Law Office of Stephen H. Swift, P.C.
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.
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.
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:
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
That's it, you've had it! After struggling for months, or even years, to pay your debts, you are ready to consider filing for bankruptcy. The time has come to find a bankruptcy lawyer but you have no idea what to look for, or which questions to ask. It's not uncommon to see a bankruptcy attorney advertise on television. Some even advertise on billboards, but you can't be sure. It might be awkward to ask friends and family for a recommendation, so most people opt for an online search.
Believe it or not, a lot can be learned just by reading through an attorney's web site, but you shouldn't stop there. Filing for bankruptcy is pretty serious and it requires the right representation. Here are some ways to find, and then select, the best bankruptcy lawyer for you.
Look for signs of professionalism
Before you get started, it makes sense to check in with some professional organizations. Membership in organizations such as the National Association of Consumer Bankruptcy Attorneys, is a good indication that the firm or attorney is up to date on the latest developments. Once you locate a few members in your area, visit the web site for your state's bar association and check their certification. Most states will have special certification requirements for practicing bankruptcy law. A certification is given when the lawyer has been practicing for a minimum number of years and spends at 50 percent of the time on bankruptcy cases. A peer review and a passing score on a written exam will also be required.
Credentials and association memberships will give you the assurance that an attorney has all the practical knowledge necessary to help you, even if your case gets complicated. It will also tell you that the attorney takes professionalism seriously.
Prepare to interview a few bankruptcy lawyers
After you have found a few firms or lawyers that look interesting, take a look at their web sites. They should include a clearly written statement of educational information about bankruptcy, plus financial forms that you can download and in preparation for filing.
Schedule a few appointments and as for a free consultation. It may be tempting to go with the first one you like, but plan on seeing more than one. You should feel perfectly comfortable with the attorney and confident in his or her abilities. To save time, complete any forms you find on the web site and bring them along. Bring a list of questions you might have and use the same list of questions with each attorney. The answers you get may help you determine which one to hire.
What should you look for in a bankruptcy lawyer?
While professionalism and rapport are important, it is also essential that you trust the person you hire. Look for the following qualities during your initial consultation.
Do they discuss with you the alternative bankruptcy solutions? For example, an attorney should tell you that a Chapter 7, or complete cancellation of eligible debts, isn't the only answer. Other options should be explored whenever possible, such as credit counseling or negotiation with creditors. A Chapter 13 bankruptcy might also be on the table if you have enough income to support at least some of your liabilities, or if you own property that could be seized in a Chapter 7 filing. It is important to understand the full range of possible resolutions before making a decision that you could later regret.
Does the attorney express a passion for his or her profession? It is important that your lawyer is personally involved and enthusiastic about the process. Many attorneys find their work rewarding and fascinating. Find out what drove them to specialize in bankruptcy law and listen carefully to the response. To be honest, there are few other practice areas where an attorney can do so much good for a client in such a short period of time.
Do they listen to you closely and understand your situation? Declaring bankruptcy can be a painful decision and there are plenty of emotions involved. You will want an empathetic attorney who is interested in helping you reach your goals, but who also shows a willingness to ask you probing questions. If the lawyer doesn't ask you how you about your biggest concerns, or what got into your financial predicament, he or she may not be viewing you as an individual. You should walk out of your meeting feeling like the attorney really wants to help you.
If you owe money, and most Americans do, you’re probably being harassed by calls from creditors. They call at odd hours of the day, hoping to trick you into answering the phone, and make it so that whenever your phone rings, you have a moment of dread when you see a number you don’t recognize.
That’s really only the start of the problems, too. Creditors can repossess your property, garnish your wages, and more.
There’s more to consider than just physical harassment, though. The stress of constantly living in fear of creditors can have emotional damages, too: anxiety, depression, and plenty of others. It can get in the way of you working to your full potential, and even take the joy out of life.
That’s where bankruptcy comes in.
When bankruptcy is filed, an automatic stay is issued to creditors, which means that they can no longer attempt to collect from you. Practically overnight, the harassing phone calls will stop, and there’s a good chance that when the bankruptcy is over, they won’t start again.
Filing for bankruptcy offers you protection from creditors through the duration of the process. That means no calls, no repossessions, no garnishments, or anything.
Any good bankruptcy attorney will make sure that even when the process ends and the stay expires, the creditors will leave you alone. That’s because it’s their job to create a plan that works for you, so that you can pay back any debts that survive the bankruptcy process.
If you file properly and don’t overspend again in the future, bankruptcy means never getting another collections call.
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!
If you've had a few problems paying the bills lately, you are not alone. Tens of millions of Americans have blemishes on their credit reports that are serious enough to prevent them from obtaining credit cards and loans. It's easy to feel helpless during these times, but you can take some positive steps right away to repair the damage.
Even if your credit is satisfactory, but you would like to improve it, it is worth reading this article. The better your credit, the less you will pay in interest and typically insurance rates as well.
Before you can improve your credit, you must first know where it stands at this moment. It is possible to obtain free credit reports once each year, but you might have to pay to see your FICO score. Be sure you use a reputable service to get current credit reports from the major credit reporting agencies – Equifax, Experian and Trans Union.
Here are some quick tips for speedy credit repair:
One reason for a low credit score may be a lack of credit history, and don't fall for the myth that you must carry a balance in order to get good scores. Using a credit card or two and paying it off every month is the best way to establish a credit score. If a regular credit card is denied due to "lack of credit history," consider getting a secured card. This is where the bank gives you a credit limit that is equal to a deposit you make in advance.
Get an installment loan
Your credit score will improve fastest if you can show your level of responsibility with both major types of credit – revolving (credit cards) and installment (personal, auto, student and mortgage loans.) If you don't have one already, consider adding a small personal loan that can be paid off over time. Small community banks and credit unions are the best place to start, and look for loans that report to all three credit bureaus.
Pay down your debt
Making that final payment on your auto, student or mortgage loan is a great way to boost your credit score, but not nearly as much as paying down – or paying off – revolving debt such as credit cards.
Ideally, a lender wants to see a big gap between the amount of credit you are using and your available credit limits, so if you've been paying your bills on time it may be wise to ask for an increase in your credit limits. Debt experts recommend that you pay down the cards that are closest to their limits first, even before the highest-rate card.
Use credit cards lightly
Any time you rack up a big balance on a credit card, it can hurt your scores. This is because the balances reported on your last statements are used to calculate credit scores, and this is what is typically reported to the credit bureaus. A good idea is to limit your charges to 30 percent or less of the card's limit; with 10 percent being even better. If you regularly use up more than half your limit on a single card, consider using several cards to ease the load, or making a payment before the statement closing date.
Check your credit limits
Your scores might be artificially depressed if your lender is showing a lower limit than you actually have. Most credit card issuers will quickly update this information if you ask. If your credit card issuer makes it a policy not to report consumers' limits, the bureaus may use your highest balance as a proxy for your credit limit.
This means if you consistently charge the same amount each month -- say, $2,000 to $2,500 -- it may look to the credit-scoring formula like you're maxing out that card every month.
If you have an American Express charge card -- the kind that must be paid in full every month, rather than the kind on which you carry a balance -- you probably don't have to worry, because charge cards typically aren't included in the credit utilization portion of the FICO formula.
Get some goodwill
If you've been a good customer, a lender might agree to simply erase that one late payment from your credit history. You usually have to make the request in writing, and your chances for a "goodwill adjustment" improve the better your record with the company. A longer-term solution for more-troubled accounts is to ask that they be "re-aged." If the account is still open, the lender might erase previous delinquencies if you make a series of 12 on-time payments.
Dispute old negatives
You may have fought with the phone company over an unfair bill a few years back, resulting in a collections account, but that may be fixable. Continue protesting that the charge was unjust, or try disputing the account with the credit bureaus as "not mine," and be persistent about this. The older and smaller a collection account, the more likely the collection agency won't bother to verify it when the credit bureau investigates your dispute.
Correct significant errors
Your credit scores are calculated based on the information in your credit reports, so certain errors there can really cost you. Not everything that's reported in your files matters to your scores, but there are a few problems that are worth correcting.
Correcting your credit report now will save lots of time later, especially if you are planning to apply for a car loan or mortgage within the next year. By the time most consumers realize they have a problem with their credit score, it is already affecting their interest rates and credit availability. Be smart about your credit score and check your credit reports regularly.
Photo Courtesy of Stuart Miles / FreeDigitalPhotos.net
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!
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:
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.
As more and more people use electronic means to do their banking, pay their bills, or make purchases, many are becoming victims of identity theft. Once a hacker gets access to your personal information, such as your Social Security number, he or she can run up significant debt in your name, or worse yet, empty your bank account. Unfortunately, the increasing occurrence of identity theft has led to a rising tide of personal bankruptcy filings.
Given the high profile cases of hackers breaking into credit-card payment systems and stealing data, all identity theft cannot be prevented, but there are many steps that you can take to reduce the risk. When someone fraudulently charges items on your credit card, they take advantage of your good record opening new accounts in your name. In most cases, hyper-vigilance is your best protection.
Here are some ways you can prevent identity theft:
Shred it. Think twice before letting bills, statements, receipts, and solicitations leave your house in one piece. Always shred financial and medical statements, pre-approved credit card offers and other solicitations, preferably with a cross-cut shredder.
Think like a thief. Before throwing anything away, check to see whether it includes any valuable identifying information that could potentially be used by an identity theft.
Lock it up. To avoid thieves who steal credit-card offers from your mailbox or intercept bills waiting for the postal carrier, get a secure mailbox. If you're home a lot, you can install a device that lets you know when your mailbox has been opened.
Stash it. Rather than throwing away receipts and other documents at the airport, shopping mall or the office, bring them home and then shred them.
Practice financial diligence. Protecting your credit and your banking and brokerage accounts is worthy of special effort. Among other things, keep your checkbook out of sight at all times and store blank checks in a secure spot.
Red flags. If you receive a notice that your email address or mailing address has been changed, it's a clear sign that someone could be trying to hijack your account. Contact the sender immediately.
Conduct financial checkups. Monitor all your financial accounts on a regular basis, looking for any unusual transactions. If you notice any improper charges or withdrawals to your account, report them immediately.
Freeze it. If you notice suspicious activity, you can add a security freeze to each of your credit reports, preventing the credit reporting agency from releasing any information about you without your expressed authorization. These freezes must be lifted if you plan to apply for credit.
Reduce your risk. You can cut your chances of identity theft by taking other steps to reduce unwanted solicitations and protect your information. You should also be diligent about managing important documents.
Cut junk mail. You can reduce unsolicited mail by going to the Direct Marketing Association web site at www.DMAchoice.org and setting your preferences. Choosing to be contacted by email instead of mail reduces the opportunity for identity thieves to obtain your information.
Be password savvy. Give each of your high value online accounts a unique password that includes symbols as well as letters and numbers. Memorize those passwords whenever possible, but if you must write them down, keep them in a locked safe or drawer. Before disposing of an old computer, consider a data wipe utility program to prevent the recovery of information from your hard drive.
Don't be a phishing victim. Phishing refers to emails that appear to be from your bank, brokerage or cell phone provider; but they are actually fraudulent emails from scammers looking for details about your accounts. They will typically ask for personal information, such as your Social Security number, account number or passwords. No legitimate company would every request that kind of information from in an email.
Filing for Chapter 7 bankruptcy can be stressful enough, but then your Colorado bankruptcy lawyer informs you that you must attend something called a "Meeting of Creditors" before your debts can be discharged? That might be enough to make you wonder what you got yourself into. Good news! There is no reason to fear this hearing when you have an experienced bankruptcy attorney by your side.
What is a Meeting of Creditors?
When you file for Chapter 7 bankruptcy, the meeting of creditors is a short court proceeding where the bankruptcy trustee and your creditors can ask you questions about your finances and the information you supplied in your petition while you are under oath. This meeting, which is also known as a 341 hearing, is essential in determining whether the papers you filed are accurate and complete.
Who Will Be at Your Chapter 7 Meeting of Creditors?
Typically, the Chapter 7 bankruptcy trustee will moderate the meeting of creditors, which means there will be no judge present. In fact, most Chapter 7 bankruptcy filers don't see a judge unless they are facing an objection or reaffirming a debt. In any case, all of your creditors will be invited to attend this meeting but they rarely show up. This is because creditors have a very short period of time in which they will be allowed to ask questions so they don't benefit much from being there. However, if a creditor has reason to believe you are hiding assets or committing another form of bankruptcy fraud, they may show up to present such evidence.
What Happens at the Meeting of the Creditors?
In most cases, you will only be examined by the bankruptcy trustee, but remember, your meeting of creditors is open to the public and several hearings are held within the same time period so you may have other debtors observing your hearing as they await their case.
When your case is called, you will go before the desk of the trustee to be examined under oath. You will be asked to provide the trustee with your full name and provide identification as well as your social security number. Since Chapter 7 bankruptcy authorizes the court to sell your nonexempt assets, most of the trustee's questions will focus on these assets.
After the trustee questions you, your creditors are allowed to examine you as well. If a creditor comes to the hearing, you may be asked about the nature or location of your assets; however a creditor will not be allowed to conduct a lengthy investigation at this meeting.
After the trustee and creditors have finished their examination, the trustee will conclude your hearing. Unless the trustee requires more information, you won't have to come in for another hearing like this. You can expect to receive your discharge once all the other requirements are satisfied.
If you have more questions about the process of filing Chapter 7 bankruptcy in Colorado, schedule a consultation with a Colorado Springs bankruptcy attorney.
Photo Courtesy of Stuart Miles / FreeDigitalPhotos.net
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.
As a Colorado bankruptcy attorney, I hear this question more than many others. How can bankruptcy be avoided? But before a client even lands in my office for a consultation, another question might have been asked: How can I pay off all this debt? Well, there is no silver bullet, no easy answer that won't require a disciplined approach, but when one is willing to make the sacrifices there is usually a way to get that debt paid down.
According to a recent article by the Motley Fool, "9 Ways to Pay Off Debt," you can throw a lot of energy at your personal debt but it won't just disappear. With annual rates of 20 percent or more, compounded monthly – debt hovers over some individuals like a "carrion bird." As the article suggests, it cannot be wished away but it can be paid down with a lot of determination, some debt-fighting resources and possibly the goodness of a few wealthy relatives.
Here are some of the Motley Fool's suggestions:
Pay more than the minimum due.
This is an important habit, according the Motley Fool. The minimum payment is only about 2 to 3 percent of the balance due, and it is clearly calculated in the bank's favor so they can get more interest. This means less cash in your pocket. Don't fall for it. Instead, pay as much as you can each month even if it means eating at home or bringing your lunch to work. Be willing to make a few sacrifices and you will have the means to increase your payments against debt. When you see that balance going down every month it will be an incentive to keep it going.
Snowball your credit card debt.
Figure out which credit card has the lowest interest rate, and then transfer as many balances to that card as possible. If the entire balance cannot fit onto one low interest card, pay at least the minimum due on all cards except one, then make the largest debt payments on that one card. When that balance becomes zero, move to the next card and tackle it the same way.
This "lather, rinse, repeat" method is also known as "snowballing" because as the debts decrease the amount of money you have to pay them off increases. This keeps happening until all the debt is wiped out. Many people take advantage of promotional offers that banks use to entice them into a line of credit. It may be worth considering, especially when you're moving an 18% card down to 5.9%, just as long as you apply the money saved on interest into paying more against the principal. Just take the time to examine each offer closely and look out for "hooks." You may need to switch your balance again after the introductory period expires, resulting in a higher interest rate than you are paying now.
Cash out your savings account.
Many people believe that having a savings account is more important than getting out of debt. Newsflash: it isn't. Savings accounts are great, but keeping money in a low-yield account is never smarter than paying off high-interest debt. Think about it. Draining your savings account may seem scary, but if it saves you a few hundred a month in credit card interest isn't it worth it? The higher the interest rates are on your credit cards, the more attractive it becomes to choose repayment over investment. The same concept applies to investing in your 401(k). If you are trying to reduce your taxable income and nearing retirement it makes sense to keep investing, but if you're young and your income isn't that high yet, pay off your debt before increasing your investment in retirement accounts.
Ask for a loan from family and friends.
This might seem a little uncomfortable, but chances are you will get a much more favorable interest rate from family members than you would from a bank. They might even tolerate a late payment or two. But it is very important to keep your word and put your agreement in writing. The last thing you want to do is destroy an important relationship over money. Loans between family members can quickly become a source of hard feelings, so you must remain scrupulous about adhering to the payment schedule.
Get a home equity loan.
If you own your home and you have accumulated enough equity, it might make sense to get a home equity loan or home equity line of credit (HEL). This strategy allows you a few ways to save. First of all, you will trade your high interest credit card debt for a 6% to 7% interest rate. Secondly, if you itemize deductions on your tax return, home equity interest counts as mortgage interest. The only caveat with this approach is you cannot look at this loan as a windfall, or as an excuse to continue living beyond your means. Only use the proceeds to pay off debt, and resist the temptation to accumulate more debt. Many HEL borrowers fall into this common trap and then find themselves paying off the HEL on top of new credit card debt. The trick is to pay off the cards and keep them paid off until the home equity line is repaid.
For more tips on paying off debt to avoid bankruptcy, look for our follow-up article later this month.
Photo Courtesy of Stuart Miles / FreeDigitalPhotos.net
If you are facing foreclosure, it won't be long before your friends and family start offering advice. You may hear about some proven strategies to keep the mortgage company at bay, and other actions that may help you avoid foreclosure. But first it is important to understand foreclosure.
What is foreclosure?
A bank foreclosure is a legal process through which a mortgage lender can take possession of your home when you are not making the monthly mortgage payments. While it is different in every state, it usually follows that when you miss a few payments on the mortgage, the lender will send a default letter. This letter usually urges the borrower to make payments to catch up or to make some alternative arrangement with the bank. However, if the situation is not fixed within a few months of this letter, the bank will begin the foreclosure process.
What is the foreclosure process like?
After a loan has been in default for a month or two, the bank will send Sheriff's Sale Notice. Usually, this sale is scheduled to take place within four weeks of the date of the letter. Sheriff's sales are auctions where people can bid on the house; however the lender is usually the winner of the auction. In certain situations, the lender can attempt to collect any balance of the loan above the price paid at the sheriff's sale. This debt is called a "deficiency" but it usually a dischargeable debt in bankruptcy.
On the day of the sale, the lender assumes ownership of the property and the "redemption period" starts. This period of time is designed to protect the borrower's from abuse by the lender and it usually lasts for six months. During this time, the borrower can remain in the home, but doesn't have to pay the mortgage or property taxes. The borrower may also buy back the home at the price paid at the auction, but this might be impossible since lenders won't give loans to people right after a foreclosure. At the end of the redemption period, the borrowers can be evicted from the home.
How can bankruptcy help?
Filing for bankruptcy during a foreclosure can help in a couple of ways, but it must have been filed before the sheriff's sale. For one, a Chapter 13 bankruptcy can help you catch up on payments if you fell behind on your mortgage. Secondly, Chapter 7 allows you to stay in the home longer while stopping the lender from collecting a deficiency after taking the home.
Chapter 13 and foreclosure
If you fall behind on your house payments but you still have a large enough income to pay the mortgage, then Chapter 13 might be the ideal solution. This is particularly true when you have some equity in the home and want to hold on to it. A Chapter 13 bankruptcy allows you to pay back the amount your fell behind over the period of three to five years, while continuing to make regular mortgage payments. Once the arrears are paid, the mortgage will no longer be in default.
Chapter 7 and foreclosure
If you fell "underwater" on your mortgage because the balance is higher than the value of your home, or you can no longer afford to make monthly mortgage payments, then Chapter 7 may be just the fix. Chapter 7 bankruptcy legally protects you from any actions taken to collect a debt, including the sheriff's sale on a foreclosed home. While the lender can still ask the court to hold a sheriff's sale, the protections of Chapter 7 can last up to three months. In the case of a Chapter 7 bankruptcy, you can gain an additional 1 to 3 months in the home without paying a mortgage.
Perhaps more importantly, a Chapter 7 bankruptcy discharges any deficiency debt that may result from the house selling at auction for less than the balance of the mortgage. In cases where the deficiency judgment is quite large; which can occur when the house is remortgaged or underwater, a Chapter 7 filing can be quite helpful.
In some circles, bankruptcy is viewed as a taboo subject. People immediately assume that those who file for personal bankruptcy are simply irresponsible with money or they are trying to escape from paying their bills. In reality, however, this is rarely the case.
Bankruptcy attorneys and other financial experts are quick to point out how many successful people they know who have filed for bankruptcy in the past. The fact is that bankruptcy offers an individual protection from creditors who might otherwise place an enormous burden on them.
Without bankruptcy protection, people who are saddled with debt would be at the mercy of their creditors, who could file judgments, garnish wages and place liens on their property. Bankruptcy allows an individual the opportunity to prove to their creditors that he or she is not capable of meeting expenses, while allowing him or her to make an attempt at restitution.
Why is an attempt at restitution so important?
Bankruptcy filers are often judged harshly by those who assume they are just trying to escape debt. They wrongly believe that one's personal bankruptcy allows them to get off the hook completely. While some of the filer's debts may be discharged in Chapter 7 and Chapter 13 bankruptcy, the court still requires them to make an attempt at restitution. In a Chapter 7 bankruptcy, the filer must forfeit any assets that are not protected, or exempt, by state bankruptcy laws. The proceeds from the sale of these assets is then used to pay back creditors. In Chapter 13 bankruptcy, filers are expected to create a repayment plan with the court, which essentially settles their debts over a period of 3 to 5 years.
While restitution may not be complete, it is an important aspect to bankruptcy protection because it requires the filer to bear some responsibility instead of walking away debt-free. Personal bankruptcy is certainly not something one should aspire to, but for most people it is a much better alternative than hiding from creditors. It offers protection from creditors and it offers a means to a fresh start. It is wise for those seeking protection to work directly with a Colorado Springs bankruptcy attorney for advice on starting the process.
How will bankruptcy affect your credit score?
