Aftershocks of Bankruptcy

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Not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. If you've reached the point where you can't manage your debt, your credit cards are maxed out and you're falling behind on your bills, you may think your best option may be your only option is bankruptcy. Wiping your debt clean might seem like an easy way out, but it doesn't mean the road ahead will be easy. So today our host, Kingdom Advisors President Rob West reveals what bankruptcy means for your credit. Now we are prerecorded, so please hold your calls until next time, but we have some great questions already lined up. I'm Steve Moore, the aftershocks of bankruptcy. That's next right here on MoneyWise Live. Rob, we should probably clear up something right from the start today. We're not saying that bankruptcy is never the answer to financial difficulty, right?

That's right, Steve. Sometimes you have no choice, but we often get calls from folks who are considering bankruptcy, and in many cases they still have other options like getting into a debt management plan like the one offered by our friends at Christian Credit Counselors. And you always want to explore those options first because bankruptcy might seem like a quick way out of your debt problems. There's nothing quick about it, and it'll have a long-term impact on your credit score. That's why bankruptcy should only be considered as the absolute last resort. I'll add to that an underscore. We have an absolute commitment to repayment in God's Word.

Amen. Okay, so let's talk about how bankruptcy does affect your credit. What's the first thing we should know? Well, as I said, your credit score will take a nosedive. It's one of the worst things you can do for your score and credit report in general. The exact impact will vary depending upon the individual and the credit scoring agency, so you can only estimate how much it will really drop. Here's what I mean, Steve, and this is somewhat counterintuitive, because the higher your credit score is before bankruptcy, the bigger the fall after. So, for example, let's say your FICO score is 700, which is in the good range. After bankruptcy, expect it to drop by 200 points or more, but if your score was only 680, it might only drop around 150 points. Either way, though, still a major impact.

Yeah, okay. All right, so that's what happens right after the bankruptcy hits your credit report. What about any long-term damage? Right, the long-term damage is also significant, but here again, the length of that depends on various factors, and the most important one is the type of bankruptcy you file. This is where a lot of confusion comes in. You'll hear 7 years and 10 years. That's right.

We hear both numbers bandied about all the time, so which one is it? Well, only the public record of a Chapter 7 bankruptcy stays on your credit report for 10 years. All other references to either kind of bankruptcy remain on your report for only 7 years, and they would include a Chapter 13 bankruptcy, any accounts included in a bankruptcy of either type, any third-party collection debts, judgments, tax liens discharged through a bankruptcy of either type, all of those 7 years. Okay, I guess it would have been too simple to keep everything on the report the same length of time.

Of course. Why do you think there is a difference there? Well, for the most part, the reason there's a 10-year period and a 7-year period is because with a Chapter 7 bankruptcy, your debts are wiped out or discharged.

With a Chapter 13, you agree to make at least a partial payment on your accounts, so perhaps that's why they're giving you a break there. Okay. When can you expect your credit score itself, just the score, to start improving?

Yeah. Ironically, Steve, you may see your score improve slightly right after the initial hit. That's because your debts will be reported as discharged or perhaps partially discharged. Technically, and I stress technically, you no longer owe these amounts.

We'll talk about that in a moment. That could help your credit utilization rate from a credit reporting standpoint. That's the amount of debt you're carrying compared to your total credit limits if you still have any, but it will take time to make any significant headway in improving your score. Black marks from a bankruptcy will be factored in for as long as they appear in your credit report. The good news is with all negative history, it gradually decreases over time.

FICO estimates that it takes roughly five years for a person with a 680 credit score before bankruptcy to get back to that score, but that's only if they don't get into more credit trouble along the way. Okay. Rob, to kind of sum this up a little bit, how should Christians view bankruptcy?

Yeah. As we said, it should only be considered as a last resort. You won't find it in the Bible, but it's a modern legal term we've created and some will be forced into it.

But if it's inevitable for you, you're in that category and you've sought godly advice about it. Perhaps it is something to consider, but remember, we don't ever look at it as a way to get out from paying what we owe. We should be absolutely committed to repaying. We can talk about that a bit more after the break, Steven. All right. Great information, Rob. This is MoneyWise Live. I'm Steve Moore.

We'll be right back. This is MoneyWise Live. Your host is Rob West. I'm Steve Moore. If you hear a phone number mentioned today, please ignore that phone number.

