DebtStoppers USA Bankruptcy Blog

As the holidays draw nearer, so does something else: the so-called fiscal cliff.

At midnight on Dec. 31 of this year, spending cuts and new taxes are set to go into effect, while a series of tax breaks are on track to expire, potentially culminating in an economy-crippling financial pickle.

If lawmakers can't agree on taking action, for instance, 2013 will bring the end of current payroll tax cuts, changes to Medicare, and - maybe most disturbingly - the expiration of tax exemptions for homeowners facing foreclosure or a short sale.

As our bankruptcy attorneys discussed earlier this month, delinquent borrowers who give up or lose their properties will be on the hook for paying income taxes on the portion of their mortgages forgiven by lenders.

But while the media is focused on the national economic effect, experts caution consumers to look inward to avoid their own personal fiscal cliffs.

A fiscal cliff is really just a situation in which feared major financial events happen simultaneously, creating an overwhelming economic effect.

In reality, many individuals are driven off their own personal financial precipices every day.

Maybe it's the day too much credit card debt finally interferes with your ability to pay the mortgage. Perhaps it's the point when your massive student loans finally come due - and you can't afford to pay them. It may be sudden unexpected car repairs that eat up your paycheck.

Maybe ordinary everyday expenses have become a problem because you lost your job months ago and are still looking for work.

The good news is that, unlike bureaucratic lawmakers, consumers actually have the ability to quickly do something before they reach the point of no return.

Experts encourage consumers to build up a liquid emergency savings they can fall back on to pay for unexpected financial challengers, such as lost wages, unmanageable medical bills or car repairs.

Of course, that's easier said than done when all your money is going to your debts.
For millions of Americans overwhelmed by credit card debt and mortgage debt, bankruptcy offers a fresh start.

The deeper the hole, the harder it is to dig your way out. Filing for bankruptcy allows consumers to reduce or eliminate debt, freeing up funds for covering other important expenses.

If you're behind on mortgage payments, for instance, Chapter 13 bankruptcy has the ability to stop foreclosure and other collection proceedings while you repay a portion of debts in an installment plan over 3 to 5 years. If you're out of work - and thus funds to pay credit card bills - Chapter 7 bankruptcy can stop creditor action and completely eliminate crippling unsecured debts.

If you can see a fiscal cliff coming, don't wait until you're soaring over the edge toward rock bottom. Take action! Bankruptcy has helped thousands of families get out of debt - and get on with their lives.

Continue reading "Instead of Worrying About Washington, Experts Encourage Consumers to Prepare for Personal Fiscal Cliff " »

A recent report on mortgage delinquencies could be taken as good or bad news, depending on your financial situation.

New information from credit bureau TransUnion shows that, if the number of borrowers who have missed their home loan payment for a year or more were excluded from the data, the U.S. delinquency rate would be only a little higher than normal, according to USA Today.

If those homeowners were ignored, the rate of delinquent borrowers would drop in half, from 5 percent to 2.5 percent of mortgage holders.

Back before the foreclosure crisis, the nation had a 2 percent delinquency rate.

That means the above-average 5 percent rate isn't being caused by new mortgages. Instead, it's being kept afloat by the same group of delinquent homeowners.

In fact, it's estimated that 80 percent of the country's delinquent mortgage holders fell into delinquency before 2008.

One of the effects of the housing bust has been longer foreclosure processing times, which means a homeowner may miss payments for years before the banks takes their home.

That's a semi-good thing for the real estate market, as it indicates delinquencies are not increasing.

The bad news is that homeowners who are delinquent aren't finding relief.

As foreclosures and short sales continue to be processed, delinquency rates should begin to fall. But unless more homeowners find a solution for their mortgage woes, it could take as long as four years until rates get back to normal, according to the USA Today article.

For many homeowners, bankruptcy could offer a solution.

Often times, struggling homeowners avoid filing for bankruptcy because they want to believe there's another way. But loan modifications and short sales have simply not slowed the flood of foreclosures.

Unfortunately, by the time most borrowers realize bankruptcy is their only hope, they're already years behind on payments, in the process of losing their home, and suffering from decimated credit.

