recourse loan is less risky for lenders, the underwriting and approval process is more manageable for borrowers to navigate.
  • Lower credit score. It’s easier for people with lower credit scores to get approved for a recourse loan. This is because more collateral is available to the lender if the borrower defaults on the loan.
  • Lower interest rate. Recourse loans typically have lower interest rates than nonrecourse loans.

Con

The one major disadvantage of a recourse loan is the risk involved. With a recourse loan, the borrower is held personally liable. This means that if the borrower does default, more than just the loan’s collateral could be at stake.

The Takeaway

Hard Money Loan signLoans can be divided into two types, recourse loans and nonrecourse loans. Recourse loans, such as hard money loans, allow the lender to pursue more than what is listed as collateral in the loan agreement if a borrower defaults on the loan. Be sure to check your state’s laws about determining when a loan is in default. While there are advantages to recourse loans, which are often used to finance construction, buy vehicles or invest in real estate, such as lower interest rates and a more straightforward approval process, they carry more risk than nonrecourse loans.

Tips on Borrowing

  • Borrowing money from a lender is a significant commitment. Consider talking to a financial advisor before you take that step to be completely clear about how it will impact your finances. Finding a financial advisor doesn’t have to be difficult. In just a few minutes our financial advisor search tool can help you find a professional in your area to work with. If you’re ready, get started now.
  • For many people, taking out a mortgage is the biggest debt they incur. Our mortgage calculator will tell you how much your monthly payments will be, based on the principal, interest rate, type of mortgage and length of the term.

Photo credit: ©iStock.com/aee_werawan, ©iStock.com/PictureLake, ©iStock.com/designer491

The post What Is a Recourse Loan? appeared first on SmartAsset Blog.

Source: smartasset.com

Unemployment Benefits Explained: Terms, Definitions and More

Since the start of the pandemic, mass unemployment has rocked the nation. To help mitigate the damage, two economic stimulus packages allotted unprecedented sums of money to create new benefits programs that assist people who are out of work.

Millions of newly eligible folks now have access to benefits. But the new programs put state unemployment agencies in a tricky position. They are receiving record-breaking surges in applications at the same time that they are tasked with creating and paying out brand new benefits. The result: overburdened websites, unclear instructions and lots of jargon.

Take, for example, this update to applicants on Arkansas’ unemployment website after the second stimulus package passed:

“Some extensions and changes to federal UI programs will include the reinstatement of the FPUC program, extension of PUA program and PEUC program for those who qualify,” the notice states.

After reading that sentence, you may have a couple choice acronyms yourself. Maybe, “OMG — WTH does that mean?”

“Understanding the difference with all these programs and acronyms is going to be confusing,” said Michele Evermore, an unemployment benefits policy analyst at the National Employment Law Project.

Our plain English guide will help you make sense of it all. Consider bookmarking this page and referencing it as you trudge through the process of getting your benefits.

The 2 Unemployment Programs You Definitely Need to Know

The overwhelming majority of people relying on unemployment benefits are receiving aid from two key programs. According to figures from the Department of Labor, more than 13 million people are collecting Unemployment Insurance and Pandemic Unemployment Assistance benefits.

These two foundational programs provide the bulk of unemployment aid through weekly payments. Once you understand the difference between them, a lot of the other programs will start to make sense.

Unemployment Insurance (UI)

Also referred to as Unemployment Compensation, UI is the longstanding benefits program run by each individual state. It’s for people who are out of work at no fault of their own. To qualify for UI, you have to have made a certain amount of money in the recent past  — typically from a W-2 job with an employer that paid into the unemployment system through payroll taxes. Specifics like previous employment duration or earnings vary.

Depending on your state, average UI payments are between $180 and $490 per week, according to the latest data from the Department of Labor. The duration of UI programs also depends on your state. They last between 12 and 30 weeks (without any extensions). The most common duration is 26 weeks.

Additionally, to collect UI, you have to be able to work, available to work and actively seeking work. Some states have waived the “actively seeking work” requirement during the pandemic.

Pro Tip

Use this tool from the Department of Labor to find your state’s unemployment website and start a UI claim.