Even those who are willing to deal with the emotional repercussions of bankruptcy might not be so thrilled about the damage it will do to their credit score. In fact, other than emotional stress, credit score is what filers worry about the most. It is true that a bankruptcy filing can show up on your credit score for up to ten years, so If you find that bankruptcy protection is the best option for your financial future you will want to start repairing your credit score as soon as possible.
The following are a few considerations to help Colorado residents with repairing their credit score.
Finally, if you are considering bankruptcy in Colorado, consult with an experienced Colorado Springs bankruptcy lawyer. Be prepared to ask questions and learn about all of your options before making a decision.
Money may not buy happiness, but the lack of it can certainly inspire negative emotions. When we lack financial stability it often causes sadness, grief, and shame, but these are just the beginning when it comes time to file for bankruptcy. There is something about admitting defeat and formalizing that defeat in a court of law that makes a financial disaster even more palpable.
The most common form of consumer bankruptcy in America is Chapter 7, which involves handing over one's non-exempt assets to a trustee, who liquidates them to pay the filer's creditors. This normally eliminates all or most of their debt. Another form of bankruptcy, Chapter 13, is where one's debt is paid off through a financial reorganization, with the goal of preserving certain assets. People who file for Chapter 7 are usually in such a state of financial ruin that it's not worth filing for Chapter 13.
While we often focus on the financial consequences of bankruptcy and the damage it does to one's credit score, the mental burden can be more overwhelming. In fact, its far-reaching effects can become psychologically burdensome, causing undue stress on important family relationships. It is important to acknowledge this and be proactive about preventing permanent damage because family support is so important during this process.
Focus on finances and emotions simultaneously
It is important to take the appropriate financial steps when facing bankruptcy, such as compiling a list of debts and hiring a bankruptcy lawyer, but try not to neglect your emotional well-being. Many people find that by the time the file for bankruptcy they have juggled debt for so long that they are emotionally spent. According to one financial counselor, "In many cases, a person's self-esteem takes a stronger hit than their finances."
As more people cope with the fallout from a struggling economy, the financial therapy industry is gaining a foothold. People are in need of emotional support when they go through a monetary crisis, and while many general psychologists offer treatment, it might not address all the concerns involved with bankruptcy. Financial therapists can help address a patient's worry about their family's anger, as well as their anxiety and fear about the future. Bankruptcy may present some obstacles in life, but for many people it is also a great relief. Even the black marks on a credit report will eventually disappear, and in the long run people look back and realize it was their only option.
Bankruptcy attorneys will often provide solace to their clients by telling them they are not alone; that in fact there are plenty of other people who have fallen into bankruptcy and it is not the end of the world. Statistics prove this out, and it's important that people realize this. In reality, filing for bankruptcy gives them the breathing space to make a fresh start. Oftentimes, once the decision is made to file for bankruptcy, clients are in a much better frame of mind than they were at the first meeting with their attorney.
According to a recent article in U.S. News and World Report ("Surviving the Emotional Toll of Bankruptcy"), many perceptions about bankruptcy are falls. Financial therapists say that while many general psychologists offer help in this area, it is not always the right kind of support. Some bankruptcy filers often worry that they have accumulated so much debt that even a bankruptcy won't be enough. Others worry that the poor economy will continue to get worse, or that their credit score is permanently destroyed. Such misguided fears only make the process of bankruptcy more disturbing. In reality, no matter how much someone owes, bankruptcy is always a viable option, and the effects of it will eventually be erased.
Blame is another part of the grieving process. While many people know that the poor economy caused their situation, they still must take ownership of what things they did have control over. In this case, a financial therapist will try to help a client separate their own worth from their personal worth. This can be difficult for many people, who have been trained to believe that their financial success is the only success that matters.
Ultimately, relief from the mental burdens of bankruptcy is dependent upon how well a person prepares to handle finances in the future. Setting smaller, achievable goals can be a great way to rebuild confidence because individuals can celebrate minor victories along the road to recovery.
This may be one of the most common questions I hear as a Colorado bankruptcy attorney, "Can I keep my house if I file Chapter 7?" But the answer isn't always so simple. In Colorado, keeping your home after Chapter 7 bankruptcy will depend on your answers to three questions. Do you really want to keep it? Do you have any equity in the home? And are you current on the payments?
Deciding whether you want to keep your house may be difficult, but if you owe more than it is worth it might not be an asset worth saving. Also, if your interest rate is too high or the house needs a lot of work it might be more than you can afford to keep. Some Colorado filers find they are better off letting it go in the bankruptcy and buying another home a few years down the road. The good news is that in Colorado, you can almost always keep your home if it makes financial sense to do so.
Secondly, the trustee in your bankruptcy case will want to know if you have any equity in the home. If the house is worth more than you paid for it, then you have equity. If you have equity, the trustee will determine if you have more equity than what is protected under the state's exemption statutes. These are the laws that determine what you get to keep in a bankruptcy. Unless you have exempt equity, the trustee is not going to come after your home. However if you have non-exempt equity there are some steps that can be taken to minimize it. This will be a topic for discussion with an experienced Chapter 7 bankruptcy lawyer.
Finally, if you are behind on your mortgage payments at the time of filing, your lender could either demand that you get caught up immediately or they could ask the court for permission to foreclose. This causes some risk and it might be better not to leave this decision up to the mortgager. When you speak with a bankruptcy attorney, find out if it makes more sense to get caught up before filing Chapter 7, or if a Chapter 13 bankruptcy makes more sense. Chapter 13 allows you to repay arrears on a mortgage over a three to five year period.
One of the benefits of filing for Chapter 7 bankruptcy in Colorado is how it wipes out all of your dischargeable debts. This will include not only credit cards and medical bills, but also the debt you still owe on your home and automobile. While you may no longer owe money on your home, keeping your home after bankruptcy will largely depend on you. Below are three common options for handling your home after a bankruptcy.
Reaffirm: This process allows the petitioner to request that the judge waive the discharge of a specific debt. With a mortgage or home-equity line of credit (HELOC), you agree to continue making payments on the house as agreed. As long as you continue to do this, the mortgagor cannot foreclose. However, if you become unable to pay, the lender can not only foreclose, they can sue you for the difference between what you owe on the home and what they sell it for at auction. One of the advantages to signing a reaffirmation agreement is it allows you to rebuild your credit score faster after bankruptcy.
Stay and Pay: This means you will continue paying the mortgage without a reaffirmation agreement. Essentially, this means you are paying a debt you no longer owe, but it keeps the lender from foreclosing because they are still receiving payments. Once you have paid the full amount that was owed before the bankruptcy, the lender signs the title over. This is a popular option because it even allows you to sell the property, but refinancing is impossible since there is no current debt left on the note. Along these same lines, if you were to go into foreclosure the lender cannot sue you for a deficiency.
Surrender: If you decide not to keep your home, or you don't feel that signing a reaffirmation agreement would be wise, you may simply hand the keys over to the lender and walk away. Chapter 7 bankruptcies free you from any associated debt with regard to your home, so there is no threat of the lender coming after you later on.
Misconceptions about bankruptcy abound in America, which is a great shame because it prevents many people from getting the debt-relief help that they so desperately need.
One of the many misconceptions about bankruptcy is that your property will be seized to help pay off your debts, and that you won’t be able to keep your house, your car, or other important properties.
This misconception is actually the opposite of the truth! In reality, without the protections offered by bankruptcy law, creditors can put liens against your property, repossess your car, or any number of other debt-payment options.
Bankruptcy isn’t about helping the creditors, it’s about helping you, the consumer. Bankruptcy law offers the average person protection from predatory lending schemes and out-of-control debt, and as such, it allows you opportunities that you wouldn’t normally have.
For example, under current Colorado law, you’re allowed to keep a vehicle with up to five thousand dollars’ worth of equity, which is most cars. For example, if your car is currently worth ten thousand dollars, and you owe more than five thousand dollars for it, then you can keep it. Further, a leased vehicle can be kept regardless of the cost.
Likewise, you can keep up to sixty thousand dollars in home equity.
Those figures may not sound like much money, but when you consider that most people actually owe more than their car or home are worth, it begins to sound much more reasonable!
Don’t let your fear of losing things keep you from consulting with a bankruptcy attorney, because they could save the things you care about most!
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
Every small business owner has dealt with his or her share of debt, but with tighter lending rules some borrowers are struggling to stay out of bankruptcy court. It seems like since the "official" end of the recession, everything from health care to raw materials have been getting more expensive, which has placed an undue strain on entrepreneurs. The New Year is a good time to take a long hard look at where your business is financially and what you can do to dig out of debt.
Thankfully, the need for bankruptcy protection has decreased significantly since 2010, but a bankruptcy lawyer can still help the struggling small business. The Colorado Springs bankruptcy law office of Stephen Swift offers debt relief for small business owners who want to get a fresh start through a Chapter 7 or Chapter 13 bankruptcy filing. But there are still some steps that can be taken to avoid this. Here are some methods recommended by Entrepreneur Magazine from an article entitled "6 Ways to Dig Out of Debt."
Attack unnecessary costs
Take steps to identify what has contributed to the explosion of your company's debt. For example, if customers aren't paying on time consider ramping up collection efforts, or if your expenses are too high then consider relocating to a less expensive office space. Sell unused equipment or ditch a costly phone system. You may be surprised at how much money can be saved by simply eliminating expenses.
Create a new budget
If your company's current budget isn't working, then consider starting from scratch. Create a new budget that addresses the immediate needs of your business, with the goal of correcting your financial dilemma. In this new budget, be sure your current revenues more than cover your fixed costs, and then allot a portion of the budget for variable expenses. Financial planners and accountants recommend that whatever is left over is used to pay down debt. This means paying more than the minimum payment on credit cards. Also, if you are not currently using accounting software like MS Money or QuickBooks, now is the time to start doing so. These inexpensive programs can be a great way to stay on track with your new budget.
Prioritize your payments
Just as you would with your personal accounts, tackle the highest-interest debt first. More than likely, this will mean focusing your energies on paying down credit cards but remember to pay off any debt that you've personally guaranteed for your business. If a supplier or creditor can come after your personal assets, these debts should be a top priority as well.
Talk to your creditors
Sometimes it is beneficial to speak with your creditors directly, letting them know that your business is in financial hardship. Many of them will offer a hardship plan that has better payment terms, or you could request a reduced settlement amount. When you speak with a creditor, make it clear that the more flexible they can be, the faster you will pay off their debt; but be sure you keep up with your end of the bargain. As any bankruptcy lawyer will tell you, the worst thing a business owner can do is to set up a repayment plan and then default on it.
Consolidate your debt
Whenever possible, try to consolidate several smaller loans into one loan with a lower interest rate. Not only will this allow you to reduce monthly costs; it will help you dig out of debt without harming your credit score. If possible, consider combining several shorter-term loans into one longer-term package.
Seek advice from professionals
Negotiating with your creditors can be very stressful at times; especially if the creditors are uncooperative. If this is the case, consider asking for help from a credit counseling organization. Many of these nonprofit organizations will only offer debt-management services to consumers, but there are a few that will work with small business owners as well. For more complicated debt problems, a credit counselor may recommend speaking with a Colorado Springs bankruptcy attorney.
Photo Courtesy of David Costillo Dominici / FreeDigitalPhotos.net
As we close in on the holiday season, it's easy to get in over your head with credit card spending. According to Yahoo! Finance ("Top 5 Reasons Why People Go Bankrupt"), poor use of credit is the third most likely cause of bankruptcy.
When credit comes easy, some people just cannot control their spending. Before they know it, credit card bills, installment loans, car payments and "same as cash" plans become a burden too heavy to carry. If the borrower is unable to make minimum monthly payments on this debt, or secure a debt consolidation loan, bankruptcy becomes the inevitable alternative.
Statistics show that even when some borrowers consolidate credit card debt, this only delays the inevitable bankruptcy filing. While a home equity loan might be worth considering, it's never smart to overuse this option. If this payment becomes unmanageable as well, borrowers may find themselves facing foreclosure.
The lure of overindulgence
Just like we eat too much between Thanksgiving and New Year's Day, Americans also tend to spend too much. It's no surprise that every January 1st we all "resolve" to put an end to these vices, but it's much easier to eat healthier than it is to break our spending habits. Even the most financially savvy adults tend to rack up large credit card bills during the holiday season.
A little self-discipline
Although it's tempting to spend more than you can afford, a disciplined approach can help you maintain financial sanity.
Why limit holiday credit card purchases? Simply put, credit cards give the illusion that you can buy more. Even if you shop for bargains, gifts bought on credit cards end up costing more money. By the time you add in the months of finance charges, you will ultimately pay a lot more for these gifts than if you had paid cash. High credit card balances affect your credit score too, especially if you are spending more than 30 percent of your credit limit.
8 Tips for Avoiding Holiday Debt
Stick to these spending principles and you will keep your holiday spending to a minimum. Here's how to put them into practice.
These tips can prevent you from falling victim to credit card debt, one of the leading causes of bankruptcy. For more information on personal debt managment and bankruptcy, consult with a Colorado Springs bankruptcy lawyer.
A lot has been written about restoring one's financial fitness after bankruptcy, but bankruptcy does just as much damage to a person's psyche. After bankruptcy, anger and shame are natural emotions, but they don't need to last forever. Many people find that a financial catastrophe like this it is just what they needed to get a fresh start. While this doesn't negate the fact that bankruptcy causes long-term damage to their credit report, one that won't go away yet for seven years, it is still better than continuing along the path they were on.
Even if your friends and family tell you it's going to be okay, the experience can still be bruising to your ego. "The creditors make you feel like you failed, you are a loser and you are worthless," says Robin Hardy, a person whose company, the Moosey Group Inc., filed for bankruptcy.
According to many bankruptcy "survivors," a common reaction is a feeling of failure. The shame of having to declare bankruptcy can be crippling at first, particularly for successful entrepreneurs and business leaders. Feelings of failure go beyond one's personal bank balance and extend to include family relationships, business alliances and one's professional reputation. Needless to say, this impact is felt beyond the individual. This is why it is so important to take any necessary steps to avoid bankruptcy entirely.
Secrets of surviving personal bankruptcy:
Here are some "survival tips" to help you stay out of trouble before you contemplate bankruptcy:
Don't bite off more than you can chew. Every time you make a purchase with a credit card, put away the amount of that purchase in a separate account and pay the bill in full every month. This may be a difficult habit to form but it will keep you from accumulating more debt.
Downsize your lifestyle. Get a roommate or find a less expensive place to live. Avoid the dining out trap and learn to cook delicious meals at home. Bring your lunch instead of going out every day. Cut back on "extras," like premium cable channels, satellite radio, regular massages.
If you do have to declare bankruptcy, don't wallow in guilt. A lot of people find that they get a second chance at life through bankruptcy. Take this time to reinvent yourself and take this opportunity to get a fresh start with your financial future. From a business perspective, bankruptcy forces you to explore who you really are and embrace the opportunity to reinvent yourself.
Why do women file for bankruptcy?
Other than women who have overspent on credit cards, there is another set of circumstances that affects women more than men. It is the dishonesty of a significant other or spouse.
In many cases, a woman's husband may have convinced her to put her home in her name only, but then when the relationship fell apart she was stuck with the burden of paying the mortgage. In other cases, a woman may have added a fiancé or significant other to her credit card, then after breaking the engagement she was forced to file for bankruptcy because of the bills he racked up.
Other than dishonesty, some common causes include a bad economy, medical bills and job loss. Many women have found they needed to file for personal bankruptcy after a divorce if their job wasn't sufficient enough to sustain their current debt load.
No matter how you landed in bankruptcy court, it isn't a death sentence. Many people find that after bankruptcy they are happier, more grounded in their personal lives and careers, and better able to navigate their financial future.
Who is filing for bankruptcy?
According to one of our recent blogs, "What Are The Patterns of Bankruptcy Filers" the most common reasons for bankruptcy are often related to circumstances beyond the control of the filer. For example, a study from 2005 revealed that 46 percent of bankruptcies were related to medical expenses from a serious illness not covered by insurance and the resulting loss of income. Shortly after this study was completed, drastic changes in the economy caused bankruptcy from unemployment, underemployment and credit card debt.
At the time of petition, the average age of the filer seems to be rising. Since the early 90's more senior citizens are declaring bankruptcy while fewer filers are under the age of 25. In fact, since 2007 those under 25 made up less than 2% of all filers. During that same period of time, the percentage of older petitioners more than doubled, now accounting for nearly 20% of all filers.
As people enter into adult life and take on new responsibilities, finances can be one of the most intimidating and confusing things to deal with. Not only will financial rules vary from state to state, but you will have financial advisors telling you to do vastly different things with your money. For one reason or another, consumers find it hard to make smart financial decisions, yet the importance of these decisions cannot be overemphasized.
Learning the ins and outs of household finances and retirement planning is something that should be done early and often, however sometimes these lessons are only learned after one takes on too much debt.. A certified credit counselor is usually an expert at reviewing your financial decisions and making suggestions from there. He or she can take the mystery out of the complex world of finance help you make the right decisions for your future. Debt consolidation specialists will also allow you to get started online by offering a free debt analysis.
Before you start working with a financial planner or debt consolidation specialist, it is important to clear up some misconceptions.
Debt consolidation is not the same as a "debt settlement."
With debt consolidation you still pay back everything you owe in full. The only adjustment that is made is the amount of interest you pay on this debt, and that adjustment will reduce the monthly payments and allow you to pay it off without exceeding your monthly budget.
On the other hand, debt settlement means you only pay back a portion of the debt because you "settle" the debt with each creditor for less than what you owe. Any time a debt settlement occurs, expect to incur a seven year penalty on your credit report.
You can still consolidate debt with bad credit.
While some options for debt consolidation may require a strong credit rating, a debt management program is a form of debt consolidation that can be used even with poor credit scores. It is always worth considering a debt management program to get relief, especially if you believe that will prevent bankruptcy.
Debt consolidation will not damage your credit or cause credit penalties.
Neither a debt consolidation nor a debt management program will cause a credit penalty. These only occur when debts are not paid back on time or in full. Debt consolidation may adjust your schedule of payments, but as long as you make timely payments on that schedule you will not be penalized. In fact, if the debts are paid in full through a debt consolidation you may actually see your credit score improve.
Debt consolidation will not keep you in debt longer.
It's easy to believe that since debt consolidation reduces monthly payments it will take longer to pay them back, but just the opposite is true. Most people find they are free from debt faster with a debt consolidation than if they had paid back credit card companies in the traditional way, primarily because their interest rates have been reduced.
How does an interest rate reduction help? When the interest rate is reduced on your debt, it doesn't grow as fast with accumulated interest. Additionally, when a minimum payment schedule is set up in a debt consolidation it usually means the debt will be paid more efficiently than the schedule set up by creditors.
We've all heard the horror stories from friends, coworkers or family members who have gone through a nasty divorce. Few "life events" compare to divorce when it comes to financial security, not to mention the emotional toll it can take on a family and their quality of life.
When Bankruptcy Meets Divorce
Money is the number one stressor in many relationships, so it makes sense to think that couples with money problems would seek a solution through divorce. However in most cases, the divorce does nothing but make their money issues more troubling because now they are trying to run two separate households on the same income. Issues such as custody, alimony and child support can cause resentful or vindictive behavior that can become even worse over time. Needless to say, when divorce gets messy you must take steps to protect your financial future.
In a divorce situation, each spouse is likely to believe that the other spouse is responsible for their money problems, which can cause them to make rash and uninformed financial moves during separation. This is never a smart move because it can result in repercussions down the road. One thing to keep in mind; you can divorce your spouse, but you can't divorce the debts incurred during your marriage.
That's right; both spouses are responsible for the debts incurred during the time of the marriage. By the time you reach a settlement the debts will be divided, but until then they are still considered "marital debt," so be careful with spending. Another important thing to remember is a divorce settlement is only between the spouses, not the creditor and credit card holder. Creditors are still allowed to collect the debt from either one of the authorized account holders.
If you suspect your ex is preparing to file for bankruptcy, be aware that the debts assigned to them could ultimately come back to you. Not only would you be liable for repayment; you would also be struggling with a lower income than you had before the divorce. In these instances it could make more sense for both of you to file for bankruptcy before the divorce. At least then you will know what to expect at the time of property division, but it will take a lot of negotiation with your soon-to-be-ex. A Colorado Springs bankruptcy lawyer can help move this process along. If your relationship has deteriorated to the point where you can't communicate with each other, this option may not be for you.
Most recent divorcees don't relish the thought of having bill collectors come after them for debts incurred by their ex. If this concerns you and you don't want to file for bankruptcy before the divorce, your attorney can offer some suggestions that will protect your financial interests. Your attorney may suggest that you obtain a lien on some of your ex's property to help make sure that you don't get stuck paying his or her share.
Bankruptcy and support payments
One of the most commonly asked questions that comes up from newly divorced clients is whether bankruptcy can reduce or eliminate alimony and/or child support payments. These liabilities are court-ordered and not dischargeable in a bankruptcy proceeding.
If you are curious about how divorce affects bankruptcy and vice-versa, consult with an experienced Colorado bankruptcy attorney.
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We've all heard the statistics about job loss and credit card spending, and many believe these are the main roads to bankruptcy. During the recession, many families faced extended unemployment, which led to foreclosure and enormous debt loads. Perhaps this explains why unemployment is often touted as an obvious bankruptcy culprit. Many people are surprised to learn that the most common cause of bankruptcy in America is not unemployment or credit card spending; it is medical debt. When an unexpected emergency comes up and a family is uninsured, medical debt is enough to wipe out their assets immediately. A recent report from the American Journal of Medicine said more than 60% of bankruptcy filings were directly resulting from unforeseen medical bills. Not only are these bills expensive; they also involve long-term costs that can push a family's finances over the cliff.
Is all medical debt incurred by the uninsured?
Surprisingly, many of the recent bankruptcy filings were from people who had some form of insurance, but not enough. As if the hospital bills are not enough, serious illnesses often require missed time at work for the family breadwinners, which can be debilitating all by itself. Many of the more affordable insurance policies have high co-payments, exclusions and deductibles, plus other coverage loopholes.
