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How 4 Teachers Use Side Hustles to Stay Afloat

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It’s no secret that American educators as a whole aren’t well-compensated. Throughout 2018, in multiple states across the country, educators have publicly demanded salary increases, benefits and more funding for public education through staged walkouts and marches at state capitols. The protests have intensified a national debate about how we value teachers and the future of public education.And then there are the statistics:

  • The Bureau of Labor Statistics (BLS) reports the average annual pay was $58,780 in 2017 for the nation’s 4.2 million preschool, primary, secondary and special education teachers. The average annual expenditure per consumer — the average spending budget for American households — for 2017 was $60,060.
  • An analysis of teacher salaries by the National Education Association reports the average classroom teacher salary is up 15.2% over the past 10 years. However, after adjusting for inflation, the average salary has actually fallen by $1,823 or 3.0% over the same period.
  • In 2017, teachers earned 19% less than similarly skilled and educated professionals, what’s referred to as a “teaching penalty,” according to the Economic Policy Institute.
  • Nearly one in five teachers leave the profession because of low pay, according to the Learning Policy Institute.

Meanwhile, many teachers have taken on side hustles or second jobs as a solution to stagnant wages in their chosen profession. Some sell their expertise by sharing lesson plans and other tools to be used by other educators via platforms like Instagram and sites like TeachersPayTeachers.

Others have taken on side hustles in the gig economy. Airbnb, for example, reports nearly 10% of its U.S. hosts — more than 45,000 people — are teachers. And, based on a Brookings Institution analysis of BLS data, elementary and secondary school teachers are about 30% more likely to work a second job than non-educators.

With that in mind, MagnifyMoney spoke with four educators about what they do on the side to make ends meet at home, and to share their advice for any educators considering taking on a side hustle.

Lorri Lewis

The 12th grade English teacher worked as a driver for Uber and Lyft to fund her wedding planning business. Now she has a fully funded emergency fund and can afford to take vacations.

Lorri Lewis, 50, of Southfield, Mich., told MagnifyMoney she has always been an advocate for having multiple streams of income. So when the 12th grade English teacher and newly single mother of two saw an opening for a paid wedding coordinator at her church in 2002, she jumped at the opportunity to try out a longtime interest. Then, about five years ago, Lewis started driving for Uber and Lyft to raise the seed money she needed to launch her own wedding coordinating business. Lewis also made Instacart deliveries once her youngest son entered college.

“Having multiple streams of income is a big thing in my life now because I’m at the top of the pay scale and want to do other things in my life, like travel,” said Lewis, referring to educator salary schedules set by school districts. The educator notes because there’s no room for a raise, her pay technically decreased a couple of years ago when she and her co-workers started paying a larger portion of their health care expenses.

Earlier in 2017, Lewis ditched the gig economy in favor of running her business.

“The nice thing about being a wedding coordinator is that it allows me to work on the weekends and the summers, which is “off time” for teachers anyway,” said Lewis.

Where the side hustles help

Lewis’ teacher salary is just enough to cover the basics, including her mortgage, utilities and student loan payments. Until recently, the majority of her side income went to raising her kids as a single parent, completing necessary home repairs and funding her business. She said it was a struggle, but now that both of her sons are out of the house, Lewis has enough to build a financial cushion.

“I’m at the point now where I’m actually accumulating an emergency fund since becoming an educator,” Lewis told MagnifyMoney. Lewis’ career in education spans 20 years.

Advice to other teachers

Lewis’ main suggestion to other educators looking to start a side hustle is to find something you can do in the off-hours, like on weekends and during summers.

“Outside of the emails and phone calls, I schedule rehearsals on Fridays and weddings are on Saturdays, so I still have Sunday to regroup and organize for the new school week,” Lewis said. She added that it’s nice to do something that doesn’t involve working with students or children so teachers can get a break from their work environment.

Cecily White-Cooper

The middle school English for Speakers of Other Languages (ESOL) teacher tutors online, sells T-shirts she designs and creates teaching materials so she can travel and fund the holidays.

Image courtesy of Cecily White-Cooper

Cecily White-Cooper, 40, in Laurel, Md., told MagnifyMoney the predominant side hustle throughout her 18-year teaching career has been tutoring. It was a necessity, both when she started her career in California and when she moved to Maryland.

“I was on the bottom tier of the pay scale,” White-Cooper said. “I was not making enough money either here in Maryland or California in order to survive.”

In California, she began by finding clients on Craigslist and tutoring students at the local public library. After moving to Maryland, she tutored with a company based in Washington, D.C., until it became too much of a hassle to travel and find a babysitter after having twins in 2009. At that point, White-Cooper turned online, teaching English to students in China through VIP Kids.

Though tutoring has always been a staple side hustle, White-Cooper also has other income streams. She designs and sells T-shirts through Merch by Amazon, Redbubble and Etsy. White-Cooper also produces her own teaching material and sells that on TeachersPayTeachers.

White-Cooper’s experience as a lifelong side hustler inspired her blog, — from which she earns some advertisement income — and a podcast of the same name, where she shares advice and interviews with other moonlighting educators.

Where the side hustles help

“Initially when I started up until when I got married, every year I had to have something going on. It was hustle, hustle, hustle annually,” White-Cooper told MagnifyMoney. White-Cooper married about eight years into her teaching career. Having a dual-income household means the extra income is no longer a necessity, but she maintains her side hustles because they provide extra money she can use to travel or pay for seasonal expenses like holiday debt.

Advice to other teachers

“There will be something that will suffer,” White-Cooper said. “For me, it’s my social life.” But she makes up for the lost time with vacations once in a while, like a trip to Las Vegas with her friends.

White-Cooper added that having a side hustle and a family has also forced her to manage her time more efficiently to be successful.

“I’m very selective about what I do and where I go in order to get my tutoring projects and all of that finished,” she said. “I do my personal projects during my lunch hour. Then once the day is over at 3 p.m., I eat lunch.”

White-Cooper said she also gets to bed earlier so she can be up early on the weekends to work in her home office before the twins wake up.

Shannon Mitchell

The high school English teacher turned to multilevel marketing companies to get the money her family needed to fix their home sewer system. Now, she runs her own jewelry business.

Image courtesy of Shannon Mitchell

It was a poor housing market, low wages and a broken sewer system that drove high school English teacher Shannon Mitchell, 40, in Fredericksburg, Va., to seek side income through multilevel marketing (MLM) companies in 2013.

“With teaching, there’s no overtime — there is no other way to make money unless you get a second job,” Mitchell said.

Upon realizing there was no other option to earn the funds to fix the sewer system, she told herself, “‘Here I am, 35, and I have to ask my parents for money.’ I was like, ‘No way. I’m taking the bull by the horns.’”

Where the side hustles help

Mitchell became a representative for Rodan and Fields, where she said she quickly made the money she needed to repair the sewer system. She later worked for an MLM called Keep Collective before ending her side gigs with MLMs in 2016.

Although Mitchell says she and her husband have always generally lived beneath their means, she says the side income from her work with multilevel marketing firms helped them have a more flexible lifestyle and extra funds for life’s emergencies. Mitchell no longer has these income streams, but she started a porcelain jewelry business, which she runs outside of teaching, and hopes it will eventually become profitable.

Advice to other teachers

While many teachers seek extra-income opportunities within the world of education, Mitchell recommended not limiting yourself to the profession. She encouraged teachers to follow their interests.

“Don’t feel like it’s all or nothing with teaching,” Mitchell said. “You can be a good teacher and also explore other things as well.”

Finally, Mitchell warns any educators interested in multilevel marketing to “be smart about it” and weigh the pros and cons.

“Don’t buy into their hype,” said the MLM veteran, who mentioned that she didn’t have the control over her business the way she thought she would when participating in an MLM.

Jessica Cioffi

The 5th-grade teacher walks dogs with Wag! to fund humanitarian trips.

Jessica Cioffi, 32, an educator based in Los Angeles, told MagnifyMoney she first looked into dog walking in June 2017.

“The summer came and some of my travel plans had fallen through, so I had some extra time on my hands that I needed to fill,” said Jessica. With travel out of the picture, she said she decided to turn to her other love: dogs. She started walking dogs through an app called Wag!

Where the side hustles help

At first, dog walking was a fun way for her to exercise, hang with dogs and get paid, but when Cioffi realized the income could help her pay humanitarian trips she wanted to do, she was motivated to walk more often. She dog walks up to 8 miles a day on the weekends and in the summer.

Advice to other teachers

Cioffi advised using breaks to earn extra income with a side hustle.

“Summer is a great time to take on extra work, especially if it is something you can find joy in,” Cioffi said. “For myself, regardless of income, Wag! was a great way to interact with animals, get outside and meet incredible people.”

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Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at

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Why Rent-To-Own Furniture Deals Are Usually A Bad Idea

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If you don’t have the funds to furnish a space or buy a new appliance outright, rent-to-own furniture can seem like a sweet deal. You make small payments over several months (or years), get repairs or replacements over the term and, in the end, you own a “new” couch or dishwasher!

But … renting to own furniture can be costly. Although the payment you’ll fork over each month is small compared to the full cost of the furniture, renting to own often translates into paying a lot more than you would if you’d simply bought the couch.

What does it mean to ‘rent-to-own’ furniture?

A rent-to-own furniture agreement, also known as lease to own or a lease purchase, is a payment plan in which you agree to make installment payments for new — or gently used — furniture. You can exit the contract anytime by either returning the item or purchasing the furniture for a lump-sum payment. After the agreed-upon number of payments are made, you own the furniture.

Generally, the rental company doesn’t run a credit check for a rent-to-own plan. Instead, a prospective renter may need to provide proof of income and an address — as well as submit personal references — to enter a rent-to-own agreement.

The risks of rent-to-own deals

The risk with these agreements is that the monthly payments required often add up to much more than the sales price of the furniture.

On top of the base payments, a rent-to-own agreement may include mandatory and optional fees that increase your cost of purchasing the item. A few examples of these fees would be:

  • Processing fee
  • Delivery and pickup fee (if not included)
  • Setup/installation fee (if not included)
  • In-home collection fee (if they send someone to your home to collect a payment)
  • Excessive damage fee (if you break the item or the item is returned with damage)
  • Reinstatement fee (to continue renting if you miss a payment or make a late payment)
  • Loss and/or damage waiver fee
  • Membership fees
  • Late payment fee

Let’s say, for example, you enter into a rent-to-own contract with one of the largest and most popular rent-to-own retailers in the U.S., Rent-A-Center. As of this writing, Rent-A-Center advertised an Ashley Furniture dining set on sale for 14 monthly payments of $104. After 14 months, you will have paid a whopping $1,382.69, excluding taxes and applicable optional fees, to become the owner of a now year-old dining set.

The same dining set is on sale at Target for roughly $590, excluding tax. In this case, the rent-to-own agreement costs nearly 2.5 times more, essentially the same as paying a 200% APR.

The high rate is similar to rates charged on expensive borrowing products infamous for trapping consumers in debt such as payday, pawn shop and auto title loans.

“Overall, rent-to-own programs often charge high rates that leave consumers paying significantly more than the furniture they are buying. That’s not worth it for any consumer,” said Adam Garber, of the U.S. Public Interest Research Group (PIRG). “You should think long and hard before entering any such deal and explore alternatives.”

On top of the payments, mandatory rental fees and applicable taxes, you may be encouraged to tack on optional fees such as, for example, a membership fee for the Rent-A-Center Benefits Plus program. The program comes with extra product protections, coupons and discounts with some other retailers for an additional $3 a week, or $13 a month.

Rent to own isn’t limited to furniture. The plans can also apply to consumer electronics, appliances or even car tires.

Take, for example, the popular Nintendo Switch gaming console. After 12 monthly payments of $115 to the other big-box renter in the U.S., Aaron’s, you’ll have paid $1,379.88, excluding taxes and applicable fees, to own the console. Meanwhile, you could buy a new version of the same console from Best Buy for $299, excluding tax.

Getting out of a rent-to-own contract

Most contracts allow you to exit the contract anytime, by either returning or buying the furniture. You are not obligated to continue the contract into the next period or to purchase the item. Most plans give you the option to buy the furniture by making an early, lump-sum payment equal to some or all of the remaining rental payments. Some companies also let you upgrade the item to a newer version anytime, which may mean entering a new agreement with a different monthly payment.

But if you choose to return the item, you will not be reimbursed for any of the money you’ve paid into the agreement.