Pandemic Unemployment Assistance (PUA)

Pandemic Unemployment Assistance is a new federal unemployment program. It’s up and running in all 50 states. The first stimulus package created PUA in March 2020. Throughout the pandemic, PUA has been a lifeline for tens of millions of jobless people who don’t qualify for regular UI benefits.

For the first time nationally, gig workers and freelancers, who are considered 1099 independent contractors, have been able to receive unemployment benefits through PUA.

Beyond helping those who were laid off, PUA offers benefits to people who can’t go to work or lost income due to a variety of coronavirus-related reasons. Some examples include contracting COVID-19, caregiving for someone who has COVID-19 or staying home to take care of your kids whose school closed due to COVID-19 lockdown rules.

Because PUA is a federal program, all states must offer it for a maximum of 50 weeks. The minimum weekly payments vary by state, however, because they’re calculated as half your state’s average UI payment. With average state UI payments between $180 and $490, you can expect minimum weekly PUA payments between $90 and $245 depending on your state.

Our guide to filing for Pandemic Unemployment Assistance includes an interactive map to help you find your state’s application rules.
A woman holds hands with her infant while looking for something on her laptop.

7 Quick Definitions to Important Unemployment Terms and Programs

Now that you have a better understanding of the two major unemployment benefits programs, let’s look at extensions, payment enhancements and other important programs that you may be eligible for.

Here’s a primer on seven key terms that you’re sure to come across as you apply for benefits.

CARES Act: The Coronavirus Aid, Relief and Economic Security (CARES) Act was the first coronavirus relief package passed in March 2020. It expanded unemployment assistance, authorized $1,200 stimulus checks and provided relief for small businesses, among several other things. Under this law, those who are partially or fully unemployed as a direct result of the coronavirus may receive up to 39 weeks of federal unemployment benefits.

CAA: The Continued Assistance Act, aka Continued Assistance for Unemployed Workers, is part of the $900 billion stimulus package that became law on Dec. 27, 2020. It extends many of the unemployment programs created by the CARES Act.

DOL: The federal Department of Labor oversees all states’ unemployment systems. Your state may have its own agency named the Department of Labor that administers its unemployment benefits. Generally speaking, DOL refers to the federal agency.

DUA: Disaster Unemployment Assistance is not Pandemic Unemployment Assistance. You may come across this long-standing natural disaster assistance program on your state’s unemployment website. Do not apply. Despite their similar names, they are very different.

EB: Extended Benefits are available in every state except South Dakota. EB is a state-level benefit that extends Unemployment Insurance by six to 20 weeks — depending on your state and your local unemployment rate. To qualify during the pandemic, you may have to exhaust a federal unemployment extension first. (See PEUC below.)

FPUC: Federal Pandemic Unemployment Compensation boosts unemployment benefits by $300 a week for up to 11 weeks between Dec. 27, 2020, and March 14, 2021. Anyone who is approved for at least $1 of unemployment benefits will automatically receive this bonus. No separate application or action is needed. This program previously paid out $600 per week under the CARES Act, but that version expired in July 2020.

PEUC: Pandemic Emergency Unemployment Compensation extends the length of Unemployment Insurance aid for a maximum of 24 weeks. The first stimulus deal extended UI benefits for 13 weeks, and the second stimulus package added an additional 11 weeks. New applicants (after Dec. 27, 2020) are only eligible for the 11-week extension. This program does not extend Pandemic Unemployment Assistance.

Adam Hardy is a staff writer at The Penny Hoarder. He covers the gig economy, remote work and other unique ways to make money. Read his ​latest articles here, or say hi on Twitter @hardyjournalism.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

Up to $200 in easy credits available at Home Depot and Best Buy with new Amex Offers

It’s a new year, which means new credit card offers and (if I had to guess) an optimistic checklist of home and life improvement projects on your personal to-do list. If you’re itching to start 2021 with a bathroom renovation, backyard overhaul or a few choice home upgrades, there are two great Amex Offers available …

Source: thepointsguy.com

5 Personal Finance Products To Be Thankful For This Thanksgiving (Especially During COVID-19)

This Thanksgiving take a minute to think about what you’re thankful for. To make things easy for you, we’ve compiled a list of personal finance products and services to be thankful for this year. Nine months into a pandemic, it’s hard to feel grateful. But here are some personal finance products I’m certainly glad exist, since they save me major time and money – especially in these trying times.