Today's broadcast is a reprise edition of the program, but I think the upcoming information will help you and bless you and make you a wise steward of what God's given you. Okay, Rob, we were chatting just a bit about bankruptcy. We've talked about it before, kind of finishing up with the Christian perspective. It's not the unpardonable sin that we're aware of anyway, but it's never a good thing. And ultimately, if at all possible, we want to try to pay back our debts regardless of what the law says, right?

Well, that's right. And again, you may be forced into bankruptcy. You may find yourself in that position, but the commitment we need to pay or the commitment we need to have based on what we read in God's Word is that that does not remove the requirement to pay what we owe. Proverbs 3 27, do not withhold good from those to whom it is due when it isn't your power to do it. Proverbs also reminds us the wicked borrows and does not repay. So we should be looking for an opportunity to repay our creditors even after bankruptcy. Steven, I could tell you story after story of people who did just that.

In fact, some of them had written about it in books. It may not be easy. Your creditor may turn you away and say, we can't even take this.

But I think the obligation is to try to do what you can in your power, and it may not be now, it may be later, to repay what you owe if at all possible. And that will really represent Christ well in the world, and I think go a long way in your role as steward to really making good on those commitments. So this is something that's not easy.

It's met with a lot of stress and anxiety. So let's put this at the foot of the cross. The Lord knows that perhaps you find yourself in this position maybe because of some poor choices, maybe because of something you had no control over. But regardless of the situation, do what you can, lean into it, communicate well with your creditors. If you need to use bankruptcy, use it.

But let's look for an opportunity for God to provide in such a way that would allow you to make good on those commitments. That's right. And if you'd like to read a captivating book about a business that was forced into business bankruptcy and then the family went back and paid what they owed in spite of it all, the book is no longer published, but it's called On the Waters of the World. I've looked it up. You'll find it on, let's see, you'll find it certainly on eBay and Amazon from time to time. It's the story of the Maloon family, and their company was Correct Craft.

I'm not a water skier, but I'm told if you are a water skier that will mean a lot to you, the Correct Craft boat company, and how they ultimately paid back all they owed even though they were forced into bankruptcy. It's a tremendous business testimony and you might find it captivating this summer. Instead of, I mean, instead of actually getting your feet wet in the water, Rob, you could just lie on the beach and read this book and have a sense that you're maybe in the water, in the boat, you know.

I'm not sure it would be the same print, but I'll take your word for it. You won't have to dry off after reading the book. Let's put it that way. All right, no sunscreen. All right, let's go out to Idaho.

Hello, Steve. Thanks for your patience. How can we help you? Well, yeah, thank you for your time.

Sure. Hey, I'm a small business owner and I'm required to have a $6,000 bond, but I only receive, and I know this sounds incredulous, but 10 cents for the entire year for the interest. So do you have any direction you can give me for a better return? Yeah, well, Steve, obviously the purpose of this bond is not about the return. You're just satisfying a requirement based on your line of work, is that right?

That's correct. Yeah, so I would just kind of look at this as the cost of doing business because you're probably not going to find much more in the way of return. Even if you increase that by 500%, you're still not going to have much more than perhaps money for a coffee at the local coffee shop. So I think right now what you need to do is just look at this as this is just something I need to have to, again, satisfy an obligation in the work that I do. And yet with my other investing that is really intended to make a profit, that's where I'm going to be more thoughtful in terms of how I'm allocating those resources to do better in the way of return. Obviously, anytime you seek additional return, you're taking on additional risks. So the key with any investing is to find an appropriate level of risk and investment strategy that matches your ultimate objectives, risk tolerance, age, time horizon, things like that.

But I think in this case with a bond for this purpose as a trucker, you're probably not going to do much better than that, so I'd probably just move on. Okay. Hey, I've got another quick little comment here. Yeah, sure.

You guys have talked about this before. It's in Luke chapter 16 verse 9. It says, I tell you, use worldly wealth to gain friends for yourself so that when it is gone, you will be welcomed into eternal dwellings. So one of the things I do as a trucker is I like to give out books. And so I was at a motel earlier this morning and we had a conversation, but at the end, I said to her, do you have a little bit of revolutionary in you? And she said, she was kind of like, what kind of a question is that? But I handed her a book called Revolutionary Love by Bishop Festo Cavinciare.