If you fail to make the required payments, the company will likely repossess the item and may charge a late fee and/or other related fees. If you catch up on payments and want to continue the agreement, you may be charged another fee to reinstate the plan. If the company determines you have damaged the piece, you may be required to pay an excessive damage fee or buy the item.

Questions to ask before you sign a rent-to-own agreement

Garber does not recommend using a rent-to-own plan in any circumstance. But, he said, a consumer who is considering entering a rent-to-own agreement “should do everything in [their] power to make sure that the contract protects [them] from additional charges down the road.”

If you do choose to go with a rent-to-own agreement, Garber recommends asking the following before you agree to a plan:

  • Will you be charged any additional fees outside of the monthly payment?
  • What happens if you miss a payment?
  • What’s the full cost of the rent-to-own plan, including fees?
  • Will you be charged for services such as cleaning, repairs or replacements?
  • Will you be charged a return fee?
  • What are the service fees? In some contracts, the company may charge a fee for services such as repairs and replacements for the duration of the deal.

Are rent-to-own plans regulated?

Depending on how the deal is structured, a rent-to-own plan may not be covered by federal lending laws, which require certain disclosures and provide consumer protections. But the plan may be covered by state laws regulating rent-to-own transactions. The protections vary depending on the state in which you live. You can check with your state’s attorney general to learn if your state has enacted protections, and to see what those protections entail.

Other ways to finance furniture

Even if you don’t have much cash on hand at the moment, it may be worth it to you to explore all possible alternatives before deciding to use rent-to-own financing. In some cases, it may even be cheaper in the long run to borrow using a credit card or a personal loan.

In-store financing

When you use in-store financing to buy furniture, the retailer will typically issue you a loan or a store credit card you can use to cover the purchase. You are required to pay the amount back over time just as you would pay off a loan or credit card. Some retailers offer promotional low or 0% interest financing options, so you may be able to avoid paying interest on the loan if you can pay it off within the promotional period. If you don’t pay off the full amount during the promotion, however, you may be charged interest retroactively on the full purchase amount, so be sure to read the fine print. Once the promo period ends, the interest rates can be incredibly high — 25% and up.

Pay in cash

If you can stand to wait a while to furnish your space, saving up and paying for the item in cash is always the best option. Read up on these savings strategies to get started. One strategy you could use: Pay yourself what you would pay for the item in the rent-to-own agreement. You can set up an automatic transfer to a savings account to simplify the process. You’ll have saved the full cost of the item in a significantly shorter time frame than it would take to own the item in a rent-to-own agreement.

‘Same-as-cash’ financing

Some rental companies offer what’s called “same-as-cash” financing. If you use same as cash, you’ll make larger monthly payments over a shorter term. The resulting total amount paid is the advertised “cash” selling price, plus taxes and any applicable fees.

For example, Rent-A-Center lets renters pay off an item over 90 days using the same-as-cash financing, while Aaron’s allows customers with rental agreements longer than six months to pay off an item at its “cash price” within 120 days.

Same-as-cash deals may cost less than entering a rent-to-own deal for a longer term, but the cash price calculated by the company may still be significantly higher.

We observe this difference in our previous example of the Nintendo Switch from Aaron’s. Aaron’s prices the Switch at $825.99, versus the Best Buy price of $299, excluding tax. Even if same-as-cash prices are equal to retail prices, after fees are applied you may still pay significantly more than you would pay if you’d bought the item from a retailer or used an alternative form of financing.


Layaway programs such as those offered by retailers Sears and Kmart allow borrowers to put an item on hold as they pay it off over a specified period. When the item is paid off, the customer owns it and can generally either pick it up from a store or have it delivered.

Enrolling in a layaway program may cost a service fee between $3 to $15. If you fail to complete the program, you may be charged a restocking fee of about $10. All fees associated with layaway programs vary by retailer.

Use a 0% intro purchase APR credit card

If you have a good credit score or better, you may be able to qualify for a credit card that won’t charge you interest as you pay off the furniture for a certain period. The key is to find a card with a 0% intro APR for new purchases and pay it off before the promo period ends.

CompareCards, another LendingTree-owned site, has compiled a list of the best 0% purchase APR credit cards >.

During the promo period, you won’t be charged any interest on purchases made with the card. But at the end of the period, you may see the rate climb significantly. For some cards, you may be charged deferred interest on the charges you haven’t paid off by the end of the promo period.

Use a personal loan

A personal loan is an installment loan paid back in equal payments over a set period at a fixed rate. A personal loan could be a good option, especially if you have good credit and can qualify for a loan at a lower rate than the cost of a rent-to-own arrangement. But you’ll need to watch out for fees that may increase the cost of borrowing, such as origination fees. You can compare your top personal loan offers from multiple lenders with our parent company LendingTree without harming your credit score.



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Subscription services

If you’re a millennial, shedding the burden of ownership and having the ability to get rid of something that’s no longer serving you whenever you feel like it may seem like a dream. But rent-to-own furniture is very different from — and a lot more expensive than — trading an auto loan for Uber rides in a big city. If that’s the kind of noncommitment for which you’re looking, companies such as Feather, based in New York City, offer furniture subscription services.

Buy used furniture

If you’re only going to live somewhere for a few months and don’t want to spend the money on furniture you’ll need to get rid of fairly soon, consider finding cheap deals on Craigslist or other online marketplaces.

Because you risk charges for damage or paying for the entire cost of furniture, Garber recommends those in a temporary living situation attempt to find low-cost furniture on resale sites such as Craigslist or at a thrift or discount store before considering a rent-to-own agreement.

In conclusion

Rent to own is usually a bad deal. Those who use rent-to-own financing often pay double or more than what they would pay if they had saved for and purchased the item. If you are considering using rent-to-own financing to buy furniture, it’s recommended you explore all other available options, including using in-store financing or borrowing with a personal loan, before entering a rent-to-own agreement.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
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Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at


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Hurricane Florence Aftermath: The Best Financial Options for Repairing Your Home

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Hurricane Florence aftermath

More than two weeks after Hurricane Florence’s devastating crawl across the Carolinas and Virginia, many homeowners are assessing the damage and beginning to make repairs.

According to real estate data provider CoreLogic, the storm affected 624,000 homes, the vast majority unprotected by flood insurance. Standard homeowners and renters insurance policies do not cover damage from storm surges and other flooding. That requires separate policies, typically purchased from the U.S. government, but consulting and actuarial firm Milliman said fewer than 10% of homeowners in the Carolinas had such coverage.

Many families facing large out-of-pocket storm costs may be wondering what the next steps are to begin rebuilding. To help you get started, we’ve rounded up advice for how to proceed, sort out what insurance will — or won’t —cover and tap financial resources available to the underinsured.

Step 1: Figure out your coverage

Amy Bach, co-founder and executive director of United Policyholders, a national insurance consumer advocacy organization, said the first thing you should do is print out a complete copy of the most recent policies you may have on your home.

Many homeowners make the mistake of calling the insurance company and getting things started before they know what coverage they have, said Bach. “A lot of these adjusters, especially in a catastrophe situation, are overworked. They have lots of clients and sometimes they try to take shortcuts to tell you what coverage you have. Sometimes they may be right, but they may be wrong.”

She added: “You have the biggest stake in getting the most money out of your insurance so it’s up to you to do your homework.”

If your printer was ruined along with other belongings in the storm, you can generally contact the insurance company directly and ask them to email you a complete copy of your policy. If you worked with an agent, you can try contacting them directly for a copy, too. If you can’t remember who your insurer is or how to get in touch with them, Bach recommends you contact your state’s Department of Insurance for help.

The declaration page

Once you have a copy of the policy in hand, focus on the declaration page, a summary of the policy and how much coverage you have available.

Coverage is usually split into four main buckets:

  • Dwelling: Covers the home itself.
  • Contents (personal property insurance): Covers the items you own inside the home.
  • Other structures: Covers items that are not part of the dwelling but on the property such as detached garages, driveways, fences, sheds and pools.
  • Loss of use: Coverage for any expense you have to incur because you cannot live in your home.

You may or may not have each type of coverage and the extent to which you’re covered will depend on your policy. It may also include personal liability protection and coverage for guest medical payments (when someone else gets hurt at your home).

Flood insurance vs. homeowners insurance

While standard homeowners and renters insurance policies do not cover damage from storm surges or other flooding, they should cover damage from, say, a neighbor’s tree that fell on your house and left a hole on the roof where water came through. South Carolina residents with questions about claims may visit the S.C. Department of Insurance. North Carolinians can visit for information. Insured residential damages in that state may total as much as $7.5 billion while uninsured damages may nearly be twice as much. Total storm damage in the Carolinas and Virginia is expected to add up to $28.5 billion.

Flood insurance

Homes financed with a federally-insured mortgage in a high-risk flood area, also called a special flood hazard area (SFHA), are required to buy flood insurance from the National Flood Insurance Program, run by the Federal Emergency Management Agency (FEMA), or as a separate policy through a private insurer. SFHAs are areas that have a minimum 1% chance of flooding in any given year. These are also known as 100-year flood plains.

If you live in a moderate- to low-risk area or don’t have a federally-backed mortgage, purchasing flood insurance is optional. However, a lender can also require you to purchase flood insurance, even if you live in a moderate- to low-risk area.

National Flood Insurance provides up to $250,000 of coverage for the structure of a single-family home and up to another $100,000 for personal possessions. Alternatively, or in addition to NFIP flood insurance, you can purchase “first dollar” or primary flood insurance policy from a private insurer.

According to federal data, the average paid loss to NFIP policyholders after the four most-recent major hurricanes in 2016 and 2017 were:

  • $55,193 to 563 policyholders after Hurricane Maria in September 2017
  • $115,104 to 75,749 policyholders for Hurricane Harvey in September 2017
  • $46,989 to 21,749 policyholders for Hurricane Irma in September 2017, and
  • $39,217 to 16,542 policyholders for Hurricane Matthew in October 2016

Issues with flood insurance

“The problem with flood insurance is that it does have some very nit-picking requirements,” Bach told MagnifyMoney. “Many adjusters will say they only pay for damage from water physically coming into contact with the damaged object.”

Bach said that means sometimes flood insurance won’t pay for a damaged foundation or water that ran up a wall. Or, it may only provide coverage that can seem partial to homeowners. For example, the coverage may replace the lower cabinets in your kitchen, but they may not match the cabinets that weren’t affected by the flooding.

Problems meeting code. Flood insurance also may not cover code upgrades. If your home was built in the 1960s, for example, and had an old electrical system, the insurance company usually won’t pay to upgrade it, but the county may not allow you to put back old wiring either.

In those cases, Bach said to “go back to the policy and say ‘I cannot replace unless I comply.’” The insurer may require you to provide documentation from the local government as proof. And sometimes, flood insurance policies only cover code upgrades if the damage done to the system is 50% or more.

Finally, Bach tells MagnifyMoney flood insurance generally does not cover the costs of living elsewhere while your home is repaired. In those cases, your homeowners insurance policy may cover your displacement costs.

Wind. Wind must be insured separately and sometimes this coverage is available only from a state-run insurer of last resort. In North Carolina, the Coastal Property Insurance Pool is available to coastal homeowners, with a similar wind pool in South Carolina.

What if I don’t have flood insurance?

Excluded from homeowners insurance coverage is flooding caused by rising water, which Bach said is going to be most people’s problem. But, the United Policyholders executive director added: “A little argument goes a long way.”

Homeowners whose insurance does not cover hurricane-related expenses may qualify for disaster aid or low-interest loans, which we’ll cover below.

Step 2: Document the damage

Do the best you can to document all of the damage using pictures and videos. Do this before you start cleaning up or making repairs.


Step 3: Prevent further damage

Do what you can, within reason and with consideration of your health and safety, to prevent further damage to your home. At this point, you may want to reach out to the insurer and begin the claim process. If your policy covers the cost, the insurer can send someone to help drain the water, patch up holes and dry out your home.

“You want to try to get that done as quickly as possible so that you don’t have a mold problem,” said Bach.

If the insurer cannot get out to your area quickly or your coverage does not cover temporary repairs and drying out, then you may elect to do what you can on your own or hire a professional in your area.

Either way, take care to keep swatches of carpeting, wallpaper, furniture upholstery and window treatments — things that may impact the amount payable on the claim. Try to avoid tossing out damaged items until you file a claim and the insurance adjuster pays a visit to your home (described below). You can learn more about proper flood cleanup in this federal Homeowner’s and Renter’s Guide to Mold Cleanup After Disasters.