The post 5 Personal Finance Products To Be Thankful For This Thanksgiving (Especially During COVID-19) appeared first on Money Under 30.

Source: moneyunder30.com

Which United Airlines credit card should you choose?

If you regularly fly with United Airlines or you live in or near Chicago, Denver, Houston, Los Angeles, Newark or San Francisco – the airline’s hubs – picking up an United Airlines credit card could make a ton of sense.

Not only can a United credit card help you earn MileagePlus miles faster, but you might also get a few handy perks, including free checked bags.

At the moment, United Airlines offers a handful of co-branded United credit cards for individuals or small business owners. But, how do you know which United Airlines credit cards are best?

Our guide aims to help you compare options so you wind up with the right airline credit card for your needs and your travel goals.

See related: United MileagePlus Dining Guide

Here’s the roundup:
United Gateway Card

  • Best card for big United spenders: Chase United Club Infinite Card
  • Best card for frequent flyers: Chase United Explorer Card
  • Best card for small business owners: United Business Card
  • Best card for frequent business travelers: United Club Business Card
  • Guide to United Airlines credit cards

    Compare fees, rewards, perks and extras:  

    United Explorer Card

    Annual fee
    • $95, waived the first year
    Sign-up bonus
    • 70,000 miles if you spend $2,000 in first 3 months
    In-flight discount
    • 25%
    No foreign transaction fees
    • Yes
    Extra bonus on certain categories
    • 2 miles per dollar spent on United Airlines, hotel and restaurant purchases, including delivery services like Caviar, DoorDash, Grubhub and Seamless
    • 1 mile per dollar spent everywhere else
    Limit on miles earned
    • No
    First checked bag free
    • Yes, for you and a companion on the same reservation
    Priority boarding
    • Yes, for you and companions on the same reservation
    Reduced mileage awards
    • No
    Redeem miles rebate
    • No
    Benefits
    • 2 United Club one-time passes
    • Tickets bought using miles eligible for free upgrades
    • Trip delay, baggage and auto rental insurance
    • Concierge service
    • Chase’s Luxury Hotel & Resort Collection perks, including breakfast for 2, free Wi-Fi and meal/spa credits
    Global Entry/TSA Precheck credit
    • Yes, up to $100 every four years
    Card network
    • Visa

    Chase United Club Infinite Card

    Anual fee
    • $525, waived first year
    Sign-up bonus
    • None
    In-flight discount
    • 25%
    No foreign transaction fees
    • Yes
    Extra bonus on certain categories
    • 4 miles per dollar spent on United purchases
    • 2 miles per dollar spent on dining
    • 2 miles per dollar spent on all other travel (including other airlines)
    • 1 mile per dollar on all other purchases
    Limit on miles earned
    • No
    First checked bag free
    • Yes, 2 bags for you and 2 for a companion on the same reservation
    Priority boarding
    • Yes, for you and companions on the same reservation
    Reduced mileage awards
    • No
    Redeem miles rebate
    • No
    Benefits
    • United Club and Star Alliance lounge membership
    • Priority check-in and screening
    • Waived fees on last-minute tickets bought with miles
    • Miles tickets eligible for free upgrades
    • Trip delay, baggage and auto rental insurance
    • Concierge service
    • Chase’s Luxury Hotel & Resort Collection perks, including free breakfast for 2, free Wi-Fi and meal/spa credits
    Global Entry/TSA Precheck credit
    • Yes, up to $100 every four years
    Card network
    • Visa