Chapter 13 bankruptcy, also known as reorganization bankruptcy, was created especially for individuals who earn a regular income, but who carry large unsecured debts that make it difficult to pay the mortgage.

When you file for Chapter 13, a legal action called the automatic stay immediately stops foreclosure while you catch up on your payments, which are organized into a manageable schedule.

Never knowing when that foreclosure or eviction notice is going to arrive is no way to live. With bankruptcy, you can get back your financial independence - and your life.

Continue reading "Fewer Homeowners Missing Mortgage Payments...But Existing Delinquencies Aren't Improving" »

For many, bankruptcy is the single most reliable and realistic way to get out of debt. Yet countless eligible borrowers will never file thanks to a commonly-held fear.

Most folks believe that if they seek bankruptcy protection, they will lose their possessions, from cars to TV sets.

But in most cases, that's simply not true.

According to a recent Bankrate.com column, most U.S. states have long lists of bankruptcy exemptions that protect consumers.

For items that aren't exempt, it all comes down to your ability to pay. The good news is that bankruptcy makes payments more affordable - in a sense, it actually increases your chances of holding onto your assets.

Filing for bankruptcy doesn't mean a repo man is going to come knocking on your door. Most things in a home, such as furniture and electronics, are already paid for.

As long as a borrower continues making payments on secured items - like homes, cars and jewelry - they will be safe from repossession.

In the case of Chapter 13 bankruptcy, debt is organized into a series of manageable payments made over a period of 3 to 5 years. From the moment you file, a legal action called the automatic stay protects your home from foreclosure and stops creditors from harassing your family.

So long as you stick to your bankruptcy plan - which is individually tailored for your financial situation - no one will be able to take your things.

Chapter 7 bankruptcy puts many potential filers off with its alternative name: liquidation bankruptcy. Chapter 7 is best suited for borrowers with large amounts of unsecured debt, such as credit card debt or medical bills, as large unpaid assets may be eligible for repossession.

The best way to protect your assets is to work with a professional bankruptcy lawyer who knows the ins and outs of bankruptcy law in your state. Our experienced bankruptcy lawyers have extensive knowledge of Tennessee, Georgia, and Illinois bankruptcy law.

Most of our clients are able to keep their possessions. However, there are always exemptions and worst-case scenarios.

But think of it this way: If you don't file for bankruptcy, nothing will be exempt from creditors.

Bankruptcy was created by the U.S. government to protect consumers, not make life more difficult. If you're drowning in debt, you're only limiting your options by not taking action.

It may sound complicated, but in reality bankruptcy is about simplification - of your debts and you life. For a vast many Americans, filing for bankruptcy can be the first step toward a more secure financial future.

Continue reading "Fear of Losing Personal Items in Bankruptcy Often More Myth than Reality" »

Perhaps the only thing worse than facing foreclosure is facing foreclosure over the holidays.

In an effort to relieve stress for troubled borrowers, mortgage giants Fannie Mae and Freddie Mac have agreed to refrain from repossessing homes from the third week in December through Jan. 3, according to CNN. Bank of America will also postpone its foreclosure evictions through the holiday season.

But while it may seem like an early Christmas present for delinquent homeowners, it's important to remember this is only a very temporary solution.

Banks will continue to conduct pre- and post-foreclosure activities. So while you might not be kicked out of your home this month, you could still receive a foreclosure notice or have your house scheduled for auction.

Millions of homeowners in the U.S. are either underwater on their mortgage, unable to afford mortgage payments or a combination of both.

As our bankruptcy lawyers reported last week, an expiring tax exemption could make matters worse by creating impossibly high bills for borrowers facing a foreclosure, short sale or loan modification.

If the law does indeed expire on Jan. 1, homeowners would owe income taxes on the portion of a mortgage debt written off by the lender. For instance, if you hold a mortgage for $250,000 and your home were to sell in a short sale for $200,000, the IRS would count the $50,000 difference as taxable income.

If you want to give yourself a present this holiday, make it the gift of real financial relief. Bankruptcy is the single most powerful tool for avoiding foreclosure, getting out of debt and regaining financial control.

If you're falling further and further behind on mortgage payments, filing for Chapter 13 bankruptcy has the ability to stop foreclosure and collection proceedings - not just during the holidays, but for good.