If you are struggling under the weight of overwhelming hospital charges, doctor bills or any other kind of medical debt, bankruptcy may be the only reasonable solution. Depending on the type of bankruptcy you choose, your bills could be eliminated entirely or significantly reduced. Of course, bankruptcy is not without its challenges. It can have a long-lasting impact on your creditworthiness and it could complicate many areas of your financial life.
Hiring a bankruptcy lawyer
There are few legal petitions that require the use of an attorney; so many bankruptcy filers feel confident representing themselves. While this may seem like the more practical choice, it is not recommended for bankruptcy. Bankruptcy needs to be handled by someone with experience handling Chapter 7 and Chapter 13 petitions. An experienced attorney will be able to show you the best way forward and protect your interests in bankruptcy court. When a medically-related bankruptcy is complete, you may find that your medical bills are either eliminated or significantly reduced.
Chapter 7 or Chapter 13 bankruptcy
Filing for Chapter 7 bankruptcy usually wipes out all unsecured debt, which includes medical debt. However, it is important to note that once you have filed for bankruptcy you may not do so again for another six years. This means that should you get sick during that time period you may be more vulnerable to legal issues and liable to pay all related bills. Most bankruptcy lawyers will recommend a post-bankruptcy strategy that includes maintaining medical insurance with full coverage.
Filing for Chapter 13 bankruptcy is another option when you are "under water" with medical bills. This type of filing will consolidated all of your debts into a manageable repayment plan. Similar to business reorganization, this option allows you to repay the bills over a 3 to 5 year time frame. While it may not be as forgiving as the Chapter 7 model, Chapter 13 allows you to hold onto most of your property. In many cases, this option is only viable for individuals with a stable discretionary income. The key benefit is the extra time it allows individuals to overcome their financial burdens.
As hospitals and providers raise their prices each year, medical bills are becoming a major issue for thousands of households. The high cost of health care continues to be the most stressful financial burden for United States citizens. If you find yourself in a predicament with excessive medical debt, a Colorado Springs bankruptcy attorney will be able to help you eliminate or reduce the amount of your bills. Contact an experienced bankruptcy lawyer for more information.
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As a Colorado bankruptcy attorney, I am often asked if bankruptcy rates are going up or down, and if the demographic makeup of bankruptcy filers has changed. Over the past few years, as the U.S. has gradually emerged from the recession, the number of people filing for bankruptcy has decreased, but there are a few trends that have little to do with the economy.
Many people who file for bankruptcy are lower-income individuals who simply cannot afford to pay for unexpected major expenses. A job loss or a major illness might be just enough to push them into financial ruin. While peaks in petitions are a sign of economic downturn, filings will also increase in states with fewer consumer-friendly laws
2005: A record year for personal bankruptcy
Among the patterns revealed by recent research, the number of bankruptcy filings has steadily risen over the past century, particularly within the 25 year period between 1980 and 2005. In fact, bankruptcy filings hit an all-time high in 2005 when a record of two million cases was filed. In that year, an astounding one out of every 55 households filed for bankruptcy. Interestingly, in 2006, bankruptcy filings dipped to the lowest point in twenty years.
Consumers outpacing businesses
In 1980, businesses accounted for 13% of all bankruptcy filings, but today they only account for 3 percent. The vast majority of bankruptcies are now filed by consumers. But these statistics are by no means consistent across the country. The number of bankruptcies varies widely from state to state, partially because the policies surrounding bankruptcy differ in each state, but also because of the number of people who live there.
States with highest number of bankruptcies
As of 2011 the state with the most bankruptcy filings was California, with more than 240,000. The number was so large it accounted for 17% of all the nation's bankruptcies that year. The five states with the highest number of petitions in 2011 were responsible for 38% of all the nation's filings that year.
These are the top five states and their number of declared bankruptcies in 2011:
Why are people filing for bankruptcy?
A study from 2005 revealed that 46 percent of bankruptcies were related to medical expenses from a serious illness not covered by insurance and the resulting loss of income. However, shortly after this study was completed, drastic changes in the economy caused bankruptcy from unemployment, underemployment and credit card debt.
Demographic changes in bankruptcy filers
Over the past few decades, researches have noticed some key differentiators among the "typical bankruptcy petitioner." For example, the average filer is older and married, has a high school education with no college, and earns less than $30,000 per year.
At the time of bankruptcy, the age of the petitioner seems to be getting older. Since the early 90's more senior citizens are declaring bankruptcy while fewer filers are under the age of 25. In fact, since 2007 those under 25 made up less than 2% of all filers. During that same period of time, the percentage of older petitioners more than doubled, now accounting for nearly 20% of all filers.
As a result of these fluctuations, the median age of a bankruptcy-seeker has increased from 38 to 45 years of age.
What about repeat filers?
Recent data suggests that 8 percent of those who seek bankruptcy protection have filed at least once before. Repeat filers are now responsible for 16% of all bankruptcy cases.
Some experts point to these repeat filings as proof that bankruptcy laws are exploited, but new laws have been enacted to curb abuse of the bankruptcy system. However, these recent policy changes have little effect on who files for bankruptcy and when.
Gender and marital status
Contrary to what one may believe, the gender distribution of bankruptcy filers is roughly equal parts men and women, and the gap seems to be shrinking. As of 2010, more than 64% of all bankruptcies were filed by married individuals, with only 17 percent of the debtors single, 15 percent divorced and 3% widowed.
Level of education
In 2010, about 20% of all bankruptcies were filed by people with a bachelor's degree or higher, while 36% have a high school education level and 29% have some college education.
A study from 2011 found that 60% of bankruptcy seekers earned less than $30,000 per year, a decrease from 66% four years earlier. During the same period, a higher number of filers reported earning more than $60,000 per year.
While it's true that there is a "typical profile" for someone who is likely to file for bankruptcy, certain life circumstances increase the possibility. No one is immune to having serious financial trouble. If you find yourself struggling financially, it may be time to contact a bankruptcy law professional who can help you understand your option.
Nothing is timelier than an article about college costs that coincides with freshman "move-in" week. Just as Colorado Springs' parents are settling up with the college billing office and heading back home, most are wondering how this will affect their financial future. Rising interest rates on college loans will have a ripple effect on the next generation of graduates, as well as their parents. With easy access to Parent Plus loans, it's not uncommon for parents to take on too much debt at a time when they should be focused on retirement.
Consult the "experts"
Knowing how easily college costs can get out of control, it always makes sense to consult with a trusted financial advisor before making decisions about school. Ask a few recent grads how they would do things differently, now that they are struggling to pay off education loans. Would they have chosen a less expensive school, perhaps closer to home? Would they have worked more and borrowed less?
Ask other parents
Parents of other college students may not feel comfortable discussing their personal financial information, but it never hurts to ask for advice. For example, does it make sense to refinance your home at a lower interest rate to get cash out for college? How about borrowing from a 401K? There are pros and cons to every option, but unless they've managed to save $100,000+ per student, most parents will need to borrow something.
The tax benefits of paying for college
A Colorado Springs financial advisor will also be able to show you which tax deductions you would qualify for as the parent of a college student. For example, contributions to 529s offer immediate tax savings, and a portion of tuition paid out of pocket is deductible. Parents and students can also get a tax break for the interest paid on student loans. It may be sound tricky, but when your student starts college it makes sense to continue contributing to a 529, while also paying tuition from your own funds and making interest payments on loans. This way, you can take advantage of all the available deductions in the same tax year.
The truth about financial aid
Before you let the cost of college intimidate you, it's important to learn the truth about financial aid. There is plenty of misinformation circulating around about this subject.
Here are some of the fallacies:
Here is the good news:
Before you decide on a financing option for your student's college expenses, consider that you will need to pay it back during a time leading up to retirement. With too much debt, a job loss or illness could push your family into bankruptcy.
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If you've watched any late night television lately, chances are you've seen former U.S. Presidential candidate Fred Thompson out there pitching reverse mortgages. Many seniors are enticed by these very noteworthy spokespeople as they explain the process of cashing out their home equity. While it's not necessarily a bad decision to do this, it is important to be aware of fraudulent companies looking to capitalize on cash-poor retirees.
On the FTC's web site, a variety of consumer data is available for the individual who wants to learn more about unusual consumer credit offers. The site explains that if you are 62 or older, a reverse mortgage can help you finance a home improvement, pay off your current mortgage, supplement your retirement income, or pay for healthcare expenses. It works by converting part of the equity of your home into cash without the need to sell the home or make payments on a second mortgage. Unlike a traditional equity loan, the reverse mortgage is repaid only when you die, sell your home or the home is no longer your primary residence. Many companies don't have income restrictions for these loans and they are generally tax-free.
With a traditional mortgage, you make monthly payments to the lender, but with a "reverse" mortgage, you receive money from the lender, and generally don't have to pay it back for as long as you live in your home.
Types of Reverse Mortgages
There are three types of reverse mortgages:
Single-purpose reverse mortgages are the least expensive option. Most homeowners with low or moderate income can qualify for these loans.
HECMs and proprietary reverse mortgages may be more expensive than traditional home loans, and the upfront costs can be high. This is an important consideration, especially if you plan to stay in your home for just a short time or borrow a small amount. HECM loans are widely available, have no income or medical requirements, and can be used for any purpose.
Before applying for an HECM loan, counseling is required by the lender. Their counselor is required to explain the loan's costs and financial implications, and possible alternatives to a HECM, like government and nonprofit programs or a single-purpose or proprietary reverse mortgage. He or she also should be able to help you compare costs for various types of reverse mortgages and explain the different payment options, fees, and other costs affect the total cost of the loan over time.
The amount you can borrow with a HECM or proprietary reverse mortgage depends on several factors, including your age, the type of reverse mortgage you select, the appraised value of your home, and current interest rates. In general, the older you are, the more equity you have in your home, and the less you owe on it, the more money you can get.
The HECM lets you choose among several payment options. You can select:
Other important facts from the FTC web site about reverse mortgages:
Lenders generally charge an origination fee, a mortgage insurance premium (for federally-insured HECMs), and other closing costs for a reverse mortgage. Lenders also may charge servicing fees during the term of the mortgage. The lender sometimes sets these fees and costs, although origination fees for HECM reverse mortgages currently are dictated by law. Your upfront costs can be lowered if you borrow a smaller amount through a reverse mortgage product called a "HECM Saver."
The amount you owe on a reverse mortgage grows over time. Interest is charged on the outstanding balance and added to the amount you owe each month. That means your total debt increases as the loan funds are advanced to you and interest on the loan accrues.
Although some reverse mortgages have fixed rates, most have variable rates that are tied to a financial index: they are likely to change with market conditions.
Reverse mortgages can use up all or some of the equity in your home, and leave fewer assets for you and your heirs. Most reverse mortgages have a "nonrecourse" clause, which prevents you or your estate from owing more than the value of your home when the loan becomes due and the home is sold. However, if you or your heirs want to retain ownership of the home, you usually must repay the loan in full – even if the loan balance is greater than the value of the home.
Because you retain title to your home, you are responsible for property taxes, insurance, utilities, fuel, maintenance, and other expenses. If you don't pay property taxes, carry homeowner's insurance, or maintain the condition of your home, your loan may become due and payable.
Interest on reverse mortgages is not deductible on income tax returns until the loan is paid off in part or whole.
Any decent financial advisor will be careful to warn clients against the perils of taking on too much debt. Not only will a heavy debt load damage your credit score, it will put you at a much higher risk for bankruptcy, especially if you suffer a job loss.
Bankruptcy presents some major challenges for individuals and families, who may need to give up some major assets in exchange for a "clean slate," so one would expect them to do everything possible to avoid a second bankruptcy. But old habits die hard, and without good financial counseling a person remains vulnerable through poor decision-making.
After interviewing several financial consultants and bankruptcy attorneys, it is obvious that something needs to change. One bankruptcy should be enough for anyone's lifetime, so be sure to make these lifestyle changes immediately.
Four changes to make after bankruptcy:
Live within your means. This statement has different meanings to different people, but in an effort to keep it simple; "living within your means" is spending only the money you have coming in currently. This means no purchases on items you cannot afford, and paying the full balance of any credit card purchases every month.
Begin rebuilding credit scores only by purchasing what you know you can afford. While it may be true that buying a car, getting credit cards or renting an apartment will speed your post-bankruptcy rebound, it can be dangerous to take on too many obligations too quickly. Be smart about the method you use to rebuild your credit score, and keep your monthly payments affordable.
Build an emergency fund. This will help in many ways, but first and foremost it will keep you from incurring unnecessary debt. Examples include unexpected medical bills, job loss, or replacing major appliances. When the cash is in the bank, there is no need to pull out the credit card.
Create an honest budget. Start by knowing exactly how much you bring home each week or month. Be sure all your expenses and bills can be paid through this income. Only then will you be able to avoid racking up more debt and falling into a dangerous financial situation.
Other important changes to make right away:
The best way to avoid a second bankruptcy is to properly deal with the habits that got you into bankruptcy in the first place. You need to train yourself to recognize your own behaviors and make an immediate plan to combat them. However, if you still find yourself in a desperate financial situation there are things that can be done right away. A Colorado Springs bankruptcy attorney can help get you back on track.
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.
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.
If you are struggling with consumer debt such as credit cards, auto loans and student loans, it is important to be very cynical about quick debt relief strategies. Many consumers will simply "Google" a debt solution and click on the first ad that looks credible, but what they may not realize is how many companies are really out to cash in on their misfortune. But where can a person find the right credit counseling service or debt settlement without risking personal bankruptcy? It turns out that the Federal Trade Commission (FTC) offers a wealth of advice on their web site.
Depending on the type of service you need, several solutions are outlined on "Coping with Debt" page of the FTC's web site. (http://www.consumer.ftc.gov/articles/0150-coping-debt#debt) But before you sign an agreement with a debt relieve service, it is still important to check with your local consumer protection agency or your state Attorney General. These organizations can tell you about any consumer complaints on file and let you know if the company has the required licenses to work in your state.
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.
What to expect from credit counseling
A reputable credit counseling service can help you manage your debts, develop a workable budget and offer workshops or educational materials. Counselors are trained in consumer credit, debt management and budgeting. Their certification allows them to develop a personalized plan to solve your financial issues. Typically, the first session lasts about an hour, but several sessions might be required to put a plan into place.
The majority of counseling services are set up as non-profit organizations that offer services through local offices but some offer online and phone counseling as well. The best case scenario is always to meet with a counselor face to face. Look for a credit counselor at larger universities, credit unions and military bases, or ask for a recommendation from your financial institution or local consumer protection agency.
A note of caution on non-profit organizations: Having non-profit status doesn't guarantee their services are free, or even legitimate. Some credit counselors charge high fees which may be hidden or they ask for voluntary contributions from clients. Steer clear of these services.
What is a debt management plan?
Rather than helping you pay the bills yourself, a DMP will require you to deposit money with their organization and they will pay your unsecured debts. The benefit of this is that creditors may agree to lower interest rates. The only condition is that you must not use or apply for any new credit while still enrolled in the DMP, which could take 48 months to complete.
If your finances are out of control and you lack the income to repay your debts, a counselor might recommend enrolling in a debt management plan (DMP). Unless a certified credit counselor has thoroughly reviewed your case, don't sign up for this type of plan. While it may work to reduce debt quickly, it could have a lasting impact on your credit score.
What is a debt settlement program?
Debt settlement might look similar to a DMP, but they are only offered by for-profit companies. The idea here is the company negotiates a smaller lump sum payment of your debt that is less than what you owe. In order to make that payment, the program requires a specific amount of money is set aside each month in savings and transferred into an escrow account until the payment can be made, but it also requires clients to stop making payments directly to creditors.
While a debt settlement firm might be able to settle your debts, it can take a long time to complete the process. Oftentimes, these programs require deposits into a special savings account 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. Also, keep in mind that creditors are by no means obligated to settle your debts, and you could continue to accrue interest on some accounts before they are paid off. Because the program will discourage you from sending payments to creditors, your credit could be severely impacted.
Another way to reduce the cost of credit is through consolidation loans, particularly with a second mortgage or home equity line of credit. These loans may seem attractive but they require your home to become the collateral. This means you could potentially lose your home if the payments are missed or late. In addition to interest on a home equity loan, you will also have to pay points. Each point is equal to one percent of your loan amount. While they may be tax deductible they can still increase the cost of the loan.
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Few people can say they've never had an issue with their credit report, even if it was not their fault; but bankruptcy brings a whole new set of issues to your standing with the credit bureaus. Whether you filed a few weeks ago or a few years ago, it will be challenging to recover a stellar credit score for at least seven years. But what about the millions of Americans who were impacted by the financial fallout of a foreclosure, job loss, or divorce? Is there something that can be done to keep a decent credit report, even right after a fiscal disaster?
According to a recent article that appeared on MSN Money, "7 Steps to Clean Up Your Credit Report," the best way to stay on top of your credit is to look at your credit report regularly. It's not uncommon to find errors that can be fixed.
A good way to keep up with your credit report is to look at it whenever you do any major reorganizing in your house. When you start tidying up the garage or the linen closet, don't forget to fix the foundation of your credit worthiness. A credit report is more than just a record of how fast you pay bills; it also represents your financial stability. It controls everything from the interest rate you pay on a loan (and whether you can get one!) to your insurance rates and career eligibility.
The biggest mistake most Americans make is to only look at a credit report when it's time to refinance, buy a car, or make another big purchase. According to a study by the U.S. Public Interest Group, nearly 80 percent of all surveyed reports had incorrect information. Knowing that inaccuracies take time to clear up, this could be a problem if you're up against a deadline to secure a loan. Regardless of your credit history it is always better to check your credit reports periodically so you can catch any issues immediately.
MSN Money has developed a quiz to help individuals get an estimated credit score, but the best way to find out is to order a credit report. You can also get a credit report by visiting AnnualCreditReport.com. The three major credit reporting agencies are Equifax, Experian, and TransUnion.
If you're striving for perfect credit score, MSN Money recommends you take these steps:
1. Order a copy of your credit report: If you have been wondering about your credit status, why not order a report and find out what it is? Federal law entitles you to a free report every 12 months from each of the three major credit bureaus: Experian, Trans Union and Equifax. If you want to check your credit more than once per year, order one at a time and space out your requests throughout the year. Find out how to fix any problems with your credit by visiting Bankrate.com and viewing their Credit Repair for Dummies." Keep in mind if you are turned down for credit or for a job you have the legal right to see your credit report at no charge.
2. Start with the basics: When checking your credit report, be sure the basic information is correct first, including name, address, Social Security number, etc. If you find small discrepancies, they are unlikely to affect your score, but be sure to straighten out any serious inaccuracies, such as an incorrect Social Security number. Then check to make sure all the accounts listed on the report are actually yours.
3. Contact the credit bureau with any issues: According to the MSN article, "...if you see any negative information like a collection account that you don't think belongs there, it could be somebody else's account that got into your report by mistake, or something you forgot about." Make sure you take care of any major discrepancies immediately. Another red flag might be an account that shows a higher balance that what you typically carry, which could be a sign of identity theft.
Whether you have already filed for bankruptcy in Colorado or you are simply considering it, remember that most negative information remains on your record for at least seven years, and Chapter 7 bankruptcies stay on your credit report for ten years. If you are concerned about how financial issues may affect your credit status, consider your alternatives before filing for bankruptcy.
Getting married? If you're looking for financial advice, just ask anyone who's divorced. Chances are they will tell you exactly what NOT to do when you plan your new financial life. Of course, a divorced person might also be somewhat jaded, and in the spirit of trust you may be looking for more positive advice.
According to a recent article on About.com's Financial Planning section, "Marriage and Money - Planning Your New Financial Life Together," a couple's financial situation will have an effect on every aspect of their married life. Knowing this, it's a whole lot smarter to put some effort into planning than it is to just "let things happen." No matter how compatible you are with your new spouse, it's very possible you hold different viewpoints on how to manage your money.
Everything from credit card debt to personal financial goals should be openly discussed before marriage. Otherwise, they could bring unforeseen challenges to the relationship. Learning how to navigate these issues while you're still in the "honeymoon phase" may be difficult, but it is too important to put off for later. You will be much better off with a strong financial foundation. Second marriages can be particularly complicated because each party has a more complex financial life, often involving support for children and/or an ex-spouse, as well as retirement assets, college funding, prior bankruptcy filings and estate planning.
Here are the four areas that will need your attention, preferably before you walk down the aisle:
Bank Accounts – One of the biggest questions everyone seems to ask is whether a married couple should have joint or separate bank accounts. Some couples have both a joint checking account and a separate account for each person. Whatever you do, please don't wait until "later" to decide this. Most financial planners will recommend both joint and individual accounts. The joint account would be used for family expenses and bills such as the mortgage, utilities, insurance and groceries. However each person would also have an individual discretionary account to use for personal spending – or "fun money." This approach helps to simplify things and it tends to limit too much personal spending.
Creating a Budget - Not only is this is an important issue to discuss, it is something you should do on a regular basis in order to stay out of bankruptcy court. Remember, your new spouse will add many complexities to your financial life, including debt, assets, bills and even savings; so even if you had a working budget in the past it's time to revisit that and make a new one.
Have a Plan for the Unexpected - Now that you're married, you will need to make some alternative plans for the unexpected. Not only will your beneficiaries change for insurance and investments, you will need to change your coverage limits. Proper estate planning will also include a new will. Take a look at your health coverage and determine which of your plans will be more beneficial to your overall health and finances. Marriage is one of the few life events that allows you to change your health insurance elections without waiting for the next open enrollment period.
Life insurance is another important topic to newlyweds. When no one else is depending on your income it's not necessary to carry a lot of life insurance, but when you have a spouse and children these needs will change, especially when a sudden loss of income would be devastating.
Planning for Retirement - Once you insurance benefits are all squared away, it's time to look at retirement plans, pensions and IRAs. When you establish the proper beneficiaries on these accounts, it ensures your assets will be properly distributed when you die. But beyond that, you may also wish to consider consolidating your retirement accounts. Take advantage of the many different tax advantages available from a Roth IRA and other tax-deferred investments. You will find that having two incomes will make it much easier to save for retirement.