    Chase United Business Card

    Annual fee
    • $99, waived the first year
    Sign-up bonus
    • 60,000 miles after spending $3,000 in first 3 months
    In-flight discount
    • 25%
    No foreign transaction fees
    • Yes
    Extra bonus on certain categories
    • 2 miles per dollar spent on United Airlines, restaurant, gas and office supplies purchases
    • 2 miles per dollar spent on transit and commute purchases, including taxis, tolls and rideshares
    • 1 mile per dollar spent on everything else
    Limit on miles earned
    • No
    First checked bag free
    • Yes, for you and a companion on the same reservation
    Priority boarding
    • Yes, for you and companions on the same reservation
    Reduced mileage awards
    • No
    Redeem miles rebate
    • No
    Benefits
    • 2 United Club one-time passes
    • 5,000 bonus miles on your account anniversary if you have both a United Business Card and personal United card
    • $100 annual United travel credit after 7 United flight purchases of $100 or more
    • Trip, baggage and car rental insurance
    Global Entry/TSA Precheck credit
    • No
    Card network
    • Visa

    Chase United Club Business Card

    Annual fee
    • $450
    Sign-up bonus
    • 50,000 miles after spending $3,000 in first 3 months
    In-flight discount
    • 25%
    No foreign transaction fees
    • Yes
    Extra bonus on certain categories
    • 2 miles per dollar spent on United Airlines purchases
    • 1.5 miles per dollar spent on everything else
    Limit on miles earned
    • No
    First checked bag free
    • Yes, 2 bags for you and 2 for a companion on the same reservation
    Priority boarding
    • Yes, for you and companions on the same reservation
    Reduced mileage awards
    • No
    Redeem miles rebate
    • No
    Benefits
    • United Club and Star Alliance membership
    • Priority check-in and screening
    • Concierge service
    • Trip, baggage and car rental insurance
    • Discoverist status in World of Hyatt loyalty program
    • President’s Circle Elite status in Hertz Gold Plus Rewards loyalty program
    • Chase’s Luxury Hotel & Resort Collection perks, including free breakfast, free Wi-Fi, dining/spa credits and upgrades
    Global Entry/TSA Precheck credit
    • No
    Card network
    • Visa

    Lifetime Globalist

    How to qualify
    • 1,000,000 base points over the course of your membership
    Base-point rate
    • 6.5 points/$1
    Benefits
    • Receive Globalist benefits indefinitely, with no requirement to qualify for status each year

     

    Best United Airlines credit card with no annual fee: United Gateway Card

    If you’re looking for a United rewards card with no annual fee, the United Gateway Card is the best (and only) option to consider. This card starts you off with 10,000 bonus miles when you spend $1,000 on purchases in the first three months your account is open. You also earn:

    • 2 miles per $1 on United flights, purchases made at gas stations and on transit and commuting
    • 1 miles per $1 on all other purchases

    As an added bonus, you’ll even rack up 3 miles per $1 on up to $1,500 in grocery store spending per month through Sept. 30, 2021. Aside from not charging an annual fee, other United Airlines credit card benefits include 25% off in-flight purchases and no foreign transaction fees. That means this card is rather limited in terms of perks, but that’s par for the course when it comes to credit cards with no annual fee.

    Best United Airlines credit card for frequent flyers: United Explorer Card

    Frequent flyers would be better off with a United credit card with more benefits, which they’ll find with the United Explorer Card. First off, you can earn 70,000 bonus miles – 60,000 when you spend $3,000 on purchases in the first three months your account is open and another 10,000 bonus miles when you spend $6,000 in total purchases in the first six months of account opening. In terms of daily spending, you can rack up:

    • 2 miles per $1 on United purchases, dining including delivery and takeout and hotels booked directly
    • 1 mile per $1 spent on other purchases

    United Airlines credit card benefits you’ll receive include two United Club passes, a first free checked bag, a $100 credit toward Global Entry or TSA Precheck membership, priority boarding, 25% off in-flight purchases and no foreign transaction fees. Not only are these perks ideal for frequent United flyers who want a convenient travel experience, but they can help cardholders save money, too. This card does charge a $95 annual fee, but it’s waived the first year.

    Best United Airlines credit card for big United spenders: United Club Infinite Card

    If you’re a big United spender and you fly with the airline all the time, you’ll probably want a card that lets you rack up a ton of miles while also affording you a comfortable travel experience. The United Club Infinite Card is perfect in either case. This card replaced an older version of the United Club Card, but it offers even better rewards and perks designed with luxury travelers in mind.

