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Bankruptcy and Divorce: They often go hand in hand

Financial problems are often a source of major problems in a marriage. Many couples in Georgia have found themselves facing the prospect of divorce at least in part due to unsustainable debt or different spending habits. Many couples choose to file a Chapter 13 bankruptcy in an effort to save their marriages from divorce.  Unfortunately, this decision doesn’t always end up working out and leaves divorce as the only option. Divorce can leave the parties wondering how their bankruptcy will be impacted.

There are several factors that play into the options for people facing divorce in this situation. Bankrate states, some people may be able to convert their Chapter 13 case to a Chapter 7. Another important thing to consider when looking at your options is whether the case was filed as a joint case or a single case.

There is a different set of circumstances for those who did not begin their bankruptcy proceedings before deciding to get divorced.  Those people will need to look at which type of bankruptcy plan is best for them according to a blog called My Horizon Today. The types of debt, the new incomes of the divorcing parties and the expenses incurred by new living situations are just some of the factors that will contribute to this decision.

Another important thing to think about during this time is how well the divorcing couples are able to work together to achieve their financial goals. If the divorce is not amicable and the former spouses are unable to communicate, a Chapter 13 bankruptcy might not be the best idea. However, for divorced couples who can get along and communicate, this type of plan may be the best thing for them even though they would likely have to communicate and work together through the 3 to 5 year bankruptcy term.

If you find yourself facing debt problems that could potentially lead you to divorce or you are divorcing and find your new financial reality untenable, contact the compassionate attorneys at Harmon and Gorove. We offer same day appointments and free consultation so we can show you how we can help you achieve a new level of financial freedom and get your life back on track.

Living Paycheck to Paycheck? You’re not alone.

Despite the booming economy and record low unemployment, many Americans are unable to pay their bills and save for a rainy day.  In fact, only 29 percent of families have enough money saved to cover 6 months worth of bills in an emergency fund and a whopping 23 percent have no savings at all. A recent study noted that 78% of American families are living paycheck to paycheck.  It is among the highest number ever recorded.

There are many reasons to explain why this might be the case.  Despite a low unemployment rate, millions of people are underemployed.  Underemployment is when you have a job but are unable to work as much as you would like or work for wages that are too low to support your lifestyle.  Countless others work in the gig economy, driving for rideshare companies or doing contract work that pays intermittently and doesn’t provide benefits or a steady paycheck.  Still more people find themselves saddled with debt that is eating up their paychecks and stopping them from being able to save for the future and get ahead.

The average American household has $137,063 in debt with the average American earning just over $59,000 last year.  While much of this debt is due to a mortgage or student loan, the average American carries a balance of $6,379 on their credit cards.  The total outstanding credit card debt in America now exceeds 1 TRILLION dollars.  Cars are getting more expensive as well. The average American household owes more than $30,000 on car loans.  Suffice to say that millions of Americans are struggling to get ahead and and countless more are actively falling behind, struggling to handle untenable loads of debt.  

If you find yourself among the nearly 8 in 10 Americans living paycheck to paycheck and you feel like you are drowning in debt, you are not alone. The competent and compassionate attorneys at Harmon and Gorove are here to help you get your finances back on track.  We offer free consultations and have helped thousands of people achieve financial freedom. Call us today and let us help you!

Are unpaid medical bills keeping you up at night?

Medical bills are among the top reasons why people file bankruptcy. The Medical industry is rife with complaints about how charges are calculated and it has little transparency in how much each procedure will cost. Many Americans have no idea how much each visit to the doctor will ultimately cost and even less of an idea about how much a procedure or hospital stay will set them back.  This is especially true of people who do not have medical insurance. The nature of Medical care is that it’s something that often times can’t be put off, especially in emergency situations. With the average cost of an ambulance ride nearing $1,000 and the cost of an air ambulance being $50,000 or more, just getting to a hospital in an emergency situation can bankrupt even the most well off citizens. The choice to seek medical care stresses many Americans, including those with health insurance.