I might not be able to be pronouncing the last name right. And then there's other books like Disruptive Compassion, but it's just a way to—I think what's going to happen is I'll get to heaven and there'll be people that say, hey, where's that guy that gave me that book? Yes. I love that. Well, I think when we see in God's Word clearly this idea affirmed, you'll find it as well in 1 Peter 3.15, which is a great reminder to all of us that we need to always be prepared to give an answer to everyone who asks you to give the reason for the hope you have.

Do this with gentleness and respect. And that's what you're talking about is being prepared with all kinds of tools. And those tools can be tracks or books or just your own testimony of God's faithfulness in your life. But what an encouragement to us today, Steve. Thanks for that. Yeah, Steve, keep on trucking and keep on handing out those books. We're glad you called today. Thanks so much. Up to Hornell, New York. Gregory, what's on your mind, sir?

Thank you for taking the time. Briefly, I am a 53-year-old. I make $13 an hour. I have no credit card debt. I have no vehicle debt. And I have no savings. I am a five-year clean and sober, recovered alcoholic and drug addict. And our Heavenly Father is rebuilding me from the ground up. So I need some help.

Yeah. Well, Gregory, first of all, what a testimony you have as to God's restoration in your life. We're all sinners saved by the grace of God when he sent his Son Jesus to pay the penalty for our sin on the cross. And when we place our trust in him, we can live with him forever in eternal dwellings. And while we're still here on earth, and as the Lord tarries, we have the opportunity to be found faithful. And being stewards of everything God has entrusted to us, and that includes not only our time and his Word and the relationships he's given us, but also the financial resources.

And so I appreciate you wanting to be a faithful steward at this time in your life moving forward. You know, I think the key for you, Gregory, is a lot of good news first, and that is that you're not sitting here under a mountain of debt. You obviously are putting a lot of pieces in place moving forward, and you're on a limited amount of income, and so it would be quite easy.

I'm sure there's a lot of people that would be willing to extend you some credit and allow you to live beyond your means. And clearly, as evidenced by the lack of debt, you have guarded against that, and that's a really good thing. So I think the key is to put a plan together moving forward based on really five simple ideas. Number one is we want to avoid the use of debt, which you've clearly done. We want to live well within our means—sounds like you're doing that.

We want to have some margin, and the only way you can have margin or savings is to take what God has given you and operate on a plan that allows you to live within your means so you have some left over at the end of the month. And then number four is to set long-term goals and give generously. So those are the five key things—live within your means, avoid the use of debt, have some margin or some liquidity, set long-term goals, and give generously.

So I think you've already done the first two clearly. If you don't have a written spending plan, I would do that. But I think the next thing is really to begin to think and pray about where God is leading you and begin to establish some goals based on where you feel like the Lord is taking you. And perhaps for you, that's beginning to put together an emergency fund.

I think that's a great starting point. Use a thousand dollars as a target there and say, what would it take for me to free up a little bit of margin on a monthly basis beyond my obligations and putting food on the table and other expenses such that you could put away fifty or a hundred dollars a month to build up to a thousand dollars? Ultimately, you'd want to have three months worth of expenses there. And then, what about saving for the longer term? And could I open an IRA and begin to save something that I would have available down the road? Make sure you're taking care of the other pieces that are critical as well, like being a systematic giver and giving a percentage back to the Lord and really thinking through where you go from here. But these are all the things that you want to be thinking about, and I realize there's limited resources, and so that may be frustrating at times. And yet, I think as you commit these plans to the Lord, you will find that He will prove Himself faithful in any and every situation. You know, if you'd like the help of one of our MoneyWise coaches, Greg, they'd be happy to walk alongside you in this process, and all you'd have to do is just go to our website, MoneyWiseLive.org, click on Connect with a Coach, and they would be delighted to give you some assistance.

That's right. In addition to that, Greg, you might go to our website, MoneyWiseLive.org, scroll to the bottom. There are lots of free resources there that may help you get a leg up on some of your own personal finances. And then down the road, if you have any further questions, anything we can help you with technically, but beyond what we've already discussed, feel free to call back. We're glad that you called today, and we're glad to hear that you're heading upwards.

God bless you. We appreciate that phone call. This is MoneyWise Live. Hey, a real pleasure to have you with us today. This is MoneyWise Live. I'm Steve Moore, that other guy over there, the guy with the answers. He's Rob West, and we're pre-recorded.

