BA Q&A: Bankruptcy Is No Joke

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Wait, actually it's this is the b a q a A the b a q a which to say the b a q a with tiffin a the b a q a eight no man day the b a.

Q a just may Okay, Hey, I am back in this too. Manday's not here today, but that's okay.

I got you. We're gonna do a little b a q A.

That's when I or myself or and Manday and I answered you were questions about business, personal finance career to the best of our black and brown ability that you're gonna take with the smallest green of salt because you do not pay us too. So we're not your attorney, we're not your doctor, we're not your your mama. But we are your favorite qtie pie internet cousins answering financial questions.

Okay, okay, so let's start out with some questions.

If you have questions, you can go to brannibisionpodcast dot com. There's like a contact us button or whatever they're You can ask a question there. You can slide into the dms on Instagram, Brianna Vision Podcast, Twitter, THEBA Podcast, Brannibisionpodcasts at gmail dot com. You can email us, you know, ask your questions. All right, so let's start with dum.

Okay, let me see who's this.

Oh hold up, it looks like we have two dudes in the STU today.

Okay, so we're gonna start with Rob.

Hey Rob, Rob says, Hey, ladies, I'm a fan of you both. By the way, my sister who by way of my sister who encouraged me to listen to your podcast. Shout out to Robin or Okay, see what your parents are there, Robin, Robin.

I love it.

I thoroughly enjoyed the topics, and I have learned a lot so far.

We love that.

I had a serious question pertaining to debt management. I'm currently twenty eight and I work for the financial industry and I'm making good money.

However, I have.

A ton of debt due to poor decisions and being taken.

Advantage of my family.

Oh wow, Okay, this debt has been lingering for years, and recently my wages were garnished. Okay, I can't afford that at the moment, in addition to repayment of my student loans beginning in October, because y'all know, know the goopid told the president we got to stop paying okay, the student loans that he paused, those payments that he paused. She says, I'm actively seeking an attorney to explore options to stop garnishment and how to manage to eliminate other

Thanks? Rob, Well, Rob.

First, I want to say I'm so sorry that you've been, you know, taking advantage of by some family, you know. Good on you for acknowledging that, you know, sometimes you make mistakes and we're here as a result of that, and those things happen because Shah I have been there, done that, literally.

Wrote the book about it.

Okay, So I just want to acknowledge that first and foremost, and I would say.

I want you to be very clear when you file for bankruptcy.

Is not easy, guy, is not as easy as it used to be because when you because there are like two ways that you could file for bankruptcy, Chapter seven and chapter thirteen. So bankruptcy as we know it gives you the opportunity to pay down a portion of your debts over time or have some of them eliminated entirely.

Right. So, either way, when you.

Declare bankruptcy, it grants what's called an automatic stay, which basically means a block on your debts to keep creditors from trying to collect. They can't deduct money from your bank account, they can't go your wages, they can't go after other assets potentially, and so you you'll have time to work with the courts and your credits to determine

You belong to me.

Now I'm the captain, now you know. So Chapter seven can be very aggressive. So it depends on what state that you're in. It's going to determine like what assets, like you're retiring an account. Maybe like I said, I know I mentioned your house in your car, but some of them are exempt from liquidation depending on your state. So you would check with an attorney depending on your state to find out what you'd be allowed to keep.

So but keep in mind if you.

Don't pay, like, if you don't align with the payment plan, they can come after other stuff like if we're chapter thirteen.

Okay.

Now, the issue to your point, Rob, is if you your credit is going to be for the most part, severely affected if you especially chapter thirty, chapter seven, you know, and so it's going to stay on your credit report for up to ten years.

And so Chapter thirteen.

Although it will affect your credit like as well, it's viewed a little bit more favorably because you're still paying off at least some of your debts versus just getting them like wiped away. The bankruptcy still stays on your credit for a very long.

Time, very long time.

And now here is the thing. Bankruptcies are publicly filed. They're considered public record. Now doesn't mean that you know they're going to be like sending a letter to your mama. But oftentimes I think it was like I I read a statistic it's like up to twenty nine percent of employers do check your credit.

And especially I'm not gonna lie to Rob.

You're in the financial industry, so filing for bankruptcy because you're in the financial industry and you're very young, you didn't say how much you owed makes.

Me feel a little bit new this.

Because although you have a job, so it might not keep you from a job.

I've actually heard people.

I remember a friend of mine was working like a trucking company and couldn't get a promotion because what she did was she handled, like I guess accounts and things like that, and they felt like, if you have bad credit, you might be more likely to steal, and so she couldn't get a promotion until she got her credit score up. I had another friend who really my mentee. She just got to graduated law school and they let her know because she had an internship. Until you get your credit

And like I said, that's this on your credit for ten years.