Communicate Often - If there is one piece of advice that has kept many couples out of bankruptcy court (and divorce court), it is this: Talk about your financial situation frequently! Don't wait until an investment goes bad, or a business deal falls through. Don't spend first and explain later. A true partnership includes full disclosure of all money-related concerns in a timely manner. Joint financial planning may be stressful, but it can keep small problems from becoming big ones. Be open with each other from the onset and talk about your concerns, keeping in mind that no two people have identical values when it comes to money. Once you identify what is important to you as a couple, you can make the best decisions possible about your finances.
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If you plan to file for bankruptcy in Colorado Springs you will no doubt meet with an attorney who will walk you through all your options, but most people want a little preview before they visit a law office. Unless you've been through the bankruptcy process before it's likely you have a long list of questions, such as "will I go to court?" or "will I be able to keep my house?"
In an attempt to prepare for the inevitable it is better to seek the advice of an experienced bankruptcy lawyer and avoid the temptation to just "Google it." While there is plenty of data available about different types of bankruptcy, few online sources will accurately summarize what to expect/
Below are five things you can expect when filing for bankruptcy in Colorado:
1. You will have to go to court. Before you start worrying about a long, drawn-out court process, in most cases you will only need to attend one hearing, known as the "meeting of creditors." This is a short and simple hearing where the trustee will ask you a few very basic questions. Creditors are also allowed to attend and ask questions but they must abide by certain state bankruptcy guidelines.
2. Your case will be complete within 4 to 6 months from the date of filing. This doesn't mean you should just go ahead and file right away. While bankruptcy can be very helpful in resolving financial woes, it is not always the best solution for everyone. In addition, it's important to choose the right time to file for bankruptcy relief. Most experts recommend you wait as long as possible to file because you can only do so one time every six years. Saving this option until you absolutely need it, but you may not even need to file. For example, if you have no "non-exempt" property or wages, there is nothing that the creditors can take from you.
3. There are some very specific things that bankruptcy can do. One of the most important things is the "discharge" or elimination of debts. It can stop a home foreclosure and allow you to catch up on missed payments, and it can stop the repossession of automobiles or other property, sometimes even forcing a creditor to return property that has already been repossessed. If your wages are being garnished or a creditor is harassing you for payment, filing for bankruptcy will put a stop to that right away. It can also prevent the termination of utility services.
4. There are some very specific things that a bankruptcy can't do. One of these is the discharge of debts that arise after the bankruptcy filing. It also cannot eliminate certain rights of secured creditors, particularly with car loans and a home mortgage, which means payments must be made on a regular basis in order to retain ownership of the property. In addition, certain types of debt are never discharged in a bankruptcy. These include alimony, child support, most student loans, criminal fines or restitution, and most taxes.
5. You will need to decide between Chapter 7 and Chapter 13 bankruptcy. It's not enough to show up a bankruptcy attorney's office and just "file for bankruptcy." You must know the differences between Chapter 7 and Chapter 13 as well as which one you prefer. Below is a description of each type of bankruptcy.
Is bankruptcy an option for you? Only you know the honest state of your finances and whether you are being threatened with foreclosure, repossession or garnishment. Bankruptcy is a great way to proactively deal with these problems, but everyone's situation is different. If you have questions about filing bankruptcy in Colorado, talk to a professional bankruptcy attorney at the Colorado Springs law offices of Stephen J. Swift.
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According to federal law and the United States Bankruptcy Court, the rules concerning personal bankruptcy in Title 11 were passed by Congress in accordance with its Constitutional grant of authority. While states may pass laws that govern other aspects of a debtor-creditor relationship, they may not regulate bankruptcy itself. It is important to understand this as so many individuals are uninformed about bankruptcy laws.
If you are considering filing for personal bankruptcy, you will only need to be concerned with two types – Chapter 7 and Chapter 13. While it's certainly not required that people use an attorney, it is usually best to seek legal advice at some level and preferable to let a lawyer handle everything. Bankruptcy is one of those things that could be very costly if not done properly. In other words, the cost of your mistakes could far outweigh an attorney's fees.
Most bankruptcy lawyers will tell you; consider any realistic alternatives before filing for bankruptcy, such as reducing your debt or paying your bills. Filing for bankruptcy will be an irreversible step that will have a long term impact on your creditworthiness.
What are the two types of personal bankruptcy?
Chapter 7 and Chapter 13 are both named after the numeric title of its corresponding statute in the U.S. Bankruptcy Code.
Chapter 13 Bankruptcy
When one files under Chapter 13, it is possible to keep some property that might have otherwise been liquidated in a bankruptcy. It also allows you the chance to reduce the amount you pay toward your debts. Whenever possible, a Chapter 13 bankruptcy should be considered before any other type of bankruptcy.
The requirement for Chapter 13 bankruptcy is that the amount owed cannot exceed $250,000 in unsecured debt or more than $750,000 in secured debt. These limits were expanded in 1994, allowing Chapter 13 accessible to be more accessible to individuals.
Unsecured and Secured Debt
Unsecured debt, also known as "uncollateralized debt" includes credit card debt, medical bills and signature loans. When preparing a reorganization plan, your unsecured debt will be the lowest priority for payment.
Secured debt, which is often called "collateralized debt," is secured with the property itself, such as the house, car, boat or other big-ticket item. When a debtor defaults on secured debt, the lender can seize the property to recover what is owed.
How does Chapter 13 work?
Chapter 13 requires you to repay your debts over three to five years. You must begin paying on the plan 30 days after you file the petition with the court. It is customary for the petitioner to make one monthly payment to a trustee, who then distributes the funds to their creditors according to a payment schedule.
Chapter 7 Bankruptcy
When a person files for Chapter 7 bankruptcy protection, most of their debts are wiped out and will never have to be paid. However, once a Chapter 7 bankruptcy is filed one cannot file again for six years.
In Chapter 7 bankruptcy, petitioners provide the court with a full list of debts and a complete list of everything they own. They may also be required to answer questions about past financial dealings. Certain property is exempt and allowed to be kept by law but the trustee has the right to liquidate everything else, the proceeds of which are applied to repay debt.
For property that is excluded from liquidation, one must still purchase pay "purchase-money liens" or contractual payments in order to keep the car or house.
Which debts are not discharged in Chapter 7 bankruptcy?
While most of your major debts will be eliminated in a Chapter 7 bankruptcy, it may be impossible to get a fresh start from everyone.
Exclusions may include debts not listed on the petition, debts incurred by fraud, alimony or child support payments, or debts incurred from damages that occurred while intoxicated or in the course of a violent crime. Certain educational loans may also be excluded, as well as most types of taxes and debts from a prior bankruptcy. Some consumer debts may not be forgiven as well, such as purchases for more than $1,000 of luxury goods or services that were incurred within 60 days of a bankruptcy petition.
As you can see, it helps to know which type of bankruptcy is right for your situation. If you have questions about filing a petition for personal bankruptcy, consult with an experienced Colorado bankruptcy lawyer.
As a Colorado bankruptcy attorney, one of the most common questions I’m asked is, “How much control will creditors have over my personal possessions?” It is rarely a surprise when creditors seize automobiles, boats or other expensive luxury items, but do they really want your clothes and furniture too? Good news: unless you happen to have a collection of valuable jewelry or brand new designer clothing, those items are usually exempt from seizure and liquidation.
Every state has different laws governing bankruptcy so it is always better to ask your attorney, but there are a few major things to know prior to filing. Once you file, a trustee will be assigned to your case, and he or she will have a particular interest in certain issues. Some of the biggest issues include:
Transfer of assets
Before filing for bankruptcy, it may be tempting to transfer assets out of your name, but this may actually put the property more at risk. For example, in most cases an attorney can easily protect a vehicle that is fully paid off and registered in their client’s name. But if the client had recently transferred the vehicle to a family member or friend, or even a stranger, it may be difficult to protect that vehicle from being scrutinized.
State legislatures and courts don’t want people to file for bankruptcy after they’ve transferred all of their valuable assets. If it were that simple, many people would take advantage of bankruptcy laws to discharge bad debt and hold onto their assets. People who live in states that don’t allow protection of many items must take steps to responsibly plan for bankruptcy. In Colorado, an experienced bankruptcy attorney will know the legal ways to protect assets without transferring them out of your name just before submitting a bankruptcy filing.
After you file for bankruptcy, each creditor will want to look closely at your account. If you have recently taken large cash advances from a credit card it could be viewed as fraudulent behavior, but even more importantly it could mean you have to pay back some or all of that cash after the bankruptcy filing.
Payments to family
Remember, if you borrowed money from your parents and siblings they might also be considered creditors. Just because you feel obligated to pay them back doesn’t mean the court considers their debt to be more important than other creditors. It is best not to make any payments to family members until your bankruptcy attorney recommends it.
Pending or current lawsuits
Bankruptcy filers who are in the midst of a current or pending litigation may not think the two cases are related, but lawsuits are also considered “assets” and must be disclosed. Your trustee might not have an interest in the suit, but you must still provide the trustee with the first opportunity to review the litigation.
Disclose any potential inheritance
If you are about to receive an inheritance of any kind, it is important to communicate this to your trustee. There are some time limits involved when an inheritance is due to you, so it would be important to mention this to your attorney.
Bankruptcy before foreclosure
If you plan to file for bankruptcy to slow down a foreclosure, this can be done. There are a few exceptions, but as long as you have other debt, such as a second mortgage or credit card debt it is legal to file before a foreclosure. Every state has different laws concerning bankruptcy and foreclosure, but filing just beforehand should buy you some time.
Bankruptcy and credit scores
Of course, one thing that bankruptcy can take from you is your good credit rating. Just like any other negative mark on your credit report, a bankruptcy filing stays on there for seven years.
What property will you be able to keep in a Colorado bankruptcy?
In a Chapter 13 bankruptcy, you won’t be forfeiting any assets because this type of bankruptcy repays your debts, but in Chapter 7 bankruptcy you may be asked to surrender some assets in exchange for paying off unsecured debts. In this case, a trustee will liquidate these assets and use the proceeds to pay your creditors.
In general, the following assets are exempt in Chapter 7 bankruptcy:
Sometimes, exceptions may be doubled for married couples, and there are dozens of exemptions and exceptions to the rules. A good bankruptcy attorney should not submit your bankruptcy petition until he or she has protected as many of your assets as possible.
Which Assets Are Not Exempt?
In most bankruptcy filings, the following assets are not exempt from seizure: non-homestead property (e.g., vacation homes), cash savings, tax refunds, recreational vehicles, boats, fine jewelry and firearms. It will become necessary to surrender these assets to the trustee or make arrangements to “buy them back” through a financial agreement with your trustee.
If you have property, which is non-exempt, you could sell it before filing bankruptcy and use the money to purchase things which are exempt; such are food, furniture, or clothing. However, you cannot give property away to friends or relatives, and have them give it back to you after the bankruptcy. Any transfers of property without receiving fair value for it within one year before filing bankruptcy are considered a “fraudulent transfer.” The property could be taken by the bankruptcy court and sold to pay some of your debts. If the bankruptcy court finds you have been dishonest in your filing, your discharge could be denied and you could be charged with state or federal crimes.
Imagine a credit card that charged a 36 percent APR, slapped you with a fee when your credit limit increased and cost you $400 a year just to own -- yet, the company tells you they're doing you a favor.
It's a reality.
Our Colorado Springs bankruptcy attorneys know that credit cards with predatory lending practices are one of the main reasons so many people get embroiled in debt. We previously discussed how many people are choosing to avoid using credit cards in order to avoid having to seek debt relief or file for a Colorado Springs bankruptcy. This card represents one of the most shameful examples of why people are backing away.
The platinum card, distributed by First Premier, (FIRST PREMIER, if you can dig it) already has nearly 3 million customers, according to CNNMoney, and it solicits another 1.5 million every month. The company's CEO claims the business is doing people a favor, because the card is aimed at people with poor credit, who might otherwise not be able to get a credit card. The fees are justified, he said, because of the risk the company is taking on.
One has to wonder, though, whether customers who are already struggling financially could possibly beneift from being slammed with such outrageous fees.
The CEO of CardHub, which allows users to compare credit cards online before applying, was quoted by CNNMoney as saying that perhaps the worst of those fees involves a credit limit increase fee, which charges the customer 25 percent of whatever amount the limit is increased by. So if your spending limit is increased by $200, you pay an automatic $50 fee. Another online credit card comparison site CEO says he knows of no other company that does that.
"While (First Premier) is bragging about helping people back on their feet, they're in fact beating people when they're down," he said.
We understand that credit cards can be very useful - they can help improve your credit score and sometimes, you can't make major purchases unless you have some credit history. But a card like this isn't your only option if your credit is bad.
One different option is a secured card, which come with lower fees because the card holder has to deposit their own money into the account. That mitigates the lender's risk, without forcing the card holder to be shackled by fees.
Let's face it; no one envisions a future that includes a bankruptcy filing. But that shouldn't dissuade you from considering it when it is necessary. As a Colorado bankruptcy lawyer, there is one question I hear almost every day, "Is there any way I can avoid filing for bankruptcy?" And while this question is answered on a case-by-case basis, there are some ways to look at it objectively.
Generally, individual filings are rarely challenged by creditors and they won't require a lot of time in a courtroom. In fact, once you file the forms and the state appoints a trustee, the process usually follows a certain pattern: either a court-monitored repayment program or a process of asset recovery and distribution. However, if you own a business filing for bankruptcy, courtroom litigation will be quite common.
You may be wondering how someone who is obviously out of cash can afford to hire a lawyer, but a better question is can you afford not to? As with any type of litigation, bankruptcy filings are full of details and defined by state and federal laws. In the event that a creditor challenges your bankruptcy filing, it is important to be working with an experienced attorney. Look for a bankruptcy lawyer with experience in litigation and one who can help you defend yourself against claims, or even countersue when necessary.
As a Colorado bankruptcy lawyer, I'm often asked if an attorney is always necessary, especially when so many filings are relatively simple transactions. When a business goes bankrupt, it's not uncommon for creditors to seek contest the filing as an effort to recover payments. Many attorneys recommend resolving outstanding debts whenever possible, prior to the bankruptcy because this will limit the number of claims filed prior to and during the bankruptcy.
If there's anything worse than filing for bankruptcy, it's having to do so and then hiring the wrong attorney for the job. For many lawyers, bankruptcy filings have become a volume business, and debtors facing bankruptcy sometimes unfortunately obtain inferior legal services. For this reason, you'll need to do some research before hiring a bankruptcy lawyer.
Avoid procrastination whenever possible. While this is certainly not going to be a pleasant experience, putting it off will make it even more complicated. Start looking for your attorney as soon as you realize you will need one.
Spend a day in bankruptcy court. Watching bankruptcy attorneys in their natural environment will help give you a better picture of what kind of lawyer you want representing you.
Seek advice from legal professionals. Do you have any business acquaintances in the legal profession who might know a good bankruptcy attorney? Bankruptcy law is a specialty, so avoid using your family lawyer or personal injury specialist. Be sure that the counsel you choose knows his or her way around bankruptcy court.
Visit law offices. Just walking in and appraising the law firm will clue you into how well organized they are. If it's neat and tastefully decorated, it's safe to say that they are true professionals. But if you see piles of coffee-stained folders stacked in piles on the floor, run in the other direction.
Find a list of your local bankruptcy court panels. The only attorneys who will sit on these panels will be well-respected and highly regarded within bankruptcy court.
Ask a lot of questions. Once you've narrowed down the list to a few candidates, ask them about their certifications, the number of bankruptcy cases they've handled, and how many they handled in a year. Find out how many of their cases are business filings and how many are individuals. Many firms will have a partner interview you, only to shift your case to a less experienced attorney, so make sure you are interviewing the person who will actually handle your case.
Don't hire the cheapest lawyer. Under the circumstances, it might be tempting to cut corners and save some cash, but you will get what you pay for. Look for a lawyer who knows the system and who comes recommended by the local bar association.
Ask for specifics on their fees. You will want to know upfront what your lawyer considers "part of the package." For example, if they need to outsource some work to a forensic accounting, how will you find out about additional fees?
Stay involved. Once you hire a lawyer, don't be content to let him or her handle it alone. Double-check all filings. Did any of your creditors get dropped off the list? Staying on top of your bankruptcy filing will help ensure that the proceedings go smoothly and will keep your lawyer on his or her toes.
Interview prospective lawyers in-person. It may take a bit longer, but once you have narrowed down your list of potential bankruptcy law firms, take the time to get to know each one of them. Not only will this help you discover which one is the best match for your case; it will help you learn about their personal style and courtroom demeanor.
Be prepared to present your case. Even the best bankruptcy lawyer cannot help you if you cannot give them accurate information. This means you will have to gather your paperwork and financial information ahead of time and share it with your attorney.
Finally, educate yourself as much as possible about the process. Most people who initiate a bankruptcy filing have very little knowledge about the law. Your attorney can give you an overview, but it is better for you to do some investigating on your own. Before making a final decision to file, find out how a bankruptcy will affect your credit rating, family members and lifestyle.
Having lenders forgive debt can be a godsend for those who are unable to pay their bills; however, depending on when this debt forgiveness occurs, borrowers may find themselves having to deal with some negative consequences when it comes to paying taxes. Also referred to as “cancellation of debt” (COD), debt forgiveness can translate into taxable income.
Specifically, when a lender discharges a borrower's debt, the lender is required to report the monetary amount of this discharge as cancellation of debt income to both the borrower and the IRS (Form 1099-C is the tax form used to report COD income to the IRS); in many cases, the borrower may have to pay taxes on this COD income.
Nevertheless, there are some exceptions to when forgiven debt qualifies as COD income, and these can include:
Given how complex the tax repercussions of debt cancellation can be, it's critical that those who are facing overwhelming debt and/or considering filing for bankruptcy consult with a skilled bankruptcy lawyer at the Law Office of Stephen H. Swift, P.C. Our trusted financial and legal professionals have extensive experience handling various matters of bankruptcy, debt consolidation, debt cancellation and other matters of debt relief. We can help borrowers in serious debt resolve their financial struggles in the most appropriate manner that will minimize future repercussions associated their taxes, as well as their credit score, remaining assets, etc. For more professional advice and an assessment of your best options, call us at (719) 520-0164.
Approximately 1 in every 5 Americans older than 65 years old have been victimized by some sort of financial fraud, according to a 2010 report issued by the non-profit Investor Protection Trust (IPT). This translated to about $2.9 billion lost by the elderly in 2010, which had increased from the previous year by about 7 percent. What is possibly even more shocking than these statistics are the facts that such financial abuse in the elderly community is continuing to grow, many of these cases result in the victims being depleted of their life savings, and the elderly are the least likely to seek out legal help for their impoverished situation after such financial abuse occurs.
The most common way for the elderly to be victimized by financial fraud occurs when their assets are somehow misappropriated or stolen by loved ones or care providers, such as in-home nurses. Another manner in which the elderly fall susceptible to financial abuse typically occurs when strangers outright scam the elderly through, for example, Nigerian letter fraud, telemarketing fraud, mail fraud, Ponzi schemes and other types of financial fraud.
While there may be an opportunity for criminal justice proceedings to prosecute the individual who had scammed or stolen from the elderly victim, the chances for the elderly to retrieve their lost money or assets can be slim, especially if the financial abuse occurred at the hands of an unknown and unidentifiable stranger; as a result, the elderly will need to seek legal help if they find themselves facing insurmountable debt and they are unable to pay their bills.
In these cases, the trusted Colorado bankruptcy lawyers at the Law Office of Stephen H. Swift, P.C. can help advise financially strapped elderly individuals on their best options for getting and staying out of debt. While bankruptcy may be the best option for some victims of financial fraud, for others, the better choice may be in debt consolidation. Regardless of your situation – even if you have previously filed for bankruptcy, our skilled financial professionals can help you financially rebuild your life.
We've heard a lot in the course of our country's economic recession about how families have been affected: lost homes, lowered wages, unemployment, etc.
Colorado Springs Chapter 7 bankruptcy lawyers understand that any one of these things can cause a great deal of financial strain, but it's even tougher when you're trying to cope alone.
In fact, single people face more financial stresses than couples, according to a new report from the MetLife Mature Market Institute and the Society of Actuaries. In particular, women have an especially tough time when it comes to retirement savings.
A big part of it is simply coping with a single income. Married couples may have more expenses overall, but they can fall back on one income or the other if there is an unexpected financial crisis.
On average, singles have a lower income rate than any other family grouping in the country. On average, singles make about $32,000 a year and have asset levels that stand around $110,000. Their homeownership rate is currently only at slightly above 40 percent, and less than 20 percent said they were on track for an adequate retirement savings fund. Also, only about 20 percent of singles said they had even had the chance to START saving for retirement, and many worried that their standard of living was likely to drop of dramatically after retirement.
The study further 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.
This is all particularly concerning because the population of singles is growing fast. The Census Bureau reports that between 2000 and 2010, the number of single-headed households shot up by about 15 percent (equaling more than 30 million nationwide).
The good news is that if you do get caught up in a personal debt crisis, a Colorado Springs bankruptcy can give you a clean financial slate.
One benefit to being single during the process is that you don't have to worry about jointly-held debts, as is often a concern with couples or recently-separated individuals.
A successful bankruptcy is unrivaled in terms of the freedom it offers, and we are here to help you obtain it.
Colorado Springs foreclosure lawyers know that many people fell victim to the housing market implosion, whereby home values were grossly inflated, as were the homebuyers' suitability for the loans to obtain them.
However, it appears the negligence might not have ended there, as evidenced by a class action lawsuit filed on behalf of homeowners throughout the country alleging major banks were complicit in the Libor manipulation rate.
You may be familiar with Libor rate after countless entities including local governments and community banks all filed suit against some of the major banks following the scandal. Libor is short for the "London Interbank Offered Rate," and it is a collection of rates that is set for 10 currencies across 15 different time zones for a range of time periods. It could be for a particular day or it could be set for a year. Essentially, it's intended to measure the cost of borrowing among the world's largest financial institutions, which trade tens of billions of dollars in loans and hundreds of trillions in derivatives.
