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02 Dec 2017

It may seem a bit opportunistic, perhaps even heartless, but there are plenty of companies that look for people who are struggling with debt and try to exploit them for profit. While this is not true of all credit counseling companies, it is very important to do your research before signing up for one of these programs. In many cases, people end up with much worse credit after working with a so-called "credit repair" company than they would if they used a different approach.


If you think you need help to stabilize your finances, take the time to do some homework and ask questions. Find out what the business provides and how much it costs, and don't rely on verbal promises. A good credit counselor should be upfront about potential issues that might arise with your credit score and how long it might take to get the promised results. Be sure to get everything in writing and read your contracts carefully before signing.

Personal bankruptcy might also be considered, but its consequences re much more far-reaching, lasting up to ten years. Meanwhile it will be difficult to obtain credit, buy a home or even get a job. There are two main types of personal bankruptcy: Chapter 13 and Chapter 7.

Types of personal bankruptcy

Chapter 13 allows people with a steady income to keep property, such as cars and basic household furnishings, while Chapter 7 involves liquidating all assets that are not exempt. Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments and utility shut-offs, as well as harassment from creditors. However, personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations. You must get credit counseling from a government-approved organization within six months before you file for any bankruptcy relief.

Debt Scams

Beware of companies that offer "advance fee loans," which guarantee you a loan if you pay a fee to them in advance. Fees range from $100 to several hundred dollars and they are often illegal. Legitimate creditors may require an application or appraisal fee in advance, but they will never guarantee you get the loan, nor will they represent that a loan is likely. If you receive a telemarketing call that offers a guaranteed credit extension after a payment is received, they are breaking a major FTC rule for telemarketing sales.

Beware of "credit repair"

Another suspicious offer might come from a "credit repair" clinic. Many of these companies are specifically targeting people with poor credit histories, promising to clean up their credit reports for a fee, but anything they are offering can easily be done without their help – and without the fee. Remember, no one can remove an accurate piece of information from a credit report; all they can do is correct inaccurate information and request that the credit reporting agencies remove it. Federal and state laws ban these companies from charging money to customers until their services are fully performed.

What about debt settlement companies?

While a debt settlement company might be able to settle your debts, it can take a long time to complete the process. Such programs often require deposits into special savings accounts for three years or longer before all the debt can be settled. Before signing up for such a program, be sure to review your budget carefully and make sure you can keep the payments up for the full term of the agreement. Keep in mind that while they attempt to reach agreements with your creditors, neither party is obligated to settle your debts, so you could continue to accrue interest on some accounts before they are paid off. Plus, because the program will discourage you from sending payments to creditors, your credit could be severely damaged by this process.

If you are considering a credit repair or debt management program, take the time to carefully select the company and make sure you understand all the terms of their contract. While many of these businesses are legitimate, others are only interested in taking your money.

06 Oct 2017

No one can see the future, and although no one deliberately makes decisions that lead to needing a Southern Colorado bankruptcy lawyer, it happens more frequently than you might think.  Debt accrues interest, fees, and grows beyond what many would ever imagine, and it becomes simply unmanageable. Excessive spending or the use of credit cards is only one possible reason. A lot of the time, unforeseen circumstances arise, like large medical bills for example. This can leave people in financial devastation that can not be undone given the monthly income they make every year.  These are reasons to consider the relief that filing for bankruptcy can offer.

  • Eliminate the Legal Obligation to Pay Many of Your Debts. This process of wiping the slate clean is called a discharge of debts. The goal of a discharge is to reduce debt to give you a fresh start. Whether it is through straight bankruptcy (Chapter 7 Bankruptcy) or through reorganization (Chapter 13 Bankruptcy), most or all of your debts can be cleared.
     
  • Stop Foreclosure on Your House and Allow You to Effectively Make Payments to Catch up on Missed Payments of Your Mortgage. If your home is in foreclosure, Chapter 13 Bankruptcy will stop the foreclosure any time prior to the sale. Bankruptcy does not eliminate mortgages on your property without payment. Rather, bankruptcy will structure a plan in order to repay your mortgage arrears (the amount that you are behind).
     