We won't be taking your calls, but we've lined up some calls in advance that I think you'll find helpful and very, very practical. At least we've tried to make them that way. So stick around. This is MoneyWise Live. Let's go directly to our phones.

Let's travel to, let's see, let's go to Chicago. And Bob, we appreciate your patience. What's your situation, sir? God bless you, brother. Well, I'm an 82-year-old missionary, okay, that is a two-time cancer survivor.

Okay. I am not able to really maintain a full-time position in ministry anymore because of my health. And I do take on assignments periodically.

I'm primarily a vision caregiver, I'm primarily a vision caster these days. Anyhow, the money that I do have is basically my social security, which according to the government is extremely below poverty. I've been having health problems for some time, as I was expressing to you. And several years ago, I got to the point where I was making some headway, but I needed to make some major changes in my lifestyle, okay, in terms of how I ate and exercising and things like that, which all required some kind of financial outlay. And I got in trouble with my credit card companies, okay, so I build up some debt. But in recent times, I have fallen into some more serious life-threatening health issues that could possibly be corrected, but the things that I have to do, my insurance will not cover.

I see. So it's my income, my disposable income, which of course, at this point in time, is going to pay my debts. I've called you guys, thank you, and talked to a couple of Christian credit counseling agencies. And like you, they don't really operate according to the idea of claiming bankruptcy. I also talked to a bankruptcy attorney who happens to be a fellow believer. And they said, well, they said, your situation, it sounds like there's not a whole lot you could do. It's either going to die or you're going to pay off your debt to the credit agencies. They said that, however, that is, if you declare bankruptcy. However, they say that in all likelihood, in your circumstances, they're probably not going to pursue you. They may, you know, in an oppressive way, and that if in fact the medical treatment, which I require, is successful, because you didn't declare bankruptcy, you will still have the debt available to pay.

And you could do it post taking the monies that you're using to get your medical care taken care of, which allows you to live. Yeah. Bob, let me ask you this, and fortunately, we're gonna have to hit a break here in just a moment. What is the total amount you owe on your credit cards?

It's about $12,000, $14,000. Okay. And would you need to take on new debt to pursue this treatment?

Yes, yes, absolutely. I don't have any other resource to do it. Okay. And have you talked to the physician and other healthcare providers about what that would take in terms of the cost? About $21,000. Okay.

And where would that come from? You'd have to charge that on these cards as well? No, no, I don't have any more money available on the cards. Okay. Let's do this. We've got to go to a quick break, but you stay on the line.

Let's come back and continue our conversation. We appreciate your call. We'll do that indeed with Bob, then take some other calls afterwards. We're MoneyWise Live, and we talk about our telephone number often, usually because we're live, but today we're pre-recorded. So if you hear a mention of the phone number, please don't call us, but you can find us online at MoneyWiseLive.org.

Just before the break, we were speaking with Bob in Chicago. He's 82 years old. He's a long-time missionary, doesn't want to declare bankruptcy. However, he is in bad health and wants to address that without going into debt further.

And there just don't seem to be a lot of options, Rob. Yeah, Bob, I realize it's a tight spot in that you're living on Social Security, which as you said the government would recognize as below the poverty level. Because of some previous health issues that are now continuing, you've accumulated about $14,000 in credit card debt, which you are current on and servicing every month.

You can continue to do so. The real challenge is you need some additional medical treatment, and that could run $20,000 or more. And from what you're being told, it's really a life and death type of situation where if you don't pursue some of this treatment, they're telling you that it really is serious. So I think the path forward really requires you, obviously, and I suspect this has been a hallmark of your life, but I think I'll just say it as what I'm seeing would be, let's start on our knees and just say, Lord, this didn't catch you by surprise, and just ask your provider, the Lord himself, to intervene in this situation and provide miraculously, whether it's a knock on the door unexpectedly with the Lord providing through another believer or through your local church, perhaps your denomination as a missionary, making the need known and seeing how the Lord might provide through other believers. I think that's first and foremost, and let's just trust that God is going to intervene here miraculously and do something unexpected where only he will get the glory for that, and we'll be able to celebrate with you in that. I think your responsibility, that's God's part, your part is just being found faithful with what he's entrusted to you, which means you have a limited amount of income to your ability to work and generate more income.