After filing, you'll be able to work out a plan to pay down debts in affordable installments. Meanwhile, unsecured non-mortgage debts like credit card debt or medical bills may be reduced or eliminated entirely.

For those with crippling credit card debt and little income, Chapter 7 bankruptcy may be the best solution.

While often thought of as a last resort, bankruptcy is actually the only guaranteed way to relieve debt and retain valued possessions like your home. Our expert bankruptcy attorneys have helped thousands of families eliminate debt and rebuild their finances for a happier New Year.

Continue reading "Lenders Suspend Foreclosures for Holidays, But Bankruptcy Offers Lasting Solution" »

Usually the first day of a new year means a fresh start. But if a federal tax exemption is allowed to expire, this Jan. 1 could mean disaster for troubled homeowners.

When a portion of debt is canceled or forgiven, that amount is often considered taxable income by the IRS. However, thanks to the Mortgage Debt Relief Act of 2007, mortgage debt is currently forgiven by lenders in a short sale, foreclosure, or loan modification if the home is a primary residence.

In 2011, the law saved borrowers an estimated $1 billion, according to The New York Times.

Unfortunately, it's scheduled to expire Jan. 1, 2013.

What does that mean? Let's say you owe $300,000 on a home you can no longer afford. If the property goes for $200,000 in a short sale, the government will tax you on the remaining $100,000 forgiven by the lender - even though you never saw a dime of the money.

Additionally, any mortgage relief rendered under this spring's $26 billion foreclosure settlement, such as a loan modification, will only make homeowners liable for taxation.

While it's still possible that the exemption could be extended, it's also highly possible that lawmakers will be too busy grappling with current fiscal woes to renew existing laws.

Since short sales and foreclosures typically take several months (or even longer, depending on state laws) to complete, homeowners just entering the process today could already be looking at facing taxes.

So what do you do when you can't afford to keep your house - but you can't afford to lose it, either?

If the exemption expires as planned, filing for bankruptcy may be the only way to avoid a large tax liability.

When you have no choice but to walk away from your home, bankruptcy ensures that the remaining debt - and any associated taxes - can be discharged.

Of course, if there's a chance of saving your home, bankruptcy can also be your best friend.

As they say, an ounce of prevention is worth a pound of cure. Filing for bankruptcy has the power to relieve debt, often making it possible for delinquent homeowners to get current on mortgage payments.

If you're struggling to pay the mortgage, attempting to work out a solution with lenders, or in the foreclosure process, time is of the essence. The right bankruptcy plan can keep you from losing your home - and the shirt off your back.

Best of all, bankruptcy can provide the financial boost needed to get you and your family back on your feet. Laws may come and go, but bankruptcy is one consumer protection that's here to stay.

Continue reading "Losing a Home to Foreclosure Could Mean Big Taxes If Exemption Expires in January" »

If predictions for spending on Black Friday hold true, it could mean a boost for the U.S. economy. But while that's a good thing for retailers, it may not be good news for consumers, say our bankruptcy attorneys.

Consumer credit card behavior appears to be returning to pre-recession levels. That means an increase in spending - and in late payments.

The average American borrower had nearly $5,000 in credit card debt in the third quarter of 2012, up 4.9 percent from a year earlier, according to a report released by credit bureau TransUnion this week.

Late payments, which have been at record lows as people cut back on credit during the downturn, have slowly begun to rise once again. Thirty-six states noted increases in credit card delinquency rates, reports TransUnion.

If history repeats itself, consumer debt will continue to rise in the fourth quarter as borrowers rely on credit cards to pay for holiday shopping sprees.

Making matters worse, lenders are starting to loosen credit standards, making it easier for consumers to obtain cards.

Between gifts, food, and fun with family and friends, sometime it feels like you can't escape the holidays without going into debt. But it doesn't have to be that way.

It's tempting to use plastic because, by postponing payments, you don't have to worry about emptying your bank account - at least not today. But paying with credit makes things worse in the long run thanks to interest, fees, and potential credit damage.

Credit cards aren't inherently bad - but if you're going to use them this season, here are a few thing to keep in mind.

