Credit and Credit Cards

Chapter 7 is often a better choice than debt consolidation

in Bankruptcy, Credit and Credit Cards

Every day, you turn on the radio and listen to product advertisements.  One of the major advertisers in the United States are debt consolidation companies.  You see their ads on TV and hear them on the radio every day.  They pop up in your facebook feed or in some google ad on the side of a webpage.  They make fantastic claims about being able to reduce your debts and consolidate your debts into a manageable debt load like they have some kind of magic wand.  It sounds like its too good to be true, and it often is.  What they’re selling you costs money, lots of it.  They make very good money on people’s need to be free of the burden of unmanageable debts.  Most of these companies just consolidate your existing debt into another loan with a lower rate.  When you’re already struggling, how are you going to make the payments on another, albeit potentially smaller loan. 

Another reason why debt consolidation can be dangerous for those struggling financially is that using a lump-sum payment to reduce the balance on your credit cards means that there’s more money to spend on your credit cards and the cycle of debt often just starts over again.  Debt consolidation loans can actually cause you to end up deeper in debt than you already were. 

Debt consolidation is a temporary fix at best.

Consolidating or reducing your existing debts may feel better temporarily but it fails in one aspect.  It doesn’t address the issue of having a substantial debt load still out there that is no longer sustainable with your current income.  You’ll probably still have a very high debt to income ratio and you’ll probably still be spending a ton of your disposable income servicing this newly consolidated debt.  Chapter 7 Bankruptcy can change that.

Chapter 7 proceedings can eliminate your debt, freeing you from it forever

Debt consolidators just change who you pay.  Instead of having to write 10 small checks every month, you write one big one to a loan company.  Sometimes, it feels good and gives you a false sense of security because you pay a lower interest rate or have lower monthly payments due to the loan being spread out over a longer period of time. The bottom line is though, you will still have to repay those debts in full.

In a Chapter 7 bankruptcy, those debts no longer impact your financial future. If you qualify for a Chapter 7 and successfully complete your bankruptcy proceedings, the result will be a discharge of your unsecured debts, such as credit cards, signature loans and medical debt.

Instead of being on the hook to repay thousands of dollars, you’ll have a blank slate that will free up more of your income for other expenses. You’ll also have an opportunity to rebuild a positive credit history. Instead of spending all your time worrying about bills and struggling to make monthly minimums, wouldn’t it be nice to be able to have the money every month to handle your finances responsibly and buy not just what you need but what you want as well.  Contact the attorneys at Harmon and Gorove today to find out how we can help you get debt free.

Millennials & Credit Cards

in Bankruptcy, Credit and Credit Cards

The types of people carrying credit card debt is changing in Georgia and around the country. Millennials, a group of people born between 1981 and 1996,  were once known for their aversion to overdue bills, especially as many of them became adults and entered the workforce during the Great Recession. Because of this experience, a significant number of millenials steered clear of credit cards. However, as they have experienced salary growth and with credit card issuers developing cards that are particularly appealing to younger people, millennials have taken on a larger and larger share of credit card debt.

Along with that overall increase in credit card debt, millennials now experience higher levels of delinquent debt. Over 8% of credit card balances carried by these younger Americans were more than three months past due. This marks a high in the level of delinquent debt carried by younger people not seen in nearly a decade. Experts say that millenials and other young people have been inspired to open credit cards as purchasing power and income has grown. Many of these new cardholders feel confident that they will be able to pay back whatever bills they run up. The problem is, life often gets in the way. Personal circumstances like an unexpected job loss or an illness can interfere with a person’s ability to pay. When credit cards are involved, interest rates are exceptionally high, occasionally topping 35%. Even people with exceptional credit often pay interest rates of 18%.

Credit card companies often tweak their marketing to appeal more strongly to young people. These companies use tons of data and studies show that traditional incentives like 0% interest and cash rewards are less enticing for millennials than sign-up bonuses or travel credits. The worst part about the rise of credit card debt is that it accompanies a big rise in interest rates recently by the Federal Reserve.  This makes it even more expensive to carry a balance on a revolving line of credit like your traditional credit card. 

When people find themselves facing insurmountable debt burdens, they may not see the light at the end of the tunnel. However, a qualified bankruptcy attorney could provide sage advice and educate people on the available options that can help you achieve your financial goals. If you find yourself drowning in debt contact the attorneys at Harmon and Gorove.  We have decades of experience helping people achieve the dream of being debt free. 