“If you can afford it, you should hire somebody and get them to do it as soon as you can,” said Bach. “But don’t hire the first person you can, because disasters do bring out scam artists.

If FEMA or state emergency services are in your area, they may be able to assist you with drying out your home. And, if there is a local assistance center set up near you, you can go there for help and information. Go here to find a disaster recovery center near you.

Step 4: File a claim with your insurance company

If you didn’t notify your insurance company before you started cleaning, you should contact them to file a claim as soon as possible. The insurance company should send you claim forms to fill out and you should try to return them as soon as possible to avoid delay in service.

The insurer should then arrange for an insurance adjuster to come out and assess the damage to the property. The adjuster will inspect the property to estimate how much the insurance company will pay for the loss. They will likely also interview you, too.

Be prepared to show the adjuster any structural damage and compile a list of damages so the visit is efficient and you don’t forget anything. If you have receipts for any of the damaged items you should present copies to the adjuster. Be sure to ask any questions you may have about your policy and the coverage it may provide.

Finally, if you had to relocate and your policy covers loss of use, keep those receipts and record all additional expenses you had to take on as part of your temporary relocation as you will need to provide proof of those costs.

Step 5: File for federal disaster assistance

If your home is in a declared presidential disaster area, you can apply for FEMA individual disaster assistance. If you do not have internet access, you can call 800-621-3362.

Disaster aid may cover:

  • Temporary housing
  • Lodging reimbursement
  • Home repairs
  • Home replacement
  • Permanent or semi-permanent housing construction
  • Child care expenses
  • Medical and dental expenses
  • Funeral and burial expenses
  • Essential household items, clothing, tools required for your job and necessary educational materials
  • Heating fuel
  • Cleanup items
  • Damage to an essential vehicle
  • Moving and storage expenses

However, FEMA disaster grants are generally low — see the following chart for average amounts from recent storms. The organization emphasizes that housing grant money is intended to help survivors get a roof over their heads and not to rebuild a home to its pre-disaster condition. FEMA encourages homeowners to consider the federal grant program as a last resort, after insurance and federal loan programs, and not to factor federal grant assistance into disaster preparedness planning.

Below is a breakdown of the average grant payout for recent disasters from the Individuals and Households Program, one the of several disaster assistance programs FEMA offers. The information provided by FEMA includes the average payout for Hurricane Florence as of this writing.

DisasterAverage IHP award

Hurricane Sandy (2012)


Hurricane Matthew (2016)


Hurricane Harvey (2017)


Hurricane Irma (2017)


Hurricane Maria (2017)


Hurricane Florence (2018)


*As of Oct. 2, 2018

You can find information about other kinds of Individual Assistance FEMA provides like disaster unemployment assistance and crisis counseling in this factsheet.

As of this writing, shows residents in the following North Carolina counties may be eligible for disaster assistance after Hurricane Florence:

  • Beaufort
  • Bladen
  • Brunswick
  • Carteret
  • Columbus
  • Craven
  • Cumberland
  • Duplin
  • Greene
  • Harnett
  • Hoke
  • Hyde
  • Johnston
  • Jones
  • Lee
  • Lenoir
  • Moore
  • New Hanover
  • Onslow
  • Pamlico
  • Pender
  • Pitt
  • Richmond
  • Robeson
  • Sampson
  • Scotland
  • Wayne
  • Wilson

In South Carolina, Chesterfield, Darlington, Dillon, Florence, Georgetown, Horry, Marion and Marlboro counties are federally declared disaster areas. As of this writing, there are no declared disaster areas in Virginia.

FEMA may require you to provide evidence that your insurance company declined your loss claim and will not cover your disaster-caused loss. When you apply for disaster assistance, you’ll need to provide identifying information like your Social Security number and a current mailing address.

Delays with disaster assistance.

It’s important to remember some FEMA funds are funneled through the state government, so depending on how your state allocates its resources, your reimbursement or assistance may take months. Some survivors are still waiting on FEMA disaster assistance aid from Hurricane Matthew in 2016.

According to a FEMA spokesperson, those still waiting on aid from a previous disaster may still qualify for FEMA assistance::

“No matter whether someone is waiting for assistance from FEMA’s Hazard Mitigation Grant Program or HUD’s Community Development Block Grants as a result of Hurricane Matthew, if they have damage as a result of Hurricane Florence and need assistance with housing or other unmet needs, they should register at to see if they qualify for assistance from FEMA or other agencies. If they prefer, they can call 1-800-621-FEMA (3362) to register.”

Where else can you turn for help?

“It’s clear that more and more people do need to take on loans to get back on their feet after disasters because insurance does fall short a lot more than you would expect,” said Bach, who has been working in insurance consumer advocacy for 26 years.

Below are a few options you can turn to for help.

Government assistance programs

The U.S. government provides the following programs that may assist eligible borrowers who need assistance with home repair, replacement, restoration or improvement financing. Homeowners with an existing mortgage may also find relief with their loan servicer — many lenders will temporarily reduce or suspend payments in a process called forbearance. The Mortgage Bankers Association says one of your first calls following a hurricane should be to your mortgage servicer. The Consumer Financial Protection Bureau provides information on this and other financial problems following a natural disaster here.

SBA disaster loans

The U.S. Small Business Administration provides financial assistance to not only business owners, but also to homeowners and renters in federally declared disaster areas. These low-interest loans may cover up to $200,000 to repair or replace the primary residence to its pre-disaster condition. Collateral is required to secure loans over $25,000. Secondary homes and vacation properties are not eligible for an SBA home disaster loan. Homeowners may also borrow up to an additional $40,000 with a property disaster loan to replace damaged personal property.

For some homeowners, the SBA may be able to refinance all or part of an existing mortgage up to $200,000 if they:

  1. Don’t have credit available anywhere else.
  2. Suffered a substantial amount of disaster damage that isn’t covered by insurance.
  3. Intend to repair the damage.

If you were already paying back a previous SBA disaster loan, the SBA is offering loan deferments of up to nine months to those in federally declared disaster areas impacted by Hurricane Florence. If you already have an SBA disaster loan, you can take out another as long as your home was in a declared disaster area and you are current on all of your payments.

FHA 203(h) mortgage

The Federal Housing Administration’s 203(h) loans are government-insured mortgages that may be used to purchase, improve, remodel or rebuild a home. To be eligible, the borrower must reside in a federally designated disaster area and the home must be damaged or destroyed to an extent that requires reconstruction or replacement.

One of the biggest benefits of a 203(h) mortgage is that it does not require a down payment. However, borrowers must pay closing costs — the seller could help by picking up 6% of the cost at most for those buying a new home — and mortgage insurance, which is collected as one upfront charge at the time of purchase and monthly premiums tacked onto the regular mortgage payment. FHA mortgage limits apply and can be found here.

Other types of government loans

SBA disaster loans and the 203(h) mortgage are programs specially designed for disaster victims, but there are other government programs — available to anyone — to help homeowners who want to make repairs.

FHA 203(k) loans

The Federal Housing Administration’s 203(k) program is designed to fund a home renovation — homeowners could use the loan to refinance their current mortgage in order to pay for repairs. The minimum credit score to qualify is relatively low, but there are several requirements you will have to meet, including working with an FHA-approved lender and, possibly, a 203(k) consultant. Read more about the different types of 203(k) loans here.

You can use the Section 203(k) rehabilitation mortgage program along with the HUD Title I Property Improvement Loan program, described here by LendingTree, MagnifyMoney’s parent company.

USDA Home Repair program

The Department of Agriculture offers the Section 504 Home Repair program for low-income homeowners. The program provides loans to repair, improve or modernize homes. It also provides loans or grants to low-income elderly homeowners to remove health and safety hazards.

The USDA offers repair loans up to $20,000 and grants up to $7,500. You can combine a loan and grant to borrow a total of up to $27,500. The property must be in an eligible area. To learn more about the home repair program, you can contact a USDA home loan specialist in your area. You can check income eligibility here.

VA rehab loans

The Department of Veterans Affairs in April 2018 updated its alteration and repair purchase and refinance loan program. The VA allows eligible borrowers to refinance a mortgage based on what the appraised value of the property would be after renovations, up to $227,500. The borrower can also finance closing costs. You can apply for a VA loan through a VA-approved lender.

Fannie Mae HomeStyle® Renovation mortgage.

Fannie Mae offers a HomeStyle® Renovation mortgage that can help finance home repairs. Homeowners could, for example, refinance the costs into an existing mortgage. Borrowers can finance up to 75% of the appraised value of the property after the renovations are completed. Read more about the HomeStyle® program here.

Nonprofit and charitable aid

You may be able to get assistance from national and local nonprofit organizations or charitable institutions. Such groups include the American Red Cross, Habitat for Humanity, Mennonite Disaster Service and the Saint Bernard Project.

Beyond meeting hurricane victims’ immediate needs, these organizations and others may help rebuild homes in your area, so it may be worth it to reach out to a local charity regarding grants and other services.

Habitat for Humanity helps low-income survivors rebuild or repair their home if they meet Habitat’s requirements. Contact your local Habitat for Humanity office.

Other financing options

If you have a good credit score and the project’s costs are relatively low (a few hundred to a few thousand dollars) you may want to consider taking out a personal loan or using a credit card to finance repairs. Bach told MagnifyMoney you may also elect to do this if you don’t have cash on hand to cover temporary living, cleanup and minor repairs that may be later reimbursed by insurance.

Personal loans

Personal loans typically have fixed rates and terms. You can usually borrow anywhere from $1,000 to $35,000 at rates between 6% and 36% APR. There are a few pros and cons with personal loans:


  • Unsecured: Meaning you won’t risk losing an asset if you are unable to repay a personal loan.
  • Fast turnaround: You can generally apply for a personal loan in minutes online and, if you qualify, you may receive the lump sum amount in your bank account as soon as 24 hours later.


  • Credit requirements: Borrowers generally must have a good credit score and a low debt-to-income (DTI) ratio to qualify. Borrowers with the highest credit scores and lowest DTI ratios generally receive the best terms.
  • Fees: You may be charged a loan origination fee or a prepayment penalty.

To get the best offer available to you, compare loan terms and rates at LendingTree.

Credit cards

If you plan to use a credit card for storm-related expenses, one idea is to apply for a new credit card with a 0% introductory offer on all purchases. Note that If you’re still carrying a balance once the promotion ends, the new interest rate on the card will apply to whatever balance is left, and some lenders may charge deferred interest, meaning they may charge interest on everything you’ve charged during the promotional period.

Credit cards charge an average 15.54% APR, according to the Federal Reserve, but there are cards with lower (and higher) rates. Generally, lenders offer the lowest interest rates to borrowers with the highest credit scores.

Credit cards generally charge a variable rate and it may change based on your daily balance, so the minimum amount you are required to pay back each month may fluctuate.

When to consider bankruptcy

John C. Colwell, a bankruptcy attorney and president of the National Association of Consumer Bankruptcy Attorneys, told MagnifyMoney a homeowner may consider bankruptcy in the event that the cost of repairs exceeds the value of the property, comparing it to a vehicle that’s been totaled in a car accident.

“If or when the insurance monies, if any, or the FEMA, federal or state relief funds are exhausted or not available, those lack of resources to financially recover would be indicators that a bankruptcy should be considered,” Colwell said.

But first, Colwell said, homeowners should check for any state protection that may make bankruptcy unnecessary.

California law, for example, protects homeowners after a foreclosure. If a $600,0000 house with a $400,0000 mortgage burns down in a fire, the homeowner can walk away and let the bank foreclose on the home. If the bank forecloses for $300,000, the original homeowner does not owe $100,000 to the bank to satisfy the mortgage. While the homeowner must face the consequences of a foreclosure, they would not need to file for bankruptcy. North Carolina has similar protections in place for homeowners.

But in most other states, including South Carolina, the mortgage company has the legal right to try and sue the homeowner to collect the remaining balance on the mortgage. Colwell said in those cases it may be appropriate for a homeowner to file for bankruptcy.

“Of course, there are other variables that impact the final decision, but that’s one strong indicator that a bankruptcy could help,” said Colwell.