    As a cardholder, you’ll earn:

    • 4 miles per $1 spent with United Airlines
    • 2 miles per $1 spent on dining (including takeout and delivery) and travel
    • 1 mile per $1 spent on all other purchases

    In terms of perks, you won’t be disappointed. Not only does this card give you membership in the airline’s United Club lounges ($650 value), but if you travel internationally, you will be able to access lounges for any airlines that are part of the Star Alliance, including Aer Lingus, Singapore Airlines and Lufthansa. Meanwhile, you also get two free checked bags for yourself and a traveling companion on the same reservation, as well as priority check in, priority boarding, priority securing screening, 25% off in-flight purchases and no foreign transaction fees. You’ll also get a $100 credit toward Global Entry or TSA Precheck membership.

    There is one major downside to this card: It comes with a $525 annual fee and there is no sign-up bonus. On the bright side, the annual fee is waived for your first year.

    See related: When is a credit card annual fee worth it?

    Best United Airlines credit card for small business

    If you’re a small business owner, you may also want to apply for one of the two United Airlines credit cards for business. The United Business Card is a good option for small business owners who travel for work or for leisure a few times per month, and this is due to its cardholder benefits and low annual fee.

    You’ll start off by earning 60,000 miles when you spend $3,000 on purchases within the first three months of account opening. You’ll also earn:

    • 2 miles per $1 spent on United purchases, dining including takeout and delivery, gas stations, office supply stores, local transit and commuting
    • 1 mile per $1 spent on other purchases

    Like all good United Airlines credit card offers, the United Business Card also comes with a handful of perks which include 5,000 miles on your cardholder anniversary each year when you carry a business credit card and a personal credit card from United Airlines. You’ll also receive two one-time United Club passes, a first checked bag free, priority boarding, a $100 United travel credit when you make at least seven purchases of $100 or more with United each year, 25% off in-flight purchases and no foreign transaction fees. A $99 annual fee applies, but it’s waived the first year.

    Best United Airlines credit card for business travelers

    Finally, United Airlines offers a business credit card that is perfect for frequent business travelers who want to earn a ton of miles and score lounge access when they fly. The United Club Business Credit Card starts you off with 50,000 miles when you spend $3,000 on purchases within the first three months of account opening. You’ll also rack up:

    • 2 miles per $1 spent United purchases
    • 1.5 miles on everything else

    While this card does have a $450 annual fee, you’ll get plenty of value when it comes to the perks you receive. Not only will you get a United Club membership valued at $650, but you’ll get a first and second free checked bag, priority check-in, security screening and baggage handling, 25% off in-flight purchases and no foreign transaction fees.

    Who should get a United Airlines credit card?

    The best United Airlines credit card offers make it easy to rack up miles for each dollar you spend, and most offer a generous bonus when you meet a minimum spending requirement. With that being said, United Airlines credit cards are really best for people who are loyal to the airline, or those who live in a United hub and wind up flying with the airline often by default.

    If you aren’t loyal to United Airlines or you want more options when it comes to cashing in your points, you may also want to consider a Chase travel credit card that lets you transfer your points to United at a 1:1 ratio, or redeem for other types of travel.

    As an example, both the Chase Sapphire Reserve and Chase Sapphire Preferred Card* let you earn points you can transfer to United, as well as other airline and hotel partners like Southwest, British Airways, Emirates, World of Hyatt, Marriott Bonvoy and more. Chase credit cards also let you redeem points for travel through the Chase Ultimate Rewards portal, which gives you even more flexibility.

    See related: How to earn and use Chase Ultimate Rewards points

    How much are United miles worth?

    Based on our internal comparisons, United miles are worth approximately 1.5 cents each. This means that, generally speaking, 60,000 miles are worth approximately $900. However, keep in mind that you may get more value if you redeem miles for premium flights or international flights.

    Fortunately, there are plenty of ways to get significant value out of your United miles, whether you want to travel the world or enjoy a relaxing trip closer to home.

    *All information about the Chase Sapphire Preferred Card has been collected independently by CreditCards.com and has not been reviewed by the issuer. This offer is no longer available on our site.

    Source: creditcards.com

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