Certainly you need to do your part. If your health prevents that, then all you have to work with is your social security. So at that point we say, okay, well, to the extent you have medically necessary procedures and treatment that is required, I think you have to pursue that, and I think you have to make your situation plainly known to these health care providers, work with them to see if they will work with you out of what resources you have available to provide the treatment as they are able to do so. And if that at some point involves you not being able to pay the debts, that may be the situation.

And this is one of the things we talked about at the beginning of the program today. You won't find bankruptcy in the Bible, but you will find this idea that we have an absolute commitment to repayment. But you may have to find yourself in bankruptcy before you're able to repay, or in your case with unsecured credit card debt, it may be calling the creditors and saying, listen, in order for me to keep food on the table and to pay my medical bills for treatment that's medically necessary, I'm not in a position today to be able to make good on this.

I'll show you my budget. I'll be very plain with you as to my situation, but I just simply can't pay the bill. And that would mean ultimately it would go into a collection status. You would get lots of phone calls. It may involve a charge-off, and then ultimately they could pursue a judgment, which would be a part of the public record, which is where you may find yourself needing to file bankruptcy.

Maybe not. It really just depends upon how they pursue you. But following treatment, or if the Lord provides another way, as you have already said, that would be potentially the opportunity for you to go back and pay these debts in full. And so I think at this point there's certainly not a quick fix here, but I would say if you have treatment that's absolutely critical for your health, you've got to pursue that, and I would just not run away from the creditors. I would let them know what's going on, and let's just ask the Lord to provide in this situation.

Does that make sense, though, to you? Well, absolutely, and that's the direction that I was planning thinking about taking, and I've always had good credit in the past, so I think the Lord being in my corner, what you've suggested is very helpful, and I thank you once again for your assistance. Well, you're welcome. And you as well. Let me just pray for you, Bob, as you go. And Father, we just lift Bob up to you.

Thank you for his service, 82 years old, serving you as a missionary, sharing the gospel around the world. Here he finds himself in a difficult spot, but this situation did not catch you by surprise. So we ask as his provider and as the great physician that you would intervene miraculously. We ask for healing on his body. Would you touch and heal his body? We ask for provision in his life so that he would be able to meet his obligations and be able to take care of everything that's in front of him. We're going to trust you for the outcome, leave him in your hands, and we ask all this in the matchless name of Jesus. Amen. Amen.

God bless you, Bob. Thank you very much. And down the road, keep us posted. Let us know how things work, and we'll also be praying for fellowship.

It's important during times like this that you have people around you that you can share with, pray with, and God bless you, my brother. We appreciate that. Thank you. Let's go down to Florida, Rob, and we welcome Jan. Jan, thank you for holding and for calling today. How can we help you? Hi, thanks for taking my call.

I'm going to make it quick. We just had a term life insurance that reached its peak 10 years, and the premium tripled, and so it's very high. And we were looking for other options, and it seemed like the only other option is just to choose another company. However, and let's talk about terms, however, my husband did have a heart attack two years ago, so I'm not sure that we'd be successful in actually going with another term with another company, except for if perhaps we qualified through an association like maybe DFW or AAA. Yes, and there is something called guaranteed issue insurance, where there is not medical underwriting, obviously more expensive, and so the challenges would be that you would have potentially not enough coverage.

I think the key is to determine what is actually needed. The purpose of insurance is to replace or offset a risk, so to the extent you or your husband or both of you are working, if something were to happen to you while you're still in your earning years and still saving for the future. Obviously, the purpose of insurance is to come in and provide money that would then provide for the remaining spouse and or dependents in the event of that loss, but only until such time as you've accumulated and saved over a lifetime of working so that you no longer have a need for insurance. And that would be the idea behind term insurance, and so the key is what is the proper amount of coverage that you need and for what period of time, ideally until you're fully retired. As a rule of thumb, we would often look at a number of 10 to 12 times the income that you're trying to replace as a starting point. So I think the key is starting with the budget and saying what can we afford, how much insurance do we actually need, and for what period of time, and then going out and looking for that policy. Obviously, the intent behind the 10-year term policy you had was not to keep it beyond the term because it just becomes so cost prohibitive that the idea is that you would drop it at that point and replace it. Now, I realize that you didn't expect a heart attack, and that's a reality now, and so we're going to have to navigate that, and so that would be why, Jan, it'd be really important for you to have an independent life insurance agent that can go out and shop this for you across a number of companies. Keep in mind, certain companies underwrite certain medical conditions differently than others.

