DebtStoppers USA Bankruptcy Blog

When you're buried in debt, making minimum monthly payments can be tempting - especially for those of us on a tight budget.

The trouble is that these minimum payments have a tendency to maximize debt.

Creditors usually allow cardholders to pay a small portion of their balance each month - typically 2-4 percent - without penalty. These minimum payments cover interest plus a little bit of the principal amount.

But as the principal slowly decreases with each payment, your minimum payment will decrease as well - meaning you're making less progress on lowering debt with each bill.

A recent Bankrate.com column explains it like this: Let's say you have a $50,000 debt with a 3 percent minimum. When you make your minimum payment of $1500 a month, it knocks down your principal to $49,500, which in turn decreases your next minimum payment to $1485.

After a year of making only minimum payments, your new minimum would be down to $1343. After five years, it would be $829 and in 10 years it would be just $454. As your minimum shrinks, so does the bite you take out of debt with each payment.

At this rate, it would take 42 years to pay off that $50K balance - and your total payment would be $99,336, or nearly twice your debt!

By simply continuing to pay the original minimum -$1500 - each month, you could be out of debt in five years, though you'd still have to shell out $83,220 to do it. Needless to say, the more above the minimum you can manage to pay each month, the faster your debt will shrink.

Unfortunately, most folks who accumulate large amounts of credit card debt do so because they don't have much money to spare. If you're living paycheck to paycheck, setting aside enough of your income to pay more than the minimum each month may not be possible.

That's why bankruptcy can be such a relief for families stuck in the cycle of credit card debt. If you have lots of debt and little savings, filing for bankruptcy may be your best shot at financial freedom.

For those with limited income, Chapter 7 bankruptcy may be able to discharge unsecured debt in just a few months. If you own a home, Chapter 13 bankruptcy can set up debt payments on a manageable schedule while also protecting your assets and stopping foreclosure.

But the benefits of bankruptcy don't end when your debt is gone.

Without those annoying minimum payments each month, many families can finally start rebuilding credit and building up savings. From medical bills to job loss, unexpected circumstances will always have the ability to impact your finances. But an emergency fund can keep you from falling into the debt trap again, no matter what your future holds.

With the right bankruptcy plan, you can eliminate debt today - and tomorrow.

Continue reading "Making Minimum Payments Minimizes Chances of Getting Out of Debt" »

For millions of struggling homeowners, a loan modification could be life-changing. Unfortunately, mortgage modifications can be awfully hard to come by - especially for those who need them most.

It's a classic Catch-22: Lenders won't consider you for a mortgage modification unless you can prove you'll be able to make your new payments. But without lower rates, how can you ever get caught up on those delinquent payments to prove you're not a risky borrower?

In most cases, Chapter 13 bankruptcy offers a more realistic - and effective - alternative.

Filing for Chapter 13 legally stops foreclosure while reorganizing your unsecured debts such as credit card debt into monthly payments over a three- to five-year period. This period gives many homeowners the time and breathing room they need to catch up on delinquent payments. As long as you stay current, you get to stay in your home.

Chapter 13 bankruptcy has another benefit. In addition to allowing you to catch up on missed payments, it also lowers unsecured debt. In time, your debt burden will shrink. As it decreases, you'll have more income left over to make important payments like the mortgage.

Yet many homeowners who would benefit from Chapter 13 never file. Why? Often times it comes down to simple misinformation.

Contrary to myth, Chapter 13 won't hurt credit - it can actually improve credit. While your credit score will take a hit when your bankruptcy case is activated, making your monthly payments - and lowering debt in the process - will steadily improve your credit.

It's possible to file Chapter 13 even after you've already discharged debts with a Chapter 7 bankruptcy plan. And according to a recent article, lenders today may be more willing to work with borrowers who are making monthly Chapter 13 bankruptcy payments. When lenders see you making good on your payment plan, they may reconsider your modification application in order to get you out of bankruptcy - and back making payments directly to them.

Finally, some folks may avoid seeking bankruptcy protection because they're embarrassed about their debt situation. But obtaining help for debt you can't handle by yourself is no reason to be ashamed.

More than any other time in history, Americans are grappling with mortgage debt, credit card debt, medical debt and debt from job loss or underemployment. Whatever your situation, it's guaranteed you are not alone.

Debt doesn't have to be a normal part of your world. At DebtStoppers, we help clients get rid of debt for good so they can get back to living their lives.

