When asked to imagine a winter holiday scene, it might be fair to say that most people would picture a winter scene with stockings hanging from the mantel of a fire place and presents scattered beneath a decorated tree. A scene like this does not come free of charge, however; it costs money to put presents under the tree. And if families are not cautious, the choices they make during the holiday season could lead to having to file for bankruptcy.
Whether a family of lesser means, of wealth or anywhere in between, the holiday season presents a tempting opportunity to stretch budgets beyond reasonable means, risking putting the family in a difficult financial position as the new year begins.
Consumers have options of how they choose to finance purchasing gifts; all offer benefits, but all also present financial risks if consumers are not careful. A CBS News article highlights three common ways to finance purchases: credit cards, debit cards and cash, and layaway.
Credit cards allow consumers to purchase items under the promise of paying the credit card company at a later date. As CBS News notes, many credit card companies offer special promotions during the holidays, allowing consumers to more quickly accumulate rewards points. If people are able to pay the balance of their credit card bill during the next billing cycle, credit cards may offer a great way to purchase gifts. However, if a person buys more than they can easily afford, the interest that accumulates on a carried credit card balance can quickly create a very difficult financial situation.
Debit cards and cash present a way to purchase gifts without fear of accumulating interest. But, paying for presents in this manner is only available to people who have the cash available to spend. If people are not careful, using a debit card can quickly deplete their checking account.
Layaway plans allows people to put presents on hold at stores after paying a small down-payment. People then save money until they are able to pay the remaining balance. As the CBS News article states, stores do not offer layaway in an effort to be helpful to consumers, but rather as a way to make money and help make sure the store does not lose sales to customers with no credit or with limited financial resources.
If used responsibly, credit cards, debit cards and cash, and layaway plans can help people put gifts under the tree this holiday season. However, if people overextend themselves financially, they may find them in situations that require solutions for regaining control of their financial situations, such as filing for bankruptcy. Bankruptcy may offer people a way out from under a mountain of debt, including credit card debt, to gain a fresh start.
According to HealthNewsDigest.com, 2.8 million Americans are turning 65 years old in 2011 and becoming eligible for Medicare. While the government program is less expensive than many private health-insurance programs, the out-of-pocket expenses can still add up and cause financial strain, especially for people living on fixed incomes.
To avoid significant health-care debt – which is one of the more common reasons why people file for bankruptcy – HealthNewsDigest.com provides the following tips to help keep medical costs as low as possible:
Understand your paperwork: Know the parts of your bill and what an Explanation of Benefits (EOB) is.
- Don’t pay the bill immediately if you are not certain it is correct: It is harder to get money back once you have paid the bill.
- Make sure the bill has accurate basic information: Check that the bill has your name, address, date of service and insurance information listed correctly.
- Verify the bill against the EOB provided by your insurer: The EOB should show the amount charged by the provider, the amount paid by the insurer and the amount to be paid by you. That amount on your EOB should be the same as the amount on your bill.
- Avoid receiving treatment or services from out-of-network providers: Your insurance company has negotiated lower prices with in-network providers, so using out-of-network providers generally will be more expensive.
- Ask the provider for a prompt-payment discount: Many providers offer discounts to people who pay for their treatments in full on the day of service.
- Ask for an interest-free payment plan: If you can’t pay right away, some providers will allow you to set up an interest-free payment plan.
- Don’t ignore bills and let them pile up or go to debt collectors: Don’t wait so long that your bill gets sent to a debt collector or begins to collect interest. If you are in the process of verifying or correcting a bill, let the health-care provider know and ask that the bill not be sent to a collector.
This prolonged recession has hit many families hard. Many people have experienced financial problems for the first time, and are unsure what to do to get back on their feet. When they turn on the TV or go online, they are constantly exposed to ads from groups or organizations that are devoted to reducing debt or helping someone file for bankruptcy.
However, not all of these groups are created equal. Some unfortunately prey on debtors to make a quick dollar, and leave the individual in worse financial shape. Debtors rely on bad advice and have to find additional help to undo the damage that has been done.
Recently, there has been a rise in the number of non-attorney bankruptcy petition preparers offering their services to debtors in need. These individuals “help” a debtor file for bankruptcy. They assist the debtor with all of the necessary steps to file for bankruptcy, offering complete service at a cost comparable to attorneys in the area.
While this may sound like a bargain to someone who has experiencing financial hardship, it is often not the answer to getting out of debt. One of the biggest issues for a person going through the bankruptcy process is what property will he or she be allowed to keep. Attorneys experienced with assisting bankruptcy clients will know how to maximize a client’s exemptions, potentially allowing a debtor to keep their most important property (source: Alex Spiro).
Exemptions are just one small part of the complicated bankruptcy process. Once the bankruptcy plan is put in place, a debtor may be unable to change its terms. Property that is liquidated to pay off debts is gone and this cannot be changed.
Knowing the complexities of the bankruptcy code is just one advantage that experienced attorneys can provide to their bankruptcy clients. By understanding all of the options that are available, debtors can make the decisions that are in their family’s best interests.