COVID-19 and your Finances

in Bankruptcy, Credit and Credit Cards

COVID-19 is a disease the likes of which no one alive has witnessed or has any real recollection of.  While we’re Attorneys here and not Doctors, we know that COVID-19 has a real impact, not just on people, but their finances as well.  Many Americans don’t have paid sick leave and if they do, perhaps they don’t have enough.  Many people work in industries that often shut down when they don’t have enough visitors like hospitality, the restaurant business, lodging and seasonal jobs that depend on foot traffic.  Let’s be honest, I don’t know about you, but I do know that I’ve been out and about and all I can say is, foot traffic is at a minimum to say the least.  Additionally, with schools and businesses closed, many of the industries that support these large employers like parking attendants,  dry cleaners, sanitation workers, janitors and custodians as well as hourly secretarial staff are all seeing hours cut back or eliminated period.  A recent CNN article suggested that more than half of all jobs in America are at risk.  The author states, “Nearly 80 million jobs in the US economy are at high or moderate risk today, according to analysis in the last week from Moody’s Analytics. That’s more than half of the 153 million jobs in the economy overall.” We could potentially take years to get back to where we are today if the worst case scenario materializes and for many, that is simply too long.  Thousands of small businesses will be affected by the economic downturn and millions of people will experience furloughs, layoffs and closures.  That said, we are here to help.  Harmon and Gorove has successfully helped people navigate economic downturns and have assisted them in making their financial situation work for them, even in the worst of times.  We understand that no one ever expects to be here, but don’t worry, we are here to help in a compassionate and judgement free way.  If you’re suffering from job loss, or simply just having your hours cut, contact us today for a free, no obligation consultation to learn how we can help you navigate the most recent economic downturn. 

5 Common causes of Debt

in Bankruptcy, Credit and Credit Cards

People come into our office all the time with debt.  It’s kinda what we do.  If you’re here and you’re not in debt or seeking a divorce, chances are, we won’t be able to do much for you.  Over time, this has given us perspective on what actually causes debt.  Below are the top five causes of debt. 

1. An unexpected emergency

Many people find themselves in debt because they aren’t prepared when something bad happens. Your entire HVAC system may go belly up and need significant repairs. You may crash your car or get really sick only to find your insurance doesn’t cover everything. To keep these scenarios from wiping out your savings and leading to debt, you once again need to boost your emergency fund.

2. College costs

Going to college is expensive. So many people find themselves saddled with debt from college and often in the early part of their lives. This makes getting ahead and acquiring those assets that help build wealth even harder than before.  The average class of 2016 graduate left school with $37,172 in student loan debt. Those student loans can force a new graduate into even more borrowing just to cover basic necessities, which only furthers the downward spiral into debt.

3. Loss of income

Losing your primary means of generating income can really hurt you. You might have been laid off or maybe you did something stupid and got yourself fired. Maybe you’re self employed and had a sudden decline in revenue for your business. Maybe you had to stop working to care for loved one.  Perhaps your health took a turn for the worse and you were forced to retire early or significantly reduce your hours.  When horrible things like this happen, it’s easy to find yourself overwhelmed and debt can quickly follow.

4. Being poorly insured

Insurance is one of the most vexing things about life. It frequently feels like a waste of money … until you need it. Many people find themselves in very serious debt  when a bad event hits and they aren’t properly insured. Imagine  your house burning down without homeowners insurance or wrecking  your car with a liability only policy. All of these things can lead to serious financial consequences. 

5. Keeping up with the Joneses

People are always looking next door and seeing what the neighbors are doing,  yours truly included. Maybe Todd across the street is putting in a pool or your college roommate is sharing photos of their latest European vacation. Maybe your obnoxious sister-in-law just closed on a house twice the size of yours. Life really feels unfair when you feel like you have to go without and like many people, you may feel pressure to “keep up” with those you perceive to have it better than you. 

DON’T DO IT THOUGH, THIS IS A RECIPE FOR DISASTER.

Chasing a lifestyle your income won’t support will have you turning to credit cards and other consumer debt to fund frivolous buys. The spiral into debt can be quick, overwhelming and unforgiving. The average millionaire drives a Honda, Ford or Toyota, and lives in a normal house in a middle class neighborhood. No one is saying you shouldn’t treat yourself to nice things or go on vacation every once in a while; but if you can’t actually afford those things you’re hurting yourself in the long run.