Continue reading "When Mortgage Modification Fails, Filing for Chapter 13 Bankruptcy Can Stop Foreclosure " »

A few years ago, it seemed that credit card offers had all but dried up. These days, mailboxes are once again being flooded with offers touting 0% interest rates.

Credit card solicitations this spring are up a whopping 18.5 percent since the last quarter, according to new research from the Mintel Group.

At first glance, it may look like consumers have won back the upper hand - but that's mostly an illusion, explain our bankruptcy attorneys.

For borrowers - especially those of us who substantially added to our credit card debt during the recession - the promise of 0% APR is awfully alluring. In theory, transferring a balance from a card with a high rate to one with no rate at all should save money by eliminating interest charges.

In reality, these offers come with a catch - usually in the form of various fees.

While you may not be paying interest, you'll likely pay a balance transfer fee - on average, 3 percent of your balance - to switch cards. That means that transferring a $20,000 debt will cost you $600, which may exceed any potential savings.

Even the benefits of zero percent are fleeting. Once your introductory period is over, your interest rate could skyrocket beyond what you were paying before. Additionally, any slip-up - be it a late payment or just exceeding your credit card limit - could be grounds for the bank to revoke your 0% rate before it expires. And don't forget that every time you apply for a new credit card, your credit score takes a hit. The more debt you have, the more you'll get dinged.

If you're not careful, transferring your balance could land you right back where you started: Carrying too much debt on a credit card with an outrageous interest rate.

If you're drowning in debt, juggling it around isn't a solution. You need to lower your balance. Bankruptcy is the most efficient way to eliminate debts you can no longer afford to repay.

When you file for bankruptcy, the benefits are immediate. An automatic stay prevents creditors from contacting you and protects personal property, including your home. Wage garnishment is halted. And while bankruptcy can lead to an initial drop in your credit score, once you've discharged debt your credit will begin climbing.

Continuing down the same path that led to debt in the first place won't change your situation. But bankruptcy can.

Bankruptcy certainly isn't something to be taken lightly. But for many folks, bankruptcy offers what other methods don't: a chance for real and lasting financial freedom.

Continue reading "How 0% APR Credit Card Offers Are Leaving Borrowers with Even More Credit Card Debt" »

Nobody likes dealing with debt collectors. But for certain groups - such as retired people or those of us who work from home - the harassment can become unbearable.

Seniors, stay-at-home parents and people with home offices are more likely to be at home during work hours, when bill collectors are most likely to call. They're also more likely to have a land line, making them easier to track down.

But they do have one thing in common with most consumers: Few of us are aware of our rights when it comes to debt collection.

If you're behind on payments for credit card debt, a mortgage or a personal loan - or a credit report mistake makes it appear as if you are - it's only a matter of time before creditors hire a lawyer or debt collection agency to recoup funds.

Often times, bill collectors will try to get their way by wearing consumers down through bullying behaviors.

Common tactics include calling at all times of the day, threatening to publish your name or throw you in jail, misrepresenting themselves as attorneys or creditors, misrepresenting documents (i.e., indicating papers are legal forms or official documents when they are not) or even threatening violence.

While common, all of these methods are completely illegal.

According to the Fair Debt Collection Practices Act, bill collectors are prohibited from using abusive, unfair, or deceptive practices to collect from consumers.

And as a consumer, you have the right to stop creditor harassment by informing creditors and collection agencies - in writing - to stop contacting you. While this can't keep a creditor from suing you, it can offer a much-needed respite from debt collection badgering.

Unfortunately, many delinquent consumers are too intimidated by threats to take action. Debt collectors harass consumers because they know fear tactics are the most effective way to gain the upper hand.

But you don't have to put up with it. Filing for bankruptcy is the fastest way to stop creditor harassment. When you file for Chapter 7 bankruptcy or Chapter 13 bankruptcy, an automatic stay stops debt collection phone calls, wage garnishment and creditor lawsuits. Meanwhile, you can eliminate the root cause of the harassment by finally getting out of debt.

No one should have to put up with harassment. Debt isn't a crime; creditor harassment is. Bankruptcy can help you escape the burden of debt collection for peace of mind - and peace and quiet.

Continue reading "For Folks Hounded by Debt Collectors, Bankruptcy Promises Peace and Quiet" »

If college students think school loans are expensive now, just wait until summertime.

As of July 1, the interest rate on federally-subsidized education loans could double to 6.8 percent when the current rate sunsets, according to CNN Money.