CBS News reports that nearly 25 percent of adults in the U. S. have an unpaid balance on a medical bill. Numerous factors may be involved in why this is the case and who the most indebted people are. Many imagine that the elderly are the group most likely to have unpaid medical bills but it’s actually  people between the ages of 20 and 50 that hold that distinction.

A recent study found that geography plays a role in who often incurs debt for medical care which they can’t afford. The Atlantic states that people who live in The South are more likely to find themselves with medical debt. In fact, of the top 10 states with the highest rates of medical debt, eight are Southern States. Some reasons may include an overall higher need for medical care as many people in the South lead less healthy lifestyles which often requires more medical attention.  Many of the states also did not expand Medicare coverage under the ACA.

Georgia is one of those states in the top 10, coming in squarely at number 10.  37 percent of people in Mississippi have unpaid medical bills while just under 30 percent of Georgians have unpaid medical bills.

Unpaid Medical bills can put a larger strain on the budgets of people who are already finding it hard to make ends meet.  Many doctors and hospitals routinely turn those bills over to unscrupulous and predatory debt collection agencies who constantly harass people, including at work, with threatening phone calls and nasty letters. Some debt collection agencies report negatively on your credit while others go so far as to sue you and garnish your wages.

If you find yourself being harassed, sued or garnished by debt collectors over unaffordable medical bills call the attorneys at Harmon and Gorove and allow us to schedule a free consultation so we can develop a plan to help relieve you of the stress that these unpaid medical bills cause.  We can help you get started on the path to financial freedom today!

Don’t let holiday debt get your 2019 off on the wrong foot

A lot of Georgians enjoy the holidays but for others it can be a bit of a season of mixed emotions. For many, it’s an opportunity for people to have extra time to spend with family members that they might not get to see often or to attend fun holiday celebrations with friends, co-workers and family. For many though, there can be a substantial monetary cost to the holiday season.  That cost goes beyond even the standard gift buying that Americans are unable to avoid. It includes things like planning and hosting parties or travelling great distances to visit loved ones. People already struggling to make ends meet often find themselves in an untenable situation and all of this added expense during the holidays can lead to significant holiday debt that can put a strain on their already difficult financial situation.

According to the The Motley Fool, nearly 50 percent of all people will find themselves in serious debt by January, nearly all of it related to holiday spending. 8 in 10 of those people will have driven up their debt load buying presents for friends and family. About 3 in 10 will have gone in debt to fund holiday travel and another 20 percent will have incurred new debt in order to fund events and celebrations during the holiday season.

Bloomberg, a major financial news outlet, states that the relatively healthy economy gives consumers the confidence to spend significant amounts this holiday season, especially compared to years past. Amazon has indicated that 2018’s Cyber Monday was the biggest shopping day ever for the company in its history and many other retailers are reporting extremely strong holiday spending during their Black Friday sales.

Mastercard  has put out news that online shopping in the holiday season exceeded 2017 spending levels by 19 percent. Total shopping sales for the entire year of 2018 rose by more than five percent over 2017 levels, as reported by Mastercard.

As we celebrate a new year, don’t let the prospect of serious holiday debt drag you and your family down.  With the average credit card interest rates exceeding 20% and rising, your financial future hangs in the balance with each passing day.  Don’t let the scourge of credit card debt ruin your 2019. Come see the attorneys at Harmon and Gorove today for a free consultation and let us develop a plan that can help you get your finances back on track and secure a bright future for you and your family.

What is foreclosure and what does it mean?

Foreclosure essentially means the process of repossessing real estate that the mortgage has fallen behind on to the point where the lender has reason to believe that you will be unable to catch back up.  Banks that complete the foreclosure process will list the home for sale in order to recover some or all of the money the bank lost on the original transaction. In the event that the bank has listed the home in the Multiple Listing Service, then the home can be put up for sale and the foreclosure process is complete.

There are three stages of the foreclosure process:

  • Pre-foreclosure: at this point the bank files a notice for lack of payment. This is generally when the homeowner falls behind two months in the payments. The owner will generally be afforded a period of between two and three months to attempt to refinance the loan or sell the property on short sale.
  • Auction: At this point the bank has set up an auction on the courthouse steps (a legal step in the foreclosure process in Georgia) in a bid to sell the home and recover its costs.
  • Bank owning: in the event that the home was not successfully sold at the auction, the lien holders have two options. The first option is being paid off by private mortgage insurance and the other option is that they can take a loss on the investment.