  • Prevent Your Car or Other Property From Being Repossessed. Even if the creditor has repossessed your car, filing bankruptcy can effectively force them to return your car or other personal property (if the bankruptcy is filed quickly enough). The past payments you have missed will be consolidated into your Chapter 13 Bankruptcy plan. After this you will no longer pay the finance company, rather you will make monthly payments to the trustee of your Chapter 13 Bankruptcy who will then pay the finance company.
     
  • Reduce or Even Eliminate High Medical Bills. Sometimes an unfortunate accident or major recently discovered illness can completely ruin a family. Many families have to make choices on allocation of bills. Often, bills that were once important become insignificant to the large medical bills acquired by a loved one. Filing Chapter 7 Bankruptcy can greatly reduce the amount of medical bills.
     
  • Recent Loss of Employment. Studies show that loss of work is one of the most common reasons people file for bankruptcy. This is very easy to see. A family can get comfortable on two maybe even one salary. They can take on regular amount of debts, join clubs, and pay normal bills with relative ease. All of a sudden one or both spouses lose a job and a family must go from two salaries to one. Losing a job is closely tied to high medical bills. Losing a job means this family may be left without the protection of insurance that was once provided by their employer. Often times these two factors combined create an almost impossible mountain to climb without the help of bankruptcy.
     
  • Stop Harassing Behavior From Creditors. Some creditors do not always take the right course of action when attempting to collect a debt. Often, creditors will persistently call the home of a particular debtor with demeaning and abusive behavior. Not only is this unethical it can rise to the level of unlawful. In essence, bankruptcy will put on hold the demands of many creditors and stop the harassing phone calls and other inappropriate behavior all together.
     
  • Restore or Prevent Your Utilities From Being Shut Off. As you have probably seen many of these reasons overlap. Some lead to another. If your home is in risk of foreclosure then your utility bill may also be in risk of being terminated. Filing bankruptcy can prevent the utility company from leaving you in the dark.
     
  • Provide Help For Large Amounts Of Student Loan Debt. While it is true that your student loans will not be eliminated like several other types of unsecured debt, bankruptcy can consolidate your student loan debt. This consolidation will allow a debtor to make monthly payments through Chapter 13 Bankruptcy that are within the financial ability of the debtor.
     
  • End Wage Garnishments. Chapter 7 Bankruptcy will stop wage garnishment. Wage garnishment basically takes away your weekly earnings often times leaving you without necessities. Chapter 7 Bankruptcy allows you to purchase necessities for you and your family. Chapter 13 Bankruptcy will also help in this regard.
     
  • Challenge Certain Claims of Fraudulent Creditors. Bankruptcy will allow you to challenge these claims from creditors who are trying to collect more money from you than you really owe. An attorney can provide the support and the backing you will need to step up to these creditors. Attorneys often even the playing field between a big creditor and a single debtor. Filing bankruptcy with an attorney can stop fraudulent reporting by a creditor.
If you can relate to any of these scenarios, please contact the Colorado bankruptcy experts at The Law Office of Stephen H. Swift today.
31 Aug 2017

So many people call a bankruptcy lawyer expecting to file for bankruptcy next week, when in reality there is a process that must be followed. For example, you must receive credit and budget counseling from an approved credit counseling service within the 180 days prior to filing a petition. The credit counseling agency will review other options with you to help you avoid bankruptcy, which should be viewed as a last resort. Some of these agencies will provide counseling via telephone or online, but most people find it more helpful to meet in person. If and when you decide to file for bankruptcy, your forms must include the certificate from this agency indicating you received credit and budget counseling.


How to choose a credit counseling agency

When the time comes to choose a credit counselor, you may find it difficult to distinguish one from another. Many agencies are legitimate but there are others that are rip-offs. Just because they say they are "approved" for bankruptcy counseling doesn't guarantee a good reputation. Remember, even the best agencies won't be able to help you much if you are in serious financial trouble.