As a result, about 7 million students - or one-third of all undergraduates - will see higher bills once they start making payments post-graduation. Students with unsubsidized loans have already been paying the 6.8 percent since 2007.

Soaring student debt is threatening to cripple the economy as recent grads struggle to find jobs that will help them make massive debt payments. In 2011, the average student had almost $27,000 in school loan debt - and that number is getting higher by the day.

Lawmakers have vowed to find a way to provide relief to students, but Washington gridlock has so far kept them from making good on that promise. Democrats and Republicans are at odds about everything from how to cap rates to how to spend revenue Uncle Sam brings home from student loans.

Meanwhile, young adults are holding off on taking out mortgages and personal loans - and that's putting a damper on the economic recovery.

But despite the lack of government support, past and present students may still be able to find financial relief.

While bankruptcy isn't able to discharge student debt, it can eliminate most other types of debt - from credit card debt to medical debt.

As student debt mounts, many young adults turn to credit cards to make everyday purchases. But as your debt-to-income ratio increases, your credit score decreases, leading to unaffordable interest rate hikes, tighter credit and harassment by bill collectors. If you own a home and have missed payments due to student debt, you may even be facing foreclosure.

Filing for Chapter 7 or Chapter 13 bankruptcy has the power to protect your possessions and provide relief from credit card debt.

Chapter 7 bankruptcy is the quickest solution for debt, often eliminating crippling debt entirely in just a few months. Bankruptcy can also provide freedom from wage garnishment, utility bills, IRS debt and many types of personal loans.

It's hard to plan for the future when your past is holding you hostage. Filing for bankruptcy lightens the load of many of the most common forms of debt, freeing up the funds you need to pay important bills, rebuild credit and start saving money.

The sooner you get out of debt, the sooner you can make financial freedom a reality.

Continue reading "As Student Loan Rates Surge, Struggling Grads May Find Relief by Eliminating Credit Card Debt " »

The wealth gap that already exists between racial groups appears to have opened even wider with the Great Recession.

A recent study by Prudential on the African American Financial Experience shows that the typical African American family has more debt and fewer savings than the general population.

According to the report, 94 percent of African Americans report having debt, compared with 82 percent of the general population. The median black household had $18,000 in non-mortgage debt - in other words, credit card debt, student debt and personal loans. That's twice as much as the general public.

While credit card debt is currently the biggest source of debt, school loans are quickly catching up. The Prudential report indicated that college-educated African American consumers were twice as likely as their white peers to be burdened with education debt.

These results coincide with a U.S. News & World Report released earlier this month, which shows that the nation's ballooning $1 trillion student loan debt is especially damaging to two groups - minorities and women.

As more and more money goes toward paying down debt, inevitably less money is left over for savings.

Perhaps not surprisingly considering the report's findings, African American consumers had roughly half the savings rate as the overall population. They are also less likely to hold long-term investments like stocks and bonds and more likely to be financially supporting a family member.

All this debt doesn't just impact pocketbooks - it impacts lives. Of those surveyed, 25 percent admitted to experiencing anxiety or depression as a result of their debt problems.

There may be a silver lining, however. Compared with one-third of the general population, half of African Americans surveyed said they are doing better financially today than a year ago.

As jobs improve and more Americans seek ways to manage or eliminate debt - such as filing for Chapter 7 or Chapter 13 bankruptcy - we are beginning to see fewer delinquent payments and foreclosures. According to Total Bankruptcy, African American women are filing for bankruptcy - and breaking free from their debts - in greater numbers than almost any other group.

As individuals lower their debt burdens, credit scores begin to increase and options for affordable loans and credit cards begin to surely and steadily improve.

The cause of debt can be varied and complex, but the solution is simple: income must exceed expenses. Bankruptcy boosts budgets by putting money that would have gone to creditors back into the consumer's pocket.

In summary, Prudential recommended that financial institutions such as financial advisors strive to better meet the needs of the average African American consumer, whom they have traditionally underserved.

But financial firms can only do so much - and it's always for a fee. Closing the wage gap, improving jobs and finding affordable solutions for college students are more realistic - albeit long-term - solutions.

In the meantime, getting out of debt remains the fastest most, effective way to improve financial standing and achieve financial independence - no financial advisor necessary. For many folks, bankruptcy can make it possible.

Continue reading "African Americans Experience Highest Levels of Credit Card Debt and Student Debt, According to New Report" »

By most media reports, the Great Recession is officially over. But that doesn't mean it's done affecting consumers - especially those in a particular age group.