This past summer, Barclay's, one of Britain's largest banks, was accused of manipulating that rate. The bank reached a settlement of more than $450 million, and other settlements involving large U.S. banks are in the works.
So how does this affect homeowners? The Libor rate is the basis for which many of these banks set their interest rates for various loans. The lawsuit contends that nearly 1 million American homeowners were affected by inflated interest rates that were spiked due to the Libor rate manipulation. Banks reportedly earned hundreds of millions of dollars, if not billions, from the fraud, according to plaintiff attorneys.
On average, this resulted in about $300 extra a year in interest.
This doesn't sound like much, but it's certainly not helping. Plus, the bigger issue is that it shows the kind of tactics you are up against when you're trying to fight a Colorado Springs foreclosure.
Our Colorado Springs foreclosure attorneys are experienced in battling with big banks to have interest rates and principal payments reduced so that you can stay in your home. If you are trying to fight off foreclosure in Colorado, call us today.
Those who have been unemployed for any stretch no the longer it lasts, the harder it is to land a new job.
Denver Chapter 7 bankruptcy attorneys have assisted numerous clients who were overwhelmed with debt after a lay-off or termination. Across the country, there are more than 5 million people who are classified as being long-term unemployed. Even more have dropped out of the labor market altogether. Typically, getting back on your feet without some kind of legal help with finances is incredibly tough because most people haven't prepared for such an event. Few people expect that they will be laid off and even those who do may be already working paycheck-to-paycheck and unable to save.
Now, a new study shows just how rough these folks have it when it comes to getting back into the job market.
Researchers sneakily sent out more than 12,000 phony resumes listing fictional job candidates responding to more than 3,000 job postings available online. The framers of the study set it up so that all of the candidates were qualified equally. The only thing they altered slightly was the amount of time that the job candidate was out of work.
For those who were out of work for 25 weeks or more, the news is grim.
The fake candidates who had been out-of-work for six months or less saw their call backs fall by about 7 percent. But then those who reported an unemployment of between six and eight months saw their chances plummet by 45 percent. In fact, those unemployed for longer than six months had only a 4 percent chance of being called back for an interview.
Researchers theorize that the idea is that if you don't have a job, your job is getting employment. If it takes you longer than a couple months to do so, the thinking goes, than you aren't very effective.
Of course, it's all much more complicated than that.
Those in the business world advise that, first of all, responding to online job postings isn't necessarily the way to go. You have a 9 in 10 chance of having your resume deleted right off the bat anyway. Instead, opt for networking opportunities and events, reach out to former colleagues and try to find ways to connect with people person-to-person.
Our Southern Colorado Chapter 7 bankruptcy attorneys know that credit card companies have long targeted the college student demographic because of their overall impulsiveness and lack of experience.
But their tactics are becoming increasingly savvy.
Today, nearly 900 universities and colleges have partnerships with credit card companies and financial firms. These are extremely profitable to all entities involved. The ones who lose out are the students.
The gimmicks are shameless. Some involve students receiving free t-shirts or gift cards "just to sign up." But as we all now, those "gifts" cost a great deal more than what students are bargaining for.
In one example provided by a LearnVest article, a college student signed up for a card in her second month of university because she liked the silly slogan on the t-shirt. Now, 15 years later, she's struggling to pay off the $25,000 in debt that still remains from that card.
Some studies have indicated that students that are repeatedly exposed to marketing by a financial institution over a period of time will overwhelmingly cave (about 70 to 80 percent). Of course, these students aren't being encouraged to shop around for competitive card rates or instructed on how to wisely manage their spending and debt.
In fact, a recent survey indicated that only about 15 percent of college students had a clue what their interest rate was and two-thirds were not sure whether they had been charged late fees.
These mistakes can follow students for many years after they graduate.
A survey conducted by Chase Card Services indicates that 35 percent women between the ages of 25 and 32 believe their credit card debt has prevented them from attaining their financial goals.
There are thankfully some protections that have been put in place under the Credit CARD Act, a federal measure that places certain limitations on credit card companies. Among those changes:
The U.S. Federal Reserve has reported that consumer credit overall has bounced back in August, following a sharp decline a month earlier.
Southern Colorado bankruptcy attorneys know this means more people are feeling comfortable with taking on more credit card debt. This can be viewed as a positive thing in terms of our overall economy, but it can also quickly launch a downward spiral, particularly if an individual is hit with an unforeseen financial crisis, such as a lay-off or major illness.
A Chapter 7 bankruptcy in Denver is one way these individuals can find relief. The proceeding allows you to end the creditor harassment and erase most of your debts.
The Reserve reports that credit debt rose to $18.1 billion in August, which marks the highest rise since May of this year, and a marked increase from July, when credit fell by $2.5 billion.
Combine that with the fact that the country's jobless rate still stands at about 8 percent, and it's clear we're not financially out of the woods.
If you are one of those who is taking on more credit debt, consider the following tips to help you keep it in check:
Colorado Springs credit card debt is easily one of the main sources of financial upheaval.
Of course, Colorado Springs debt relief attorneys know that they can be a great asset if you use them the right way. However, when times are tough, some see them as easy access to money they don't have. But that's the problem: If you don't have the money know, chances are you aren't going to have three times the money next month when the bill arrives. This is where people find themselves in deep trouble.
1. Gluttony. Mostly, this involves maxing out your credit cards or borrowing just about up to your limit. For example, if the issuer of the card offers you a $5,000 limit, that doesn't mean you should take out $4,500 of it just because you can. What's more, when you take out that much, you risk harming your credit score. It increases your debt-to-income ratio, and makes it appear as if you are high-risk.
2. Pride. Many people simply assume that their credit score is Ok, so they don't bother checking it. However, in a lot of cases, errors are common. Sometimes, creditors mark that you are delinquent on a payment, when in fact you aren't. It's important to know where you stand.
3. Lust. This comes in the form of applying for more credit than you can actually afford. Plus, the more credit card inquiries you have, the worse your credit score will be.
4. Greed. Cash advances on credit cards are usually a bad idea. The interest rates on these transactions can sometimes top 25 percent. Take out only what you need - and know that you can pay back in a timely manner.
5. Envy. When you apply for a credit card that is above what you can afford. A lot of times, platinum or gold cards come with astronomically high annual fees. They only really pay off if you travel enough to earn the rewards.
6. Wrath. There may be a temptation to cut up all your credit cards if you've been badly burned by one company. However, this is a bad idea because it won't give you a chance to rebuild your credit.
7. Sloth. If you don't check your monthly statements, you risk the possibility that you could be paying for things that you previously signed up for and have since forgotten about.
Colorado Springs Chapter 7 bankruptcy lawyers know that anyone who has ever struggled with debt wants to ensure their children don't endure the same.
While some debts are inevitable, establishing good spending and saving habits early on can save them a great deal of heartache later on.
This is critical especially considering that a recent survey indicated that 12th graders were failing on basic, personal-finance literacy tests. (And only half of adults were able to get the right answers on basic questions about inflation and interest rates.)
A number of federal and state initiatives in the last year have focused on addressing these issues in high schools. For example, President Barack Obama's Advisory Council on Financial Capability has launched a campaign aimed at young people, with nearly two dozen money lessons important for children.
Here are some of those key points:
Contact us today for more information.
A Colorado Springs bankruptcy is generally the result of circumstances beyond one's control: divorce, lay-off, medical crisis, etc.
However, our Colorado Springs Chapter 7 bankruptcy attorneys recognize that almost everyone can benefit from delving into their financial habits and breaking a few bad ones.
This is especially important for people after they have had a bankruptcy discharge, as this will be key to re-establishing credit.
Some of the biggest bad money habits include:
Part of heading off serious debt problems is recognizing when you may be heading toward them.
Our Southern Colorado Chapter 7 bankruptcy lawyers have seen a number of clients who file for bankruptcy years after the warning signs started flashing.
In some cases, there wasn't much they could do about it. When you get derailed by an illness or a job loss, you may have little choice but to roll with the punches.
Other times, though, you may be able to address certain issues and establish alternatives.
One of the prime examples of this is credit card use. Credit card companies are experts at making money, and their ultimate goal is to make money off you, whether through annual fees or high interest rates or missed payment penalties.
The average consumer has three credit cards, according to credit bureau Experian. Only 15 percent have more than seven cards. Reuters recently profiled a man who had 40 credit cards - and was making money off of the cash back rewards! But the fact is, that is extremely rare. The issue is not so much how many cards you have, but rather how much credit you are using.
Typically, as long as you don't apply for too many cards at once, you could have a dozen credit cards and not be in trouble. In fact, it may actually boost your credit score if you have credit that you aren't using.
However, the problem is when you take out more credit than what you can afford. The more credit cards you have, the more tempted you will be to utilize that credit.
So let's say you have $100,000 in credit that is available to you. If you have $10,000 in credit actually charged on those cards, you have a 10 percent credit utilization ratio. FICO indicates that those consumers who have the best credit scores (generally defined as 760 and over) have a credit utilization ratio of 7 percent.
So as with anything else, the bottom line is to control your actual spending. If you can have more cards and honestly say you won't take out the credit on them, by all means, have more. However, if you worry that having access to that credit may tempt you to dig yourself deeper in debt, simply decline those offers.
Toni Braxton has won six Grammy Awards - and filed for two bankruptcies.
Our Colorado Springs Chapter 7 Bankruptcy attorneys understand that she intends to talk about her financial journey in an upcoming music television show.
While some may view multiple filings as a sign of irresponsibility, the fact is that there are some situations in which the filer may have little choice. It's also worth noting that someone who has already been through the bankruptcy process knows that when circumstances outside their control begin to snowball, there is no sense in wasting precious time and money in an effort to save a credit score that is likely to suffer regardless.
In Braxton's case, the first bankruptcy stemmed from a recording deal that was beyond deplorable. In fact, her late-1990s hit son, "Unbreak My Heart" reportedly earned her a total of less than $3,000.
Then two years ago, Braxton filed again after a medical ailment impeded her ability to perform Las Vegas shows she was contracted to perform. Promoters and venues lost a great deal of money, and sued Braxton. After unsuccessfully attempting to settle with them, she sought another Chapter 7 filing.
The Bankruptcy Abuse and Consumer Protection Act of 2005 changes the wait times in between bankruptcy for certain debtors. But it's not true that you have to wait eight years across the board before you can file a new bankruptcy. Essentially it works like this:
If none of your debts were actually discharged in the previous filing - that is, you merely filed for the protection of the automatic stay - than these time limits won't apply to you.
Despite reports that the U.S. economy is inching toward improvement, we now know that household incomes in the U.S. fell to levels we haven't seen since 1989.
In fact, Colorado Springs Chapter 7 bankruptcy lawyers understand that a recent report from the U.S. Census Bureau indicates that median incomes fell by nearly 2 percent last year.
Families are on the brink of poverty, and despite falling income levels, many families have not adjusted their lifestyle. This, unfortunately, is a recipe for becoming trapped in debt.
The current presidential campaign is dedicating a great deal of focus to why this is happening and what can be done to prevent it.
On a macro scale, some of the issues economists have identified include:
Whatever the causes, having a reduced income means making adjustments. In some cases, those adjustments are only possible with the help of an attorney who can help you either reach a debt settlement or apply for bankruptcy protection.
You may just now be settling down with the idea that your child is actually in college.
He or she is probably getting in the swing of classes, exams and group projects. But one area of study that college students as a whole routinely flunk is credit card savvy.
Too often, our Colorado Springs Chapter 7 bankruptcy lawyers are seeing younger and younger clients who seek are seeking bankruptcy protection because they got in over their heads with credit cards.
The good news is that for a college student or someone in your early 20s, a bankruptcy filing is unlikely to dramatically impact your financial future. You have more time to bounce back than, say, someone who is facing down retirement in the near future.
That said, part of what credit card companies bank on with college students is that they won't know how to spend responsibly. The fact is, it's good for college students to have a credit card, as it can help to boost their overall credit history, which they are not likely to have much of at this point in their lives. However, the problem is that to a college student, a credit card can seem like a magical wand of instant gratification. But then, of course, the time comes to pay up.
In the interest of avoiding major headaches for your child, here are some bullet points of what you may want to discuss:
Colorado Springs foreclosure lawyers understand that while rising home prices have helped to pull some homeowners from the debts of this housing crisis, younger homeowners are still facing an uphill battle.
According to real estate database Zillow, the percentage of homeowners who were underwater, or owed more on their homes than they were worth, dropped to about less than 1 percent (to about 31 percent)in the second quarter of 2012. This is somewhat encouraging, but of the 15 million borrowers who remain underwater, a huge portion of those are below the age of 40.
In fact, about half of all borrowers in this age bracket are underwater. This is double what the underwater rate is for older borrowers.
What we're likely to see as a result is a stagnation in the economy. That's because when these borrowers can't move out of their starter homes into bigger homes, those younger couples seeking starter homes have a harder time doing so. That means they are more likely to rent or continue living at home for longer stretches of time.
These under-40 underwater borrowers, in order to sell their home, either have to come up with a lot of cash upfront or go through a short sale.
What they don't necessarily have to do is simply walk away. Our Colorado Springs foreclosure lawyers know that the entire process seems daunting and frustrating, but you do not have to endure it alone.
Our attorneys are experienced at finding foreclosure alternatives, such as loan modifications and principal loan reductions. These are available with increasing frequency as the government works to settle with major banks over foreclosure abuses and other housing wrongs. So even if you were previously unsuccessful in working out an agreement or modification on your own, there's a strong likelihood that we can help you negotiate better terms with your mortgage lender.
This may help you avoid both foreclosure and/or bankruptcy, depending on how deep in debt you are.
Unfortunately, many homeowners simply struggle to pay the current price in the hopes that the market will rebound and they will be able to make their money back. The fact is, you may never fully recoup the losses on the investment you made in your home. However, you shouldn't have to go broke just trying to pay your mortgage.
We can help.
A report released recently by the federal Government Accountability Office indicates that more than 300 members of the military had their homes illegally foreclosed upon in the last few years.
Our Colorado Springs foreclosure lawyers know that there are special protections in place specifically for members of the armed forces. Unfortunately, sometimes those rules are not properly applied by banks and mortgage lenders - which is why these soldiers will need someone who will fight for them.
Here's what is happening:
The Servicemembers Civil Relief Act, or SCRA, sets forth a number of provisions to protect those in the armed services from being unfairly closed upon, particularly while they are serving active duty assignments overseas.
Those protections include:
However, despite these protections, the mortgage companies are not following through. Mortgage lenders either aren't noting when a homeowner is on active duty, or even when they are, the terms are ignored anyway.
Soldiers face unique challenges with a foreclosure because when they are assigned to a different base, they can't sell their old home. As in a lot of cases these days, they may owe more than the home is worth.
Soldiers who are moved to a new base are supposed to automatically receive approval for a short sale if the home was bought prior to the end of June and the loan was owned by either Freddie Mac or Fannie Mae.
Also, earlier this year, the U.S. Justice Department reached a deal with four major lenders - Citigroup, Wells Fargo, Ally Financial and JPMorgan Chase - regarding wrongful foreclosures against servicemembers. Any soldier who was wrongfully foreclosed upon is entitled to a minimum payment of about $117,000. Compare this to non-military borrowers, who under the recent $25 billion settlement agreement reached with 49 states' attorneys general, receive about $2,000.
Many people wonder about every detail: What about the car? My antiques? My jewelry?
The answer is somewhat complex because every situation is different. The best way to get a gauge on what you can protect and what you can't is to consult with an experienced bankruptcy attorney who can help you analyze your individual situation, along with the laws that apply uniquely to Colorado residents.
That said, it's highly likely that your creditors aren't going to want to take the coat off your back or the ring off your finger. Unless you had a fairly sizable and expensive collection of jewelry, it's probably safe.
People may mistakenly think that they can protect these items by transferring them to family members prior to filling them. Not only could this be detrimental to your bankruptcy, it's illegal. The court wants to be able to consider all your assets when determining how the case will be handled. It doesn't want you shedding yourself of bad debt while hanging onto valuable assets. It's probable that if you have a vehicle that's paid off or an heirloom necklace that your attorney is going to be able to protect those items from creditors in a Chapter 7. However, if you start giving away or selling those things to friends or relatives, there's a strong likelihood that they might not be protected.
You'll also want to be mindful of taking out any large cash advances just prior to filing. For example, if you know you're going to be filing for bankruptcy and you go on a shopping spree with your credit card just a few weeks before, the bankruptcy trustee is going to see that. It is generally considered fraudulent and not only might you have to return those items if possible, but it may hurt your chances for a successful bankruptcy.
Likewise, you can't make payments to family just before you file. Family members and close friends to whom you owe money are considered creditors like anyone else, and you can't show favortism in this regard.
Bereaved family members have enough to contend with when someone passes away without having to shoulder the burden of left-over debts.
You should know that you aren't responsible for debts that weren't in your name or that you did not co-sign for. That doesn't mean widows and widowers especially won't suffer a financial blow.
Here are some things you need to know:
The credit card companies and other creditors have the right to collect their payments from the deceased person's estate. If it's a secured debt, such as a vehicle payment, the vehicle may be repossessed and resold, with the remaining balance, if there is any, billed to the estate.
However, if there is not enough to cover the debt from the estate, creditors are generally out of luck, and must eat that cost.
If it's unsecured debt, such as a student loan, creditors can still collect the remaining balance from the estate.
Of course, this may affect any beneficiaries of the estate as the amount they can collect will dwindle based on the debts owed. However, beneficiaries won't be held responsible for the remaining balances on bills if the estate won't cover it.
However, there are some exceptions. If your spouse passes away and you had multiple joint accounts, joint debts or had co-signed for some of those debts, you can still be held responsible for the entire amount. This is often a harsh reality when spouses die, particularly because your income has effectively been halved (or more) by your loss, but your expenses haven't decreased.
You may be able to offset some of that cost through any life insurance policies you may collect, but that may not cover everything.
This is why many widows and widowers end up filling for Chapter 7 bankruptcy in the wake of a death, particularly if the deceased was the primary wage-earner for the family. Adjustments must be made in your monthly costs in order for you to get by. Sometimes, the only way to get rid of that debt is to have it erased in a bankruptcy.
There is an old saying that it's hard to see the forest through the trees.
Colorado Springs Chapter 7 bankruptcy lawyers know this is one way of saying it's difficult to gauge the entirety of the situation when you're in the middle of it. This is exactly the case with debt.
It starts with a missed payment here or a credit card charge there. We continue moving along with life thinking it will eventually get handled or take care of itself.
The problem with debt, though, is that it compounds upon itself. Many people don't realize they're in trouble until they've depleted their retirement or other savings - money they'll never be able to recover.
Bankruptcy is one way to address debt that has become unmanageable. That is, you have no other real hope of paying it back, or to do so would take so long and be so arduous as to be detrimental to your future, and quite frankly unwise.
The only real way to know whether bankruptcy is the best option for you is to meet face-to-face with an experienced attorney who can help you comb through your finances to determine the right decision. Generally, if you're already considering it, chances are your debt has already reached a breaking point.
Here are some other questions to ask yourself if you're contemplating filing for a Chapter 7:
Are you juggling bills? By this, we mean are you applying for more credit cards or payday loans to get cash advances to pay existing cards or basic expenses?
Are you paying the bare minimum payments on your credit cards, loans and other bills?
Are you consistently putting more on your credit card each month than you bring home in earnings?
Has your income decreased significantly in recent months or years?
Are you having to take on overtime just to pay your basic expenses?
Are you being hounded by debt collectors on the phone and in the mail?
Are you concealing the costs of purchases from your wife or husband?
Are you using your retirement account or savings to pay for monthly expenses?
If you answered yes to one or more of these questions, it's time to start considering your options. There is no hard-and-fast rule about the right time to file for bankruptcy, but if you start to see yourself slipping into some of these categories, it's time to explore ways to facing down the debt.
A new trend has been spotted with regard to classification of hospital stays for Medicare patients - and it's driving up medical debt at a rapid pace.
Colorado Springs Chapter 7 bankruptcy lawyers know that medical debt is one of the driving forces for those seeking relief from bankruptcy.
The good news is a bankruptcy will erase those debts, allowing you to focus on your health, recovery and the future.
However, we still need to make consumers aware of what is increasingly becoming a driving force for some of these situations in which individuals - particularly the elderly - are owing tens of thousands or even hundreds of thousands of dollars.
It has to do with the way patients are classified when they are in the hospital. If you are considered an "inpatient," that means you have been formally admitted into the hospital. The way Medicare works is that if you stay three or more days in inpatient care, certain medications will be covered, as well as subsequent rehabilitation costs for the first 20 days, and then another $145 a day after that - up to 100 days.
However, if you are classified as "under observation" while in the hospital, or if your classification is switched at some point prior to those three days, none of that is covered. It's a technicality, but one more and more hospitals are switching to for this reason:
Hospitals get paid quite a bit less under Medicare for "under observation" patients. However, with tremendous cuts to Medicare left and right, the agency has employed a number of auditors to trim costs. Those auditors are second-guessing almost every inpatient admittance. If they determine an inpatient classification wasn't necessary, those auditors have the authority to withhold payment from the the hospital entirely.
That means hospitals are taking their chances by simply classifying patients as "under observation" automatically - no matter that it seems to violate even the basic Medicare rules and that it breaks the bank for patients, particularly those who may require longer-term treatment.
What's worse, many patients aren't even aware of it until after they've been released - when they get their bill.
Doctors say the classification won't impact the level of treatment you receive. But at the end of the day, they're interested in your physical health - not your finances.
That's where we come in.
For the last five years, Congressional intervention has meant that underwater homeowners wouldn't face tax penalties when a portion of their debt was forgiven upon foreclosure.
However, Colorado Springs foreclosure defense lawyers know that protection is set to expire at the end of the year.
This means if you're on the verge of foreclosure, the time to seek help is now. If it ends up not being worthwhile to stay and fight for your investment, you could end up paying tens of thousands of dollars in income taxes if you wait until after Dec. 31, 2012.