In conclusion

If you were one of the estimated 624,000 homeowners affected by Hurricane Florence, help is available. Sources of financial assistance range from your own insurance policies to government assistance and loans to charitable organizations or simply borrowing from a private lender. Rebuilding may be costly and seem overwhelming, so look to resources like United Policyholders and the Insurance Information Institute or your state’s emergency management office. North Carolina residents may visit ReadyNC. South Carolina residents may go here.

If you need advice when deciding between options, consult a fee-only financial professional who has experience working with homeowners following a disaster.

If you are considering bankruptcy, it’s recommended you speak with a bankruptcy lawyer about the options available to you and any protections provided by your state.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at


By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

Advertiser Disclosure


SmartyPig Savings Account Review

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Year Established2005
Total Assets$24.1B
LEARN MORE on SmartyPig’s secure websiteMember FDIC

If you’ve ever put off saving for vacation or lifecycle event, but then ultimately borrowed to pay for it, using a credit card or personal loan, then you might want to check out the SmartyPig savings account. SmartyPig, in partnership with Sallie Mae Bank, offers a virtual “piggy bank” that allows savers to automatically fund goals with set deadlines and earn 1.75% APY on their money to boot.

SmartyPig’s Most Popular Accounts


Account Type

Account Name

Compare Rates from Similar Accounts



SmartyPig SmartyPig Savings


CIT Bank Savings Builder


on CIT Bank’s secure website

Member FDIC

The SmartyPig Savings Account: At a glance

A SmartyPig account is a good way for new savers to get into the habit of saving little by little to meet timely goals


Minimum Balance Amount








$50,000.01 - $250,000

  • Minimum opening deposit: $0
  • Minimum balance to earn APY: $0.01
  • Monthly account maintenance fee: None
  • ATM fee: N/A
  • ATM fee refund: N/A
  • Overdraft fee: N/A

This account is your standard high-yield savings account tied to personal goal planning. As of this writing, the online-only savings account promises account holders a variable 1.75% APY on all balances (although its website claims to offer tiered interest rates.) To put that into perspective, the FDIC reports the average savings account earns only 0.08% APY.

This account is free to open and charges no fees. Each account is FDIC insured up to $250,000 via Sallie Mae Bank. SmartyPig limits account balances to $250,000.

This savings account allows account holders to set automatic biweekly or monthly deposits to a primary savings account by either setting up direct deposit to the account or linking an existing checking or savings account elsewhere. You can only connect one account to fund your SmartyPig primary account. You can then set automatic transfers from your primary savings account to fund specific savings goal accounts with target dates, for a little extra motivation.

The company’s policy is to delay the availability of deposits made by bank transfer for five business days, during which you may not withdraw funds from the account and the funds can’t be used to make any payments.

When you reach your savings goal, the service automatically stops allocating contributions to the goal account — even if that’s prior to your predetermined target date — and you can transfer the funds out whenever you’re ready to use them.

Like most savings accounts, you are limited to making only six withdrawals per statement cycle from this savings account under Federal Reserve Regulation D. The company says it will not process any attempts to make excessive withdrawals. On the bright side, the limit applies to your primary account and each goal account individually.

What stands out about the SmartyPig account?

Goal planning

The account’s standout feature is its goal planning system. The feature can be helpful to someone new to saving or struggling to stick to their goal to sock away some money. The system allows you to set a deadline for their savings goals and make automatic recurring contributions to your primary account so you don’t have to think about saving.

Each savings goal must be a minimum of $50. You can set a target date for each goal, but no pressure — you won’t be penalized if you don’t reach your target date in time. You can always cancel the goal and the funds will be returned to your primary savings account, or you can reset the target date.

Automatic saving

Automation can make saving a painless and less-stressful practice. You can set biweekly or monthly direct deposits or transfers from a linked deposit account to fund your primary savings account. You’ll be able to schedule automatic transfers from your primary account to your goal accounts, too. If you choose to set a monthly or biweekly recurring goal contribution, it must be for at least $10.

Solid interest rate

This savings account rewards savers with a minimum 1.75% APY on account balances as low as a penny. That’s almost 20 times higher than the current national average interest on simple savings accounts. Interest is compounded daily and credited monthly.

Amazon connection

You can also use funds held in the account to order gift cards once your account has been open for at least 60 calendar days. The feature is useful if you want to make a purchase on Amazon but don’t want to wait up to three days for a transfer to an external funding source to post. Amazon gift cards can only be used on purchases and SmartyPig does not offer refunds or exchanges on unused gift cards.

Where the SmartyPig account falls short

We see four key shortcomings in the account.

Account holders can only link one checking or savings account as the external funding source for their SmartyPig primary account. The limitation can be a downside for anyone who uses more than one deposit account to manage their finances or wants to set recurring deposits from more than one account.

Another shortcoming is the $50 minimum that is required for the goal accounts. It can be a bit steep for some simple, short-term savings goals like birthday or holiday gifts.

SmartyPig is an online-only service, so you won’t be able to visit a physical branch to make changes to or address any concerns with your account in person.

Finally, account holders are not issued a debit card or granted ATM access to their funds. If you need to use your money, you’ll have to initiate a transfer from your savings goal account or SmartyPig primary account to your linked checking or savings account, which may take up to three business days to post.

How to open a SmartyPig account

You can open an account online where you will be directed to the online application form.

To open an account, you must:

  • Be at least 18 years old;
  • Have an existing checking or savings account; and,
  • He a U.S. citizen, permanent resident with a green card and Social Security number, or a U.S. resident with a Social Security number.

When you link a checking or savings account to your SmartyPig account as an external funding source, you must verify you own the account before you’ll be permitted to transfer any money from your SmartyPig account to the external account.

To verify the source, you’ll confirm the amounts of two deposits of less than $1 that the company will make to the external account. If you don’t verify your external account within 14 calendar days, the funding source will expire and you’ll need to start all over. There is no minimum deposit amount required at account opening.


on SmartyPig’s secure website

Member FDIC

How the SmartyPig savings account compares

magnifying glass

SmartyPig offers an APY slightly lower than the best offerings currently available, but— if you’re new to saving — its goal planning feature may be worth missing out earning a few basis points more from a competitor. Check out our ranking of the best savings accounts currently available if you’re looking to earn the highest rate possible on a simple savings account. Additionally, a simple savings accounts is the only account offered. The company does not offer checking, money market or certificate of deposit accounts.

Overall review of SmartyPig savings account

The SmartyPig account is a solid simple, high-interest savings account and it’s goal planning system makes it a good option for anyone who is needs a little help trying to establish a savings habit. That said, if you’re already used to saving your money there are competitors worth considering as an alternative to the SmartyPig account that currently offer higher rates and may offer easier access to your cash when you need it.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at


Advertiser Disclosure

Personal Loans

The 5 Best Personal Loans for Excellent Credit in 2018

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

Having debt of any kind is costly, even for those who have proven to be good borrowers. If you have an excellent credit score, there are plenty of affordable personal loan options that can help reduce the cost of carrying debt.

Whether you’re looking to take out a new loan or consolidate old debts, we narrowed down the top 5 picks for borrowers with excellent credit from our personal loans comparisons page. Here are some of the top options.

1. LightStream

LightStream is the online lending division of SunTrust Bank. LightStream offers personal loans up to $100,000 with rates as low as 3.34% APR for the best-qualified borrowers. You can receive the funds in as little as one day after filling out their online application.



Credit Req.


Minimum Credit Score


24 to 144


Origination Fee

No origination fee


on LendingTree’s secure website

Advertiser Disclosure

LightStream is the online lending division of SunTrust Bank.... Read More

Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates under the invoicing option are 0.50% higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 3.34% APR with a term of 3 years would result in 36 monthly payments of $292.31.

Fine print

You must have “good credit” in order to qualify for a loan. The lender doesn’t give a numerical value of what it considers to be good credit, but it says individuals with good credit generally meet the following characteristics:

  • Several years of credit history
  • A mix of account types
  • Stable income
  • Good payment history with few (if any) delinquencies
  • Proven ability to save money. Examples include having liquid assets, cash down payments on real estate, retirement savings and manageable revolving credit card debt
  • Stable income
  • Sufficient income and assets to repay current debt obligations on top of a new loan from LightStream

LightStream uses its own scoring system to determine if you have good credit. The lender makes a decision and sets the terms you’re offered based on your individual profile. LightStream does hard credit pulls only, as it doesn’t offer a pre-approval process. If approved, you have 30 days to transfer the funds to your account. If 30 days pass, the application will expire and you’ll have to reapply for the loan.


  • Low rates. LightStream has highly competitive rates for qualified borrowers.
  • Large and small loans. You can borrow as little as $5,000 and as much as $100,000.
  • Fast funding. You will see the funds deposited into your account the next day if you schedule funding by ACH transfer by 6:00 pm EST. If you apply before 2:30 pm EST on a business day and schedule funding by wire transfer by 3:00 pm EST, you can get the money the same day your application is approved.
  • Long loan terms. LightStream offers repayment periods of 24 to 144 months.
  • No fees. LightStream charges no fees on its loans. There is no origination fee or other fees commonly associated with borrowing.
  • Rate Beat program. Yet another reason to compare offers before you decide on a personal loan: LightStream says it will beat any interest rate presented by a lender by 0.10 percentage points if it meets the terms and conditions presented here.
  • Loan Experience Guarantee. If you accept a loan but are not satisfied with your experience with LightStream, contact the company. They’ll email you a questionnaire to fill out and send you $100 once they receive the completed form. The guarantee expires 30 days after you receive the loan.


  • High credit requirements. If your score isn’t at least in the high 660s you aren’t likely to qualify for a LightStream loan.
  • A hard pull. You can’t see if you qualify for a LightStream loan without your credit score taking a hit, because LightStream doesn’t have a pre-approval process that allows you to check rates with a soft pull. LightStream uses a hard pull to qualify borrowers, which could drop your score by as much as five points. However, it may be worth what you could save with a personal loan from LightStream compared with other lenders.

2. Earnest

Earnest is a lender best known for its student loans, as the online lender is owned by Navient, the nation’s largest student loan servicer. But Earnest offers personal loans up to $75,000 on terms from 36 to 60 months. The lender is designed for borrowers who demonstrate they are financially responsible.



Credit Req.


Minimum Credit Score


36 to 60


Origination Fee

No origination fee


on LendingTree’s secure website

Instead of offering credit-based loans, Earnest has taken a very nontraditional approach using a merit-based system.... Read More

Fine print

Earnest is likely a smart fit for borrowers with good credit scores who may be denied by other lenders because they lack a long credit history. In determining terms and rates, Earnest considers factors such as the borrower’s saving patterns, career trajectory and education, in addition to their financial situation.

In order to meet eligibility requirements for a personal loan from Earnest, a borrower should:

  • Be at least 18 years old
  • Have proof of consistent income
  • Maintain a credit score of at least 650
  • Be a U.S. citizen or permanent resident alien, or have a TN, E, O, H1B or F1-OPT visa
  • Have no bankruptcy declarations in the last three years
  • Show a history of on-time payments as the primary borrower on revolving or installment accounts, as reported to a credit bureau
  • Have enough savings to cover at least two months of regular expenses
  • Spend less than they earn; increasing bank account balances
  • Not carry large amounts of non-student, non-mortgage debt
  • Not be regularly charged late, overdraft or insufficient fund fees

Earnest personal loans are not available to residents of Alabama, Delaware, Kentucky, Nevada or Rhode Island.

Earnest asks applicants to provide education and employment information, and connect certain financial accounts to get a sense of how financially responsible the applicant is. Earnest look at things like cash flow, debt-to-income ratio, retirement contributions and savings habits. Earnest will also do a hard pull of your credit report to make a decision.

The lender will take five to 10 business days to make a decision on most applications and update applicants via email.


  • Low rates. The lender offers some of the lowest rates on the market for top-qualified borrowers — Earnest loans max out at 18.24% APR (while other lenders may go into the mid-30s).
  • Smooth application process. Earnest has a long application, but its customer reviews praise the ease of applying and the helpful customer service.
  • Comprehensive website. Earnest is transparent about its terms, rates and loan requirements on its website. In addition, the site gives detailed information about Earnest personal loans and is easy to navigate.
  • No fees. Earnest doesn’t charge loan origination fees or any other fees commonly associated with lending.