According to a recent report, Generation X could be haunted by debts accumulated during the downturn well into retirement.

While income and consumer confidence are on the rise, it could take decades for savings funds to recover from the blow they took during recent tough economic times.

Baby boomers born between 1946 and 1955, for instance, lost 28 percent of their median net worth between 2007 and 2010. Later boomers, or those born between '56 and '65, lost an estimated 25 percent during that time.

But Generation X has them all beat: Folks born between 1966 and 1975 lost a whopping 45 percent of their wealth.

Worst of all, those in their 30s and 40s had the least amount of savings to begin with. That may be because they're the most likely group to be grappling with expenses such as house payments, raising a family, old school loans and credit card debt.

Part of the problem is that Gen X wasn't exactly in great financial shape prior to the recession, with far less wealth than previous generations had at the same age. In fact, the average Gen-X consumer currently has $80,000 in debt.

Financial experts advise that retirement savings should replace 70 to 100 percent of pre-retirement income. If Gen-Xers keep saving at their current rate, most will only be able to replace 50 percent of their paycheck.

But all hope is not lost. Remember, we're talking about the average consumer here - not every consumer.

The average consumer is buried in debt. The average consumer is drowning in student loans. The average consumer has more mortgage than she can afford and is facing foreclosure. In short, the average consumer has way too much debt. But it doesn't have to be that way.

Our DebtStoppers bankruptcy lawyers have helped thousands of consumers overcome overwhelming debts to find financial independence now and into the future.

A Chapter 7 or Chapter 13 bankruptcy plan has the power to eliminate debt - and, along with it, stress, anxiety and obligations.

By simply dealing with debt, it's possible for most folks to rise above financial troubles to achieve a financially stable future.

All too often, people accept debt as a fact of life because they feel powerless to fix their financial problems. Bankruptcy puts power back into the hands of consumers. And as so many of our clients already know, there aren't many things more empowering than finally breaking free from debt.

Continue reading "Great Recession May Have Long-Term Effects on Finances of Gen-Xers" »

Credit card judgments are like ticking time bombs: You never know when they're going to go off.

For many consumers, bankruptcy is the best way to diffuse this potentially disastrous situation.

As consumer debts grow, more lenders are choosing to obtain judgments against defaulting borrowers.

With a judgment, lenders and their bill collectors are granted the legal ability to garnish wages or seize property.

In most states, a judgment remains enforceable for up to 10 years. That means that your lender can decide to execute a judgment at any time. If you have a judgment on your credit report, you'll always be at risk - and the odds of legal action only increase with time.

Since it costs money for lenders to obtain a judgment, you can bet they won't want to squander additional dollars to have an existing judgment renewed. If you've had a judgment against you for a while now, there's a good chance debt collectors are preparing to take action soon.

Of course, the simplest way to protect yourself is to pay down debt. If possible, contact your creditor and either agree to make payments or attempt to negotiate a settlement. Make sure to get your agreement in writing before you pay a dime.

For many folks, however, making payments is easier said than done. If credit card debts have spiraled out of control, it may not be feasible to get current without help.

But just because you can't afford to pay your delinquent debts doesn't mean you can ignore them. Living in denial doesn't just prolong your financial problems; it actually worsens them as late fees, high interest rates and legal actions accumulate.

Unpaid debts have a way of touching nearly every area of your life. Whether it's finding a job, getting a loan, or holding your family together, your success may hinge on how you handle your financial obligations.

By filing for bankruptcy, you can prevent a creditor from executing a judgment - and wipe out the debt that put you at risk for legal action in the first place.

If you can't afford to pay your debts, how will you manage to get by when creditors start seizing your hard-earned money? Bankruptcy protects your paycheck from wage garnishment and saves you the embarrassment of giving your employer a glimpse into your private financial life.

The only thing certain about debt is that it will never go away on its own. Bankruptcy has the power to protect your privacy and possessions, stop creditor harassment and start you down the path to financial freedom, once and for all.

Continue reading "Can Filing for Bankruptcy Stop Creditor Judgments for Credit Card Debt?" »

When you're falling behind on your mortgage payments, the chance to change the terms on your loan via a mortgage modification can sound almost too good to be true.

Unfortunately, it often is.

Loan modifications have gained notoriety in recent years, as lawmakers have tried to encourage them as a solution for struggling homeowners with programs like the Home Affordable Modification Program (HAMP).

