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10 Feb 2012

Credit cards are more and more frequently being declined - by consumers.

Recent reports out of Great Britain echo the consumer trend that has been continuing in  U.S., with people seeking debt relief by unburdening themselves from lending institutions that often jack up interest rates to boost their bottom line.

While it might seem that a floundering global economy might contribute to a rise in credit card usage, what many people seeking debt relief in Colorado and elsewhere are finding is that owning a credit card simply isn't worth it.


Our Colorado Springs debt relief attorneys know that credit cards are, in fact, one of the leading causes of bankruptcy in the U.S. Most Americans, according to CNNMoney, have racked up an average of more than $10,000 in credit card debt.

USA Today reported that revolving credit, which is comprised mostly of credit card debt, fell by 20 percent in 2010, and new credit card accounts dropped nearly 50 percent from 2008 to 2010.

Often, the decision stems from exasperation over the standards by which the credit card industry governs itself, which are often seen as unfair to consumers. These include predatory lending and a tendency to hike interest rates to 20 or 30 percent at even the smallest hint of financial trouble.

Congress passed a law in 2009 that is supposed to make it difficult for companies to charge certain types of fees or raise interest rates on balances that already exist. Leading up to those changes, though, many companies aggressively increased their rates, even for customers who were paying them on time.

Now in Europe, and particularly in England, credit card usage is facing what is being called a "mid-life crisis," with more people turning instead to digital payments, payday loans and debit cards.

Even for those who have decided not to take on more credit card debt, digging their way out of the trench they are already in can be cumbersome. That's where an attorney experienced in the debt relief process can be a lifesaver.

Here are some basic tips to helping you manage your debt:

1. Some borrowing, such as for a home or college, can be beneficial. But be mindful of how much you are borrowing, and don't accept more than what you can afford to pay back.

2. Keep your spending in check. People often spend outside of their means, and quickly end up with an overwhelming amount of debt. Write down your monthly expenses, and stick to your budget.

3. Pay off the debts with the highest interest rates first.

4. Pay more than the minimum monthly balance on your credit cards. Otherwise, you'll barely be making a dent in the principal amount you owe.

5. Seek help as soon as you realize you need it. A reputable Colorado Springs debt relief counselor can help you get your bills consolidated and help you better manage your finances.

13 Feb 2013

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.

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.
05 Oct 2012

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:

  1. Know where you stand. Ignoring credit debt will not make it go away. Know what your interest rate is and keep a close eye on your credit report.
  2. Hold off. If you can wait a few months to get your credit in order, you may be able to improve your credit score and get a better deal on your card. This will also give a you a goal to begin addressing your other debt problems that may be affecting your credit (late payments, etc.).
  3. Pay more than the minimum. Otherwise, if you have an interest rate that is somewhere in the neighborhood of 13 to 15 percent, all you're doing is increasing what you owe the longer you take to pay it off.
  4. Protect yourself from identity theft by not using public computers to make online purchases with your card. Monitor your accounts regularly so you can easily spot odd transactions. If you do see something off-color, report it immediately.
  5. If you do start to get in over your head with debt, consult with an experienced Denver bankruptcy attorney for advice on what to do next.
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.

 

14 May 2012

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.

21 Sep 2012

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:

  • Not having a budget. You will find it impossible to pay your bills in full, on time - not to mention put some away in savings - if you don't know how much you have to work with. Take the time to write out your budget and track your monthly expenses. You may be more comfortable with the old-fashioned, pen-and-paper route, or you may find it easier to use free online services and programs.
  • Consistently overspending. This typically happens when you arrive at a store without a very specific idea of what you plan to buy. This goes for everything from grocery to home goods to clothing. Go in with a list. Budget for your purchase. Stick to your list.
  • Paying retail. Sometimes, you can't avoid it. But in many situations, there are options for you to cut corners on cost. Maybe you're eligible for a senior discount. Check out the weekly ads before grocery shopping. Use coupons. If you are using a credit card, use one with rewards. Find out if you can earn cash back if you do your shopping online.
  • Indulging in impulse buys. If you see something and buy it without thinking twice, it's probably something you don't need and can't afford. If you can establish a 48-hour waiting period on any item over a certain amount - say $50 -that gives you a chance not only to evaluate whether it's necessary, but whether you can afford it and also whether you may be able to get a better price somewhere else or by waiting a week or two.
  • Having lowered financial expectations. Just because you have undergone bankruptcy does not mean you can not make you dreams a reality, whether it's purchasing a home or moving across the country. You simply have to be calculated about it. It may not happen within the first year after your discharge, but with careful planning, there is no reason to think it couldn't happen shortly after that.
05 Oct 2012

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.

26 Sep 2012

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:

  1. You are not going to be able to purchase everything you want. Consider as you conduct your back-to-school shopping - or any shopping - take a picture of a "want" item. Have them revisit it in a few weeks to consider whether it is still necessary.
  2. Forgoing one purchase allows you to save up for another. One way to drive this message home is to hold off on simply buying the items yourself. Instead, give them money and help them decide how they should spend it and how much should be saved. Back-to-school shopping should at least partially involve older kids' allowance money.
  3. Avoid trying to keep up with your peers. This is tougher than ever right now because social media sites like Facebook make it that much easier to compare your wealth to that of others - especially with some kids posting pictures of their new $200 designer jeans. But talk about how damaging it can be - not only to their wallet but to their self-esteem - to measure their worth in this way. Help them minimize impulse purchases.
  4. Know that it is Ok to make mistakes. These can provide invaluable lessons. Some suggest allowing high school students to invest a small amount in stocks. They may learn to diversify if they lose it all on one product.

 

Contact us today for more information.

 

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