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SMART MONEY A COLUMN BY BRUCE WILLIAMS

It’s too late to atone for past bankruptcy

Tuesday, January 29, 2013 - 12:01 am

Q.: Several years ago I filed bankruptcy against several credit card companies for approximately $50,000. Now I am determined to attempt to reconcile this situation. Can you advise me ? – S.S., via email

A.: I congratulate you for having this moral sense, but the reality is that the companies involved have long since written off the bankruptcy discharges. I wouldn't make any effort to contact the companies.

Q.: Can you please explain what an interest-only mortgage is? – V.S., via email

A.: An interest-only mortgage is a loan on which, for a set term, the borrower pays only the interest due on the principal. The principal balance remains unchanged. Interest-only loans represent a somewhat higher risk for lenders, and therefore they carry a slightly higher interest rate. The reason most people take out interest-only mortgages is that these loans require the smallest monthly payments. But equity does not build unless the house rises in value. Interest-only mortgages tempt people to buy more house than they can afford and gamble on the outcome.

Send questions to bruce@brucewilliams.com or to Smart Money, PO Box 7150, Hudson, FL 34674. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.