  • Extensive application. The Earnest personal loan application asks for more information than most other lenders, but that’s because Earnest considers many other factors when determining your financial responsibility. The application requires you to connect financial accounts and provide documentation of education and employment information.
  • Hard Pull. Earnest doesn’t allow you to check interest rates with a soft pull before applying for a personal loan. You have to go through the entire application process, which includes a hard pull of your credit report.
  • Slower approval response. If you need fast funding and can’t wait five to 10 business days, Earnest may not be your top option. Compared with other lenders that could give you an answer immediately, Earnest is a bit slower to get you your money.

3. RocketLoans

RocketLoans is a subsidiary of Quicken Loans, the largest mortgage lender in the U.S. This digital lender is speedy — RocketLoans approves and funds personal loans up to $35,000 for a term of either 36 or 60 months, in real time.



Credit Req.


Minimum Credit Score


36 or 60


Origination Fee

1.00% - 6.00%


on LendingTree’s secure website

Rocketloans is a digital finance business that is part of the Quicken Loans family. ... Read More

Fine print

RocketLoans offers personal loans from $2,000 to $35,000 on repayment terms of either 36 or 60 months. The personal loans carry rates ranging from 5.98% to 29.99% APR. RocketLoans requires applicants to be at least 18 years old (19 in Nebraska and Alabama) and a U.S. resident.

The lender bases eligibility on financial characteristics such as:

  • Credit score
  • Monthly income
  • Amount of existing debt

RocketLoans also determines an applicant’s rate based on the payment method they select. Among other items, RocketLoans says the financial profile includes your:

  • Credit history
  • Monthly income
  • Debt-to-income ratio
  • Loan term
  • Homeownership
  • Number of credit inquiries

The RocketLoans application requires applicants to enter their full name, income, employment status, phone number, email, Social Security number, residence and date of birth. RocketLoans uses a soft credit pull to show applicants the options they qualify for. After choosing an option, the applicant will have to enter additional data and RocketLoans will do a hard pull to validate the information.

If approved, borrowers should receive the funds in their bank account within one to three business days. Qualified borrowers may have loans approved and funded on the same business day they apply for a personal loan.


  • Soft Pull. RocketLoans uses a soft pull to show you the rates you’ll be offered, so you won’t hurt your credit score shopping around. After you select a loan offer, RocketLoans asks for more information and does a hard pull.
  • Individualized offers only. The soft pull isn’t a tease. RocketLoans will only show you offers that actually become loans, should you choose to accept.
  • Fast funding. RocketLoans funds personal loans within one to three business days. In some cases, you can get same-day funding up to $25,000.
  • 24/7/365: You can apply and be approved for a loan any time during the day, since the entire RocketLoans process is online. However, loans will only be funded on business days.


  • Origination fee. RocketLoans charges a one-time, nonrefundable origination fee equal to 1.00% - 6.00% of the loan amount. The fee is deducted directly from your loan funds, so you may need to request a bit more money than you need. The origination fee increases the overall cost of borrowing.
  • Moderate to high rates. The lowest rate RocketLoans offers on its personal loans is 5.98% APR and as high as 29.99% APR. If you have an excellent credit score, you may be able to qualify for a lower rate with another lender.
  • Limited options for repayment. RocketLoans borrowers only have two repayment terms to choose from: 36 or 60 months. Other lenders offer more repayment options to qualified borrowers.

4. BestEgg

BestEgg is an online-only lender powered by Marlette Funding, LLC. Best Egg offers personal loans up to $35,000 on rates up to 5.99% – 29.99% APR. Prospective borrowers can check their rates with a soft pull and, if they select a loan and are approved, receive funding in as little as one business day.



Credit Req.


Minimum Credit Score


36 or 60


Origination Fee

0.99% - 5.99%


on LendingTree’s secure website

Advertiser Disclosure

People looking for a process that is fast and straightforward can’t go wrong when applying through Best Egg for a personal loan. ... Read More

*The Annual Percentage Rate (APR) is the cost of credit as a yearly rate and ranges from 5.99%-29.99%, which may include an origination fee from 0.99% - 5.99%. Any origination fee on a 5-year loan will be at least 4.99% and is deducted from loan proceeds. The APR offered will depend on your credit score, income, debt payment obligations, loan amount, loan term, credit usage history and other factors, and therefore may be higher than our lowest advertised rate. Requests for the highest loan amount may resulting an APR higher than our lowest advertised rate. You need a minimum 700 FICO® score and a minimum individual annual income of $100,000 to qualify for our lowest rate.

Best Egg loans are unsecured personal loans made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC. Equal Housing Lender. "Best Egg" is a trademark of Marlette Funding LLC. All uses of "Best Egg" on this site mean and shall refer to "the Best Egg personal loan" and/or "Best Egg on behalf of Cross River Bank, as originator of the Best Egg personal loan," as applicable. Loan amounts generally range from $2,000-$35,000. Offers up to $50,000 may be available for qualified customers who receive offer codes in the mail. The minimum individual annual income needed to qualify for a loan of $50,000 is $130,000. Borrowers may hold no more than two open Best Egg loans at any given time. In order to be eligible for a second Best Egg loan, your existing Best Egg loan must have been open for at least six months. Total existing Best Egg loan balances must not exceed $50,000. All loans in MA must exceed $6,000; in NM, OH must exceed $5,000; in GA must exceed $3,000.

Borrowers should refer to their loan agreement for specific terms and conditions. A loan example: a 5–year $10,000 loan with 9.99% APR has 60 scheduled monthly payments of $201.81, and a 3–year $5,000 loan with 5.99% APR has 36 scheduled monthly payments of $150.57. Your verifiable income must support your ability to repay your loan. Upon loan funding, the timing of available funds may vary depending upon your bank's policies.

To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you.

Fine print

Best Egg considers the information provided in an application, from the credit bureau and an applicant’s debt-to-income ratio to determine if they qualify for a Best Egg loan. To meet qualification requirements, an applicant must have:

  • A minimum credit score of 660
  • At least three open credit accounts
  • No tax liens or bankruptcies
  • No delinquent payments
  • A maximum debt-to-income ratio of 40%
  • An annual income of at least $50,000

The applicant may be asked to submit documentation like a pay stub or utility bill to verify income and address in order to receive loan funds.
If approved, Best Egg will deposit the funds in the borrower’s bank account within one to three business days.


  • Soft Pull. You can check and compare the rates you are offered on a personal loan with BestEgg without hurting your credit score, as Best Egg uses a soft pull to show you your offers.
  • Fast application and funding. The Best Egg application is quick and easy to fill out. If approved, applicants may see the money in their account as soon as the next day.
  • Can have two loans at once. You are eligible for another personal loan from Best Egg even if you already have one Best Egg personal loan, as long as the first loan is six months old and you don’t borrow more than $50,000 in total.
  • Borrow as little as $2,000. Best Egg is a good option if you only need a small amount of money. The lender offers loans for as little as $2,000, while other lenders may have higher minimums.


  • Lowest rate is up to 5.99% APR. The lowest rate Best Egg personal loan may carry is up to 5.99% APR, and the highest is up to 29.99% APR. Borrowers with excellent credit are likely to qualify for the lower rates on the spectrum, but they may also be offered even lower rates from other lenders.
  • Origination fees. BestEgg charges origination fees between 0.99% - 5.99% on its personal loans.
  • Processing fees. Borrowers not enrolled in automatic payments are charged a $7 processing fee for each payment made. That adds up to $420 in fees over a 60-month repayment term. If the payment is late or returned, customers are charged $15.
  • Limited options for repayment. Best Egg borrowers only have two repayment terms to choose from: 36 or 60 months. Other lenders offer more repayment options to qualified borrowers.

5. Peerform

Peerform is an online peer-to-peer lender owned by Versara Lending. The lender offers personal loans from $4,000 to $25,000 on terms of either 36 or 60 months. Peerform personal loan rates range from 5.99% APR to 29.99% APR.



Credit Req.


Minimum Credit Score


36 or 60


Origination Fee

1.00% - 5.00%


on LendingTree’s secure website

Even with a credit score of 600, you still might be able to secure a loan through Peerform. ... Read More

Fine print

Peerform requires borrowers to be at least 18 years old (19 in Alabama or Nebraska), a U.S. citizen or permanent alien. Applicants will need a Social Security number, a valid email address and a bank account to apply. Applicants may qualify for a Peerform personal loan with a minimum 600 credit score.

Prospective borrowers must register an account with Peerform before you can apply for a personal loan. The form requires your name, contact information and salary. Applicants will need to email or upload an approved form of photo identification and may need to provide additional paperwork like Social Security card or utility bill if requested.

Applicants must email two pay stubs to prove employment. If self-employed, they must show a recent tax return and two recent bank statements. The Loan Analyzer will determine whether the borrower is eligible for a loan and present rates and terms. Once the applicant selects an offer, investors have up to 14 days to review it and decide whether or not to fund the loan.

It may take up to 14 days for investors to fully fund the loan. Once the request is funded, the lender Cross River Bank will send the money to the borrower’s bank account via direct deposit.


  • Can decline a partially funded loan. Applicants can decline a loan even if its been partially funded at the end of the two-week funding period as long as investors have provided less than 60% of the amount requested and at least $4,000.
  • Payment flexibility. Peerform allows borrowers with repayment issues to delay payment for up to 14 days without paying a late fee.


  • Processing fees. If a borrower isn’t enrolled in automatic payments, Peerform allows them to pay by check, but charges $15 fee per payment. If the payment is more than 14 days late, Peerform charges the greater of 5% of the payment amount or $15. If the payment is returned, the borrower is charged $15.
  • Origination fee. Peerform charges origination fees between 1.00% - 5.00% of the loan amount, depending on the grade it gives your application. The amount is deducted from the loan total.
  • Limited options for repayment. Peerform borrowers only have two repayment terms to choose from: 36 or 60 months. Other lenders offer more repayment options to qualified borrowers.

Compare your options with LendingTree

LendingTree isn’t a lender, but it can help you find and compare your best offers from multiple lenders at once. All you need is a few minutes to complete a short form. Once submitted, a soft credit pull is used to see if you’re prequalified for loans with dozens of lenders.

You may be able to see how much you can borrow and the interest rate offered to you based on the soft pull. LendingTree is a great place to start your search for a personal loan, as you’ll be able to compare the terms on multiple, prequalified offers from lenders right away.



Credit Req.

Minimum 500 FICO

Minimum Credit Score


24 to 60


Origination Fee



on LendingTree’s secure website

LendingTree is our parent company

LendingTree is our parent company. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. LendingTree is not a lender.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at


Get A Pre-Approved Personal Loan


Won’t impact your credit score

Advertiser Disclosure


Status Money Review

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Would knowing what other people are doing with their money affect how you save, spend and invest your money? Status Money, a New York City-based fintech company, is betting you’ll make a change for the better if you can see exactly where you stand compared with your peers and millions of other people.

Status Money’s founders are data scientists who hope the information their platform provides — like how much the average person your age spends dining out — puts your finances in context. Ideally, you can then use those insights to make improvements.

What is Status Money?

Status Money is a free financial management and budgeting service, similar to Mint or Personal Capital but with the added benefit of being able to compare your financial standing with about 15 million other people in the U.S. Like other personal finance services, Status suggests financial products or services, based on its analysis of your accounts and other financial information you provide.

You can access it online at, and a mobile app is in the works, slated for Apple and Android devices by the end of 2018. The service launched in September 2017 and, as of this writing, Status is only available to users based in the U.S.

Here’s a breakdown of what Status Money offers, as well as my experiences with the service since using it in May 2018.

Peer comparisons

Status’ major standout feature is the anonymous peer comparisons it provides — something none of its competitors in the fintech space do. Status collects and sorts data from millions of public and private records — including the U.S. Census report, credit reporting bureaus and the like — and organizes it for you in easy-to-read charts and graphs so you quickly see how you stack up compared with millions of others.


“The information itself should be available. There is no rhyme or reason in the world that the information isn’t available for free for everybody,” said Majd Maksad, Status Money co-founder. “It has to be useful and it just has to be out there.”

On Status, you can see in real time how every detail of your financial picture compares with your peers and either the national average, income range, your age group or a random sample.

Your peer group comprises of people in your age range (e.g. 18 to 29), your income range (e.g. $50,000 to $65,000), your area (e.g. the NY/NJ/PA area), the type of location you live in (urban versus rural), your credit score and whether you pay rent or own your home. All of those factors are taken into account for an accurate peer comparison.

Status provides analytics for just about every financial aspect from your spending habits broken down by category, to your net worth, credit score and the interest rate you pay on your debt.