Since World War Two, going to college has been seen as the ticket to the American Dream. Statistics show college educated employees earn more than their non-college educated coworkers.
A recent report from the National Association of Consumer Bankruptcy Attorneys (NACBA) indicates there may be growing clouds on that horizon.
They report potential clients with student loan debt have increased significantly in the last three to four years and “about half (48 percent) of bankruptcy attorneys reported significant increases in such potential clients.”
The trouble with student loans for those who cannot repay them, is that unlike many types of debt, they are generally not dischargeable in bankruptcy. There is also no statue of limitations, allowing the creditors to sue years, and even decades, after the debtor left school.
The only way, under the bankruptcy laws, to discharge student loans is known as “Undue Hardship.” The most widely used test came out of a case the Brunner case.
A demanding three-part test is used to determine if one qualifies for an undue hardship discharge, where one has to have virtually no chance of ever improving one’s income.
Co-Sign Any Student Loans Recently?
Another source of concern is the number of parents implicated in this debt. The NCBA report indicates that in 2010, 17 percent of parents had taken out loans for their children and this compares to 5.6 percent in 1992-1993.
If their children default on the loans, the lenders will come looking for them. In the worst cases, parents could lose a lifetime of assets repaying large student loans.
A Drag on the Economy
With all, or a large percent, of their income being directed to paying down student loans, this debt will weigh down on the entire economy, taking money away from other purchases.
Many student loans will require 20 to 30 years to repay, leaving many with no discretionary income for most of their adult lives. The NCBA notes that 2010 was the first year that student loans had surpassed $100 billion.
The combination of the down economy and rising tuition costs has left many recent college graduates with substantial amounts of student debts. And, according to a news article by the Southern California Public Radio, the amount of student loan debt that Americans have acquired now exceeds debts for credit cards and car loans, combined.
The Federal Reserve Bank in New York estimated that by the fourth quarter of 2011, $867 billion in student loan debt was outstanding, and a recent report by the Consumer Financial Protection Bureau estimated that the total amount owed on student loans was over one-trillion dollars.
In an economy where students are unable to find high-paying jobs, making monthly student-loan payments becomes very difficult if not impossible. While filing for Chapter 7 or Chapter 13 bankruptcy may be able to help these graduates alleviate many types of debt – such as credit card debt or medical bills – so that cash can be freed up to make student loan payments, it is very unlikely that their student loans will be discharged.
In certain circumstances, though, student loans may be discharged through bankruptcy. If it is proved that the student loans are an “undue hardship” on debtor, his or her dependants, or his or her family, then a judge may order the student loans to be discharged.
Proving undue hardship is very difficult, though. In general, it must be shown that the debtor:
- Is unable to maintain a minimum standard of living;
- Is unlikely to change or improve his or her current situation any time soon; and
- Has made “good-faith efforts” to repay his or her student loans.
Even though student loans may not be discharged through bankruptcy, filing for bankruptcy still may help you get back on track. Knowing the options available to you can help you make the decisions that are best for your financial future. Another way out of the situation is to rebuild your credit with help of excerpts in Rebuilding Credit Kansas City MO.
As the economy continues to struggle to rebound, many people are having financial problems. Making ends meet can be difficult when you unexpectedly lose a job or have wages reduced. Filing for bankruptcy is just one of the options that may be available to you if you are unable to pay your bills.
Most people do not realize that there are costs associated with filing for bankruptcy protection. Some law firms may charge a significant amount of money to handle a bankruptcy for a client, placing further financial strain on the individuals needing to file. This may scare some clients away from the process, and be reluctant to discuss bankruptcy as an option for their situation.
Clients need to know that each bankruptcy attorney will have a different fee system in place. Finding help at an affordable cost is not impossible, as there are options available to you. What is most important is for you to find someone who understands your situation, who can help you determine what is best for you and your family’s financial future.
One thing people need to be aware of is that there are non-attorneys offering to file bankruptcies for individuals. However, working with non-attorneys to prepare your bankruptcy petition could result in problems down the road.
Non-attorneys may not be as familiar with all of the aspects of bankruptcy law, and may miss certain items that would be beneficial to clients. Once the petition has been entered, it can be extremely difficult to make modifications. If property is liquidated to help pay for debts, it will not be possible to undo those types of transactions.
If you are having financial trouble, you need to know that bankruptcy is an affordable option. It is important to work with someone who can walk you through the process and answer all of your questions.
Bankruptcy is one word that terrifies a large portion of the population, but in such a difficult economy, it is becoming a more common occurance. Many feel cornered and strapped financially believing that bankruptcy is their only option.
However, many people in financial trouble may have already exhausted the options that are available in addition to bankruptcy. Some people may wish to consolidate debts, which allow them to make one low monthly payment instead of several monthly payments. This makes the debt more manageable, but doesn’t necessarily reduce the debt that is owed. It may just spread the payments out over time, keeping the financial problems around longer.