Many of the approved credit counseling agencies will also offer debt management plans, also known as DMPs. A DMP allows you to repay some or all of your debts by consolidating them with the agency. The counseling agency then distributes the money to your creditors. Be careful if you choose an agency that offers this service, as some will try to enroll you in a DMP even when it doesn't make sense. In many cases, bankruptcy might be the best solution for you, and if you sign up for a plan that you cannot afford you will end up in bankruptcy anyway.

When should you meet with an attorney?

For most individuals, it is a good idea to meet with an attorney prior to hiring a credit counselor. Some law firms will have a specific counselor that they recommend. A bankruptcy lawyer can also give you legal advice about whether bankruptcy is the answer for you, as well as many other suggestions.

Which property can I keep in a Chapter 7 bankruptcy?

Another one of the most common bankruptcy-related questions is concerning property. Everyone wants to know what property they will be able to keep, but it all depends on the type of bankruptcy you choose. For example, in a Chapter 7 case you can keep all the property that is "exempt" from creditors' claims. However, in a Colorado bankruptcy lawyer will tell you there are some exemptions in this state.

Here are the Chapter 7 exemptions in Colorado:

  • $5,000 in equity in your car or $10,000 equity if you elderly or disabled
  • $60,000 in equity in your home, or $90,000 if you are elderly or disabled
  • $3,000 for household goods
  • $20,000 for things you need for your job (tools, books, etc.)
  • Except for the home, the amounts are doubled when a married couple files together.

It is important to remember that the value of the property is not based on what you paid for it, but rather what it's worth now. This will be especially helpful in determining the value of furniture and cars.

What about Chapter 13?

In a Chapter 13 case, you can keep all of your property if your plan meets the requirements of the bankruptcy law. In most cases you will have to pay the mortgages or liens as you would if you didn't file bankruptcy.
In most cases you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt. Even if your property is not fully exempt, you will be able to keep it if you pay its non-exempt value to creditors in Chapter 13.

Photo Courtesy of Stuart Miles / FreeDigitalPhotos.net

20 Jun 2017

If you’re like many other Americans, you may think that bankruptcy is just another word for being broke, or not having any money, but in this age of extended credit, how do you define ‘broke’? When do you know when you don’t have any money?

This can be a complicated problem, because many people may think to themselves, “well, I have a job and I’m making money, so I’m not broke”. Unfortunately, the sad fact of the matter is that it is possible to be broke, or insolvent, while still earning money from a job.


With the practices of today’s predatory lending companies, who encourage you to spend and create debt for yourself, it can be all too likely that you’ve racked up more debt than you can easily pay off. You can end up paying off interest on credit and giving the bank far more money than you originally borrowed, and that’s money that isn’t going to feeding your family and paying your bills.

In cases like these, filing for bankruptcy may be just the help that you need. With the help of an experienced Colorado bankruptcy attorney, many of your debts can be flatly forgiven, and others can be made to work with you to create a payment schedule that doesn’t interfere with your quality of life.

Far too many people wait too long to file for bankruptcy because they don’t think it applies to them, or they don’t think it would help them.

Don’t wait to consult with a bankruptcy attorney, because some even give free consultations. It could change your life!

19 Feb 2017

In this financially turbulent time, many Americans have found themselves facing foreclosure. It’s not an altogether strange story… Being able to make a mortgage payment is getting harder and harder as more people lose their jobs.

It only takes getting behind on one payment, and then before you know it, you can be paying huge amounts of interest. Creditors want to you owe them as much money as possible, which is why they entice you into vehicles, property, or other goods that would normally be beyond your means.


It may have seemed like a miracle that a credit company was willing to loan you the money to buy a great new house, but there was nothing miraculous about it. For them, it’s a win-win proposition. If you pay the money back, then it’s no problem for them. But if you fail to pay on time, they’ll just keep taking and taking until you have nothing left.

That’s why filing for bankruptcy is such an important part of your rights as an American. If you’ve bought a house beyond your means, or if you’ve suffered a bad turn of luck, you may be facing foreclosure. If your house is foreclosed, you may have nowhere else to go, but the credit companies don’t care. That’s not their problem.