In a best case scenario, a mortgage lender will agree to a loan modification with a trial payment period. If the trial is successful, the homeowner may enjoy permanently lowered payments thanks to their new terms.

For most homeowners, however, loan modifications aren't the dream come true that lawmakers have made them out to be.

Qualifying Is a Challenge

The reality is that lenders have little incentive to offer modifications.

Since they can make more money off late fees as homeowners approach foreclosure, lenders are usually in no rush to process loan modification applications - leaving stressed-out homeowners in limbo for months. Meanwhile, lenders may be moving forward with foreclosure.

It's not uncommon for homeowners to lose their properties to foreclosure after being denied - or before being approved - for a modification.

When you're headed toward foreclosure, time is of the essence. If you don't act quickly you will lose your home and any equity you have paid into it. That's why Chapter 13 bankruptcy is often a better solution for families facing foreclosure in the near future.

Terms Aren't Always Better

Normally when you're seeking a loan, you can shop around for the best terms. But Uncle Sam requires that homeowners receive a loan modification from their own lender or from a preferred counselor.

Often times, these terms aren't significantly better than your current mortgage. Once you factor in the cost of receiving a modification, back interest that may be added back into the loan, and damage to your credit as a result of the modification, you could end up paying more per month than you do now.

Modifications May Not Stop Foreclosure

Even if you qualify for modification - and even if your new terms are an improvement over your old ones - you may still end up in foreclosure. Why? Because mortgage modification fails to address the underlying cause of most folks' financial troubles.

Mortgage payments are rarely the reason for default; other household debts, namely credit card debt, are usually the culprit.

If you're struggling with snowballing credit card debt, slightly lower mortgage payments won't offer relief for long. Until you deal with debt, your home will always be at risk.

Unlike modification, Chapter 13 bankruptcy has the ability to restructure unsecured debt into manageable payments, providing the breathing room necessary for homeowners to prioritize their mortgage.

Additionally, filing for Chapter 13 enacts an automatic stay that legally protects your home from foreclosure and other assets from repossession. And while many worry that bankruptcy will hurt credit, it's usually just the opposite.

Reorganizing debt and creating manageable mortgage payments allows you to get back on track, so you can begin rebuilding credit - and your financial future.

Continue reading "Loan Modification vs. Bankruptcy: Which Is the Best Way to Stop Foreclosure?" »

Debt has a tendency to sneak up on you.

You open a new credit card account and tell yourself you'll pay off the balance each month. You raid your 401k and promise yourself you'll pay it back when you get that windfall you've been waiting for. You make a late payment or find yourself taking out a payday loan "just this once."

Individually, these financial decisions may seem pretty harmless. But the problem is that they can add up quickly - and the trouble they cause has a way of multiplying.

Before you know it, you're paying late fees, bank penalties and higher interest rates on top of your existing debt. Throw in some unexpected hardships - say, car repairs, medical costs or job loss - and pretty soon you're swimming in a swell of debts threatening to pull you under. Sound familiar?

When debt has spiraled far beyond your control, personal bankruptcy is often the fastest and most effective way to regain power over your finances. Filing for Chapter 7 bankruptcy can eliminate unsecured debts entirely. Chapter 13 bankruptcy can reduce debt, set up a realistic payment schedule for remaining debts, and stop foreclosure.

Of course, if you can recognize that you're on track for financial disaster early on, it may be possible to reverse course before drastic measures like bankruptcy are needed.

Here are some signs you're headed for a financial meltdown.

Late payments have become the norm

When you're low on funds, it can be tempting to put off a payment. After all, you can just get current again next month, right? Unfortunately, it's never as easy as it sounds.

If you're struggling to pay a bill this month, how will you manage next month when your bill includes a hefty late fee? One missed payment can quickly turn into two or three - and soon enough your credit score plummets and your interest rate jumps. But the biggest concern about missed payments is what they denote: that your debts are running your life.

You're juggling credit cards

Credit cards can come in handy when you need to build credit or make a purchase without cash. But plastic goes from helpful to harmful fast when you start relying on credit cards to make purchases with money you don't have.

If you're unable to pay off your balance in full, it's a sign you have more credit card debt than you can manage. Making minimum payments allows debt to grow unchecked, even if you stop using your card - leading to larger minimums and higher rates. If you're paying the smallest amount possible or transferring your balance to new cards, you're only putting off the inevitable. All it takes is one costly month to completely derail your finances.