Some people may decide to borrow money from friends or family. This is a difficult decision, but it is sometimes necessary in order to stay afloat. Problems could arise here if the borrower is unable to repay the money at a specified time. They may find themselves in danger of being sued, and could face garnishment of their wages.
Clients trapped into bad mortgages may need to consider negotiating with their bank or financial institution. Clients that restructure their mortgages can make the burden of their debt much more manageable, but could potentially be facing foreclosure. Filing for bankruptcy may allow a family to remain in their homes, which could be extremely important for some.
While people may be afraid of the consequences of bankruptcy, it is often because they do not know what really may happen. The negative connotations of bankruptcy may make people feel like they are doing something wrong by filing. That is not true – for some families bankruptcy is the best option that is available for their situation.
Many families have lost precious time and money by trying to avoid filing for bankruptcy and have made their situations much, much worse.
The economic downturn that hit the United States a few years ago has devastated many families. From job loss to foreclosure, many families are struggling to make ends meet. And, many families are doing whatever they can to pay their bills; even to the point that they may not realize that what they believe is debt relief is actually making their debt matters worse.
Barnkrate.com offers some signs that may indicate that people are in or getting deeper into debt trouble:
- Credit card balances are increasing and income is decreasing
- Only paying the minimum amount due on bills each month
- Using new credit cards or cash advances to pay existing credit card debts
- Possessing an increasing number of credit cards
- Credit cards are close to their limits
- Charging more on your credit cards than you are paying
- Working overtime or another job to make payments
- Creditors or collection agencies are calling or mailing letters
- Using credit cards to pay for necessities
- Using savings or retirement accounts to pay bills
- Job loss has you fearful of how you will pay your bills
Experiencing or engaging in one or a few of the signs occasionally is probably not an indication of financial trouble. However, if one or more of these indicators become a pattern, Bankrate.com notes that financial difficulties may exist.
At time it is difficult to ask others for help. But there is help available when your bills have become overwhelming and everything you try to get out of the financial hole only makes the hole deeper. There are many options for relief, including Chapter 7 and 13 bankruptcy.
A recent filing by Grammy Award-winning singer Dionne Warwick proves that anyone can end up in the financial situation where bankruptcy is the best possible debt relief option. The hope for Warwick, 72, is that this bankruptcy filing will allow her to once again take control of her finances.
When looking at what happened to cause the 72-year-old to file for personal bankruptcy , her publicist said her debt is due to “negligent and gross financial mismanagement.” This mismanagement reportedly went on from the 1980s until the mid-1990s.
In her bankruptcy filing, Warwick lists assets at $25,500, while liabilities reach more than $10.7 million. Of the more than $10.7 million, the Internal Revenue Service is listed. This is supposedly due to the fact that while she did owe in back taxes, she has paid up what was owed. However, penalties and interest have continued to pile up, and even though the singer has tried to make payment options with the IRS, an agreement could not be reached.
In looking at this recent bankruptcy filing, there are certainly lessons the average Indiana resident can learn. The first being that debt can happen, even to those with a decent income who think they are financially responsible.
When debts do get out of control, as Warwick’s filing goes to show, bankruptcy is often an option. Depending on the type of filing this can result in debts being discharged or a repayment plan being established. If repayment is the route, filers typically have between three and five years to pay back what is owed.
Lastly, keep in mind that those who are thinking of filing for bankruptcy should talk with an attorney who specializes in debt relief in Indiana. This attorney can help explore different options to maximize the benefits of bankruptcy.
The Great Recession and housing market crash brought with it unprecedented numbers in terms of foreclosures. Not only did the housing crash effect homeowners who really wanted to continue living in their homes, but it also had an impact on neighborhoods as homes now sit vacant.
Part of the issue with these now vacant homes, is not only are these homes susceptible to crime and property damage, but there are plenty of cases where the homeowner still technically owns the property and now owes back property taxes and other fees.
These types of homes have been labeled as “zombie” foreclosures. This is when a homeowner received notice of the foreclosure and moved out, only to find out years later that they still legally owned the home.
According to RealtyTrac, in the past three months there have been roughly 302,000 homes in the U.S. that fall under the category of “zombie” foreclosure. Indiana is one of the states with a high number of these types of properties.
In looking at how this even became a problem, one must look back to 2008 when the housing market crashed and banks were having a hard time re-selling properties. In order to save money on costs associated with foreclosures, the banks would just not officially foreclose on the home. While good for the banks, for the homeowners it has become disastrous. Not only is their credit score now affected by the foreclosure, but the unpaid property tax debt only further drives down their credit score.
For those in Indiana who are either facing foreclosure now, or who are living in fear of a foreclosure, as the “zombie” foreclosure issues goes to show, it is important to talk with an attorney when figuring out what next steps need to be taken. Maybe filing for bankruptcy is the best option in order to just avoid the foreclosure process altogether? Or, maybe getting rid of a second mortgage is the best choice? Either way, an attorney can walk through these scenarios with a struggling Indiana homeowner.