If you’ve found yourself drowning in debt, whether it’s one of these causes of debt or not, reach out to the experienced and compassionate lawyers at Harmon and Gorove for a free consultation today.  We have decades of experience helping people get their finances back on track and and creating lasting prosperity for our clients.  

The $1,000 Emergency!

in Bankruptcy, Credit and Credit Cards

Everyone has an emergency pop up from time to time.  The car needs repairs, you broke your arm, the toilet is backing up or the roof is leaking.  An unexpected emergency can cause a serious problem for lots of people.  We have talked about the savings rate in America before and how so many people have so little money saved for retirement or unexpected expenses.  A new study recently released by bankrate.com paints a very bleak picture for people in the United States when it comes to funding an emergency. We you can read the study in the post above or we can give you the TL;DR summary here:

  • Bankrate reports indicate that the percentage of U.S. adults who would use their savings to cover a $1,000 emergency room visit or car repair has remained within the range of 37 to 41 percent since 2014.
  • Nearly four in 10 Americans (37 percent) would borrow money in some capacity if hit with an unexpected bill.
  • Among respondents who reported that they or a close relative paid for a major unanticipated expense in the past year (28 percent), the average cost was $3,518.

 

Having an emergency can be expensive.  The average cost of an unexpected emergency expense is over $3,500.  That can put a pinch on the wallet of even the best savers in our country, yours truly included.  Over 30% of the respondents to the survey said that they would have to take on additional debt to cover the expense of a $1,000 emergency.  Many people even turn to fundraising services like Go Fund Me to help with unexpected problems.  While all of these are options in a time of need,  what we really need to look at is the cause of the problem, our ability to save.  So many people are burdened with debt and debt collectors live to make money off the shame of having debt.  Funding unsustainable debt keeps up from being able to get our lives back on track and increase our savings.  

That’s where we step in.  Bankruptcy is viewed by many as a last resort.  Something that is shameful or should only be considered if you’ve exhausted all options.  The truth is, Bankruptcy is a good financial tool that can help you get your life in order and get a fresh financial start.  Harmon and Gorove offers Chapter 7 and Chapter 13 bankruptcy plans to help you get your life back in order and hit the reset button on your finances.  Contact the attorneys at Harmon and Gorove today for a free consultation.  Let us help you sort out your life so the next time a $1,000 emergency comes along, you’re prepared. 

72 Month Loans: A Car Buying Nightmare

in Bankruptcy, Credit and Credit Cards

For many Americans, buying a new car is a reason to celebrate.  People often choose to buy a car when a major milestone occurred such as graduation from school, a marriage, the birth of a child getting that promotion or reaching the retirement milestone.  However, today’s new cars are more expensive than ever, causing more and more people to take out car loans that stretch past the traditional limit of 48-60 months.  72 month loans are pretty much standard practice with 84 and even 96 month loans becoming commonplace.  While this may seem like a good idea when you’re looking at your monthly payment, this practice is leading Americans down a road of debt that is difficult to come back from,

The Hidden Costs of Car Ownership

With the average cost of a new car climbing over $37,000 in 2019, the average American family is finding it harder and harder to get into any car at all, much less their dream vehicle.  This is where unscrupulous car dealers and banks come into the equation. Car dealers and now selling people cars and financing them for periods exceeding 60 months at an alarming rate.  An example cited in a recent Wall Street Journal article described the plight of a young man who recently purchased a car understanding that he needed the payment to be $400 a month or less.  Once the dealer got them into the finance office, they convinced him to add on high margin items like extended warranties and tire protection packs that added another $100 a month to his loan.  In order to get close to the payment he needed he ended up financing his $27,000 car in a 72 month loan which will ultimately cost him $9,000 in finance charges and not be paid off until 3 years after the bumper to bumper coverage expires and long after any secondary warranties expire as well.  This could potentially leave him paying thousands of dollars out of pocket to cover repair costs in addition to his $500 a month payment.

Fortunately, There’s help

If you are one of the unfortunate people who have found themselves underwater on a car that requires thousands of dollars in repairs, isn’t running at all or is now worthless because of unscrupulous car dealers tricking you into thinking you could afford a vehicle by spreading payments out over an extremely long term, you should consider speaking with one of the attorneys at Harmon and Gorove.  Our attorneys have decades of experience helping good people free themselves from the bondage of debt and unscrupulous creditors.  Contact our office today for a free consultation to learn about how bankruptcy can help you get your finances back in order and your life back on track.