Status provides algorithmically derived, real-time insights about how your data compares with your peers’ and lets you know about opportunities for improvement. For example, Status may recommend you consolidate your credit card debt with a personal loan at a lower rate if it notices you pay more interest on your debt compared with your peers.


Status recently added an entirely separate “Opportunities” tab where you can not only see recommended financial opportunities, but also how well you match with the opportunity. Maksad told MagnifyMoney the match was developed with Netflix in mind. It’s based on your financial behavior and your peers. It takes into account things like your financial situation, the financial institutions you use, your previous interaction with similar opportunities and opportunities your peers may have taken advantage of.


Spending tracker

You can use the monthly tracker feature in Status as a budgeting tool. You can set a spending limit by category for the month overall, and Status will send you an alert when you go over your intended spending limit. You’ll receive an email, for example, if you spend $110 on expenses in the transportation category for the month when your limit was $109.

You can also see your projected spending in the current month for that category, your historical spending habits broken down by category and how your spending compares to your peer group and a second group you have selected (either the national average, income range, your age group or a random sample).


Is Status Money secure?

You might be wondering: With the ability to compare your financial stats with those of 15 million other people, is your information secure?

“Security and privacy have been our focus areas since the beginning,” said Maksad. “From day one we had to buckle down on privacy and security.”

Status says it encrypts and stores personal information using security technology independently rated by BitSight, a top security agency.

What about my data?

Status doesn’t sell your information to anyone but it may share your personal information with its partners that help it provide its service. That means Status won’t try to make money off your data, but it would share some of the information you provide with TransUnion in order to access your credit reporting data so you can use it with Status Money to help make financial decisions.

If Status is free and doesn’t sell data, how does it make money?

Status makes money through ads for products advertised to you based on your profile, as many of its competitors do.

What we like about Status Money

Peer pressure through information

Status money gives you information about the people most similar to you, and research has shown that knowing what your peers do may influence your behavior.

In a study released this year, researchers at the University of Chicago’s Booth School of Business and the University of Maryland Smith School of Business analyzed the spending habits of 6,000 Status Money users from September 2017 to April 2018.

The study found the average Status Money user reduced their spending as a percentage of monthly income by about 7% after joining. When people realized they were spending more than their peers, they reduced their spending by an average 23%, or $600 per month, regardless of income level. Those who realized they were underspending increased spending by an average 1%.

The university researchers approached Status to conduct the research and were not incentivized in any way.

Reviewer’s take: I was shocked to see I spent thousands less than my peers on average, and that made me feel good. So good, in fact, that I started paying more attention to my spending habits so I could stay ahead of the curve.

I was also surprised to see I have $10,000 more in debt on average than the 34 million others in my age group, but I was I was pleasantly surprised to know I have competitive rates on all my credit cards and student loans.

And seeing that I don’t have as much in assets as my peers do motivated me to rebalance my retirement funds, increase my retirement contribution and get serious about my emergency fund.

Actionable information

Status doesn’t simply tell you that you’re paying more in credit card interest than your peers do. It will show you opportunities to reduce your costs, like debt consolidation. Just keep in mind that the products Status shows you may not be your only options, and you should shop around before opening any new accounts to make sure you’re getting the best deal.

Reviewer’s take: I didn’t personally take advantage of the Opportunities tab, but I thought they were fairly accurate and I’m interested in moving forward with some of them when I’m ready.

I thought it was interesting that one Opportunity was saving on things to do in NYC with Groupon. I already use Groupon for self-care services like massages and facials, but didn’t really think to use it for entertainment, although I do spend a fair amount of money on live events. It made me feel the options were very personalized — more tailored to my tastes than recommendations from other budgeting apps.

Multiple levels of comparison

You can compare yourself in just about every way to your peers, and either the national average, income range or your age group on Status. Here are a few examples of what you can compare with Status:

  • Monthly income
  • Credit score
  • Debt as a whole
  • Debt, broken down by type
  • Interest rate on debt
  • Overall monthly spending
  • Monthly spending by category
  • Overall savings
  • Monthly savings
  • Overall net worth
  • Net worth, broken down by debt and assets
  • Overall assets
  • Assets, broken down by type
  • Historical home and car values

Maksad told MagnifyMoney the service aims to add comparison categories like marital status, household size, education level and gender in the future.

Important insights, all in one place

Like most of its competitors, Status allows you to see your net worth, track your spending and manage your budget, using a single platform. These are crucial components of any personal financial management system.

Reviewer’s take: The app was pretty good about categorizing my transactions, but I did have to routinely go in and recategorize some of them. This was a minor hassle since editing transactions is quick and easy. I’d spend a few minutes a week reviewing the transactions.


You get all of the insights, comparisons, budgeting features and financial opportunities Status provides, for free. There is no paid version of Status Money and there might never be, Maksad told MagnifyMoney.

Downsides to Status Money

No mobile app

Status says it plans to release iOS and Android mobile apps in 2018. Maksad said the app will also be free once it’s released.

Reviewer’s take: This bothered me because it’s not my natural inclination to type a web address into a web browser when I’m on my phone. Also, I absolutely abhor having to manually enter my login information. If it doesn’t say “continue as Brittney” or use FaceID, I’m not logging in. I didn’t try creating a shortcut prior to writing this review, but I am considering the switch. Again, it’s putting in the effort. For now, I can’t wait for Status to roll out the app for iOS so I can log in more regularly.

No bill pay

As of this writing, Status doesn’t offer bill pay, but that’s on par with competitors.

No investing

As of this writing, Status doesn’t offer wealth management or investing features, which some competitors do (for a fee).

Who Status Money would be best for

Status may be a good tool for anyone who wants to see where they stand financially in reference to others, track their budget or monitor and build their wealth.

The service’s tech-savvy design and use of peer comparisons to influence spending behavior make it a better money-management app for the younger generations (millennials and Generation Zers).

Several studies have shown that peers are more influential to younger people. As we age, our peers have less and less influence on our beliefs and behaviors. On top of that, millennials and Gen Z are the first generations to grow up with social media. They are the demographics that have been conditioned to want to know what their peers are doing and care about keeping up with trends in the groups they identify with.

If you aren’t interested in what your peers are doing and would prefer to have access to bill management or investment features, you may want to try out a different budgeting and financial management service.

How to sign up for Status Money

To sign up for Status Money, you provide the usual personal information (name and email) and set a password to create an account.


Then Status requires you to enter more detailed personal information that’s needed to track your finances, set your peer group and pull your credit information like your income, housing status, Social Security number and assets like your car or home. When all of that’s done, you can link your financial accounts and access Status Money’s services.

Status says it can connect to more than 12,000 financial institutions. If your institution isn’t available, you can email Status and request to have it added. It took me about 20 minutes to link all of my accounts, but it could have taken less than 10 minutes if I had all of my passwords on hand. For that reason, I recommend you gather all of your login information for all of your accounts ahead of time.

After that’s handled, you’re all set. You will see a dashboard with various options to see high-level and more detailed financial information and comparisons.

How Status Money compares with competitors

Status Money has something no other fintech service provides: anonymous peer comparisons. But the service also lacks features its peers offer like access to a human financial adviser, and Status doesn’t yet have a mobile app.

Here’s a breakdown of how Status Money fares against its main competitors: Mint and Personal Capital.

Status Money vs. Mint vs. Personal Capital


Status Money

Status Money


Mint Budgeting APP

Personal Capital

Personal Capital App

Peer comparisons




Budgeting/spending tracker




Credit score monitoring




Credit report information




Spending alerts




Bill pay




Bill management




Mobile app

No. iOS and Android apps to be released by the end of 2018

Yes. Apps for iOS and Android.

Yes, but only for budgeting features. Apps for iOS and Android.

Website/web app




View net worth




Paid version



Yes, 0.49%-0.89% of what you invest, if you want to use wealth management features

Investing/wealth management



Yes, charged as a percentage of invested funds

Retirement planning




Tax preparation assistance




Customer service



Phone 24/7 & Email

The bottom line

The lack of a mobile app is pretty annoying, but I’m hoping Status stays on track with its plan to release apps for iOS and Android soon. Overall, I feel having the comparison in front of me motivated me to become more mindful about how I use my money so that I could “win” in my financial life. I know that is technically impossible, but it feels like a competition and if you are competitive, you will be driven to do better than your peers, too.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at

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Advertiser Disclosure


Everyone Can Now Freeze Their Credit Reports for Free

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.


If you have been holding off on freezing your credit report because you’d have to pay a fee, wait no longer. Today — one year and 14 days since Equifax originally announced hackers had exposed the sensitive information of more than 146 million consumers — a federal law making it free for consumers to freeze and thaw their credit reports goes into effect.

The provision rolled into the federal Economic Growth, Regulatory Relief and Consumer Protection Act makes it free to place, lift and permanently remove a freeze on your credit report with credit reporting agencies, regardless of the state you live in.

How will the new law affect me?

Before the law went into effect, it cost consumers anywhere from $2 to $12 to freeze, thaw or permanently remove a freeze a credit report depending on the law in the state they lived in. Only three states (Indiana, Maine and South Carolina) allowed free credit freezes.

Barring protected consumer status or proven identity theft, a consumer generally needed to pay a fee to each of the three major credit reporting bureaus — Equifax, Experian and TransUnion — to complete each credit freeze-related action. For example, it could have cost someone living in Colorado $30 to simply freeze their credit reports (paying $10 to each reporting bureau) and another $36 to thaw or permanently lift the credit freeze on each report.

Now, the big three credit reporting bureaus and other smaller credit reporting agencies are required by federal law to allow all consumers to freeze, thaw and permanently unfreeze their credit reports, free of charge.

Under the law, a reporting agency must notify a consumer of the placement or removal of a credit freeze within one business day if the request was made online or over the phone and within three business days if the request was made by mail.

The new law also applies the following changes:

  • The credit reporting bureaus must also provide a webpage that allows consumers to request a credit freeze or place a yearlong fraud alert on their credit report. Prior to the law, initial fraud alerts lasted 90 days.
  • The webpage must also allow a user to opt out of sharing their information with companies for the purpose of advertising credit or insurance.
  • The Federal Trade Commission must also set up a webpage that will list the links to the credit freeze pages for each credit reporting agency.
  • The law requires credit reporting agencies to provide free electronic credit monitoring to all active duty members of the U.S. military.

What is a credit freeze?

A credit freeze, or security freeze, restricts access to a consumer’s credit report. This prevents others from using your information to commit financial fraud.

Neither you nor fraudsters will be able to open new accounts in your name while the credit freeze is in effect. If you are applying for new credit, you can temporarily lift the freeze from your credit report, which is also referred to as thawing the freeze.

A credit freeze does not affect your existing creditors’ access to your credit report if the creditor is conducting account activities like credit monitoring and credit line increases or if they need to place the account in collections.

A warning: The credit freeze doesn’t prevent thieves from using your information to commit all forms of identity theft. The credit freeze only protects against forms of fraud that require access to your credit report.

The credit freeze also won’t stop you from getting prescreened credit offers. However, the new law requires reporting agencies to allow you to opt out of sharing information with companies for the purpose of advertising credit or insurance to you.

How to freeze your credit report

To freeze, thaw or permanently unfreeze your credit report you need to notify each of the three major credit reporting agencies separately. You can contact each bureau online, via phone or by mail.




Equifax: 1-800-685-1111 (1-800-349-9960 for New York residents)
Experian: 1-888-EXPERIAN (1-888-397-3742). Press 2.
TransUnion: 1-888-909-8872


Send a letter to each credit bureau by certified mail requesting the freeze. Here are the addresses.

Equifax: Equifax Security Freeze/P.O. Box 105788/Atlanta, GA 30348
Experian: Experian Security Freeze/P.O. Box 9554/Allen, TX 75013
TransUnion: TransUnion LLC/P.O. Box 2000/Chester, PA 19016

Mobile app options exist to put restrictions on consumer’s credit report information, as well:

Note: A credit report lock isn’t exactly the same thing as a credit freeze, though they serve the same purpose. Freezing your credit reports can only be done by phone, mail or the online portals above. Lock/unlock services allow you briefly grant or prohibit access to your credit report using online and mobile apps.

TrueIdentity app by TransUnion — Allows those enrolled in free True Identity service to instantly lock and unlock credit reports.

Lock & Alert by Equifax — Allows consumers to lock and unlock credit reports for free.