If successful, foreclosures can have a number of financial consequences for the former homeowner depending on the agreements that were in the loan agreement that you signed when you purchased the home. The most significant consequence is that the homeowner loses the home, is evicted and loses all the equity you have built up in the home. You could also be sued for any amount the lender does not recover in the sale of your home and you could also potentially face tax consequences with your state and the federal government. It is extremely important that a person knows their rights in the foreclosure process.

If you are experiencing a potential foreclosure call the experienced attorneys at Harmon and Gorove and schedule a free consultation with a dedicated attorney who can help you navigate the foreclosure process and potentially save your home and stop the process of foreclosure.  We have helped thousands of people save their homes, come let us see what we can do for you.

Calculating Your Credit Score: Why does it matter?

Any business that relies on consumer lending (ie. banks, car dealers, mortgage brokers, etc.) need credit scores. Using them allows them to quickly decide if you are worthy of credit and if so, what your interest rate will be. Using credit scores is a quick and easy way for lenders to keep up their volume of lending. A credit score allows lenders to decide immediately whether they can sell you a car or give you a credit card right away.

Consumers can improve their credit scores by planning their credit use to bolster their standing in the eyes of the credit agencies. To do this, knowing how the scores are calculated is extremely important. Here is what you need to know.

How a credit score is calculated

A company called Fair Isaac created the credit scoring system that is in widespread use today.  They keep the exact formula private but due to pressure from consumer groups and the government, they have given us a general framework of how their system works.  This information gives people who want to improve their credit score a leg up. By knowing what goes into the formula, consumers are able to make decisions with their money in ways that can improve their credit scores.

Credit Scores are composed of someone’s history of payments, current debt outstanding, how long your credit has been established, the number of new credit accounts, and types of credit accounts. Each of these different factors comprise a percentage in the formula used to calculate your credit score. Your credit history makes up 35 percent of the score’s calculation.

35% of you score depends on your payment history and whether your bills are paid on time. The formula takes off points for late payments, accounts you have had sent to collection agencies, and any bankruptcies you had in the past 10 years. When accounts you have that are in collections are satisfied, some of the point deduction falls off. This is also the case with accounts that are late. The longer a bankruptcy occurred in the past, the less it affects the score.

Outstanding debt makes up 30% of the score. It is almost as important as your payment history. While it may appear that payment history is vastly more important than your outstanding debt, in terms of credit risk, the two are very close in significance. Even if a person has a good payment history, a significant amount of outstanding debt indicates that person has fallen into a debt situation that has the potential to become unmanageable.

Length of credit history also plays an important role in your credit score. In this category, people who are older or established credit at a younger age have a major advantage. The formula uses length of credit history as the basis for 15% of the score. The formula estimates that people with longer credit histories are better to lend to than those who have just opened a line of credit. Also, it favors longevity with a lender versus those who have closed old accounts in favor of new lines of credit.

10% of your credit score is determined by how many new accounts you have opened. Any time you open a new line of credit it can temporarily lower your credit score.  While this may seem like a bad thing, opening new accounts for people with a limited credit history still improves their score because you must establish credit with a good payment history and ever increasing credit limits.

The kinds of credit accounts you open effects 10% of your score. Mortgages and car loans are better than credit cards. Credit cards are better than payday loans or title pawns. Having a mortgage makes you look more stable to lenders while having a payday loan and high credit card balances may indicate poor financial wellbeing.

Credit scores are convenient and they allow lenders to make decisions on credit quickly and conveniently for you and them. By building a credit profile that raises your credit score, consumers can make better decisions about credit and have more options to get credit at a lower cost.

Are you having trouble with your credit? Are lenders or collections agencies harassing you?  If they are there’s a good chance they have already had a negative impact on your credit score.  Come see the attorneys at Harmon and Gorove today for a free consultation about how we can change your financial situation through the bankruptcy process and start your on the road to rebuilding your good credit.