If you file for bankruptcy any time before the foreclosure sale date, your property can be protected under bankruptcy law, and in most cases, you can even just keep the house!

28 Nov 2016

It should come as no surprise to learn that singles are less affluent compared to other family structures. According to recent research by the MetLife Mature Market Institute, singles reported the lowest income levels (averaging $32,000), the lowest asset levels ($110,000) and the lowest rates of homeownership (43 percent). A surprisingly low 17 percent said they were on track to reach their retirement savings goals and 20 percent hadn't even started saving. The biggest worries for singles were affording their living expenses and maintaining their standard of living in retirement.



Most of the financial stress originates from relying on one income instead of two. This makes singles more vulnerable than couples who enjoy double earnings. Additionally, singles tend to earn less money and have lower education levels than their married peers, whether they have children or not. The study also reported that singles between the ages of 45 and 80 were less likely to have taken steps to pay off debt than married couples of the same age.

Changing demographics raise economic concerns

The MetLife study comes at a time when the country's demographics have already shifted in favor of single-person households. In fact, the U.S Census Bureau reported that single-earner households had grown to 31 million as of 2010, a 15 percent increase over the previous ten years. Meanwhile, traditional husband-wife households are on the decline, making up less than half of all households in America. If singles continue to be financially insecure, this trend could prove to be troubling for the economy.

Of course there are always individuals that buck the trends and find a way to make single life sound better. Eleanore Wells, a singles expert and author of "The Spinsterlicious Life," said it is far easier for her to save for retirement, because her money is her own and she can spend it how she wants to. Wells isn't the only one who feels this way. Many divorcees say they are better off single than they were as a couple, especially if their partner was less financially responsible.

Are singles more likely to declare bankruptcy?

Single people face more financial stresses than couples, but bankruptcy is usually caused by major economic stresses, such as a lost home, lower wages or unemployment. Any significant financial strain is likely to result in bankruptcy, but it's even harder to dig out of debt when you're facing it alone.

Singles are also less likely to seek the advice of a financial counselor, and less likely to save for retirement. The MetLife study found that couples were far more likely than their single counterparts to pay off debt or have met with a professional to help them map out their finances.

All of this stress on singles ultimately results in a higher rate of Colorado bankruptcy filings for single-headed households. But there is a bright side of bankruptcy; it can give you a fresh start and a clean financial slate. A successful bankruptcy is unrivaled in terms of the freedom it offers. One of the benefits of being single during the bankruptcy process is that you won't have to worry about jointly-held debts, as is often the concern with couples or recently-separated individuals.

A consultation with a Colorado Springs bankruptcy attorney will help you determine if bankruptcy is the right solution for your debt problems.  Many people try debt counseling first, or a debt consolidation loan.  An attorney specializing in bankruptcy can advise you on the best course of action. 

19 Sep 2016

It makes sense that if you are filing for bankruptcy, you aren't in a position to pay a fortune to an attorney to help you do it. Some people turn to a lawyer who will do it for a few hundred dollars, while others try to navigate the process on their own.

But our Colorado Chapter 7 bankruptcy attorneys want you to know the truth: This is one area where you really can not afford NOT to hire an experienced lawyer.  Failing to do this is likely to cost you much more in the end.


We work especially hard to keep our rates competitive, as we understand the challenges that our bankruptcy clients are currently facing. But we also want our clients to know that we refuse to cut corners, as many of the $500-a-case bankruptcy attorneys will.

Here's what you risk when you hire a cheap attorney with little to no experience in bankruptcy law:

  • Not having all eligible debts included in the filing;
  • Untimely or sloppy paperwork that could result in unfavorable rulings;
  • Getting slapped later with additional fees because the attorney was too inexperienced to realize the time associated with properly filing a bankruptcy claim;
  • Having your case dismissed without discharge.

This is certainly not to say that all low-cost bankruptcy attorneys are bad at what they do, and you also can't necessarily assume that just because an attorney is priced high that he or she is better.

So sure, you might find someone who will do a decent job for a few hundred dollars, particularly if your case is uncomplicated. But you take an enormous risk when you do this because if you end up stuck paying debts that would have otherwise discharged, that few hundred dollars you saved on an attorney will be spent to these creditors in the long-run.