Rob, you young, sir, You're young, so I'm not here to tell you what to do, but I'm here to tell you what I would do, which is I follow for bankruptcy. You know, like unless I owed a million dollars, ten million dollars something crazy, then I'm like that makes sense. People be following for bankruptcy for some old ten thousand dollars. No not you know and you you know you got seven kids and you're eighty five. No, Rob, you're twenty eight. I'm sure you don't own a million or a million dollars.

You want to know something some of them? Here you go.

There's credit counseling right there are literally certified nonprofit credit counseling agencies that help you basically similarly due to what Chapter thirteen would do, which is helped to reorganize your dat One of my favorite is write this down, Rob, you got your pen NFCC dot org. Actually gonna be just like typeing in so I can't remember, I can't look at it. N f n FCC dorg.

And they are the wh do they call themselves?

They are that I believe they're the National except National Foundation for Credit Counseling and I like them because one they it's a nonprofit organization and they have partners in every state that these certified nonprofit credit counseling agencies in every state, so you can find one in your state then and from what I remember the last time, I mean, I don't know if they do now, but it would be like they used to do, like a sliding scale,

I don't know if that's still the case.

You would have to obviously call connect with the counselor you can connect like VA. You know, you can call them, you can connect with them online. But that is my favorite. I have never heard anything bad about them. I love the NFC and I've been recommending them for like the last ten years and everybody always comes back and says thank you so much. So credit counseling is a is an alternative. Also two, the debt consolidation. That's a second alternative.

That says we can give you an interest rate of eight percent or whatever.

So it's like, okay, that's less than what I'm paying now, and that loan you used to pay off the three or four people that you ow, oh, and you're just paying this one person now, this one credit union, you know, or sometimes people do this with roll of transferring balances to a credit card you can roll over, you know, sometimes some cards, if you have excellent credit, we'll say you pay a zero percent interest rate for like, you know,

So consider that consolidation.

That's getting a loan from a credit union, ideally a credit union that's going to provide you with a better interest rate. If you're not a member of a credit union, google credit union near me, you can someplace you can join today and apply today. Consider balanced transfers, you know, to like if you have multiple credit cards. So that's another alternative. And so like also to a debt management plan.

Paper, say Hey, Rob, here's the way you should pay off your debt.

They will reach out to your creditors for you, negotiate better repayment terms, negotiate lower interest, and then say, okay, Rob, we've done all this work.

Here's how much you have to pay who and when? Does that make sense? Okay?

And then like, lastly, you can do debt settlement or debt relief, you know, and so what that means. And I've done this, so I owed. I remember one time, like child, like, I dyed my hair. I did not know I was alert to a black guy. And when I say my face blew up, it was a hot air ballode. I mean my face blew up. It looked crazy.

Child.

They gave me the equivalent of a Bendadryll and a drip. I was so mad. Eight hundred dollars later, I was like, Dad, I don't have eight hundred dollars. So I just ignored them, and they were calling and calling and sending letters. I just ignored it because.

I was scared. It was like maybe fifteen ten, fifteen years ago.

And then my sister, who worked in the medical field, was like, girl, you can negotiate for less.

You know, what do you have. I was like, I don't know.

I have like three or four hundred dollars. And so I called the hospital back and was like, I don't have eight hundred dollars. I have three hundred dollars. And they were like okay. They were able to offer me a settlement for less money because I said I had this in lump some and so you can actually negotiate with your creditors and say I don't have this, but

Kay, I hope that was helpful.

Whatever, Yeah, because I know you know these things happen, and you know we're not here to beat anybody up.

We're just here to offer solutions.

So we're gonna take a quick break and we're gonna come back and answer the second question from another dude.

Okay, it's rain, and then hallelujah, it's rain. Let me stop.

Anyway, we'll be back in black in a moment, so we can pay some bills and I can answer your next.

Question, and we're back and black and we are here.

Like I said, you know, you know Briann abishing typically because you know me and many are two. Hey ladies, let's usual your audience. But I don't know the guys are representing today. You know, we answered Rob's question, and now we have a question from Todd. I don't know if that's your real name, but that's what you put in the email. So child, that's your business. So Todd as a listener, So let's see what Todd has to say. Hi, Tiffany and Mandy, my name is Todd. I just wanted

Right.

There is term and term life insurance is issue for a specific number of years, like for a specific timeframe, right, and you pay a premium monthly, like, so you might pay like, I don't know, for twenty years or whatever, you know, like and then you get a payout a death benefit that's guaranteed to your beneficiaries if you died between that timeframe.

That's why it's called term.

But what I really want you to understand that term life insurance is like regular insurance. Meaning think about when you have insurance for your car.