Your finances are straining your relationships

It's normal to occasionally disagree about debt. But when you're constantly fighting over money, it's a sign you're living beyond your means.

Financial stress takes a toll on every aspect of your life. When you worry every phone call could be a bill collector and you're never sure if you'll be able to afford your next payment, you're living in a state of fear and instability that can impact performance at work, your relationships with family and even how you feel about yourself.

There's a reason having too much debt is a top cause of both depression and divorce. Bankruptcy can not only help you regain control of your finances; it can help you regain your relationships and your sanity.

You're paying overdraft fees

Everyone makes mistakes now and then. But if you're consistently overdrawing on your checking account, it's a sure sign your expenses are out of line with your income.

When you're teetering on the brink of being broke, overdraft fees are often the last straw. If you find yourself unable to stay in the black, filing for bankruptcy can stop fees from accumulating and provide the breathing room you need to build up a cash cushion.

You're not saving money

Saving is the key to financial freedom. Maintaining a stash of savings will keep you afloat amid a financial emergency and ensure that you can actually afford to retire. Yet savings is one of the first places people cut when money gets tight.

If you're not setting any of your paycheck aside - or, worse, if you're robbing your own retirement funds - your debt is setting you up for financial ruin. Getting rid of debt with bankruptcy can free up more money for today and for the future.

The earlier you recognize your finances are in trouble, the easier it will be to make the changes necessary to get yourself back on track. But if you're in over your head, there's no shame in asking for help. When debt is disrupting your life, bankruptcy can be your ticket back to financial stability - and peace of mind.

Continue reading "Do You Have Too Much Debt? 5 Signs You Need Help Relieving Your Debt Burden" »

A great bankruptcy attorney is kind of like a great dentist.

No one wants to get a root canal, right? But when you're suffering and the situation isn't going to get better on its own, a good dentist has the professional skill to expertly repair your problem - and the people skills to make the process as painless as possible.

Likewise, a good bankruptcy attorney takes what is often a stressful and embarrassing situation and turns it into an opportunity to find comfort and much-needed relief.

Filing for bankruptcy can be the fastest and easiest way for your family to escape the overwhelming burden of debt and find financial freedom. But taking that critical first step can be so intimidating that many consumers never get that chance.

The right bankruptcy attorney makes that first step - and all the steps that come after it - easier than you thought possible.

Here at DebtStoppers, we offer free debt consultations to all potential clients. If you crave independence from debt but you're uncertain about how to achieve it, our bankruptcy attorneys will thoughtfully discuss your situation, candidly answer your questions and walk you through your best possible solutions, all in a no-pressure environment with no strings attached.

So what makes a good bankruptcy attorney? There are two important qualities to consider: competence and compassion.

You want your bankruptcy attorney to be bright, knowledgeable and experienced enough to navigate the often confusing intricacies of bankruptcy law, which vary by state and situation.

For instance, many people file for Chapter 13 bankruptcy - which reorganizes debt into an installment plan with recurring payments - because they believe they earn too much money to be eligible for Chapter 7. And some lawyers will push clients into a Chapter 13 because it's easier. But with some time and effort on the part of a patient bankruptcy lawyer, it may be possible to qualify for Chapter 7 bankruptcy - which can eliminate debt completely in just a few months.

But just as important as an expert attorney, you want an empathetic attorney: one who understands your emotions and puts you at ease.

With the right representative on your side, filing for bankruptcy doesn't have to be uncomfortable.

Thousands of people file for bankruptcy protection every year. It's nothing to be ashamed of or embarrassed about. A good bankruptcy lawyer will never make judgments about you, brush off your questions or push you in a direction you're not 100 percent comfortable with. Your attorney is there to make the process of getting out of debt easier, not harder.

At DebtStoppers, we help clients wade through the myths surrounding bankruptcy to uncover the truth. For example: Bankruptcy does not cause lasting credit damage, it won't keep you from obtaining credit cards or buying a home, and it won't leave a stain on your reputation.

Just the opposite, bankruptcy can help you rebuild credit, qualify for better loan and credit terms, and improve your good standing - not to mention your confidence and self-esteem. Bankruptcy isn't an obstacle; it's a means of overcoming obstacles to achieve a fresh start.

Our DebtStoppers bankruptcy attorneys have helped thousands of Americans find just such a second chance. What's more, many of our clients have gone on to get credit, buy homes and cars and build up their savings soon after filing.

If you're suffocating under crippling debt, filing for bankruptcy with DebtStoppers can be your breath of fresh air.