In most cases, if you have a good attorney, you can save your home by negotiating a significant reduction on your principal payment through a loan modification. This is going to lower your monthly obligations, making it easier for you to keep up with every month. This is particularly helpful to homeowners who were caught up in the housing crisis, where they purchased their home for far more than what it was actually worth. Reducing the principal balance can bring your payments back in line with what would be considered a fair market value.
However, there are a few situations when it may make sense to initiate what is called a strategic default, which is where you simply walk away from the home and allow the bank to foreclose without a fight. This is rarely advisable because it is so harmful to your credit. However, sometimes it can be worth it when there is no way you'd be to keep up the payments and the bank absolutely won't work with you.
Prior to 2007, the statute was such that if your home was foreclosed upon, the bank had the option of "forgiving" the difference between what you owed and what was paid for the property. However, this "forgiven" amount was deemed income by the federal government - income upon which you had to pay taxes. When the housing crisis hit, Congress stepped in and allowed an exemption, meaning homeowners wouldn't have to consider this income.
What was originally intended to be a three-year relief was extended another two years. But now, it's going to expire. That means if you are forgiven $20,000 worth of the mortgage, you will have to pay taxes on that $20,000 as if it were in your pocket. If you're facing foreclosure, chances are this is money you don't have.
The bottom line is that if you are facing foreclosure, you need to act now so that you can get the matter settled before the expiration of these tax benefits, should you need them.
Collection agencies are becoming increasingly aggressive with their tactics, as evidenced by a soaring number of lawsuits filed by individuals who have been harassed by these companies.
Colorado Springs Chapter 7 bankruptcy lawyers know that these businesses can be brutal - calling you at all hours of the day and night, on every line you own, even going so far as to contact family members, neighbors and relatives.
You have the right under the Fair Debt Collection Practices Act to request that these communications stop by sending what's known as a cease communication letter. You can ask that they only communicate with you in writing or that they cease contact with you altogether.
However, many companies will flagrantly ignore this request (and the law) by continuing to contact you. This is where their conduct stems into the territory of harassment and abuse, and that's where a lot of these lawsuits are coming from.
It's noteworthy that when you file for a Chapter 7 bankruptcy, the court issues what's known as an automatic stay. This is spelled out in 11 U.S.C. 362, and it essentially bars the continued communication of your debtors to you for a period of time while your bankruptcy proceedings are being processed.
According to the Transactional Records Access Clearinghouse, there were nearly 900 consumer credit lawsuits filed just in May of this year alone. Those suits were filed in all 50 states and throughout some 90 federal court districts.
What that number reflects is a 12 percent increase over April of this year - and it's grown every month since the beginning of this year.
The number of consumer credit lawsuits has actually tripled in the last five years, beginning in May of 2007. From January through May of this year, nearly 6,300 of these suits have been filed.
Some industry analysts say that the debt collection business is fast-growing. Along with it, there is the misuse of consumer information, as well as the ignorance of the Fair Debt Collection Practices law.
A new report from one of Denver's largest human resources firms indicates that salaried employees in Denver are set to receive some of the largest pay raises in the country.
Our Colorado Springs Chapter 7 bankruptcy lawyers know this is great news - but it's important to note that it's only going to affect a small number of companies and individuals, and that the increases are expected to be marginal.
A larger national study, conducted by the Economic Policy Institute, indicates that low-paying jobs aren't actually going anywhere. In fact, about 30 percent of available jobs today will put a full-time worker either just at or below the poverty line. Unfortunately, it's going to stay at that 30 percent until at least 2020, and estimations that higher-tier jobs will grow after that point aren't hopeful.
The fact is, many people took on jobs that were beneath their skill level when the recession hit. It was never intended to be a long-term thing, and that's why in the meantime, a lot of these folks racked up enormous amounts of debt - credit cards, loans, medical bills - believing that they would eventually pay it all off.
If you're one of the lucky few in Denver who will be expecting a raise, you may now be able to start putting a dent in those debts.
But to take a look at what was actually reported, Aon Hewitt, the human resources firm, surveyed some 1,300 businesses across the country. The average base pay for workers had risen 0.1 percent this year as compared to 2011. Certain Denver companies, meanwhile, saw a 3.2 percent increase this year over last and expect a 3.6 percent increase in 2013.
To put this in real terms, if you're making $40,000 a year, a 3.2 percent increase represents about $1,280 year or $128 a month. Certainly, this is an improvement - but it's not going to pull you out of tens of thousands of dollars of debt if that's what you're facing.
Meanwhile, 30 percent of the population is making around $11 an hour, which puts them at about $23,000 a year. If you are part of a family of four and make this much, you are on the poverty line.
A bankruptcy is one way of clearing those old, looming debts to make way for smarter spending and saving habits.
There's no doubt you've heard the phrase, "Bankruptcy should be a last resort."
For people who are in relatively good financial shape, that's probably a good mantra to keep. The whole idea of bankruptcy is not to make it easy for people to avoid debts they can easily pay off.
However, Colorado Springs Chapter 7 bankruptcy attorneys know that for people who are struggling with mountains of debt, waiting to file until you're out of all other options can be dangerous, and the reasons are numerous.
Often, we see clients who have dragged their financial burdens on far longer than was necessary - because they were seeing bankruptcy as the last option.
But the fact is, you save yourself an enormous amount of stress and further financial trouble by exploring it as an option sooner.
By not doing so, first of all, your health is likely to suffer. We have worked with countless clients who had become physically ill as a result of their financial woes. Not only is their stress high, but they don't sleep. Some drink alcohol or overeat or chain smoke. Others suffer from depression. The bottom line is it's not a healthy way to live your life.
Secondly, it's highly possible that you'll end up making some costly, and maybe even irreversible, financial mistakes. This is easy enough to do. For example, some people cash out their retirement in order to pay off their credit cards, only to later realize they'll have to file for bankruptcy anyway. They'll never get that retirement money back, and the credit card debt would have been forgiven.
Thirdly, you may think you don't need to file because you're treading water with your finances. But the fact is, that's all you're doing, and without the relief that bankruptcy provides, you won't get any farther. That means you won't ever be able to save up enough for retirement or pay off your student loans or have any savings cushion. Again, it's not a healthy way to live your life - and you have options.
A nationwide drought that has prompted authorities to declare a natural disaster in 1,000 counties in 26 states (including Colorado) has left many farmers abandoning acreage, filing insurance claims and, in some cases, contemplating bankruptcy.
Our Colorado Springs Chapter 7 bankruptcy lawyers know that while this drought is currently affecting farmers and those in the agriculture business, it won't be long before food prices start to soar, which will inevitably affect everyone.
When even basic expenses like food become difficult to afford, many people will be forced to choose between continuing to pay down existing debts and eating. For most, that isn't a choice at all.
A Chapter 7 bankruptcy can help by allowing you to unburden yourself from those existing debts, particularly if you are so deep you have little hope of ever being able to repay it anyway.
According to officials, this is the worst drought to slam the country in nearly 25 years.
In addition to farmers, reports indicate that restaurants, the boating industry and others will be affected as well.
So far, the U.S. Department of Agriculture has approved roughly 280 disaster loans relating to the drought, which equal more than $28 million.
But that's only a temporary fix, and those loans can be tough to get.
The dryness is a major factor for states in the south and west - and Colorado is right in primary dry zone.
What makes it especially worse for farmers is that the lack of rainfall follows record heat waves, fatal storms and raging wildfires. In fact, the last 12 months have been hotter than any other since 1895 - when we first started maintaining weather records in the U.S.
An official with the Drought Monitor reports that half of all U.S. ranges and pastures are in either poor or very poor condition, which is a spike of nearly 30 percent in just a matter of weeks.
Factoring in the recent wildfires in Fort Collins, the nationwide acreage torched by brushfires shot up from 1.1 million to 3.1 million.
While we can't adjust the temperatures or make it rain, we can help you find financial relief.
Our Colorado Springs Chapter 7 bankruptcy attorneys have talked a great deal about the student loan debt trap that many young people have found themselves in over the last few years.
However, a new element of this crisis has recently emerged: That of older adults who are battling student loan debt. We're not talking about the parents of college students (although, they too are struggling).
These are individuals who have perhaps gone back to college either to change careers or boost their skill set. However, what certainly seemed like a smart move a handful of years ago has now left them burdened with debt and with fewer job prospects to boot.
It's important to note that unfortunately, a Chapter 7 bankruptcy will not erase student loan debt, except in extreme circumstances (your bankruptcy lawyer can help you explore whether that is a possibility for you). But what a bankruptcy can do is free you from the other debts that may have piled up as you worked your way through school.
These are not individuals who were careless about their future or reckless about their money. Here are some examples:
1. A 51-year-old who acquired nearly $90,000 in student loan debt after graduating from chiropractic college 15 years ago. Financial aid officers told her she could likely expect to repay it within five years. But with the economy tanking, she was never able to get her practice off the ground. Able to make the minimum payments, her loan has ballooned to over $150,000.
2. A 59-year-old attended school for arts administration back in the 1980s. He didn't finish his degree, but ended up taking various field-related jobs. As other financial obligations took priority, his student debt kept getting put to the back burner. He still owes$20,000.
3. A 64-year-old who attended law school after earning a Ph.D. in immunology, and then sent two children to college at top universities. Collectively, the family owes about $120,000.
Not all of these individuals are in terrible shape, but many live paycheck-to-paycheck. That means one medical emergency or personal injury could send them into a tailspin of debt.
You do have the ability to take the reins on the situation before that happens.
We can help.
A Colorado bankruptcy can provide you relief from a long list of creditors.
Our Chapter 7 bankruptcy attorneys know that this includes credit card bills outstanding medical balances and business debts.
However, there are certain debts that are almost never dischargeable. Generally, those are going to include student loans and taxes, though there are special circumstances in which you can apply for an exception.
Child support payments, however, you will almost certainly continue to pay.
That was the issue in the case of Florida v. Davis, recently heard by the U.S. Appeals Court for the Eleventh Circuit. Although this was a Florida case, the same general principles with regard to child support and bankruptcy apply here in Colorado.
Here are the facts, as outlined in court documents:
Mr. Davis and his wife were married in 1997. They divorced in 2003 in Illinois. Mr. Davis moved to Florida, and it was that state's department of revenue that oversaw the child support payments for which he was obligated.
Then in 2008, an involuntary Chapter 11 bankruptcy was filed against Mr. Davis. This is a rare situation in which creditors seek relief from the bankruptcy court.
In the list of creditors spelled out in the filing, there was $180,000 that Mr. Davis owed Ms. Davis for child support. The bankruptcy court required proof of claim from each of the creditors. However, neither the state's department of revenue nor Ms. Davis filed any paperwork.
The debts were formally discharged by the court in May 2009.
The following month, the state department of revenue filed a proof of claim for the $180,000 owed to Ms. Davis.
The bankruptcy court, however, determined that neither Ms. Davis nor the department of revenue could seek relief due to res judicata, or in other words, the case had already been decided and closed.
The case was then taken to the appellate court.
The appellate court determined that while Mr. Davis did have to pay the child support - it was not a debt that could be discharged in the bankruptcy process - the department could not seek interest or liability because it had not properly met the court's deadlines.
Although child support can't be discharged in a bankruptcy, filing frees up your income from other obligations so that you will be able to pay.
Contact us today for more information.
Many people contemplating filing for a Chapter 7 bankruptcy worry that they may not be able to save their home.
Our Denver bankruptcy attorneys know, however, that the truth of the matter is bankruptcy is often one of your only options for saving your home.
While it's not going to be the solution for everyone, there are many people who can benefit. Consulting with an experienced bankruptcy lawyer is the only way to know for sure, but here are some thoughts to help you as you weigh your options:
A bankruptcy will halt a foreclosure proceeding. It will effectively end the creditor harassment. This gives you time to reorganize your finances and in some instances, catch up on your missed or late payments.
It's generally going to be one of the best options for you to explore if you are behind on your payments but you still have ongoing and steady income.
In fact, a lender can't foreclose or even try to collect debt from you once you've filed. A Chapter 7 will delay the foreclosure. It may also help you to ward it off altogether by freeing you from other debt so that you have the means to be able to pay your mortgage.
Another possibility is filing for a Chapter 13 bankruptcy. This option allows you time to fix your finances, usually within the course of three to five years. In this scenarios, the court will set an income-based budget with monthly payments handled by the bankruptcy trustees.
These trustees in turn pay those bills, first attacking the secured debt. Then, they focus on unsecured debt, starting with any back taxes you owe. After that comes debts such as medical bills and credit cards. After that, trustees will pay the remaining bills, usually for a few cents on the dollar.
If borrowers are able to keep up with those payments, they can usually come out of a bankruptcy with their home still in their possession.
What the court generally can't do is reduce your mortgage debt down to what the home is actually worth (a big concern for the many homeowners who are underwater) or lower interest rates or loan terms.
However, given some recent financial settlements finalized to hold some of the largest banks accountable for foreclosure abuses, there may be some additional remedies you may seek in terms of loan modification.
Contact us today for more information.
As Colorado Springs residents continue to grapple with a massive, fast-moving wildfire that has already killed at least two people, destroyed more than 350 homes and damaged dozens more, many may have just been pushed over the edge to a Chapter 7 bankruptcy.
It's no surprise that many were already suffering financially prior to this. Now, many have lost everything.
Our Colorado Springs bankruptcy lawyers know that despite the stringent guidelines imposed by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, special provisions were set forth to protect those who had suffered a major natural disaster, such as flooding, a hurricane, or tornado - or a fire.
Specifically, these provisions were created in the wake of Hurricane Katrina. Part of it deals specifically with bankruptcy fraud, which the courts do take very seriously. Usually, if you don't have sufficient or proper paperwork, your case might be closed, your debts deemed non-dischargeable or you might even be prosecuted. But these new provisions allow that if you're important documents or other paperwork was destroyed as a result of a natural disaster, you can't be prosecuted or penalized for that.
In that same vein, the normal deadlines and meetings that you may have been otherwise compelled to meet become more flexible. One example might be that a debtor might not be able to leave their location due to flooding. So in turn, if they do not attend their credit counseling meetings as a result, they can't be penalized for that.
Plus, while the Bankruptcy Abuse Prevention and Consumer Protection Act was designed to make it more difficult to file for bankruptcy (in an effort to drive down fraud), the natural disaster provisions actually make it easier for you to file if you've been affected by an act of nature. In part, that involves waiving lost property through the means test, waiving your credit counseling requirements and, as we mentioned earlier, not punishing you for not having the proper documentation that may have been lost in the disaster.
Those whose homes may have been damaged or destroyed by this blaze may feel financially ruined and hopeless. We can help.
If you are stuck in a cycle of high-interest debt, it could be time to consider filing for a Chapter 7 bankruptcy.
Colorado Springs bankruptcy attorneys know that it becomes a vicious cycle: You have poor credit, so they give you a high interest rate, and then you're stuck barely being able to make the minimum, so you're scraping by just so you can cover the interest. At that rate, it could be a very long time before you are free from debt.
For example, let's say you owe $20,000 and your interest rate is 17 percent. At that rate, you could pay $400 every month, and it would still take you 7 years to pay off - assuming you put no additional charges on that card. In that 7 years, you will have paid $15,000 in interest. Now, let's say you can get that interest rate lowered to 10 percent. At that rate, still continuing to make that $400-a-month payment, you can pay off that debt in five years, and pay about $6,000 in interest.
As you can see, interest rates make a huge difference.
Of course, that's not what the banks want, so they are likely to play hard ball when it comes to negotiating. And at the end of the day, if you're borrowing money because you're spending more than you make, then getting a lower interest rate is not going to be a long-term solution.
Factor in a major life change, such as a lay-off or illness, and the situation quickly begin to snowball.
This is where a Chapter 7 bankruptcy can help.
If will allow you to leave those debts behind - and not look back.
In moving forward, however, as you try to rebuild your credit, you are likely to be offered only credit lines that have exorbitant interest rates. The key at the very beginning is to taking out only the credit that you can afford to pay back in a short period of time. Doing this regularly over time will allow you to ultimately boost your credit score after bankruptcy.
What you want to keep in mind is that all this money you are forking over in interest to these banks is making it more difficult for you to retire on time, send your kids to college, start your own business - or whatever other goals you have.
A bankruptcy can change that.
There are a large number of so-called debt settlement agencies advertising services that boast that they can help you avoid a Chapter 13 bankruptcy in Colorado Springs.
If you have overdue medical bills, late car payments and credit cards with sky-high interest, you know you have to take some form of action. And it can be tempting to want to avoid any negative marks on your credit.
But Colorado Springs bankruptcy lawyers know that first of all, a lot of these companies pose a buyer beware situation. A lot of them charge high rates for actions you may be able to take yourself, and some have even been pursued criminally for fraud.
A Chapter 13 bankruptcy, on the other hand, is a federally-approved process that is overseen according to strict legal standards, and when it's all done, you are free from debt.
The other thing about a Chapter 13, versus a Chapter 7, is that lenders and other institutions tend to look upon it less harshly because you are actually paying off a good portion of what you owe. Additionally, you have the protection of legally blocking your creditors from harassing you or coming after you for more once the process is done.
Now, if you decide to go with a debt settlement or credit management company, as mentioned before there is always the possibility of fraud. But also, you're generally going to be looking at higher monthly payments than what could be arranged in a Chapter 13 plan. Plus, in a Chapter 13, you're paying back a portion of the debt, rather than all of it, which is what you'll do with a debt management plan.
With a debt management plan, you're also looking at likely paying on those debts for a longer period of time. Plus, your creditors might not all agree to the terms of the plan (whereas in a bankruptcy, they would be legally compelled to do so). This is probably going to mean you'll be paying higher fees and balances for those agencies.
And also, it's not clear that there's really even much benefit to your credit score, as debt management plans are also reported to credit reporting agencies.
One of the top reasons people avoid bankruptcy like the plague is that they fear the impact on their credit score.
Colorado Springs Chapter 7 bankruptcy lawyers won't sugarcoat it and say there will be no affect whatsoever. However it's worth noting that when you file for bankruptcy, the scoring algorithms are such that you are being compared in segments with others who have suffered similar financial blows.
And the fact is, many more people are filing for bankruptcy these days than ever before. Their reasons are varied, but mostly it boils down to enormous medical bills and student loan debt, the housing crisis and out-of-control credit card debt.
What a Chapter 7 bankruptcy does is wipe the slate clean. It erases your previous debt (with some exceptions) and allows you to start fresh again.
It's true, though, that a Chapter 7 will remain on your credit score for about 10 years. However, many people have found that this is not nearly as inhibiting as it sounds. You can still buy a house, get a car loan, etc. You may have higher interest rates and that will force you to keep your spending in check, but it won't cripple you.
If the idea of a Chapter 7 scares you, you can always explore a Chapter 13. This is an option whereby you structure a payment plan to your creditors to pay back a portion of what you owe in monthly installments. A Chapter 13 usually only remains on your credit report for 3 to 7 years after it's discharged.
Another option is debt negotiation or debt settlement. This is similar to a Chapter 13 in that it involves you paying a fraction of what you owe. However, it's not all encompassing and it doesn't necessarily involve all of your debts.
So let's say you owe $15,000 on a credit card. You hire an attorney to help you reach a debt settlement and end up with a bill for $4,000. Your credit may still be damaged, particularly if the debt has already gone to a debt collection agency, but it's generally easier to repair your credit than it is to claw yourself out of debt.
It may come as a surprise to some people to hear that a Colorado Springs bankruptcy can actually be looked back upon as being a positive thing.
As "Real Housewife" Teresa Giudice explained recently on the show, the bankruptcy "made us stronger."
Our Colorado Springs bankruptcy lawyers know that many of our clients express that the whole process is freeing. That's not to say it is without its challenges or that it's easy. In fact, this is why it's critical to have an experienced attorney by your side, helping you sort through the details. It can be a difficult choice to make, but once it's all over, the reward is a fresh start.
Guidice and her husband, Joe, who are from New Jersey, filed for a joint petition, which means their filings have to be separately discharged.
There has been a great deal of back-and-forth between the Guidices, the lawyers and the bankruptcy trustees. In fact, Joe Guidice actually abandoned his effort to have his debts forgiven through the process after invoking his Fifth Amendment right to avoid self-incrimination. The court had claimed he was hiding assets and income, including a pizza restaurant, a boat and expensive gifts and trips - something that was reportedly learned after the trustee viewed episodes of the show that were filmed around the time the bankruptcy was filed.
Generally, if a bankruptcy trustee believes that someone is lying to the court, they will make a criminal referral to federal prosecutors. This is not a place you want to be. After consulting with a criminal defense lawyer, Joe reportedly agreed to withdraw his bankruptcy petition. That means he's still on the hook for his debts. That means that he would still be responsible for payment of the debts they hold jointly, even if Teresa is absolved of liability.
Teresa is nearing the end of her pursuit to have her debts discharged through a Chapter 7 bankruptcy.
In a recent episode, she reportedly said she was beginning to see the light at the end of the tunnel.
Statistics can be deceiving.
While recently-released figures seem to indicate that home prices are actually up, the reality is that we may soon see a glut of foreclosures in Denver, Colorado Springs and across the country.
Our Colorado Springs foreclosure lawyers know that it has a lot to do with people who are underwater on their homes, and yet are hanging on by their fingertips, hoping the market will do an about-face so they won't lose as much money. this means there are fewer homes actually on the market, which is driving down the supply, and therefore increasing the demand. There have even been bidding wars in a few cases.
When we look at the figures across the country, we see an increase of little more than 1 percent on home prices, when compared to a year ago. While this may seem minimal, you have to remember that the value of homes plummeted after the market tanked in 2008. The fact that it's inching up at all is seen as an improvement - until you really analyze what's going on.
Of course, it is good for those homeowners who are looking to sell right now. They're probably still going to take a loss, but it will be blunted by this short-term spike.
However, this is not going to last long-term because we still have a large number of people who are on the brink of foreclosure. They may be making the minimum monthly payments, but just barely.
This is where our Denver foreclosure lawyers come in. First of all, if you're trying to remain in your home, we can look into helping you secure a loan modification, meaning we could fight for your loan amount to be lowered to what would be considered a fair market value.