Know your limit

Banks lowered many consumers' credit card limits in wake of the subprime mortgage crisis. If you're increasing your credit card spending, it can be easy to approach the limit on your cards before you realize it.

Even if you don't exceed your limit, it's still important to monitor spending. Remember: the more of your available limit you use, the lower your credit score.

Pay on time

Missing just one payment can send your credit score plummeting by 100 points. That means higher interest rates on future loans, difficulty obtaining a mortgage, and even higher insurance rates. And that's in addition to late payment fees.

Often times, just one late payment is all it takes for debts to snowball out of control.

Keep an eye on your overall debt picture

If your debts are too big for you to manage, ignoring them during the holiday season won't make them go away. Often times, it takes a drastic approach like filing for bankruptcy to get your finances under control.

Of course, if you're considering a fresh start through bankruptcy, it's even more imperative to manage your credit card spending. Bankruptcy has the power to lower or eliminate unsecured debts like credit card debt. But if you have a significant jump in credit card purchases just before filing for bankruptcy, it can impact your ability to discharge debts through Chapter 7 or repay debts through Chapter 13 bankruptcy.

The bottom line

This isn't the time to live in denial. Once the holiday glow is over, you'll be left to start the new year buried under debt. Instead, why not turn over a new leaf in 2013? Staying in control of spending - and getting a handle on existing debt with bankruptcy - can make it possible.

Whether you're paying with credit, debit or cash, reigning in spending and dealing with debt today can mean a more stress-free holiday season - and a much happier new year. Bankruptcy can help you get there.

Continue reading "Consumer Credit Card Debt Increases Headed Into Holiday Shopping Season" »

The goal of this spring's $26 billion mortgage settlement was to help victims of predatory lending practices. Now, it appears that banks may be using the funds to help themselves.

Back in April, the five biggest banks in the U.S. agreed to refinance mortgages and reduce principals on loans held by homeowners who are facing foreclosure because they are underwater or behind on payments.

Under the plan, the settlement would reduce the mortgage payments of as many as 2 million of America's most embattled borrowers.

But if a consumer advocacy group is correct in its suspicions, a big chunk of those funds are going to wealthy homeowners - not the low- and middle-income homeowners who need them the most.

According to the Maryland Consumer Rights Coalition, there's evidence that loan servicers are concentrating their efforts in affluent neighborhoods.

Wealthier homeowners are more likely to have expensive mortgages, and writing down these large mortgages can allow loan servicers to reach their required goal more quickly.

Furthermore, it appears that banks aren't offering the promised principal reduction modifications in neighborhoods with low and moderate incomes.

Yet borrowers with lower incomes were hit hardest by the careless lending standards that led to the housing bubble, and are therefore most in need.

Unfortunately, until monitors of the settlement start requiring demographic and geographic data, it's difficult to ensure at-risk homeowners will get the relief required to avoid foreclosure.

The good news is that there's still hope for troubled borrowers. Whether you are a victim of a predatory loan or simply of changing financial circumstances, bankruptcy is an often overlooked solution.

For those who qualify, Chapter 13 bankruptcy makes it possible to develop a manageable debt repayment plan without giving up secured debts, like homes and cars. Meanwhile, a legal action known as the automatic stay puts a stop to foreclosure while you make payments.

Many homeowners hold out hope that they'll be able to receive a mortgage modification. The sad truth is that lenders willing to perform modifications are few and far between - and those who do usually reduce interest, not principal, making little difference in monthly payments.

Why wait around for help that may never come - and risk losing your home and dignity?

The right bankruptcy plan has the power to lower the total amount you pay toward your debts each month - making it easier to pay the mortgage, the credit card bills, and all those other expenses in your life.

Make this the season you give thanks for the most important gift you can give yourself: a fresh start.

Continue reading "Are Banks Bypassing Poorer Homeowners When Distributing Mortgage Relief?" »

Five years after the economy first started to slump, Americans are still feeling the pinch - but one group is feeling it more keenly than others.

According to a new study, the millennial generation appears to have suffered most due to the downturn.

Nearly 50 percent of people between the ages of 18 and 34 believe they will be worse off financially than their parents, reports The Today Show.