IdentityWorks by Experian — Allows those enrolled in IdentityWorks Plus or IdentityWorks Premium services to lock and unlock credit reports. The IdentityWorks Plus and CreditWorks Premium services charge fees.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at


By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

Advertiser Disclosure


Survey: Vast Majority of Multilevel Marketing Participants Earn Less Than 70 Cents an Hour

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.


Take a look at your Facebook or Instagram feed and you’ll easily find at least one friend or family member constantly posting about the makeup, oils, supplements and even sex toys they sell to make some extra cash working from home. Most of these products and systems are provided through direct sales companies that use a sales model called multilevel marketing (MLM).

MagnifyMoney was curious about the return on investment for multilevel marketing participants and how their involvement affects their personal network of family and friends. We surveyed 1,049 multilevel marketing participants involved with at least one company over the past five years. Our conclusions show that most participants could earn significantly more money in exchange for a lot less time and money invested if they were employed in a minimum wage job.

Key takeaways

  • Most participants make less than 70 cents per hour in sales – before deducting expenses.
  • Fewer than half of participants made $500 in in the last five years.
  • Men report earning significantly more sales than women.
  • Married men and people who got money from friends and family to participate are the most likely to lie about how much they’re earning, fight with close friends and family, and even lose friendships than other groups.

What is multilevel marketing?

Multilevel marketing, or network marketing, describes a business strategy used by some direct sales companies. The sellers, called participants, earn commission or profit directly from the items they sell to their network. In addition, the strategy rewards participants who recruit new sales members to the company by giving the recruiter a commision from their recruit’s orders. In turn, the recruit can theoretically recruit another person and that third person in the recruitment chain can recruit a fourth, and so on.

Commissions from the last person recruited go to everyone up the recruitment chain. Recruits are often expected to purchase “starter kits” or inventory to start selling products, which also earn the recruiters (and the recruiters’ recruiter) commission. Thus, multilevel marketing as a business strategy incentivizes participants to grow a sales network underneath them, also called a downline.

MLMs often target stay-at-home mothers and others who may be interested in earning income in their downtime. But success in multi level marketing can be costly. Participants are encouraged to spend money to attend conferences and training seminars, invest in marketing materials and host events with the hope of selling products. All of the expenses are out of pocket and non-reimbursable by the company providing the products.

Multilevel marketing companies are swamped with controversy because the strategy lends itself to the proliferation of pyramid schemes.

The findings are concerning

The MagnifyMoney survey of 1,049 American multilevel marketing participants revealed many other concerning findings about the financial side of involving oneself — directly or indirectly — with multilevel marketing companies.

As far as side-gigs go, the earnings are minuscule

It’s hard work making money in multilevel marketing. Overall, 20% of participants never made a sale (18.3% if you exclude people who signed up just for discounts) and nearly 60% of participants reported earning less than $500 over the past five years.

Using median results, MLM participants worked 14 months out of the past five years for 33 hours per month. Overall, participants earned a median of $18.18 per month, translating to $0.67 an hour, before deducting business expenses. Meanwhile, workers in the service sector — the lowest-paid of all major occupations in the U.S. — earn an median $10.53 hourly compensation.

If flexibility is a priority for people looking for extra income, MLM participants should know they may earn more money working as an independent contractor in the gig economy. For example, the Economic Policy Institute reports Uber drivers earn an average $11.77 an hour, after vehicle expenses and fees are considered.

The gender wage gap is ever-present among MLM participants, as men earned a median $35 a month, while women earned a median $14. According to the Direct Selling Association, women made up about 73.5% of membership in direct selling companies in 2017.

Some lie about their earnings

If you ask an MLM participant how their business is going, you may not get a straight answer, especially if the participant is a married man, or if you already gave them some money for the business.

A little more than 22% of all MLM participants admit they have lied to friends and family about the money they earned or their total investment in their MLM business — granted, the relationship dynamic between seller and customer may encourage participants to lie about their income and investment to make sales and win over recruits. The focus of direct selling is selling your product to your network of family, friends and acquaintances. As a subset, multilevel marketing takes that a step further, as participants also try to recruit new participants from their personal network.

Based on the responses, married men and those who already received money from friends and family were more likely to lie. In response to the MagnifyMoney survey, 36.5% of married men and 35.2% of those who borrowed money from their families and friends admit to lying to friends or family about how much they spent or earned to participate.

In addition, 42.7% of married men say they’ve fought with close family and friends about how much time or money they’ve invested, as did 42% of MLM participants who got money from loved ones to cover some or all of their participation costs.

Some go into debt

The financial burden of success in multilevel marketing may encourage participants to rack up debt to attend conferences and training or pay for marketing materials and other expenses related to involvement.

Nearly one in three (31.6%) of MLM participants said they used a credit card to finance their involvement in the business, and nearly one in 10 (9.1%) participants report taking out a personal loan. Of those who used a credit card, 15.4% say they haven’t finished paying off their MLM-related debt. Of those who haven’t paid off their credit card debt, 63% report earning less than $500 from their MLM business. Separately, nearly half (49%) of those who haven’t finished paying off their credit card debt spent between $100 and $500 on their MLM involvement, overall.

About one-fifth of participants said they borrowed money from friends and family members. The borrowing may have had a negative impact on their relationships as nearly a third (30.9%) of participants who did persuade a friend or family member to give them money said they ended up losing a friendship, and more than two-fifths (40.2%) said they fought with close family and friends over the time or money invested.

Going into debt to participate in an MLM

Borrowing to participate in an MLM isn’t advised, based on our findings of a poor return on investment. But if you do, it’s important to understand your financing options.

If you are among those who may consider participating in a multilevel marketing company and need to borrow to cover your business expenses, you may want to consider using a personal loan as an alternative to financing with a high-interest credit card or risking your relationship with friends and family members by asking them for money.

A personal loan is a fixed-rate installment loan, as opposed to a revolving debt like a credit card, so it may help limit the amount of debt you get yourself into. Generally speaking, personal loans charge lower interest rates than credit cards to borrowers who are able to qualify for the best terms, so they may be a less-expensive borrowing option for those with good credit scores. As of this writing, borrowers may qualify for personal loans with rates as low as 5.99%, whereas the average interest rate charged on credit cards is 15% APR, according to Federal Reserve data.

If you do opt for using a credit card, you should consider applying for a credit card with an introductory 0% APR period, during which new purchases will not accrue interest. You just have to make sure you pay off the balance before the end of the intro period, otherwise you’ll have to pay interest on the remaining debt at the regular purchase APR — maybe even deferred interest on the amounts you paid during the 0% APR intro period.

If you already spent money on a high-interest credit card and want to save interest while paying it off, you could apply for a balance-transfer credit card with an intro 0% APR — or you could consolidate your debt with a low-interest personal loan.

Before deciding to borrow, you should always compare rates on personal loan offers from multiple lenders to ensure you get the best terms available to you. You can compare your top rate offers from multiple lenders in minutes with our parent company, LendingTree.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at

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Pay Down My Debt

Debt Consolidation vs. Bankruptcy – Which Option is Better?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.


If you feel as if you are drowning in your debts, you may already be considering options for assistance, like one of several debt consolidation methods or filing for bankruptcy. The assistance you ultimately turn to will heavily depend on the severity of your financial situation. If you’re choosing between debt consolidation and bankruptcy, you are comparing options that vary greatly in cost, complexity and risk.

“Every possible option should be thoroughly researched, and no quick decisions should be made,” said Martin Lynch, director of education at Cambridge Credit Counseling in Agawam, Mass. “It usually takes a long time to get into debt trouble, and the process to unwind those debts should also involve patience and consideration before you commit to any option.”

What is debt consolidation and how does it work?

  • Personal loans
  • Balance transfer credit cards
  • Home equity loans
  • Home equity lines of credit

When you consolidate debts, you essentially roll multiple debts into one. A new loan or line of credit is used to pay off previous debts, leaving you to manage one monthly payment. Popular debt consolidation products include personal loans, balance transfer credit cards, home equity loans and home equity lines of credit.

Ideally, the consolidation loan will have more favorable terms than existing debts, like a lower interest rate or monthly payment. In addition, consolidating debts could help reduce the number of bills a borrower is responsible for keeping up with.

What is bankruptcy and how does it work?

  • Chapter 7
  • Chapter 13

Bankruptcy is a federal protection that helps individuals and businesses who cannot afford to repay their debts. Bankruptcy can eliminate consumer debts and may help debtors repay what they can through court-approved debt repayment plans. The law allows individuals to file for either Chapter 7 (liquidation) or Chapter 13 (repayment) bankruptcy.

Chapter 7 bankruptcy is referred to as liquidation bankruptcy because a borrower may have to sell some of their assets to pay off their debts. In Chapter 7, any of the borrower’s assets that are not exempt from sale under law may be sold by a court-appointed trustee or turned over to creditors to settle debts. Most other debts are discharged, with some exceptions (more on that in a minute).

In a Chapter 13 filing, a court approves a repayment plan that lets the borrower repay their creditors over three to five years. Any remaining amount owed on the debts will be discharged after all payments are made under the repayment plan.

Some debts, like most student loans, most tax obligations, child support, alimony and court and criminal fines are not eligible for discharge in bankruptcy.

Comparing debt consolidation and bankruptcy

Here’s a comparison of debt consolidation and bankruptcy.


Debt consolidation

  • A FICO credit score of at least 600
  • A low debt to income ratio below 40%
  • No recent bankruptcies


Chapter 7
You must complete credit counseling within the six months prior to filing for bankruptcy, as well as a post-bankruptcy debtor education course for debts to be discharged.

You must also pass a “means test” for eligibility:

  • Your monthly income must be below the median state income, based on family size.
  • Your disposable income isn’t enough to satisfy your debt obligations.

Chapter 13
You must complete credit counseling within the six months prior to filing for bankruptcy, as well as a post-bankruptcy debtor education course for debts to be discharged.

  • Secured debt (e.g. mortgages and auto loans) must not be worth more than $1,184,200 total
  • Unsecured debt (e.g. credit cards and medical bills) must not exceed $394,725

What debts qualify?

Debt consolidation

Existing debts such as:

  • Credit cards
  • Medical bills
  • Utility bills
  • Payday loans
  • Student loans
  • Taxes
  • Bills in collection


Chapter 7
A bankruptcy trustee or bankruptcy court liquidates nonexempt assets sufficient to repay creditors.

Chapter 7 bankruptcy may result in discharge of the following existing debt:

  • Credit cards
  • Personal loans
  • Medical bills
  • Utility bills
  • Payday loans
  • Bills in collection
  • Obligations under leases and contracts
  • Promissory notes

Certain items do not count toward your assets, including:

  • household goods
  • wedding rings
  • money in retirement accounts
  • medical supplies

Some assets are exempt under federal and state law, and exemptions vary by state. Federal bankruptcy law allows you to keep up to $15,000 of home equity and $2,400 of vehicle equity, so your home, vehicle and other assets could be protected under state or federal exemptions. But exemptions aren’t automatic — talk to a bankruptcy attorney in your area to understand what you’re at risk of losing.

Chapter 13
You can file for Chapter 13 if you have less than $394,725 in unsecured debts like credit cards and personal loans and less than $1,184,200 in secured debts like a mortgage or auto loan. Filing Chapter 13 may stop home foreclosures, though you must make timely mortgage payments during the Chapter 13 plan. You can also prevent repossession of some assets by restructuring secured-debt payments within the Chapter 13 repayment plan.

Chapter 13 bankruptcy may result in discharge of the following existing debt:

  • Credit cards
  • Medical bills
  • Utility bills
  • Payday loans
  • Student loans
  • Taxes
  • Bills in collection

A Chapter 13 bankruptcy discharge does not eliminate long-term obligations like a home mortgage. You will continue to pay the remainder of the obligation after the repayment plan ends.

Effect on credit score

Debt consolidation

You may see your credit score drop slightly, because applying for new credit generates a hard inquiry on your credit report and can shave a few points off your score.

However, you can expect your credit score to improve as you make on-time payments on your new loan.

Your credit score might actually improve in the short term if you pay off revolving debts (like credit cards) but keep the accounts open. Closing accounts lowers your credit limit, raising your credit utilization ratio — a major factor in credit scores — and in turn lowering your credit score. Not paying off debt or adding additional debt can also impact you negatively.


