Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, December 20, 1993 TAG: 9312180046
SECTION: BUSINESS PAGE: A10 EDITION: METRO
SOURCE: MAG POFF
DATELINE: LENGTH: Long
These loans are substantial and are for my married daughter with serious and disabling health problems. Can any relief be granted for waiver of interest if I elect to pay in full. Is there any other relief? Are the loans incurred in 1988, 1989 and 1991 dischargeable in bankruptcy?
A: A counselor at the Federal Student Financial Aid Information Center said the loans can be discharged in bankruptcy.
Bankruptcy is a serious step for your daughter's credit rating, however, so you may want to explore other alternatives.
The counselor said your lender may be willing to waive interest in return for getting the payment made.
She also said loans can be canceled, up to as much as 100 percent, if a student becomes permanently and totally disabled. The disability must be permanent and total for cancellation of the loans.
Your daughter should call the toll-free line at the center and discuss her problems with a counselor there. The number is (800) 433-3243.
\ Applying for loans after bankruptcy
Q: More than six years ago, my husband and I had to file bankruptcy. Since that time, we have re-established our credit with several places and do have good credit.
Our mortgage is with a credit union at 8 percent interest and we may be better off to stay with them. But my car is with the same institution at 10 percent, which does seem high.
Our lawyer advised us that there were banks that would loan to customers in this situation. Is this so and where should we apply?
A: Banks will lend money to people who have re-established credit, especially if you can explain the reasons that forced you into bankruptcy. With six years of good credit history, you should feel comfortable applying to banks.
You should start at the place where you have a good record for handling your checking and savings accounts. Banks look more favorably on good customers. You should establish a relationship with a bank if you don't already have one.
Check the terms of your car loan before you begin, however. If you are paying simple interest (applied to the declining balance like a mortgage), it will pay you to refinance at a lower rate. But there is less chance a payoff would be profitable if your loan was granted under the so-called Rule of 78, where you pay most of the interest up front. Don't give up on refinancing your mortgage if you plan to live in your house for several years. Visit a mortgage company and at least work out the figures.
\ Annuity likely considered income
Q: My husband is anticipating nursing home care sometime within the near future. I have in my name only a tax-sheltered annuity through my employer. Would this have to be considered an asset for Medicaid determination?
A: It probably would be considered income rather than an asset.
Cynthia Hamblett, Medicaid eligibility supervisor for the city of Roanoke, said annuities usually are listed as unearned income. It probably would be considered as income in determining the amount of money you can keep for spousal maintenance.
You would make a final assessment of your eligibility situation after your husband is admitted to a nursing home. Hamblett said this cannot be performed in advance.
\ Leave funeral planning to children
Q: My husband and I are not in too good health. We have been retired a long time, and we are trying to get some things fixed to help our children when something does happen like being in the hospital.
We signed the living will, and we have bought our vaults, cemetery lots and our headstone. I checked on the funeral to get an idea of the cost, and both would run about $5,000.
My husband thinks he has enough to pay cash. I worked for 29 years, so I have $14,300 in two insurance policies. Should we go ahead and pay cash or should I let the children pay it from the insurance and the estate? I made my grandchildren beneficiary of the larger policy and my husband beneficiary of the smaller one. I have two sons.
A: Don't deplete the little cash you have in order to pay the funeral in advance. What if you faced an emergency? You would have no cushion to help you if your savings have been spent. You should be able to trust your children to plan your funeral.
You should, however, name as your beneficiary the people who will have to bury you. Those people are probably your sons. What would happen if your grandchildren keep or spend foolishly your insurance money while your children go into debt for your funeral? Your sons or your estate should be the beneficiary after your husband, who would have first responsibility if he outlives you.
Consider prepaying the funeral only if one of you must enter a nursing home. A prepaid funeral is not counted as an asset when it comes to qualifying for Medicaid support.
Mag Poff will help find answers to your personal finance questions. Send them to her at the Roanoke Times & World-News, P.O. Box 2491, Roanoke 24010. Or leave a recorded message by calling (703) 981-3434 and, when asked for a mailbox number, press 66639 (MONEY), followed by the # symbol.
by CNB