In this month's presidential election, nearly half of people under the age of 30 named unemployment as the most important economic issue affecting them today - more than any other demographic. Rising prices came in second at 37 percent.

It's not just the recession that's causing trouble, but the timing of the recession, explain our bankruptcy attorneys. Many people in their 20s and 30s have been taking on debt before and during the downturn in order to pay for college, homes, cars, and other expenses.

The average college graduate today owes nearly $30,000 in student loans. Credit card debt and medical costs are also on the rise. Meanwhile, good full-time jobs are harder to come by.

As a result of fewer dollars and limited personal savings, many millennials have had to alter their lifestyle - eating out less, renting rather than buying, putting off marriage and kids, and even delaying moving out on their own (or moving back in with mom and dad). However, the ensuing savings still may not be enough to pay for growing debt and the accompanying fees and interest payments.

For many young adults, all this financial pressure only results in more credit card debt, which in turn leads to a plummeting credit score - and skyrocketing stress levels. What many consumers don't realize is that bankruptcy - not taking on additional debt - is often the best solution.

Living with debt is like slapping a band-aid on a worsening wound. It might let you get by day to day, but in the long run, you're only going to cause more pain.

Filing for bankruptcy has the power to not only stop the financial bleeding, but to begin the healing process.

Unless your boss suddenly decides to bestow you with a miraculously large raise, your income is not going to be enough to cover a growing mountain of debt. Bankruptcy provides the ability to adjust payments to more manageable levels by lowering - and in some cases, eliminating - unsecured debts like credit card debt.

When money is tight, why would you want to give up chunks of your hard-earned paycheck to creditors? Bankruptcy can help put your earnings back where they belong: in your own pockets.

With more money to pay the bills, you can get your finances, your credit score and your life back on track.

Continue reading "Persistently Sluggish Economy Proves Most Painful for Members of Millennial Generation" »

With the uncertainty of the election over, many Americans are breathing a sigh of relief today. But struggling homeowners now have a new reason to worry.

A tax break that prevents homeowners from having to pay income taxes on the forgiven portion of a foreclosure or short sale is set to expire at the end of the year.

If Congress doesn't extend the Mortgage Forgiveness Debt Relief Act of 2007, tens of thousands of homeowners could be affected. Each month, an estimated 50,000 borrowers go through foreclosure and more than 41,000 homeowners complete a short sale, according to CNN Money.

Let's say one of these homeowners owes $200,000 on a home. If it goes into foreclosure and is sold at auction for $150,000, the remaining $50,000 would be considered taxable income by the IRS.

That means that a person who falls into the 25 percent tax bracket could potentially owe $12,500. Imagine perhaps doubling your tax bill in a year, while also losing the roof over your head - not a fun prospect!

Experts disagree on whether Congress will extend the break. On the one hand, the Senate and House both believe it's a good policy. On the other hand, it's rare for Congress to pass legislation in the months after an election, known as the "lame duck" period.

But regardless of whether the exemption is renewed, there is still hope for homeowners.
Borrowers able to discharge debt through a bankruptcy filing won't have to pay the tax.

Bankruptcy protects borrowers in more ways than one. By filing for Chapter 13 bankruptcy, homeowners gain the power to stop creditor actions - including foreclosure. Chapter 13 then continues to protect the property while homeowners work out a payment plan that fits their financial situation.

Under bankruptcy, your payments will be determined not by what you owe, but by what you can afford.

Whether you've missed a single payment or are days away from having your house sold on the auction block, bankruptcy offers a priceless second chance.

With the right bankruptcy plan, you won't have to wait to see if Uncle Sam bails you out. You have the freedom to put yourself and your family on the path to a better financial future - today.

Continue reading "Struggling Homeowners Brace for Expiration of Foreclosure Tax Break" »

Late fall marks the end of wedding season and, for many newly married couples, the end of the honeymoon phase and the beginning of reality - including debt.

Thanks to rising prices and falling wages, today's young adults carry more debt from credit cards, student loans and mortgages than at any time in history.

Chances are if you're getting married, your spouse will come with some level of debt.
For many, maintaining a healthy marriage will require discussing, understanding, and managing these debts, according to a recent article in The Wall Street Journal.

Not only can large debts take a financial toll, they frequently take an emotional toll as well.

