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.
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.
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.
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.
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:
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.
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.