However, there may be some situations in which it actually makes fiscal sense to default and allow the loan to go into foreclosure. Of course, that's not a decision you should make without the assistance of a skilled attorney, and we can help guide you through the process.
The other thing that is going to eventually work against these homeowners is that you have banks that are scrutinizing their loans more closely than ever, combined with a populace that has a higher track record of poor credit scores. This is ultimately going to drive down that demand.
Chapter 13 bankruptcy attorneys in Colorado Springs know that when you're trying to keep your head above water, your credit score can get put on the back burner.
A late bill here, an unexpected expense there - it all begins to snowball. Some of things may be beyond your control. However, there are likely other actions you are taking that you may not even realize are negatively impacting your score.
A Chapter 13 bankruptcy works to help reduce the risk of a plummeting credit score while simultaneously helping you wipe out your debt. That said, working to rebuild your score going to be in your best interest and speed up your financial recovery.
Here is what you DON'T want to do:
1. Consolidating your credit. Now, if you're going through a Chapter 13, that actually is a form of debt consolidation. It's putting all your debts into a lump sum that you agree to pay back over a set period of time. But a credit consolidation is a little different. This is a way for banks to make money, and what they do is consolidate all your debts into one big, new loan. The general principal is that you are given a lower interest rate. The problem is that wiping out your old debt can actually hurt your credit score, which is partially calculated based on the length of your credit history. If you close all the old ones and put it into a new one, that could cut your score significantly.
2. Shopping around for your credit. Yes, you're going to want to get the best deal when it comes to credit cards, car loans and mortgages - particularly if you are being mindful in the wake of a bankruptcy. But making a lot of requests for your credit score in short order could reduce your overall score.
3. Refusing to pay. This is a particular issue that comes up if you are disputing a charge, whether due to a product being faulty or because you feel the charge was unfair or unwarranted. Those marks can stay on your credit score a long time, so it's best to try to work those out with the vendors as soon as possible.
4. Cancelling your credit cards. This may sound like a smart move, particularly if what got you into debt in the first place was racking up credit card debt. However, credit scores are calculated using the amount of debt you have versus the amount of credit available to you. So even if you pay off the card, it could be in your favor to keep it active so that you have credit available to you that you aren't using. That looks good on your score.
For those who have already undergone a Chapter 7 bankruptcy or are considering it, chances are keeping a close eye on your credit is high on your priority list.
Colorado Springs bankruptcy lawyers will tell you that your credit is indeed important, as it impacts everything from your ability to buy a car to, in some cases, secure employment.
So it's understandable that you would want to monitor your credit, and there are agencies that advertise this service.
It's not worth it.
First off, you can't count on them to be honest. A lot of these companies go on about how they offer "free" credit scores. Some of the services will even insinuate that they are actually the federally-mandated, official site for free credit reports. But in fact, there's only one, and you can find it at AnnualCreditReport.com.
Additionally, a lot of people end up saying they didn't realize they were even signed up for credit monitoring until they began seeing their bank account debited.
The thing is, even if you are getting "free" credit scores, it is probably not the FICO scores that the majority of lenders rely on or the service that you've signed up for is not free - or both.
Secondly, some companies will try to sell you on the fact that they can protect you from identity theft. Of course, if you're struggling with debt, theft is the last thing you need. However, a credit monitoring service isn't going to stop it. You may catch it a little sooner, but it's not going to prevent thieves from getting a hold of your information and racking up even more debt. The good news, though, is if there are fraudulent charges on your accounts, you can fight them.
Thirdly, it's simply not worth it for what you pay. You figure that you're going to pay somewhere in the neighborhood of $20 each month. That equals about $240 annually. If you're already in debt or just emerging from a bankruptcy, that's not likely an amount you can afford - especially for a service you can essentially get for free on your own.
Colorado Springs foreclosures still account for a large part of the market sales, according to a recent report by the Denver Business Journal.
For those battling a foreclosure, it's more than dollars and cents. It's about an emotional attachment to the place you call home, and choosing to let it go can be extremely difficult. It also may not be necessary.
Our Colorado Springs foreclosure lawyers can help you sort through the pieces to determine what your best option is.
The most recent statistics, culled from a Realty Trac quarterly sales report, indicates that although sales of foreclosures are actually down nearly 14 percent compared to this time last year, foreclosures still accounted for nearly a third of all home sales in the state.
Throughout Colorado, that equaled nearly 7,000 foreclosures sold, with an average price of approximately $180,000.
What is somewhat encouraging is that when you look at foreclosure sales across the rest of the country, Colorado is actually in better shape than most places. The average price for bank-owned foreclosure sales in the U.S. was about $20,000 less than in Colorado.
Rebounding home prices mean that the housing market overall is in better shape - which could mean you might actually be less underwater on your payments than you once were. That doesn't mean foreclosure might not make sense for you - but it may give you a little more leverage than you might have had otherwise.
The state with the highest number of foreclosure sales was Nevada, which reported nearly 60 percent of home sales were attributable to foreclosures. That was actually a drop of 5 percent from last year, though the average price per foreclosed home there was slightly less than $117,000.
California reported high foreclosure rates as well, with about 47 percent of total home sales. There, average prices were about $235,000 (though California has always had a more expensive cost of living than most states).
In some cases, Realty Trac analysts have said that an increasing number of distressed homeowners are looking to short sales to avoid foreclosures. This is one option to avoid the stain of a foreclosure on your credit score, but still get you out from underneath an underwater home.
Increasingly, cash-strapped companies are passing that pain onto their employees - with the end result being reduced or frozen wages and waning benefits.
Colorado Springs bankruptcy lawyers know that in this market, those are often things so many of us can't afford to lose.
To get a better sense of what's happening with employers and employees across the board, let's take a look at the numbers:
Since 2007, some 40 percent of employed adults have experienced their benefits declined or cut off completely. That's according to a survey conducted by the National Endowment for Financial Education (also known as NEFE).
Of those individuals, more than 70 percent said it was their health insurance benefits that saw the largest reductions. As employers were forced to cut back, it was their workers who burdened the majority of that cost for higher co-pays, premiums and deductibles.
In fact, the average out-of-pocket cost for workers' health plans climbed by nearly 8 percent, which equaled nearly $3,500 for an average family of four. That's a lot, especially when you consider that many families are already struggling to avoid losing their homes and put food on their tables.
Five years from now, it's expected that roughly 50 percent of the largest Fortune 1000 companies are going to simply drop health care coverage altogether. That's going to have an enormous impact on struggling employees.
Now the majority of employers (more than 60 percent) are saying that if they did drop health care coverage, they would make up for it by offering their employees some other incentives, such as higher pay, more vacation time, etc. However, what we're seeing of those companies that have already dropped health care coverage is that that hasn't historically been the case.
Workers are making less money and their ability to save for retirement has been significantly hindered. A quarter of those workers surveyed said they had to scale back their 401(k) contributions, and another nearly 15 percent said they had to stop contributing to it altogether.
That leaves the future looking quite scary.
A Colorado Springs bankruptcy attorney can help.
Colorado bankruptcy attorneys know that with wedding season coming up, many brides have visions of destination vows, mile-high wedding cakes and princess gowns.
But all of that can quickly lead to a Colorado Springs bankruptcy, if you're not careful. Of course, parents want to give their children a memorable and special occasion. They reason that it's a once-in-a-lifetime event.
While there may be certain aspects upon which you can certainly splurge, it's important not to get yourself into a pattern of debt for a one-day event, no matter how special. Consider that according to TheKnot.com, the average wedding cake costs a whopping $550. For a cake.
So the key is to spend smartly.
Here are some ideas for ways to keep your wedding costs down:
One trick to try is to have the first layer of your cake be a yummy sheet cake. But for aesthetic purposes, consider using a cardboard "fake cake," or a decorated foam set that sits atop one layer of the real stuff. That way, you cut the bottom layer for pictures, then wheel it in the back for the bottom layer to be cut and served. No one is any wiser and you just saved several hundred dollars. Or, consider serving cupcakes instead.
Consider hosting this event at a relative's home and serving cheese and meat trays and salads from a local deli or supermarket. This could save you bundles.
Of course, it would be rude not to feed your wedding guests at all. But the time of day will determine what kind of food you should feed them. And if you have an earlier wedding (say, morning or early afternoon), you can opt for breakfast or lunch food, which can be a whole lot less expensive than a dinner. Think waffles, French toast and omelets versus salmon and braised beef.
You can curb your costs here by serving wine, beer and perhaps a "signature" drink, which can be less costly than stocking up on various kinds of high-end liquor. You may even want to consider skipping the champagne toast, or substituting sparkling cider instead.
Colorado Springs bankruptcy attorneys know that in order to avoid being burdened by debt in old age, retirement savings are crucial.
However, life has a way of throwing in a few surprises, and in those cases, a Colorado Springs bankruptcy can give you the freedom to enjoy your golden years free from the stress and worry of cumbersome debt.
A lot of financial analysts say that it's wise to try to save for your retirement as if you would live to be 100 years-old. Of course, we know that as of right now, the average life expectancy is quite a few years less than that. So why bother saving that much?
Because the truth of the matter is, life is unpredictable. You already know this if you are considering filing for a Colorado Springs bankruptcy.
A story is told by a Stanford management science professor in which a statistician drowned in a river that had an average depth of just three feet. Of course, while the stream was very shallow close to the shore, it was 12 feet deep toward the middle.
The whole concept is that if you use the average life span to figure out how much money you're going to need to save for retirement, you may ultimately find yourself drowning in debt in your old age.
So what we know is that for the average 65-year-old man, assuming he's healthy, he'll live for probably another two decades. For a woman of the same age and situation, it's about another 22 years. What's important to note, however, is that a lot of people live longer than that nowadays.
In fact, a 65-year-old woman has a 40 percent chance of living until she's 90-years-old.
So if you're 65 years-old and you have about $500,000 saved up - enough to last for the next two years - there's about a 10 percent chance that you may use up all your money by the time you're 85. And then what will you do?
Of course, there's no one-size-fits-all amount to save. But if you're in a situation where you may be in middle age and be so burdened by debts that you've been unable to put anything aside, it may be time to consider a Colorado Springs bankruptcy.
Discussing your situation with an experienced attorney can help you explore your options.
Colorado Springs debt relief attorneys know that when you're underwater in debt - mortgage, credit cards, medical bills and student loans - someone telling you that there actually is such a things as "good debt" would probably be given a murderous look.
However, when trying to set up a plan for Colorado Springs debt relief, it's important to note that there actually ARE situations in which debt is a positive thing.
Now, before you go racking up a ton of credit card purchases, you need to know that there is good debt - and there is very bad debt - and then there is REALLY bad debt.
First, let's look at the really bad. This is usually the kind of debt that piles up when you are spending more than you are bringing in. Our Colorado Springs bankruptcy attorneys know that in a lot of situations, that is simply beyond your control. For example, you were badly injured in a car accident or you lost your job or had to take a serious cut in pay. You may find yourself not even able to keep up with the minimum payments. In those situations, a Colorado Springs bankruptcy may be your best option.
Secondly, the bad debt is the kind of debt that stacks up because you are living outside of your means. Likely, you are purchasing luxury items that you really can't afford (vacations, a kitchen remodel). That means you are only able to make the minimum payment. The problem with this is that it ends up costing you way more in the long run, and if you hit one unexpected snag in the road (job loss, injury), you are in serious trouble.
Thirdly, the good debt. This is the kind of debt that is going to aid you in achieving a positive result in a set time frame. It's going to help you slowly increase your assets and your net worth. This is what financial advisers are going to tell you to go ahead and take on. One type of this is a mortgage (of course, assuming that it's actually worth what you're buying it for and that it has a favorable interest rate of 5 percent or lower). These are debts that are going to mean monthly payments that you will easily be able to afford. Other examples include car loans and school loans - assuming it's not a luxury sports car that you can't pay for or an education that is not going to mean much in the current economy.
But generally speaking, good debt can improve your credit score and your overall financial stability.
After a divorce, you become more susceptible to increasing debt, and subsequently a Colorado bankruptcy. To be sure, bankruptcy can be a blessing in disguise, as it allows you to free yourself of debts you may have accrued during your marriage, and those that piled up following your divorce.
In some cases, you could be doing everything right, and still end up in sticky financial straits. However, there are often steps you can take to minimize the impact of a divorce and the struggles of single-parenthood.
With Mother's Day fast-approaching, here are some tips for single mothers in particular:
1. Watch what you earn versus what you spend. Sometimes, single mothers avoid looking at their finances critically because they are afraid of what they will find. However, this will only lead to bigger problems down the line. Stop to take an honest look and figure out what the necessities are, versus the luxuries. If there's nothing left over for savings, some of those luxuries may have to be cut for now.
2. Get good life insurance coverage. A recent survey by the research firm LIMRA found that nearly 40 percent of single mothers said that in the event of their death, their families would be in major financial trouble. A large number said it's likely they'd only have enough to keep them afloat for a few months. Even if you have a policy through your employer, it may not be enough. It's worth it to check out rates from multiple insurers.
3. Prepare for the possibility of disability. This is particularly important for women, who may face some medical health risks that their male counterparts don't - namely, uterine cancer and pregnancy. Mounting medical bills are one of the main reasons people find themselves mired in debt.
4. If you don't have health insurance, get it. See above.
5. Make sure you have some money set aside for emergencies. Sometimes, this is going to mean some painful decisions. Things like cutting the cable or the premium cell phone plan. However, it's critical to ensuring stability and security of you and your children.
Many people are living paycheck-to-paycheck, and one unexpected event - a car accident, a lay-off or a new child - can mean it all gets very overwhelming very fast.
These are all things that are often beyond our control. While a Colorado bankruptcy is nothing to be ashamed of - and in fact, it's often a smart move to create the foundation for a fresh start - there are things you can do to decrease your risk of acquiring even higher debt.
It starts with cutting out the impulse spending. This is much easier said than done, particularly when we are constantly bombarded with advertisements and the advent of online shopping that allows us to make instantaneous purchasing decisions.
Some people make the mistake of swearing off credit cards in the wake of a Colorado bankruptcy.
This is not only unnecessary, Colorado bankruptcy attorneys know it's probably going to hurt you in the long-run because you need to rebuild your credit in order to earn consideration of future loans on a vehicle, mortgage and other items.
The key is to be wise about and protecting your score and your money. A Colorado bankruptcy allows you a fresh start, and a skilled attorney can help guide you through the process. It's you, however, who will have to call the shots and make wise decisions because the truth of the matter is, even with the Credit CARD Act (Credit Card Accountability, Responsibility and Disclosure Act), there are still a number of ways that credit card companies and banks can take advantage of you.
A few things to consider as you start on the path of rebuilding your finances:
1. Don't put more on the card than what you can pay off in a short period of time. This will not only help you to slowly boost your score, it's going to give you more leverage with the company if you're unhappy about a rate increase or an annual fee.
2. Keep an eye on your credit score and your credit history. Make sure things are up-to-date and you aren't a victim of any sort of fraud. Even a small, typographical error can bring down your score dramatically. It's a good idea to review it about three times a year.
3. Know what kind of protections your card offers - and what it doesn't. Sometimes, cards will offer extended warranties if your purchase is stolen or accidentally damaged. Of course, the card companies aren't going to highlight this to you, so you'll have to look through the disclosure statements to see.
4. Go over your credit card statement for errors. Billing errors are common, and fraud can happen to anyone.
5. Protect yourself from online identity fraud by making sure you are entering sensitive information into the company's secure database and don't give away your card number - or any other personal information - without being confident in the site.
A recent story on MSNBC detailed how foreclosures in Colorado and throughout the country are churned out using less-than-upstanding tactics by some of the country's largest banks.
Colorado foreclosure attorneys read with interest this exclusive piece. It allowed an inside look at so-called "foreclosure factories" which provides a greater understanding of the process and underscores why it's so important to have a skilled Colorado foreclosure attorney on your side in these matters.
A recent settlement by five of the largest banks and attorneys general from 49 states - including Colorado - granted $25 billion to alleviate the hardships caused by the real estate implosion resulting from unsavory tactics by financial institutions. A portion of that money is slated to go to individuals who were improperly foreclosed upon due to robosigning techniques and the banks not having the proper paperwork to ensure they even owned the property in question.
Part of that agreement was that they would alter their methods.
But this piece shows little has changed. At Wells-Fargo, which services nearly 18 percent of the nation's residential mortgages, entry-level staffers are given the title of "vice president" and told they need to keep a quota of how many foreclosures they need to process in a given day. The average number they are expected to produce in an 8-hour shift is 10.
This is concerning because if you are currently in the midst of fighting a Colorado foreclosure, you know that the process involves an inordinate amount of paperwork. These "vice presidents" are made to sign off on statements swearing to have personal knowledge of certain facts of the case - facts that they are unlikely to know given the volume they churn out each day.
What's more, employees of the bank, speaking on the condition of anonymity, have said borrowers who were seeking help in the form of loan modifications had sent reams of personal financial documents to the bank. Problem was, they were sent to fax machines that went weeks without being checked.
In some cases, the foreclosure process was kick-started when borrowers fell behind on miniscule payment amounts - sometimes as little as $2 on the interest.
Having an experienced Colorado foreclosure attorney walk you through the process is critical, given the type of practices that are continuing at these large banks.
When medical bills stack up, the ensuing Colorado debt can seem insurmountable.
Our Colorado Springs debt relief attorneys understand that these snowballing bills can present severe financial challenges. Sometimes, individuals are forced to choose between paying a doctor bill and buying groceries. Often, they end up paying off medical bills using credit cards, which then force them to pay astronomical interest rates - which can also result in a seemingly unscalable hole of debt.
What you may not realize is that just because you owe a particular balance on a medical bill doesn't always mean that figure is concrete. In fact, you can often negotiate to lower those rates - especially when health care companies consider that the alternative is not getting paid whatsoever.
Individuals have reportedly cut some of their medical bills in half. Part of it involves your willingness to pay at least part of it upfront. For example, a $3,000 bill was reduced to a $1,500 bill when the patient agreed to pay that $1,500 upfront.
This is expected to be an increasing trend, as out-of-pocket costs for health care are climbing ever-higher. In fact, some 40 million Americans last year were enrolled in health care plans that mandated a $1,000 deductible for individuals and $2,000 for families - almost double what it was just a handful of years ago. It's no wonder medical debt is such a huge problem in this country.
One tactic is to directly ask the source. If you know that your insurance doesn't cover a procedure, or worse if you are totally uninsured, ask your doctor if he or she would be willing to have you pay whatever Medicare might reimburse them for. That might possibly take 30 to 40 percent off the price from the get-go. The "Health Care Blue Book" can help to give you a better idea of what health care providers are typically paid by insurance companies.
Another thing to consider is shopping around for health care services. Some places might provide the same procedure for far less.
You may also consider asking the doctor's billing office if they might be willing to cut some of the price if you pay it upfront.
Additionally, have an idea of the tests you might need and those you don't. Unnecessary blood work or other tests are sometimes ordered simply because that's part of procedure - but the costs add up. Talk to your doctor about whether such tests are actually necessary.
And of course, you always have the option to consult with a Colorado Springs debt relief attorney, who can assist you in negotiating especially high medical and credit card debts.
Grappling with tax debt in Colorado Springs can be stressful for anyone. The penalties and pressure that builds from having it hang over your head can be a roadblock in starting fresh in your financial future.
Our Colorado Springs tax debt relief attorneys can help. Bankruptcy may be an option, or you may need someone to assist you in negotiating payment plans or reductions with the IRS.
Some individuals, however, will do just about anything to get out of paying taxes. CNNMoney recently reported on some of the strangest tax evasion efforts ever. Odd as they may seem, multiple individuals have tried them - and been unsuccessful.
The first involves the use of 666, known as the "mark of the beast," in Christian religious text. One individual from Kentucky argued that he couldn't file his W-4 forms because his Social Security number contained this information. His new employer ultimately terminated him as a result. He sued for religious discrimination, but the lawsuit was tossed. Others have refused to file tax paperwork at all, saying that all Social Security numbers were essentially akin to this "mark."
Similarly, some people claim that paying taxes is against their religious beliefs. Not only has this argument not ever worked, but thousands of dollars in fines can be accrued as a result of trying to avoid paying.
Another creative tax evasion effort involves individuals who say they shouldn't have to pay federal taxes because they claim their state isn't actually part of the U.S. This has happened in both Texas and Indiana - and always, the argument falls on deaf ears. You can even be fined up to $25,000 for even making this argument.
Some individuals have taken it so far as to refer to themselves not as an actual person. They say that federal tax law pertains either solely to companies, or that they are not a "person" as defined under the constitution. These cases haven't been successful, and the IRS has taken many to court over these claims.
Other people have tried to make the case that only gold money is taxable. This just flat-out isn't going to fly with the IRS.
The bottom line is that while coping with Colorado Springs tax debt is tough for anyone, the best way to go about tackling it is to meet with an experienced debt relief attorney.
A multi-billion national settlement among 49 states' attorneys general and five major banks will have implications for those who endured a Colorado Springs foreclosure.
Our Colorado Springs foreclosure attorneys have been closely following the news regarding the settlement, which aims to reduce the mortgage payments for those who are underwater on their homes, as well as grant monetary relief to those who may have been unjustly forced from their homes.
The settlement amounts to $26 billion in all. But what does it mean for you?
To understand this, we have to first look at what the loan servicers and mortgage lenders agreed to do. The servicers and banks essentially have pledged about $17 billion that will go toward decreasing mortgage payments for homeowners who owe a great deal more than their home is worth and who are behind on those payments. This is expected to equal out to about $20,000 of reduction for each homeowner. For those whose mortgages are held by Bank of America, those reductions could be even greater, equaling about $100,000 or possibly more.
Another thing that these entities agreed to do was refinance mortgages for homeowners who are up-to-date on their payments. This will allow them to clasp onto the low interest rates that are available right now.
Next, the banks have committed about $5 billion to the federal and state government. With that money, homeowners who were improperly forced from their homes will receive lump sum payments of between $1,500 and $2,000 - barely the cost for moving expenses, but certainly a start.