Heavy financial burdens can make it difficult for a couple to make important decisions - like buying a house or starting a family. They can also put tremendous strain on relationships, and - as our bankruptcy attorneys know from experience with clients - are common factors in divorce.

Once a couple is legally married, many states consider both spouses responsible for future debts, even if one partner's name isn't tied to them.

The good news is that if your husband or wife's debts were accumulated before you tied the knot, you probably won't be considered legally liable for them - unless, of course, your name is on the account (for instance, if you opened a joint credit card account or co-signed on a home loan).

The bad news is that, even if you don't have a legal obligation to pay off debts, they can still negatively impact you.

Often times, one person in a marriage feels blindsided because their spouse either attempted to cover up large debts or wasn't entirely clear about them.

The best way to handle tough financial problems is to do it together, ideally before you say, "I do."

The Wall Street Journal article recommends couples have a frank, open conversation about each person's current debt and credit histories and whether they intend to pay the debts separately or together.

For example, it may be wise to tackle the highest-interest debt first, regardless of who it belongs to.

Or, if you decide each spouse is responsible for paying off their respective debts, you may want to work together to develop a tighter budget that frees up more funds for you to meet your individual obligations.

For those with overwhelming debt, bankruptcy is a time-proven way to get your finances back under control. In addition to relieving debt, filing for bankruptcy often has the ability to stop creditor harassment, stop foreclosure, and protect your possessions.

Don't let debt stand in the way of a happy marriage. Bankruptcy is one of the most powerful tools for creating a fresh financial start - and a better future for you and your family.

Continue reading "For Many Couples, Getting Married Means Being Wedded to Credit Card Debt " »

As if it isn't hard enough to face foreclosure, many delinquent homeowners are now at risk for another hardship: foreclosure rescue scams.

With more Americans falling behind on mortgage payments, our bankruptcy lawyers note that a growing number of individuals are attempting to benefit from the misfortune of others.

In Illinois, for instance, foreclosure activity during the third quarter of 2012 increased by 31 percent compared to the previous year. Meanwhile, foreclosure scams are on track to increase by as much as 70 percent in 2012, according to the Treasury Department.

The good news is that some of that rapid rise may be attributable to better awareness, and therefore better reporting, of scams.

The bad news is that many folks are still falling victim to frauds that can not only cost them an arm and a leg, but ultimately their home.

Often times, mortgage brokers or real estate brokers who have suffered business losses due to the real estate crash begin offering "foreclosure rescue services" to homeowners as a side business. These folks may mean well - or they may not - but they are rarely able to do much to stop foreclosure.

Worst of all, homeowners usually don't realize they've been taken advantage of until they've shelled out thousands of dollars for supposed foreclosure help.

By the time most people realize the phone call that their house has been saved is never going to come, they're usually so much farther behind on payments that avoiding foreclosure becomes near impossible.

In some cases, foreclosure rescue specialists encourage homeowners to send payments directly to them rather than to the bank or to lease their home then later attempt to buy it back - tactics which only increase the odds that a homeowner will lose the property.

When you're in danger of losing your home, you may be willing to try anything to avoid foreclosure. But this is exactly when you should be the most wary of folks trying to help.

Look at it this way: Companies wouldn't offer assistance if they didn't believe they could gain financially. Bankruptcy, on the other hand, is different. Bankruptcy is a legal process created by the U.S. government specifically to help Americans down on their financial luck. And for many folks, filing for bankruptcy is the only way to truly avoid foreclosure.

Of course, unlike foreclosure rescue scams, bankruptcy doesn't make guarantees to save your house. But what it does do is provide the legal protection you need to stop the foreclosure process, giving you the opportunity to catch up on payments.

Meanwhile, bankruptcy has the power to consolidate - and in some cases, eliminate - your debts so that making payments becomes easier.

There's only one way to avoid foreclosure, and that's taking back control of your finances. Bankruptcy is often the most effective way to do just that.

Continue reading "More Foreclosures Can Mean More Foreclosure Rescue Scams" »

With sales of new homes in September jumping to the highest level in years, one might assume the real estate market is finally recovering.

But while the increase is certainly a good sign, it doesn't tell the whole story, say bankruptcy attorneys.