The mistake many people make is assuming they can't afford one because of how much they owe. But what's important to note is that when you file for bankruptcy, you will likely be advised to stop paying all or most of your creditors immediately. These are debts that are going to eventually be discharged anyway, so it's often pointless to continue paying. What this also means is that if you have some form of income, you should be able to afford a qualified attorney.

Contact us today to see how we can help. 

28 Mar 2016

One of the most disturbing trends in money management is overuse of debt consolidation loans. Sure, they may be the perfect solution for people who have gotten into unforeseen financial trouble, but debt consolidation loans are too often used to treat symptoms instead of addressing an underlying problem. One of the greatest myths about these loans is that they save money on interest. The only way interest rates get cut is when someone borrows against home equity, but home equity loans can become a crutch as well.


Bankruptcy attorneys have seen many clients come into their office after thinking they had "fixed" their finances through debt consolidation, only to find out later on that the old habits are still there. They just "moved" the debt to a different collector. It's a bad idea to think you can borrow your way out of debt. A true fix will be neither quick nor easy, but it will have a lasting effect.
People who find themselves in debt frequently are likely to avoid addressing its real source, which is overspending and undersaving. Financial coaches rarely recommend a debt consolidation loan for clients because they know it doesn't work.

Statistics about debt consolidation

Some debt consolidation firms estimate that more than 78 percent of the time, after a client consolidates credit card debt, it gradually grows back. The reason for this is the client hasn't developed a game plan to prevent it from happening, such as saving for unexpected events or paying cash all the time.

When a debt consolidation offers lower monthly payments, most people feel like they've "won," but they soon find that the lower payment isn't coming from lower rates; just a longer payment term. Staying in debt longer usually means you pay the lender more money, which explains why so many lenders jumped into the debt consolidation business.

For example, say you've accumulated $30,000 in unsecured debt, including a four year loan for $20,000 at 10% and a two-year loan for $10,000 at 12%. Your monthly payment on the $20,000 loan would be $583 and you would pay $517 on the $10,000 loan, with monthly payments totaling $1,100. A debt consolidation company comes along and tells you they can lower your payment to $640 per month and by negotiating with your creditors lower your interest rate to 9% because all of your loans would be rolled into one. While this may sound tempting, what they don't tell you is now it will take you six years to pay off the loan. Instead of paying the $40,392 you would have owed on the original loans, now you're paying $46,080, even with the lower interest rate of 9%. Not such a great deal after all. But now do you see why these debt consolidation companies are so profitable?

How Can You Really Get Out of Debt?

The solution is not in the interest rate. You will need to change your spending habits by committing to a written game plan and sticking with it. If needed, get a second job and start paying down your debt. Figure out how to live on less than you earn and be frugal! Changing your habits isn't easy, but it will put you on the path to financial freedom and out of bankruptcy court, which is where you want to be.

Will a Debt Consolidation Damage Your Credit Score?

A lot of people think that a debt consolidation will make their credit report look better because it will show a lot of closed, paid-off accounts. But the answer really depends on what you do afterwards. If you get the debts consolidated and then start using your old credit cards again it will hurt your credit score. The best thing to do after a debt consolidation is to cut up your cards and stop filling out credit card applications. Make your loan payments on time every month and check your credit score regularly for any changes.

Consolidating credit cards with high balances using an installment loan — a loan with fixed monthly payments — may actually benefit your credit rating, especially if you use the loan to pay off credit cards that are near their limits. At the same time, any new loan can cause a short-term dip to your credit scores — so don't be surprised if that happens.

Transferring a high-rate credit card balance to a card at a lower rate can be another way to consolidate. If you decide to go this route it's important to be disciplined in your approach. Otherwise, you may fall into traps such as getting stuck with a balance at a high interest rate after the introductory period ends. If you use a substantial portion of the available credit on the card to consolidate balances from other cards with lower balance-to-available-credit ratios, your credit scores may drop.

