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.
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.
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 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.
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.
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.
With the economy continuing on a downward spiral, millions of people are battling debt, foreclosure andbankruptcy in Colorado Springs and across the country. For many people, the stress can be overwhelming.
Medical experts have long warned that stress is a major catalyst for a number of serious and potentially life-threatening physical ailments, including weight gain, heart disease, gum disease, gastrointestinal problems and more.
It's a vicious cycle because the more stressed you are, the more your health suffers and the more you end up shelling out on health care - almost twice as much as someone who is carefree, according to researchers with the Health Enhancement Research Organization.
Many of the financial troubles you face can be addressed with help from an experienced Colorado bankruptcy attorney. Tackling your personal financial struggles with someone who has helped thousands of people in similar situations will not only augment the balance on your bank statements, it will also improve your well-being.
In addition to taking this crucial step to free yourself of these financial burdens, there are other steps you can take to alleviate these concerns.
First, seek help from your employer. According to a 2010 study by Buck Consultants, nearly three-quarters of all U.S. employers offer some form of wellness program, which encompass everything from discounted yoga classes to reimbursements for gym memberships. Stepping up your work-out routine will help to clear your mind and give you confidence to keep that same momentum in other aspects of your life.
If your company doesn't offer this type of reimbursement, look on sites like Groupon or search for trial memberships that might give you a few weeks free. Many gyms also want new customers, so they may be willing to cut you a deal directly if you ask.
Secondly, consider talking with a counselor. Many employers offer free or reduced-cost access to counselors on a weekly or monthly basis. Some also offer group sessions, which specifically address techniques to manage stress.
And finally, take some time each day to breathe deeply. A recent study conducted by researchers at Harvard found that meditating each day improves a person's memory and reduces stress. Even a few minutes a day can make a huge difference.