It is term, right.

Because typically people get insurance for a car, it's annual and you've renew annually.

You know, like you.

Might pay monthly, but it's like if this is only good for this year, and every year they reassess and you pay right. So even though they make this big differentiator like oh, what's term? No, No, I just want you to think of every other insurance in your life health insurance, dental insurance, petitan insurance, homeowner's insurance, of car insurance. It's basically term, and the way is the same way

That's it.

And people say, when I didn't die in thirty years, I just wasted my money. Which to that, I say, when you didn't get in the car insurance this year? Did you waste your money when my house didn't burn down? Did you waste your money when my dog is still alive? Did you waste your money on pet insurance when I still have my teeth? Did you waste your money on dental insurance?

Like?

Come on, now, you know, like that's how insurance works. It is there to protect you in case. But we don't say it wasn't worth the money because I didn't have the incident. But with life insurance, insurance companies have gotten very good, especially insurance brokers who sell it have gotten very good and making you feel bad for not dying. Oh keep back, child, So what happens if you were alive in thirty years? You don't waste your money, child? Are you raising?

I want to be here in thirty years. But so they pushed his whole life.

Now, the problem with whole life is that the expense is not just that much more. I want you to think about what happens when you fly. So I just came back from from Europe. I went to London Paris, and I went to the Amafi coast and I flew business class, which is first class, and I use points because anybody paying out of pocket. But when I looked at the price, if I was going to fly economy, I don't even know, Like let's just say economy, I don't know. I'm just making up to London is eight

Like four thousand.

I'm just making it up right that the difference is not like eight hundred for economy sixteen hundred for business. No, no, no, no, they make the difference astronomical.

So that way like it.

Because if it was just double, then everybody would just be like I just figure out how to five. Business is way more comfortable. It's similar to term and whole life that term. I'll give you an example. I am forty I'm about to be forty four this year for forty year old, healthy woman who does not smoke for a thirty year policy. Last time I checked, it was like if I wanted a thirty year term insurance plan life insurance plan.

I think it was like forty bucks a month.

That's how much it would cost a forty year old woman who doesn't smoke to get a thirty year plan. Forty bucks a month for a million dollar plan.

Sorry for clarity.

So if something happens to this forty year old woman in the next thirty years, by the time she's seven, if she is not here anymore, her family will get a million dollars. That same woman who wants to get a million dollar policy in a permanent whole life or universal or whatever those are just like the same that's calling it permanent. It's about a seven hundred and forty dollars, so it's not even comparable. So it's like, what do I get for paying an extra seven hundred dollars?

A hoodache is what you get?

People will say, well, you get it for life, for life. The purpose of life insurance is not so you can you can get it for life life. The purpose really of life insurance is to protect your dependence for when you can no longer be there for them financially now, So meaning.

Thirty years should be enough.

Because if you have a child and by the if you get life insurance for them the year that or you get life insurance for yourself the year they're born, and it's thirty years by the time they're thirty, the assumption is this child can go on and take care of themselves.

Do you see what I mean?

So you know, like unless you have like a special needs child that's gonna need that's gonna need looking after for life, then you can talk differently with your financial advisor about maybe whole life might be a choice. But really for most people, term is fine. And the difference

That's seven hundred dollars.

Them insurance ages be just giggling all the way to the bank, honey, you know, because they know that, like it's so much money in their pocket. So I actually have, like in the Bookicko of Money. So if you actually have my book Gicker of Money, I want you to go ahead on in the over and mosor mosy on over to page two forty eight in the physical book,

Get a tax referral tax deferral.

You know, make sure you're already taking advantage of like pre tax deferral accounts like your four win k on Ira. You know, a permanent life insurance policy is not the only tax planning strategy, and honestly, it's not even the best.

And it's the most expensive. So you can pay seven hundred.

Dollars to save what ten dollars of taxes like it doesn't make sense because they'll tell you own like it's a it's a tax defral deferral strategy. But there are other strategies that are way better and less expensive.

Another one.

If the insurance broker says it's building value because it has cash value, what you need to know is that there are better ways. This is the number one way they tell you it builds cast value. There are better ways to build your wealth. Do some quick math. What's the difference between what you would pay for term per year versus the permanent policy with the same death benefit right at the same pad amount.

You know what would that cost you?

The difference of amount, if you put that into the stock market, that would be more than the cash value.

So if I put let's do let's.

Do some maid, I'm about to pull up, Let me pull let me pull out my phone because you know town, because the people be getting me hot when they be talking about a whole life. Seven hundred dollars chiund times

This is according to consumer.