Another $1 billion is being paid to the Federal Housing Administration by Bank of America, the parent company of Countrywide Financial, which is alleged to have defrauded the federal housing agency.
The settlement also requires that banks get rid of their robo-signing techniques altogether. This was essentially a technique in which banks would churn out hundreds of foreclosure documents each day, often with agents having no verification of the facts to which they were attesting.
If your home was foreclosed upon between 2008 and 2011, you may be eligible to receive a payment, and you should notify your bank. The exact amount of the payment is going to depend on how many people seize on it - and about 750,000 are expected to do so.
Those facing a Colorado Springs foreclosure will have to wait it out a few more weeks before it is revealed whether Freddie Mac and Fannie Mae mortgages rates will be reduced for underwater homeowners.
Our Colorado Springs foreclosure attorneys know that the possibility of losing your home is nerve-wracking, not only for what it might mean in terms of your immediate future (i.e., where we will we live, will my kids have to change schools, etc.), but also your long-term credit.
We can help you sort through the details and determine your best option moving forward.
The question raised by a recent CNNMoney article was whether a principal mortgage reduction for some of the pair's combined 3 million loans will actually help homeowners.
At first, the Federal Housing Administration had resisted taking this action, saying it would be too expensive for tax-payers, who ultimately fund them. But the calls to action have been renewed, following a $26 billion settlement between five major banks and attorneys general in 49 states that would lower principal mortgage payments for some 1 million homeowners whose loans aren't backed by Freddie and Fannie.
Internal studies, however, had suggested that such a move would essentially equal a costly bailout for embattled homeowners - by already weary taxpayers.
Now, though, President Obama has offered three times the incentives if they will reduce their principal mortgage payments under the Home Affordable Mortgage Program, called HAMP. So now, the administration is taking another look to see if such a move would make financial sense.
While Fannie and Freddie-backed loans are about 3 million total, about 75 percent of those homeowners wouldn't qualify because they have kept up on their payments. So ultimately, about 750,000 might be eligible for a reduction under the criteria. That's a relatively small percentage, considering there are about 11 million underwater homeowners throughout the country.
The hope is that the move would ultimately reduce the number of foreclosures by helping to keep people in their homes. There's a concern, though, that this move might encourage individuals to strategically default, in order to take advantage of the program.
While it remains to be seen what the federal mortgage giants will decide, contacting a Colorado Springs foreclosure defense attorney will help you figure out what your best options are.
Job numbers may be creeping back up, but so are gas prices. The fact that folks are getting back to work doesn't necessarily mean that a personal financial crisis has been averted. In other words, trying to catch up sometimes is more of a challenge than going backwards.
Whether you and your family are considering filing for a Colorado bankruptcy, or whether you are already rebuilding your path to financial security, advice from consumer advocacy groups and finance experts on how to protect your hard-earned income is information everyone can appreciate.
~ Unless you plan to pay off the balance of your credit card each month, don't use it to snag that 'sale' or 'discount' item.
~ Create a budget to take better control of your spending. Most banks now even offer online banking services that include expense analysis so you don't even have to do the work yourself. You just click a few buttons and your ATM card history will reveal if you are blowing 15 percent of your take-home pay each week on take-out.
~ Review your car insurance policies. Sometimes changing your deductible or coverage scope (or, your insurance company) can save you money.
~ Be willing to settle for a knock-off or a second-hand brand name item.
~ When grocery shopping, stick to your list and don't splurge on impulse purchases of specialty cheeses or coconut water.
Colorado debt-relief lawyers with the Law Office of Stephen H. Smith understand that even the most industrious Colorado families can find themselves overwhelmed by unmanageable (and often unexpected) medical bill debts.
Call (719) 520-0164 today to schedule a free consultation.
Denver bankruptcy attorneys were not surprised to read that a 2011 national consumer complaint survey found that out of 1.8 million consumer complaints, debt collection trailed only identity theft for lead complaint category. In this two-part series on dealing with personal debt, Colorado debt-relief attorneys break down the numbers for common consumer complaints and offer tips on dealing with debt collection calls.
According to the Federal Trade Commission report, identity theft complaints captured 15 percent of all consumer complaints filed in 2011 with debt collection claiming second place at 10 percent. Nationally, the 'Top 10' consumer complaints and their rankings are as follows:
Further, the FTC report indicates that across Colorado, consumers registered 28,854 complaints (33,010 if you include identity theft complaints) in 2011. Of those, debt collection topped the list by a comfortable margin. Statewide, the 'Top 10' consumer complaints and their rankings are as follows:
According to the Coloradoan, Colorado had the highest per capita consumer complaint rate with 573.7 complaints filed per 100,000 residents, and was followed by Delaware and Maryland, respectively. At least one Colorado-based consumer expert attributes the high number of statewide complaint filings to better consumer awareness.
If you or someone you know has been plagued with harassing debt collection calls, Colorado Springs bankruptcy attorney Stephen H. Swift can help you navigate the bankruptcy process and reduce the financial stress facing many Colorado residents today. To schedule a free confidential consultation, call (719) 520-0164.
In this second-half of a two-part series on dealing with personal debt, Colorado Springs debt-relief lawyers examine the federal guidelines for what constitutes debt collection "harassment" and offer tips for Colorado consumers dealing with seemingly unrelenting creditor calls.
According to the, a debt collector may not "harass, oppress, or abuse any person in connection with the collection of a debt". Among other things, this means in an effort to collect a debt, a creditor may not:
~ threaten violence,
~ use profane or obscene language,
~ publish the names of consumers who have unpaid debts (except to a credit reporting agency),
~ use false, deceptive, or misleading information in an attempt to collect a debt, or
~ threaten action that is either not legally permitted or not intended to be pursued.
As reported by Investopedia, abusive debt collectors capitalize on consumer fear and ignorance, banking on the notion that the average debt holder doesn't realize they have considerable rights when it comes to how debts can be collected. With that in mind, the Federal Trade Commission arms consumers with one tool that can stop the constant calling -- the certified letter.
According to the FTC, if a consumer has communicated by phone with a debt collector and now wishes to cease contact, sending a 'cease-and-desist' letter – via certified mail, return receipt requested – is the first step to stopping contact.
Upon receipt, the FTC reports that a debt collector can only continue contact for two reasons:
~ to advise a consumer there will be no further contact, and,
~ to advise a consumer of creditor plans to take legal action.
While a consumer can still be sued for the balance of a debt, this step should at least stop contact.
For many families seeking Colorado debt relief, stopping harassing creditor calls is the first step on a path back to personal financial security. If you or someone you know is feeling overwhelmed by creditor calls, speaking with an experienced Colorado bankruptcy attorney can help you achieve debt relief.
For a free consultation, call (719) 520-0614.
As our Colorado debt-relief attorneys discussed in an earlier post to the Swift Law blog, whether a Colorado family has health insurance coverage or not, the ever-increasing cost of medical care continues to bankrupt families across the state and nationwide. In 2007 alone, crushing medical bill debt was tied to more than 60 percent of all personal bankruptcy filings in the United States.
With that said, the Colorado legislature is hoping to change this grim statistic. The Denver Business Journal reports that Senate Bill 134, also known as the "hospital charity-care bill", recently passed the Colorado Senate with an overwhelming majority vote of 28-6.
Bill sponsor, Sen. Irene Aguilar (D-Denver) -- who is also a practicing medical doctor -- told
Key points of include:
~ requiring hospitals to provide patients with clear and accessible information about their charity, financial aid, payment plan, and cash discount programs,
~ directing that hospitals turn to collection agencies only after all other options of medical bill debt collection have been exhausted, and
~ prohibiting hospitals from billing patients more than the lowest cost they bill insurance companies for the same procedure.
According to Colorado Public News, Colorado hospitals currently charge uninsured accounts nearly 400 percent of costs on average while a private insurer -- thanks to group bargaining -- is being billed at closer to 100-150 percent of costs for the same services.
Southern Colorado debt-relief lawyers with the Law Office of Stephen H. Swift understand that even hard-working Colorado families can find themselves overwhelmed by unmanageable (and often unexpected) medical bill debts.
Contact us today for more information and to schedule a free consultation
For Colorado Springs debt-relief lawyers, a pair of competing headlines about statewide gas prices serve as a perfect illustration of just how complex, uncertain and stressful the economic recovery remains for many struggling families who are overwhelmed by debt and thinking about filing for Colorado personal bankruptcy.
On March 18, the Denver Post reported that Metro Denver recorded the lowest gasoline prices of any major city in the country last week, registering a whopping $1.23 difference in per gallon prices with Los Angeles, where gas prices were highest.
But just one day later, an article in the Reporter Herald revealed a recent and dramatic 4.6 percent spike in statewide gas prices. In Fort Collins alone, gas climbed more than $0.15 per gallon in one week.
TIME offers a few tips for Colorado motorists hoping to save pennies at the pump:
~ Invest the $40-55 for annual membership a big-box retailer (for example: Costco or Sam’s Club) that offers discounted gas.
~ Paying cash inside (instead of using your credit card at the pump) can mean up to $0.10 per gallon in savings at stations where credit card payments come with a premium price tag.
~ Go the there's-an-app-for-that route by downloading a gas-price checker app, or turn to websites like gasbuddy.com to find the cheapest gas in town.
According to the American Automobile Association, so far this week Colorado per gallon prices for diesel, premium, mid-grade and regular fuel are highest in Vail and lowest in Fort Collins. With that said, Denver and Boulder have tied for lowest premium price at $3.88 per gallon. (Meanwhile in Vail, premium gas tops $4.26 per gallon).
Denver bankruptcy attorneys know that for many Colorado families fighting to make ends meet, spending a few cents more (or less) at the pump can be the difference between staying in the black or reaching a personal financial crisis. For nearly three decades, the Law Office of Stephen H. Swift has helped thousands of Colorado families obtain debt relief. To schedule a free initial consultation to discuss what we can do to help you, call (719) 520-0164.
According to the Bureau of Labor Statistics and the Denver Post, respectively, Denver debt-relief attorneys are pleased to report that Colorado has seen its employment rate jump by 1 percent in the last month. In January alone, 19,500 people joined the workforce, bringing Colorado's non-farm employment numbers to their highest level in three years.
Construction, real estate and leisure -- all huge industries in Colorado -- have each also marked steady growth and resurgence. While such indicators show promise that the economy is slowly coming around, Colorado bankruptcy lawyers know this good news tells only part of the story. Far too many Colorado families are still struggling, and for them making ends meet is still more a dream than a reality.
Unemployment numbers across the state may be down, but that doesn't mean that landing a job -- especially for those who have been hit hardest by long-term unemployment and personal financial crisis -- is getting any easier. In part, the struggle to rejoin the workforce is made more challenging by job applicant screening process that excludes potential hires who have filed bankruptcy or who have poor credit scores.
Currently, seven states have moved to block employers from making hiring decisions based on an applicants' credit report. And now, USAToday reports that Colorado lawmakers are considering similar legislation. With that said, the Colorado Springs Independent has reported that the El Paso County Commission is now embroiled in an internal battle over the appointment of a board member to fill a vacant Retirement Plan seat after commissioners learned the appointee filed for bankruptcy nearly 18 years ago.
The question at the center of the debate: whether the personal financial history of citizen volunteers should be disclosed if the candidate in question will be overseeing county money? In this case, the appointee will be overseeing a $261 million fund.
Surviving a personal financial crisis is challenging enough without worrying about the lasting impact of the wrong financial decision. At the Law Office of Stephen H. Swift, our staff has the knowledge and experience to help your family make the right decisions to get back on a path to financial security.
Because reports of skyrocketing medical costs span both statewide and national news, Denver debt-relief attorneys were not surprised when a recent Centers for Disease Control and Prevention national health survey revealed that one-in-three American families are feeling the financial pinch of outstanding medical bills.
Of that same group, the CDC reports that one-in-five families are struggling to pay down their outstanding medical bills, while one-in-10 families are simply unable to pay any portion of medical debts at all.
Overall, MSNBC reports that nearly 39 percent of families with children aged 17 and younger are experiencing financial stress linked to medical care, including bills that are being paid down over time and bills they just can't pay, period.
In one notable -- if not ironic and certainly tragic -- instance, South Florida small-business owner Mary Brown, who is perhaps best known for her outspoken stance against the Affordable Care Act, is herself now seeking personal bankruptcy protection. The Kansas City-Star reports that about $4,500 of her $60,000 consumer debt is unpaid medical bills.
Meanwhile across the country, the Sacramento Bee reports that the number of Northern California hospital stays resulting in charges of $1 million or more rose from 430 in 2000 to almost 3,000 during 2010. The article spotlights three achingly-familiar storylines:
~ a gas station attendant diagnosed with liver cancer,
~ a new mom whose premature son has spent the first four-and-a-half months of his life in the hospital, and
~ the fast-food worker whose near-fatal car accident has left him $1.3 million in debt.
Hospital officials and health experts both say they expect the growth in million-dollar hospital charges to continue thanks, in part, to an exploding aging population reluctant to seek medical care until a health issue has reached a critical stage. Pair that with sharp and ongoing increases in medical staff pay; costly, necessary and frequent add-ons to infrastructure (think: high-tech/high-dollar equipment); and, the fact that hospitals charge a premium for critical-care services, and the cost-of-care boom makes sense.
Colorado bankruptcy lawyers know that for families struggling to stay solvent, health issues can be exacerbated by the stress of how to pay for them. We are here to help. For a free initial consultation with the Law Office of Stephen H. Swift, call (719) 520-0164, today.
In the first half of our two-part series on young Americans and debt, Denver debt-relief attorneys identified key financial stressors currently plaguing young Americans aged 34 and younger. These include:
~ a job market unwelcoming to recent college grads (one recent Pew Research Center reports reveals that in 2011, the unemployment rate among 18- to 24-year-olds was 16.3 percent, 6 percent higher than among 25- to 29-year-olds (10.3 percent), and more than 7.5 percent higher than among 3o to 34-year-olds),
~ student loan debt in excess of $25,000 per 2010 college graduate, and
~ the accumulation and persistence of other personal debt -- such as car payments, outstanding medical bills, and large balances on multiple credit cards.
In this post, Colorado debt-relief lawyers focus on turning our collective financial stress into a teachable moment.
The Denver Post reports that many minor-aged children aren't just living with parents struggling to avoid harassing collection calls, foreclosure and bankruptcy, but that they themselves are also drowning in debt.
Industry experts suggest that to help teens avoid their own credit nightmares, lessons on spending and saving should happen alongside teaching basic hygiene. One consumer advocate, FoolProof, has gone so far as to set up lesson plans that teach young earners about money and financial responsibility. Their interactive online modules cover everything from credit scores to spending decisions to predatory lending.
One Ohio educator started her own don't-do-it-my-way blog about the realities of personal financial crisis after she and her two young sons had to move back home with her mother. (In her case, it was an expected car repair that broke the bank.) Her straight-talking "What Not To Do" series offers pragmatic financial advice, from embracing a don't-live-above-your-means lifestyle to explaining why treating credit like "free" money is a bad idea.
Struggling with debt is not something you have to do alone, because you aren't alone. The Colorado debt-relief attorneys with the Law Office of Stephen H. Swift have helped thousands of Colorado residents slash their debt and start fresh. To set up a free consultation, call (719) 520-0164 today.
As the economy continues to rebound at a seeming geologic pace, Colorado Springs debt relief attorneys know that Americans aged 25 and younger still face great challenges finding a path to financial and job security. This two-part series on young Americans and debt will focus on two areas of concern: the economic realities facing many recent college graduates, and minors, credit and financial literacy.
For the recent college graduate, Colorado Springs debt relief lawyers report a troubling outlook. The employment rate for young adults today has dropped to 54 percent -- the lowest since the government began tracking such data in 1948.
The Grand Falls (NY) Post-Star reports that as of 2011, outstanding student loan debt has now exceeded both the $1 trillion mark and our national credit card debt for the first time ever. And, for those college students who graduated with student loans in 2010, on average they carry more than $25,000 in debt into their post-college lives.
Unfortunately, they are carrying that debt into a bleak job market while also frequently bearing other significant debt in the form of credit cards, car payments, even medical bills.
According to a recent survey conducted by the Pew Research Center, for young Americans aged 18 to 34, the recession has done more than drain their bank accounts.
The PRC report further reveals that:
~ 24 percent of young Americans surveyed say they have taken an unpaid job to gain work experience,
~ 24 percent say that they have moved back in with their parents, (among those ages 25 to 29 that number jumps to 34 percent),
~ 22 percent say they have postponed having a baby because of the bad economy, and
~ 20 percent say they have postponed getting married.
Colorado debt-relief attorneys with the Law Office of Stephen H. Swift understand that the financial pressures facing young Americans today can seem overwhelming. With that said, we have been helping people achieve debt relief for more than 20 years. During that time, we have helped thousands of Colorado residents make a new financial start by eliminating or reducing their debts. Call us today at (719) 520-0164 to schedule a free consultation.
Nearly half of all Americans aren't able to save up as much money as they should, often necessitating debt relief in Southern Colorado and elsewhere in the country.
This is according to a recent poll which found about 45 percent of people have less savings than credit card debt. Southern Colorado debt relief attorneys know that the economy is inching toward improvement, but many people are so deep in debt that they find it nearly impossible to claw their way out.
This most recent survey, from, Bankrate.com analyzed the spending habits of more than 1,000 adults, and looked at how much people have been able to save. What they found is that just 54 percent of U.S. consumers have more savings in case of an emergency than they do credit card debt. If and when an unplanned event or emergency happens, half the people in the country will be in serious financial trouble.
What's more, about 16 percent don't have any savings.
These figures represent about a 2 percent improvement over last year - not much to celebrate.
This kind of financial insecurity is harmful to the economy overall, experts say, because when people aren't able to save, they aren't likely to spend on more than what they need day to day. If they do, they are risking their own financial future, as having money stored away for an emergency can be critical in helping you avoid finding yourself crushed by debt.
Meanwhile, another survey found that Americans are having a hard time saving for retirement. In fact, almost half the country isn't saving enough to allow for a decent standard of living once they are no longer able to work. That survey also found that a third of Americans don't have enough to cover an unexpected doctor's visit or car repair. On average as a country, we're saving less than we used to.
Stephen Brobeck, the executive director of America Saves, said what this all collectively illustrates is that the recession has ended for a large number of families, particularly those in the lower income brackets. Working families are still struggling with a sagging housing market, sky-high unemployment rates and incomes that have stayed stagnant.
An experienced Colorado debt relief attorney can help.
Banks continue to reach into consumers' pockets for anything they can, regardless of whether it is going to require people to seek debt relief in Colorado or elsewhere as a result.
Now, Southern Colorado debt relief attorneys are somewhat encouraged to hear of an announcement made by the U.S. Consumer Bureau chief, who says the agency plans to go after banks for their outrageous overdraft protection fees.
Chief Richard Cordray, who recently took over the post, said the agency is also going to be asking for thoughts from the general public on how these fees are worded on checking account statements.
Cordray was quoted by CNN Money as saying that the way banks initiate overdraft fees has resulted in severe financial harm to people who are often the least able to afford it.
Banks have tried to defend themselves by saying the overdraft fees are put in place to spare their customers from being embarrassed when a purchase is denied because there isn't enough money in their account. But when that transaction is completed, the person is hit with penalty fees that generally range between $30 and $35 - sometimes for a purchase that may be just a few dollars. The example given was when a $3 cup of coffee becomes a $40 cup of coffee, due to overdraft fees.
Recent research by the Federal Insurance Corp. determined that in 2008, people who overdrew their accounts more than 20 times annually paid more than $1,600 in overdraft penalties. This is especially alarming when you consider that someone who is likely to overdraw their account that many times is probably someone who is struggling with debt in Denver or elsewhere.
That report spurred action that caused the banks to ask whether customers actually want overdraft protection - instead of signing them up automatically - but banks can still automatically enroll people for overdraft protection for online bills.
Another aspect that the bureau intends to look at is the common bank practice of clearing large purchases before smaller ones. This is a banking strategy that makes it more likely that a customer will overdraft on several smaller purchases - triggering even more fees.
The final part of the bureau's investigation is going to focus on why so many of these fees come down especially hard on younger and low-income consumers. In fact, nearly 47 percent of younger bank customers were at some point slammed with overdraft fees. Of those, more than 15 percent had higher than 10 overdrafts annually.
Recent media reports indicating that Colorado foreclosures are on the decline don't tell the whole story.
Colorado foreclosure attorneys know there is much more to it, and many families continue to suffer as the result of greedy banks and careless politicians.
According to a story by Reporter Heather Draper of the , the urban counties in Colorado have seen a dip in the numbers of foreclosure sales and filings this past January, as compared to a year ago.
Draper cites the new figures released by the state's division of housing, which reports that foreclosure filings have dropped nearly 30 percent since last year, from 2,699 in January 2011 to 1,939 this January. She also cites foreclosure auction sales, which dipped from 1,499 last January to 1,150 this January.
While all this might be true - and encouraging if it continues on this same slope - we must remember that this report is only comparing two, 30-day time frames. A 23 to 30 percent decrease sounds like a lot, but we're not talking about this in terms of an entire year.
In truth, the housing crisis in which this country finds itself embroiled is far from over. And what many homeowners might not realize is that filing for bankruptcy can actually help by allowing the opportunity to shed their second and third mortgages on homes that are underwater anyway. Filing for bankruptcy will also halt the foreclosure process, and potentially give you and your family the opportunity to stay in your home, at least temporarily, until you can work with an attorney to determine the next step.
One misconception people have is that they have to be current on their mortgage payments in order to keep their home. This is not always true. A Colorado foreclosure attorney can help you sort through the legal mess.
According to the Journal, all counties except Broomfield showed a decrease in foreclosure auction sales. It's important to note, however, that some of those counties saw only minimal slides, like Mesa County which reported a 2.5 percent decline. A percentage like that is within the margin of error, and therefore not definitive enough to say whether things are actually improving or not.
Foreclosure can be a complicated process, but with the help of an experienced attorney, it can be far less stressful.