According to the Commerce Department, sales of new homes climbed 5.7 percent last month - the highest increase since April of 2010 - and 27.1 percent in the last year.

In addition, construction of new houses and sales of previously occupied homes have both increased.

That's good news for builders and for folks who have been hoping to put their house on the market. Unfortunately, it's not necessarily good news for potential home buyers.

As USA Today reports, buying a home is still out of reach for many Americans - especially those who hope to purchase their first home. Even if borrowers manage to qualify for a home loan, they may be unable to afford the required down payment.

A recent article in the Fiscal Times noted that, despite deals available in today's housing market, a middle-class income won't afford a home in half of the nation's major cities, such as San Francisco and Miami.

Falling home prices have helped, but not enough to make up for consumer debt and always-rising expenses.

A sluggish economy has left many consumers with massive amounts of credit card debt, outstanding medical bills, and student loans. In turn, large balances and late payments lead to fees, penalties and - ultimately - a tarnished credit score that can make it feel like a home will be out of reach forever.

That doesn't have to be the case, however. If overwhelming debt is keeping you from moving forward in your life, filing for bankruptcy may be able to set you free.

While many folks avoid bankruptcy for fear it will worsen their credit, bankruptcy is often the only tool powerful enough to actually improve credit.

It won't happen overnight, but with a commitment to meeting bankruptcy's requirements, consumers who file for bankruptcy can expect to rebuild their credit for a fresh financial start.

When you relieve the burden of debt, your dreams of owning a home you can afford stand a far better chance of becoming reality.

Continue reading "Home Sales Increase, But Many Potential Homeowners Still Can't Qualify for Mortgages" »

As of this June, the average American household had just over $15,500 in credit card debt.

Considering credit card debt is only the third largest source of debt behind mortgages and ever-rising student loans, it's no surprise that most consumers' wallets are feeling pinched.

And it may also be no surprise why a growing number of Americans are falling for debt settlement scams.

Debt settlement companies frequently attract the attention of their customers with amazing claims. They may promise to cut credit card debt in half overnight or to settle your entire credit card balance without bankruptcy. But is getting rid of mountains of debt really as easy as hiring the right company?

According to CreditCards.com, most debt settlement claims are in fact misleading. Here are some of the true facts they reveal about debt settlement.

Not Everyone Qualifies - And Those Who Do Must Often Wait

Debt settlement firms may promise to slash your debt, but in reality, drastic debt reduction is reserved for folks who can prove that financial hardship such as illness, job loss or divorce has made it impossible to pay back debts.

Since so many Americans are also struggling with debt, even those who have a valid excuse for difficulty making payments may have to wait in line for help. Creditors aren't quick to work with consumers - or debt settlement companies - because they're already overwhelmed with millions of other people trying to get their balances lowered.

Many Debt Settlement Companies Are Costly - Especially When They're Scams

Unfortunately, many companies that claim to help consumers are simply out to make a buck (or quite a few bucks) off someone else's financial suffering.

Often times, debt settlement companies will ask their customers to stop sending payments to creditors, instead directing the payments to the firm. By doing so, they say, creditors will become more eager to negotiate.

What actually happens is that the missed payments lower your credit score. Meanwhile, debt settlement companies are earning interest on your money. In worst case scenarios, they may mismanage the funds, go out of business, or skip town.

There is such a thing as a reputable debt settlement company, but even a solid reputation doesn't guarantee a firm can do much to lower your debt. And when you factor in actual costs - which include large maintenance fees, percentage fees, interest, and even taxes on forgiven debts - attempting to eliminate debts may actually result in new debt.

Debt Settlement Takes a Toll On Your Credit Score

Many customers attempt debt settlement because they hope they'll be able to take care of debt without resorting to bankruptcy, which they worry will damage their credit. But what most folks don't realize is that nearly any financial action - from debt settlement to a foreclosure or short sale - will show up on a credit report.

What makes bankruptcy different is that, while it will lower your score initially, it sets up the framework for you to begin rebuilding your credit. Depending on whether you file for Chapter 13 bankruptcy or Chapter 7 bankruptcy, you can either reorganize your debts into more manageable payments or eliminate debts entirely.

