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20 Aug 2012

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.

22 Jun 2012

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.

21 Nov 2013

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.

11 Jun 2012

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.

Here's why:

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.

08 Oct 2012

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:

  • A person under the age of 21 must have an adult co-signer on their account.
  • A person under the age of 21 must provide some proof of income that will indicate they will be able to repay the debt, should they reach the maximum limit.
  • Banks and credit card companies have to stay at least 1,000 feet away from campuses if they are offering any sort of free gift or perk in exchange for signing up for a credit card.
01 Apr 2012

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.

CBS News, U.S. World & News Report and the Fiscal Times each featured a handful of money-saving tips for consumers hoping to best stretch their earnings between paychecks. Suggestions include:

~ 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.

30 Oct 2013

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.

 

11 Sep 2012

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:

  • Globalization. Technology and production power in the U.S. is not a strong, relative to other nations, as it once was. The U.S. will need to dedicate more resources to improving its workforce skill set.
  • Inequality. With the decline of labor unions and the failure of minimum wage to keep pace with inflation, fewer people have the same opportunities to excel that they once did. This means we are underusing a valuable resource: Our people.
  • Debt. Now, we're talking about government debt here, particularly with regard to more people receiving public assistance than are paying into it. It's important to note that without Social Security income, some 22 million more Americans would be living in poverty. But creating this safety net does come at a cost.
  • Aging. This somewhat relates to the earlier issue, but as baby boomers continue to age and begin moving into retirement, we are going to see overall incomes decrease.
  • Lower-wage jobs. There are multiple theories for why this may be, but at the end of the day, the job growth that is currently being generated happens to be within those industries that are lower-paying.

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.

We may not be able to give you a raise, but we can help you get a leg up.  Contact us today for help and for a free consultation.

 

26 Jan 2012

Recent news reports suggest that Colorado's unemployment rate dropped to 7.9 percent, continuing a steady drop, which is certainly good news.


But even at 7.9 percent unemployment, which is better than the national average, that still leaves many people without work and steady income. Whether employed or not, months spent looking for work can lead people to considering Colorado Springs bankruptcy protection.

Much is made about bankruptcy and much of it is negative, due to successful lobbying on the part of the credit card companies. They despise bankruptcy because they know that people who file for bankruptcy are allowed to get rid of years' worth of debt. And that means the debt they attempt to sell to investors is going to be less and less attractive if consumers are using these laws to their advantage.

According to The Denver Post, analysts believed 10,000 jobs would be added statewide in 2011, but they had hoped to see the number be closer to 17,700. The 7.9 percent rate in December was a slight drop from 8 percent in November. In December 2010, the unemployment rate was 8.9 percent. The national rate in December was 8.5 percent.

In 37 states, the unemployment rate dropped in December, while in 10 states it was unchanged. The rate only increased in three states, The Post reports.

When people spend months at a time looking for work, they may be forced to consider unemployment benefits from the government. While this small influx of money may be beneficial, it's unlikely to maintain the person's bills and monthly expenses. This leads to credit card debt and dependence on loans. That puts people deeper and deeper into debt, which requires a way out.

With credit scores dropping and few positive prospects in sight, Colorado Springs bankruptcy can help. Filing allows consumers to lose the debt that has given them great frustration and kept them held hostage to their lenders. It allows a fresh start and a way to move on with life without the baggage of debt.

26 Aug 2012

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:

  • An interest rate cape and reduction set at 6 percent if the borrower is on active duty and has requested a lower rate. The rate is capped for an additional 1 year after the soldier comes back from active duty.
  • Unlike civilian foreclosures, mortgage lenders have to receive court approval before foreclosing on a military member's home.
  • If a foreclosure suit is filed, mortgage lenders have to notify the court if the borrower is an active duty servicemember.

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.

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