Continue reading "How to Find a Good Bankruptcy Attorney When You Need Help Getting Out of Debt" »

Several years into a slow but steady economic recovery, student loan debt is threatening to wipe away any gains.

As our bankruptcy lawyers discussed last week, the investor-led housing recovery could stall as investors pull back and ordinary home buyers fail to step in because they're grappling with massive student debts.

With the average student debt load topping $25,000 - and many grads paying off debt in the hundreds of thousands of dollars - it's normal for folks to have education loan bills as high as a typical mortgage payment.

According to a new study by Trulia.com, these borrowers are starting to put a damper on the fragile recovery.

In the past, college graduates have been more likely to buy homes and cars than those without degrees because they typically earned more money and could thus afford them.

But these days, people with student debt are less likely to take out car loans and mortgages, as large portions of their paychecks are earmarked for debt - making it difficult to save for a down payment or qualify for a home loan.

And the problem could get worse as the percentage of young adults with student debt grows. Since 2003 - just ten years ago - the portion of 25-year-olds with debt from education loans increased from 25 percent to 43 percent.

As more borrowers default on their student loans, the Consumer Financial Protection Bureau is seeking solutions for making repayment easier - particularly for those with private student loans, which have fewer repayment options than federal loans.

Strategies could include income-based repayment, in which payments are made based on earnings rather than what's owed, and loan refinancing.

Even lowering payments for just a few years could offer enough relief to allow borrowers to catch up or find a financially-stable job, say experts.

One of the biggest problems with student debt has been the unavailability of bankruptcy. While filing for bankruptcy can relieve other unsecured debts like credit card debt and medical bills, student loan debts are rarely discharged.

But while bankruptcy can't directly eliminate student debt, it can still provide a solution. Keep in mind that, along with education loan payments, today's young consumers are also struggling with credit card debt and high rates of unemployment and underemployment.

Chapter 7 bankruptcy can wipe out many unsecured debts in as little as a few months, drastically reducing monthly payments and freeing up the money to get current on student loans.

If the recovery is going to be sustainable, we need to make it easier for borrowers to manage student debt payments. But until then, bankruptcy can be the most realistic way to buy time - and money.

Continue reading "As Student Loan Debt Drags Down Economy, Consumer Group Pushes for Repayment Reform " »

Home prices are rising, foreclosures are falling and consumers are snatching up properties: It looks like the housing market is on the mend. But all is not as it seems, say bankruptcy attorneys.

Recently, real estate experts have been speculating that the real estate recovery won't last.

According to CNN Money, there are three main reasons the market comeback could be in jeopardy.

Investors

Homes are selling, but it's not homeowners who are doing the buying.

The majority of properties are being purchased by investors taking advantage of low mortgage rates and home prices. As a result of this surge in demand, home values and interest rates are being driven up.

Meanwhile, low- and middle-income consumers looking to buy a primary residence will be unable to afford a mortgage. Sound familiar? It's similar to what caused the original housing bubble.

As prices rise, investors will likely pull back, reducing - and maybe even reversing - any gains.

Economy

It used to be that housing threatened the economy; these days, the economy seems to be threatening housing.

After making gains, the job market is slowing down. Recently it was announced that half a million workers withdrew from the job market, either because they gave up on finding work or opted to retire and thus stopped collecting unemployment.

Student debt is on the rise and, while the number of families with credit card debt has decreased, those with debt have more than ever.

With smaller paychecks and more expenses, it's becoming increasingly difficult for first-time homebuyers to finance a purchase. Those with homes are unlikely to upgrade because, often times, they're struggling to keep up with their current mortgage payments.

The good news is that, while bankruptcy can't help the economy, it can help consumers.

Filing for bankruptcy can eliminate debts and help potential homeowners improve credit and the possibility of qualifying for a loan. And if you're struggling to hold onto a home you already own, Chapter 13 bankruptcy can stop foreclosure.

Cuts

As if the situation isn't bad enough, the $85 billion in spending cuts from the sequestration will peak this summer.

On top of additional job losses, these cuts include the expiration of payroll tax cuts and unpaid days off for more than one million government employees.

It may be enough to bust the already-tight budgets of the many U.S. homeowners struggling to make mortgage payments - leading to more foreclosures, falling prices and the same cycle all over again.

Just when we think things are getting better, the economy throws a curve ball. The reality is that the market will always be up and down. It's up to us as individuals to improve our personal financial situations.