If you can't afford to pay your debts, it's unlikely you can afford to pay an expensive debt settlement company. Why risk compounding your debt situation when there's a proven solution?

Bankruptcy is the only method designed by the U.S. government to give consumers a fresh financial start.

Continue reading "Credit Card Debt Settlement Deals Typically Too Good To Be True" »

The good news is that an anticipated flood of foreclosures is shaping up to be more of a trickle.

The bad news is that, rather than lose their homes to foreclosure, some borrowers are simply being pushed into short sales.

According to a recent housing report, the number of foreclosure filings dropped to the lowest level in 5 years last month.

This September saw just over 180,000 foreclosure filings, which include default notices, planned auctions, and bank repos. That's down from 7 percent a month earlier and 16 percent a year ago.

Housing experts had been bracing for a huge wave of foreclosures following April's $25 billion mortgage settlement, which cleared the path for lenders to begin processing foreclosures that had been on hold after the robo-signing scandal.

Now it seems that the flow of foreclosures is more streamlined than expected.
In part, the lower number of homes falling into foreclosure is due to the improving economy and today's low mortgage rates.

Homeowners with good credit standing and cooperative lenders may be able to refinance for a more affordable rate (though our bankruptcy attorneys warn that modifying a mortgage doesn't always mean a lower payment).

However, there's more to the story. Another explanation for the decline in foreclosure filings is the increase in short sales. Many banks today are eager to agree to short sales, in which the lender accepts a price lower than what the borrower owes on his or her mortgage.

Lenders prefer short sales over foreclosures because they're faster, require fewer legal expenses and typically generate more money for the bank.

Unfortunately for homeowners, short sales don't come with the same advantages. They do nearly as much credit damage as foreclosures. Since the IRS considers unforgiven debts to be taxable income, they'll leave you with a big bill. And as with foreclosure, borrowers ultimately lose their home.

Making matters worse, some ruthless lenders have later filed for deficiency judgments demanding that borrowers pay the difference between the short sale payment and the mortgage balance.

For those facing foreclosure or a short sale, filing for bankruptcy can be a better solution. Chapter 13 bankruptcy has the power to stop foreclosure, lower debt payments and protect against creditor harassment. You may be underwater, but you'll only take a loss if you lose your house.

As the economy picks up, fewer people are falling behind on their mortgages. But for the many homeowners still in distress, bankruptcy can be a breath of fresh air.

Continue reading "Foreclosure Rates Hit New Low As Refinancing, Bankruptcy Help Distressed Borrowers Hold onto Homes " »

For a growing number of Americans, filing for bankruptcy may be the only realistic solution for eliminating crushing debt.

Unfortunately, many of these potential filers put off seeking bankruptcy protection because of a common misconception.

Since notice of a bankruptcy filing will remain on an individual's credit report for 7 to 10 years, most people automatically assume they will be unable to obtain loans or credit for many years after filing.

In reality, most folks can get approved in as little as a year, according to the New York Times.

As long as bankruptcy filers continue making an effort to improve their finances, having a bankruptcy "black mark" on a credit report doesn't mean all that much.

For instance, those who reorganize their debts through Chapter 13 bankruptcy can apply for a mortgage backed by the Federal Housing Administration just one year after filing. In contrast, people who file for Chapter 7 - which has the power to discharge most or all unsecured debts - must wait two years.

According to the Times article, borrowers able to quickly re-establish their credit stand the best chance of being considered by lenders.

In some cases, the situation leading to bankruptcy can also make a difference. For example, if circumstances outside of your control are responsible for your debts - such as illness, death of a spouse, or divorce - it may be possible to reduce the waiting period for a mortgage by writing lenders a hardship letter.

Of course, all this isn't to say that life after bankruptcy is always a walk in the park.

Bankruptcy itself doesn't make financial problems disappear. What bankruptcy does do is provide the framework for consumers to solve their financial problems, even if those problems once seemed impossible.

Obtaining the full benefits of bankruptcy protection requires determination and a commitment to improving one's finances. But with a little hard work, the right bankruptcy plan can get you out of a heap of debt.

Continue reading "Life After Bankruptcy Is Better Than Most Americans Think, Says New York Times" »