So one might look more favorably on one condition versus another, and then there's always these guaranteed issue policies in situations where you just simply don't qualify. So check out a Certified Kingdom Advisor there in Florida at MoneyWiseLive.org and ask for a referral to a Godly life insurance agent who can help you. This is MoneyWise Live with Rob West. We'll be right back. Good to have you with us today. It's MoneyWise Live, and let's see, Rob, why don't we take a few emails here? I think we have time.

This first one is from Andy. He says, I was on the show and took your advice. We are in a lot of debt. As of now, we're debt-free. We followed the plan and allowed God to work through us to help others. Thank you. So it's not a question. It's just a thank you. Yeah, absolutely.

We take those too. Anytime you have a testimony you'd like to share with us, please email us, and you can use that same questions at MoneyWise.org. Andy, let me say I'm proud of you. You said you were in a lot of debt. You're now debt-free. Clearly, that didn't come without a lot of hard work.

You said we followed a plan, and that's really important to make a plan and then stick to it. And I love that you say, now God is working through you to help others. And that tells me, Andy, that you've taken this freedom that you now have and the money that's been freed up because you're not sending it toward all this interest and paying down debt, and you're using it to be a conduit into God's activity through your giving. And that's exactly why we do what we do every day so people can live in freedom and be able to respond to the leading of the Holy Spirit so they can give to those in need. And that's what it's all about, Steve.

Indeed, it is. Okay, Teresa does have a question. She says, Dear Rob, I have two credit cards that I opened in 2005. Since then, I opened what I thought were 12 months, same as cash plans for items I purchased.

However, those companies sent me a credit card. Should I close all three of these additional cards at once or do it some other way? Yeah, Teresa, great question.

First thing, let me just challenge you a little bit. Let's not open those same as cash plans in the future. And here's why, right? If you pay them off, of course, you're not going to pay anything. And so then you were able to use somebody else's money for a little bit of time. But here's the thing, if you're saving and you've got the cash, let's just go ahead and buy it for cash.

You know, so often the reason these companies do this is they know the percentages are that most people don't pay it off in time, and then they apply and exorbitant interest rate. So in the future, we can avoid all this by just paying cash at the time of purchase. Now, you've got these, they sent you the credit card, it could be that they haven't been activated. So I would check that. And if they haven't, just let them know you don't have any intention of using them. And please don't activate them. If they have been activated, and you pull a copy of your credit report at annual credit report.com. And all three of these are now showing up. I'd probably close to now and maybe close one more six months from now.

It's not going to make a big impact on your credit, but I probably wouldn't close them all at once. Okay, and let's see, I think we have time for Melanie's email. Dear Rob, I've been listening for a long time. I remember when you talked about websites that are for high school students looking for scholarships for college. Back then, I didn't need that information, but I sure do today.

Will you mind telling me that information once again? Yeah, when it comes to scholarships, the web is your friend because there's wonderful resources out there. I'll mention a few scholarships.com the College Board. There's one called niche.com niche.com and then petersons.com. I will also direct you to Amazon or wherever you buy books and just do a Google search for college scholarships and grants. And you'll find some wonderful books and I would allow the ratings to be your friend there. Look for others who have highly rated these resources and there's some good ones that give you an exhaustive listing of scholarships.

You may even want if your particular student knows the direction they're headed in terms of a profession or a major, look for grants and scholarships specific for that particular industry because there are some niche scholarships out there. Okay, great information. Thanks Rob and thank you for your emails. Now if you'd like to send a brief email to Rob, first keep it brief, just a few lines and then the address is this questions at moneywise.org. That's questions at moneywise.org. Okay and with that Rob, why don't we go right back to the phones, all right?

Sounds good. Perry, New York. Deanna, what's your question for Rob West? Yes, if you don't go through a lawyer does it well have to be notarized? You know, I am not an attorney Deanna, but what I would just say is generally speaking in all states the signing of a will really must be witnessed by two or more people and in most states the will itself does not have to be notarized.