A study by LendingTree, the parent company of MagnifyMoney, found 43% of people with a bankruptcy on their credit file have a credit score of 640 or higher within a year of the bankruptcy, and that figure goes up to 65% two years post-filing — but you should expect your credit score to drop after filing for bankruptcy.

Bankruptcy is considered a very negative event and will cause serious damage to a filer’s credit score for as long as it remains on the credit report.

A Chapter 7 filing stays on your credit report for 10 years, while a Chapter 13 filing should fall off your report after 7 years.

The older negative information is, the less impact it will have on your credit score.

You may see accounts included in the bankruptcy filing removed from the report before the bankruptcy is removed. Any individual account that was included in the bankruptcy will be removed 7 years from its delinquency date.

The amount your score falls will vary depending on how many accounts are part of the bankruptcy and whether they were delinquent or charged off. Your credit score prior to bankruptcy also plays a factor in this — borrowers with higher credit scores prior to filing for bankruptcy can expect to see larger drops in credit score.

How it appears on your credit report

Debt consolidation

Balances on consolidated debts will decrease or be marked as paid off, and a new loan will be added to your credit report.


Chapter 7
Bankruptcy will drop off your credit report 10 years from the filing date. Accounts included in the bankruptcy will be removed 7 years from their delinquency dates.

Chapter 13
Bankruptcy will drop off your credit report after 7 years from the filing date. Accounts included in the bankruptcy will be removed 7 years from their delinquency dates.

Length of process

Debt consolidation

The time frame varies from several months to several years, based on the term of the debt consolidation loan.


Chapter 7
The entire process may take up to six months to complete.

Chapter 13
The legal process may take several months; the repayment period will last three to five years.


Debt consolidation

You will have to pay interest on your new loan, and rates vary widely by loan type.

Some personal loans may charge fees such as:

  • Loan origination fee
  • Prepayment fee
  • Loan credit insurance

Credit card companies may charge a fee to make a balance transfer between credit cards. A 3% balance transfer fee is common. With a balance transfer credit card, you may be able to transfer credit card debt to a card with a 0% APR on balance transfers for a limited time, but if you don’t pay off the balance during the 0% APR intro period, your debt may begin to accrue interest.

There may be fees associated with a HELOC or home equity loan such as:

  • An appraisal fee, to gauge the current value of the property
  • Application costs
  • Processing fees
  • Miscellaneous lender fees
  • Cancellation fee
  • Inactivity fee


Chapter 7

  • Filing fee: $245
  • Administrative fee: $75
  • Trustee fee: $15
  • Attorney: varies
  • Pre- and post-bankruptcy credit counseling/debtor education courses: about $50-$100 each

Chapter 13

  • Filing fee: $235
  • Administrative fee: $75
  • Convert Chapter 13 to Chapter 7: $25
  • Attorney: varies
  • Pre- and post-bankruptcy credit counseling/debtor education courses: about $50-$100 each

Generally, interest is not paid on unsecured debts. Interest on secured debts are paid through the Chapter 13 plan. How bankruptcy courts determine that rate varies by state, but the Supreme Court case Till v. SCS Credit Corp. provided guidance that the rate can be calculated as the prime rate plus 1.5%.

Tax consequences

Debt consolidation



If you are owed a tax refund, the money may be delayed or the funds may be turned over to trustee.

Discharged debt is taxable as income, so if you have debts discharged you may need to set aside funds to pay the tax when the time comes.


Debt consolidation

  • Avoid severe credit damage.
  • Improve your credit score over time.
  • There’s no risk of losing personal property with a personal loan or balance transfer credit card.
  • It may be easier to qualify for than bankruptcy.


Chapter 7

  • You can have most unsecured and secured debts discharged quickly, within 4 to 6 months.
  • You may not have to pay back the entire amount of what you owe.
  • By law, collections efforts have to stop.
  • Under state and federal law, you may be allowed to keep certain exempt property.

Chapter 13

  • You can pay back some of what you owe to creditors over 3 to 5 years.
  • Your remaining debts are discharged after completing the 3- to 5-year repayment plan.
  • You may not have to pay back the entire amount of what you owe.
  • Make one installment payment to a trustee, instead of managing multiple debts.
  • Save property like a house headed to foreclosure or vehicle about to be repossessed.
  • Save assets that would otherwise be sold in a Chapter 7 filing.
  • It may allow you to catch up on delinquent mortgage payments over time.
  • By law, collections efforts have to stop.
  • It protects cosigners from liability on consumer debts.
  • It may lower the monthly payment on secured debts.


Debt consolidation


Chapter 7

  • Because of the credit score damage caused by bankruptcy, you risk not being able to qualify for credit when you need it, particularly in the first few years after declaring bankruptcy.
  • You risk losing assets not protected by exemption (consult with an expert about what’s applicable for exemption in your state).
  • You must wait 2 years to take out an FHA mortgage and 4 years for a conventional mortgage.
  • You may face issues renewing professional licensing.
  • Cosigners are not protected in a Chapter 7 filing, so creditors can still go after them and can sue for payment.

Chapter 13

  • Because of the credit score damage caused by bankruptcy, you risk not being able to qualify for credit when you need it, particularly in the first few years after declaring bankruptcy.
  • You must wait 2 years to take out an FHA mortgage and 4 years for a conventional mortgage.
  • You may face issues renewing professional licensing.

Life after debt consolidation or bankruptcy

Be prepared to make some life changes after consolidating your debts or declaring bankruptcy.

Debt consolidation

After you’ve consolidated your debt, your focus should be on paying it off. If you’ve consolidated credit card debts, try to not rack up debt again on the credit cards.

You can build your credit score by adding positive information to your credit report. Paying your bills in full and on time can help both keep your credit utilization low and establish a record of on-time payment history. Together, those factors comprise 65% of your FICO score. Your utilization is the overall percentage you use of your available revolving credit, and experts recommend keeping that figure below 30%. Your on-time payment history makes up 35% of your credit report and demonstrates you can manage your debt payments.

Making and following a budget can help prevent you from piling up more debt. It would be wise to start saving some amount of money in an emergency fund, as it may keep you from turning to high-cost debt when you encounter unexpected costs. Experts recommend you save enough to cover three to six months’ worth of fixed expenses.


Having the bankruptcy on your credit report will weigh down your credit score for a while, but the process also gives you a fresh start.

“Filing for bankruptcy can devastate a score, but that’s not the focus of the consumer’s decision at that point — discharging debt is,” said Lynch. He adds most filers have at least some credit offers soon after filing, although they may not receive the best rates.

You can rebuild your score over time by adding positive information to your credit history, like on-time payments, and using very little of your available credit. If you need an idea of where and how to start rebuilding, LendingTree has tips on rebuilding your credit after filing bankruptcy, here.

The same advice as debt consolidation stands as far as managing your cash: You should create and follow a budget, as well as establish an emergency fund so that you don’t find yourself in a similar situation a few years down the road.

How to decide which option is better

When debt consolidation makes sense over bankruptcy

Debt consolidation may be a more attractive option compared to bankruptcy if you have a reasonably good credit score and can pinpoint the root of why you got into debt in the first place. If it was a one-off incident like a job loss or medical issue that forced you to rack up debt, or you’ve recently kicked poor spending habits that got you into debt, you may be able to use a debt consolidation loan to finally get back on track.

A good credit score will help you qualify for a debt consolidation loan at a lower interest rate, making it less expensive overall for you to pay off your debts. The better your credit score, the more debt consolidation options you have.

But if you haven’t resolved the issue that got you into debt in the first place, debt consolidation can be risky.

When bankruptcy makes sense over debt consolidation

Lynch recommended speaking with a credit counselor or a bankruptcy attorney to evaluate your options if the amount of unsecured debt you’re responsible for exceeds about 20% of your income. But the decision to file bankruptcy ultimately comes down to an individual’s capacity for disciplined repayment.

“The best candidates for bankruptcy are those consumers who know what the consequences will be, know what property they may stand to lose — in the case of a Chapter 7 filer — and have done their best to determine what the 3 to 5 years of repayment would be like if they were to file Chapter 13,” said Lynch.

Consider your debts

Jeffrey Arevalo, an financial wellness expert at Greenpath Financial Wellness, recommended you consider your income, the types of debt you have and your assets in deciding if bankruptcy is right for you — and, if so, which type of bankruptcy you would need to file.

According to Arevalo, you should consider whether bankruptcy can help you with the kind of debt you’re dealing with in the first place; there are some debts, including student loans, child support, alimony and tax debts, that won’t be eligible for discharge in either a Chapter 7 or Chapter 13 filing.

Consider your assets

The assets you own may affect whether or not you opt for bankruptcy over debt consolidation, too. You may risk losing certain assets like secondary residence properties, valuable vehicles and other assets that aren’t exempt for sale under applicable state and federal law to pay off your debts if you file Chapter 7 bankruptcy. The rules vary by state, so check first to see what you’d risk losing if you file for Chapter 7.

On the other hand, a benefit of filing for Chapter 13 bankruptcy is that it gives you an opportunity to save your home from foreclosure or a car from repossession, if that’s a risk you’re facing.


Finally, filing would depend on whether or not you are eligible for bankruptcy.

“Based on bankruptcy guidelines in your state, if you make too much or too little of income it will determine whether or not you have the ability or inability to repay your debt,” said Arevalo.

To be eligible for Chapter 13 bankruptcy you must first:

  1. Have regular income
  2. The amount of secured debt (like a mortgage or auto loan) cannot be more than $1,184,200, and the amount of unsecured debt (like medical bills or credit card debt) cannot exceed $394,725

To be eligible for Chapter 7 bankruptcy you must prove you cannot afford your debt payments. To do so you must:

  1. Prove your monthly income is less than the median income in your state for your family size
  2. If you don’t pass the first requirement, the court will use another complex calculation to see whether your disposable income is enough to satisfy your debt obligations

Student loans

Filing for either type of bankruptcy won’t result in your student loans being discharged in most cases, according to the experts.

“Contrary to popular belief, both federal and private student loans can be discharged in bankruptcy, but the standards applied most often — the so-called ‘Brunner test’ — are difficult for many people to satisfy,” said Lynch.

To have student loans discharged, you have to file an adversary proceeding, a lawsuit filed in bankruptcy court. That’s when you have to pass what’s commonly referred to as the Brunner Test, meaning you must prove repayment would “impose undue hardship on you and your dependents.”

The following factors determine undue hardship:

  • Repaying the loan would not allow you to maintain a minimal living standard.
  • Evidence shows that the hardship will likely continue throughout much of the loan’s repayment period.
  • Good faith efforts were made towards loan payment prior to the bankruptcy filing.

The chances of any individual borrower passing the test are slim, according to John Colwell, president of the National Association of Consumer Bankruptcy Attorneys.

“You can sue and try to prove a hardship discharge in bankruptcy but the burden of proof on the debtor is very high,” Colwell said. On top of that, Colwell told MagnifyMoney, the process is an additional expense for an already cash-strapped debtor, who would have to pay a lawyer to file the lawsuit and combat an aggressive opposition from the student loan companies.

In February 2018, the U.S. Department of Education announced it would review the undue hardship definition, but, according to Lynch, “it’s even debatable whether that would have any real effect, as actual changes would have to come via Congress.”

Statute of limitations
Borrowers who have private student loans should remember private loans are generally subject to a state’s statute of limitations, Lynch added.

“If the statute has expired, there may be no need to include the loans in a bankruptcy filing,” said Lynch. He advised anyone considering bankruptcy with private loans to first speak with an experienced bankruptcy attorney who has had success with discharging student loans.

Repayment options
Student loans likely won’t be discharged in either type of bankruptcy. However, if you opt to file for Chapter 13 bankruptcy, the repayment plan may reduce your payment to something more manageable for your budget — or you may have no payment at all for three to five years as you pay down your debts.

If you have federal student loans and are struggling to make payments, it may be beneficial to contact your loan servicer and ask about forbearance, deferment or your eligibility for one of several repayment plans. Some private student loan companies offer similar options.

The bottom line

Understanding your mix of assets and and passing the eligibility test doesn’t necessarily mean bankruptcy is the best option for you over debt consolidation. And owning a house or having the credit score to qualify for a balance transfer credit card or personal loan doesn’t mean you should consolidate your debt.

If you understand the differences but are struggling to make up your mind or having trouble understanding your options, you should contact a professional. Lynch recommended speaking to multiple financial professionals, including a credit counselor or bankruptcy attorney, and weighing their recommendations before making a final decision.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at


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