Taking action by filing for bankruptcy has the ability to relieve debt and make payments more manageable, resulting in improved credit, reduced risk of foreclosure and better loan terms. So no matter what happens to housing, your family is protected.

Continue reading "Experts Caution Real Estate Recovery May Not Have Strength to Last" »

Could the foreclosure crisis officially be over? Foreclosure filings in the first quarter of 2013 fell to the lowest level since 2007, according to new data from RealtyTrac.

This March, banks took ownership of 44,000 homes. While it may sound like a lot, compare that with September 2010, when banks repossessed more than 100,000 properties.

Foreclosure activity has slowly started to decline in recent years for several reasons.

For instance, more homeowners are turning to foreclosure alternatives such as short sales - or are avoiding the loss of their homes entirely by filing for Chapter 13 bankruptcy, which stops foreclosure proceedings.

The surge of foreclosures that occurred when banks resumed processing paperwork following the robo-signing scandal has mostly subsided.

Even the reasons for foreclosures have changed.

At the height of the housing bust, homeowners were defaulting due to plummeting home prices and outrageous mortgage terms. These days, most folks losing their homes to foreclosure are struggling with non-mortgage financial troubles - say, a job loss, illness or divorce.

Of course, having too much credit card debt is still a leading cause of mortgage default for everyone from low-income families to wealthy households.

But while the foreclosure drop-off is good news for homeowners in most parts of the country, there are still a few states buried under a backlog of foreclosures. Foreclosures in Georgia, Illinois and Florida are higher than in any other state.

Even more bad news: Many foreclosures in these states are being dismissed because banks aren't ready to proceed with their cases. However, this gives homeowners false hope, as dismissed cases can be reopened at any time.

In some cases, homeowners have fallen in and out of foreclosure two or three times, ultimately losing their home - in addition to dollars lost dealing with the process.

If you're at risk for foreclosure, it's never too soon to protect your home. When you file for Chapter 13, a legal action called an automatic stay has the power to stop foreclosure proceedings while you pay off debts over a manageable timeframe.

If lack of income requires you to file for Chapter 7 bankruptcy, it may still be possible to avoid foreclosure. Meanwhile, you can eliminate most crippling unsecured debts, such as credit card debt and medical bills.

The tide of foreclosures is turning, but there are many factors that still put homeowners at risk. With bankruptcy, you can protect against foreclosure while relieving debt and improving your family's finances - a win-win any way you slice it.

Continue reading "Foreclosures Dwindle to Pre-Housing Crisis Levels" »

Filing for bankruptcy isn't something to be taken lightly, but the consequences are not as dire as most consumers think.

While many folks worry bankruptcy will be the end of their financial freedom, it could actually be a new beginning. Take unsecured credit offers, for example.

It's a commonly held belief that it will be difficult to impossible to get a credit card after bankruptcy. But as a recent Bankrate.com column points out, a bankruptcy discharge can, in some ways, make you more appealing to creditors.

If you qualify for Chapter 7 bankruptcy, your debts could be eliminated entirely within a matter of months. With no debt, you're an ideal candidate for new credit cards.

Furthermore, creditors know that it will be eight years before you're eligible for another debt discharge through Chapter 7 - and you're unlikely to file again anyway, as most people who go through bankruptcy only do so once in their lifetime.

Consider it bankruptcy's hidden benefit: In many cases, receiving a bankruptcy discharge can actually improve credit.

That's not to say bankruptcy comes without drawbacks.

Yes, when you file, the bankruptcy will appear on your credit report for the next 10 years. And yes, if you have a history of bad credit, the credit card offers you receive initially will probably come with high interest rates, low credit limits and other less-than-stellar terms.

But look at it this way. Bankruptcy provides a fresh financial start, so in theory you won't need to be reliant on your new credit card anyway. When you use plastic only occasionally and make sure to pay your balance each month, you won't have to worry about a low limit or sky-high interest.

Instead of focusing on the best offer, focus on the one that will allow you to most quickly reestablish good credit, such as a secured card, says Bankrate.com. A card from a bank or credit union may come with fewer perks than one from a finance company, but will be viewed more favorably by lenders - and that's what counts.

The sooner you begin reestablishing credit after bankruptcy, the sooner lenders will trust you enough to consider you for a mortgage, car loan, or better credit card.

With responsible financial behavior, your life after bankruptcy can become more financially rewarding than you could have imagined.

Continue reading "Getting Credit Cards After Bankruptcy Easier Than Most Consumers Think" »