Reports, the average annual rate of return for a whole life guarantee cash value is one point five percent. You might as well put it in grandma's own mattress one point five percent. Banks are giving more than that. You literally can just put your money instead the set of a whole life insurance policy into a savings account. Right now, savings accounts are giving up to four percent, if not more so that whole cast value that you get who was cast value?

Cats?

Right?

No in inflation which, honey, know what is the inflation rate?

Now?

We're about to find out inflation rate USA USA rate.

Of inflation. Let's see what's the inflation rate currently? Right now?

The bag the US the r inflation rate is three point one eight, meaning your money is losing its value at a little over three percent. So if they are making you richer by one point five percent, but your money is decreasing by three point eight percent, you losing money.

Whereas if you put your money.

In the market and the market is generating seven to eight to ten percent on average annually over the last thirty thirty years or so, like you're going to you'll be up like four percent because the market is generating say eight percent, and you are losing three percent due to inflation. So the difference in that is five percent, right, So that means you'll be up five percent.

But if Whole.

Life says we'll give you one point five percent, but you're gonna lose three percent of inflation, that means you're down one point five percent.

That doesn't make sense, honestly.

That's why it irritates me so because I'm like that whole cast value cash value.

You're not giving any.

Interest with cash value. That extra seven hundred dollars just goes to people's pockets. That's why they be pushing it so hard, because I mean, I've spoken to insurance agents.

The amount of money they make on Whole Life job.

It makes their whole life, and that's been at least if they say you'll have this benefit that can provide that you can provide to your children no matter what, even if you don't have any other assets, they get this life insurance policy from you. I want you to know that this guarantee you comes at a significant cost that most it doesn't make most sense for most people.

I bet you that's seven.

Hundred dollars month would be more helpful for when you're actually alive than a potential one day hopefully million dollars if you pass away at eighty Does that make sense? And who knows what a million dollars will be by then? So I just hope that you understand that, like I

That's his core thing.

Now, certainly you can use life insurance to help boost your family to grow wealth.

So I'll give you an example how I'm using it now.

So most people know that my husband passed away suddenly from aneurism, like two years ago, and we had life insurance. I had it, like, oh, I think I have like a three million dollar policy because of like the budgetista has done very well. We have property and all this

So that was good he did that.

And so just so you know, too, you don't have to have a lot of money to prepare, you know, because his life insurance policy largely is making sure unless of my bonus daughter doesn't have to worry about paying for school and the money that I put up for too, she doesn't have to worry about her first home.

So, like, you know, I am not anti.

Life insurance, like it was such a useful tool in helping us, like I didn't need the money, but really helping us want pay for, you know, funeral expenses, but also too, making sure it did what it's supposed to do, making sure that you're dependent your daughter, our daughter, you know, doesn't have to worry about certain things that we would have taken care of with him being here. With that being said, my financial advisor said, Tiffany, you still have

I can't remember.

Don't get me to lie, but I can't remember how much I'm paying, But the amount is fairly.

Nominal for my income. Now for me, I.

Said, let's keep it because I recently got it just like a few years ago, and so I still have thirty years on it and it doesn't hurt me financially to pay, and it can be used as a tool for my family so when I'm not here to set them up for wealth. That's what you mean. Yes, it is possible to use that as a tool, but I don't pass that thirty years. If I'm still here, then

I have four sisters.

So I say all that to say that, yes, life insurance can certainly be used in that way. Want it coverage what it's supposed to cover, which is my dependence, who depend on me within this thirty years, twenty ten, whatever years, and then beyond that, if it doesn't harm you financially, certainly you can think about keeping it on like I'm keeping it on. But I hope that makes sense. Yes, So I'm not you know, I'm not here to tell you what to do, but I'm here to tell.

You, y'all whole life is a whole mistake.

And if you are a broker, go someplace else, please, because I know you're like, oh, I.

Block.

You know, I don't be y'all be writing sometimes you'd be writing a whole solio quick, I said, poor tink tank because I don't the moment I read any sort of like black. Now, if you have some constructive things, certainly you know, because I don't get everything right.

But here's the thing.

This, this part of the book, one thing of when I wrote Get You with Money, I made sure the parts where I am not the expert in I am not an insurance expert but you know what I did.

I literally hired.

An insurance expert to interview for this component, to go through all parts of life insurance and why and in the ins and out because I ain't want to just be talking and so when you come at me, I'm just saying, like, this is not just like what I pulled from the air. No, no, no, I interviewed actually a number of people were one expert in particular, like why what is the difference, Why is it not better?

All right.

So if you want your questions to be answered on the Brando Vision podcast Brannobision Podcasts at gmail dot com, the BA Podcast on Twitter Barnabisch and podcasts on ig barnabischmpodcast dot com. Just contact us there and get your questions answered. Until next time.

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