Remember, moving around debt is not the goal here. The goal is to pay off those balances to free up cash flow as well as to help build strong credit. A consolidation loan, used correctly, can help you get there just a little faster.

Contact Us today for more information and to receive a free consultation.

17 Dec 2015

Whether you're struggling to make mortgage payments or seriously behind, foreclosure is a scary proposition. Not only would this be devastating to your lifestyle, but you may be concerned about its impact on your credit. But isn't every major financial problem going to damage your credit? When it comes to your FICO score, is it much different to go through foreclosure or bankruptcy, complete a short-sale, or request a loan modification from your bank?


While it may seem to be a minor, there is actually a significant difference between these options. Before you decide what to do, find out which activity will have the greatest impact on your credit score.

Your credit score

Every person is assigned a number by a credit scoring company that predicts your likelihood of default on payment obligations. This number is called a FICO score. Each credit reporting agency uses a different set of factors and calculations to get to this score, but most of the information they use is contained within your credit report. For this reason, it is very important to look at your credit report often, just in case there are any errors in reporting.

A FICO is required in 90 percent of all mortgage applications, so it is a number that could impact both your buying power and interest rate.

What influences your FICO score?

Payment history accounts for 35% of this score, which means if you pay your bills late your number will be lower. The more recent the problem, the more it will affect your score.

Outstanding debt accounts for 30 percent. If the amount you owe to a creditor is close to the credit limit, this will negatively impact your credit score. Also, carrying a balance on several accounts will reduce your score because it will seem like you are overextended.

Length of credit history accounts for 15 percent, which means the longer you've had an account open, the better it is for your score. However, new credit (10 percent) shows you've been applying for many new credit limits, which could negatively impact your score.

Finally, the type of credit you have will account for 10 percent. FICO looks for a healthy mix, including both revolving and installment loans, but this will only be important when there is little information available to determine your score.

What happens when you file for bankruptcy?

A bankruptcy filing will show up on your credit report for 10 years, which is three years longer than most other negative information, such as short-sales, foreclosures and loan modifications.

The impact of foreclosure on your credit score

If your credit score is high to begin with, any kind of financial distress will cause a deeper dive than if your score was already low. In fact, borrowers with higher FICO scores could see a drop of 100 or more points. Additionally, it will take longer to get back to an original score if that score is high, but the number of years it takes to rebuild will largely depend on your future payment history and debt load.

If you have excellent payment behavior and your available credit increases, your score will improve more quickly than if you continue to make some late payments and are remain overextended.

Foreclosure, bankruptcy and short-sale often impact borrowers' scores so dramatically because borrowers only resort to these measures when they are seriously delinquent.

What about loan modifications and forbearances?

If your lender reports that you are "paying under a partial agreement," this could have a negative impact on your FICO score, but a lot depends on how your loan modification is reported. Either way, if you are no longer paying your mortgage as originally agreed, it will have some impact on your score.

Bankruptcy is worse for your credit score

Statistics from FICO indicate that bankruptcy is slightly worse for your credit score than foreclosure, forbearance, short-sale, or a loan modification. When comparing foreclosure to short-sale, borrowers who faced foreclosure took longer to rebuild credit than those who completed a short-sale. This can be attributed to the fact that foreclosure is normally triggered by such life events as a job loss, divorce or medical problem, conditions which will likely continue long after the foreclosure.

Keep in mind, however, that these statistics reflect the average situation, and everyone's financial situation is different. ¬¬

Photo Courtesy of Stuart Miles / FreeDigitalPhotos.net

15 Sep 2015
Experiencing a damaging credit event like a foreclosure, short sale or bankruptcy doesn’t mean you will never be eligible for a mortgage again.  As you prepare to buy your next home, take a look at this useful chart to see typical waiting periods before you can be approved for a mortgage.  If you experienced extenuating circumstances*, your wait time may be shorter than you think. 






*Extenuating circumstances are temporary events that are beyond a borrower’s control, such as the loss of a job, medical bills or death of a wage earner. Divorce and the the inability to sell the house after a job relocation do not qualify.  These events must be documented, and they are subject to review by the underwriting team.
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