The confusion comes in with something called the self-proving process. This eliminates the need for a probate judge to find your witnesses and have them testify that you were who you said you were and that you were of sane mind when you signed the will. Basically the witnesses sign this self-proving document attesting to all of that and typically they do it at the time of the signing. That document, not the will, will have to be notarized and then included with the will. So that's where some confusion comes in but I think it's probably a good idea to have it notarized and I think you want to also address this second document that really attests to the witnesses and the fact that they are attesting to what they need to do. But you know this is a situation Deanna where I would generally recommend most people seek out a legal professional when doing a will.

It's just not something you want to get wrong. You want to make sure that it's in order according to the laws in your state. It's also a great time to do some other estate planning in the form of a health care surrogate and a durable power of attorney and a living will. Things like that alongside your last will and testament. So my preference is that you use an attorney so it's done properly but you certainly can do it yourself and there's a lot of online tools to help you do that and I think what you would want to know is does your specific state require it? They are certainly going to require the witnesses. The question would be whether the notary is required as well and so I'd look there in New York just to see exactly what's required. Deanna thank you very much.

Interesting the will itself doesn't have to be notarized but you have to have at least two people testify that you are who you say you were or are most of the time. That's right. Okay interesting. Fort Lauderdale Florida hello Jordan we appreciate you hanging there sir. What's on your mind? Oh excuse me it's a ma'am I apologize. How can we help you?

Thank you for taking my call. I want to know the difference. What is the difference between treasury bonds and government bonds?

Ah yes well it gets pretty technical pretty fast. T-bills as the treasury bills are called are government issued bonds with less than a year to maturity. So they're also called notes and when they have a maturity of more than 10 years they're actually called bonds so that's where some of the the confusion comes in it really has to do with the duration. The key with the treasuries though Jordan is that they're backed by the full faith and credit of the United States government so very safe very secure but offer a very low interest rate. Now then you have a money market and you have money market and then you have a money market fund. A money market account as it's typically called would be an interest bearing account at a bank or credit union and most of them pay a higher interest rate than a regular savings account and often have the FDIC insurance which would not be the case with a money market fund which is simply a mutual fund that only invests in highly liquid instruments like cash and cash equivalents with a short-term maturity.

So I know it gets pretty technical and it can get confusing. I think the key is to your original question treasuries are referring to treasury bills which are government issued bonds and ultimately the specific name of them has to do with the the duration of them and with that comes a corresponding yield or interest rate very safe but they're going to pay very low interest. Okay so the what about the government bonds because I have two funds I have money market treasury bond market government bonds. Yeah so the T bonds that you're talking about the treasury bonds are often referred to as long bonds because they take the longest to mature of the government issued securities so they're offered to investors with a term of 30 years to maturity so you receive a fixed interest payment generally every six months they pay the highest rates of the three types of government securities there's bills bonds and notes because they're the longest term investment so still going to be on the low end overall but they're the highest of the government bonds and again all backed by the full faith and credit of the United States government. So I realize it can be a bit confusing and for that reason why don't we send Steve her a copy of Austin Pryor's book the sound mind investing handbook let her read up on these and Jordan if you have any questions after you do that give us a call back. Yeah Jordan now you stay on the line let's make sure we get your contact information we'll get that book right out to you and I trust it'll help you it can be confusing because frankly people use different terms from time to time for the same vehicles she asked about money markets treasuries and government bonds but government bonds that's kind of a generic term right Rob? It can be yeah I mean it really comes down to the types of fixed income securities the government offers they fit into these three categories treasury bonds treasury notes and treasury bills and each one has a different rate at which it matures and each pays interest in a different way and so that's where the distinction comes in. Okay Rob we are out of time nonetheless I'm going to ask you obviously the number one topic on all the newscasts these days is the coronavirus lots of people concerned about what it's going to do to their jobs their careers their investments leave us with a a couple of prudent words here from God's word. Yeah well I think you know the key Steve is we are to be investors remember the parable of the talent says that what we were entrusted we should be wise stewards and part of that stewardship responsibility is we should take a portion of what God gives us today and and save it and to the extent we have some short-term savings we should put it to work so we can earn a return and we go through periods like this and there's going to be an economic fallout to this coronavirus we have no idea how much but that's why we invest for the long term we don't look at the short term this is probably just a bump in the road and we look at it in a much longer context. Thanks Rob and thank you again as I mentioned for tuning in and for being a part of the program MoneyWise Live is a partnership between Moody Radio and MoneyWise Media join us again next time.