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Hold it, fold it or run

You’ve got to know when to hold ’em,

know when to fold ’em;

know when to walk away,

know when to run…

Thus is the advice that is given to a young protege of the Gambler in the hit Kenny Rogers song. This advice is also good for people who are facing problems with debt to consider.  One of the toughest things for people who are facing uncertainty about their finances is knowing when to fold and get the financial help they need. 

We often play a bad hand

Almost everyone wants to repay their debts. We feel like it’s the “right” thing to do.  Paying your debts fits the narrative of the hard working hero who scrimped and went without to pay your debt in full.  Lord knows the creditors who push these massive debt loads onto people with the false assumption that they’ll be able to pay want you to think that not paying your debts will be the financial ruin of you until the end of the world. 

If you’re in debt, it’s hard to know what your choices are and to know which debts are the best to get rid of and which ones you need to keep. 

The problem is that no one talks about the actual cost of paying off burdensome debt.

Nobody talks about people who have such a strong commitment to pay burdensome debt, get blinded to other needs and other financial pitfalls.

Certainly, no one mentions good people who sacrifice and still fail to find a way to pay off their debts.

Nobody seems to care about the elderly; drowning in debt with no hope of better times ahead.

So how do you know how to play your hand, so to speak, when choosing the best way to succeed at getting out of debt?

Just like the cards you have, the decision about what to pay (hold) or file bankruptcy on (fold) depends on a number of factors. 

What’s the amount you owe?  

HOLD:  the lower your total debt, the more likely you can succeed in paying it off.

FOLD:  If you have a very large amount of debt it will take longer to pay off and will likely cause other events to interfere.

What’s your age?

HOLD: If you’re young, you have more time, theoretically, to pay off your debts due to the amount of time you have left in life to work. 

FOLD:  If you’re close to retirement, now’s the time to seriously start looking at cleaning up your finances

Do you have critical debts?

HOLD:  Do you owe taxes, have a mortgage or owe some kind of domestic support? These critical kinds of debts should take priority over unsecured or other debts that could be discharged. If you don’t owe these types of debts, a payment plan for other debts can often succeed.

FOLD:  paying unsecured bills when you owe these critical types of debt is EXTREMELY risky.

What does your retirement savings look like?

HOLD: IF you have a pension or a substantial amount of money saved for retirement, you can try to get your debts paid.

FOLD:  If you’re way behind on saving money for your golden years, wouldn’t it be better to use that money to save for retirement instead of paying back unsecured creditors?

Do you have an emergency savings fund?

HOLD:  If you have a big enough cushion to sustain a loss of income, try to pay off debt.

FOLD:  If you’re like the majority of Americans and have very little saved, you make yourself even more vulnerable diverting money to existing debt.

How to succeed

The number one thing you want to avoid is spending money you don’t have on old debts when you have no reasonable chance of succeeding.  Living paycheck to paycheck with no savings isn’t a good way to live and it makes life very tough. The young protege got some good advice for that taste of whiskey.

Kenny Rogers’ gambler told him:

That the secret to survivin’

Is knowin’ what to throw away

And knowin’ what to keep

Keep paying on old debts only if you have the ability to succeed.  Otherwise… well you know how the rest of the song goes. 

If you feel lost and are unable to find a way out of debt, contact the attorneys at Harmon and Gorove.  We have helped tens of thousands of people get the help they need in order to get the fresh start they so desperately need.  

 

A Study: Debt in Georgia

Consumer debt all over the country is approaching record levels.  We are all aware of the student loan crisis and medical debt, but the reality is, debt of all kids is at an all time high.  Citizens of the State of Georgia are facing incredible levels of debt.  More than 39% of Georgia residents have at least 1 account currently tied up in debt collection.  A recent CNN report states that more than $14 Trillion dollars of debt is outstanding in America.  That includes mortgages, student loans, car loans and credit cards, medical debt and other debts.  These levels of debt are scary to most people because levels of debt this high represent unsustainable amounts of money to service these debts.

The average American Family lives on less than $64,000 per year and while that number has risen lately, it pales in comparison to the average amount of debt carried by Americans at more than $137,000 .  Citizens of Georgia face higher collections and levels of debt that the national average. Citizens of Georgia have on average about $2,700 of credit card debt which on average costs around $275 a month in payments in order to actually pay it off.  That is a significant payment for most citizens in Georgia who average a gross monthly income of only $4,600 before taxes.  

What can we do about debt? Well that’s the million dollar question.  We try to pay it off if we can.  No one takes out a loan wanting to not pay it.  We often find ourselves struggling to deal with paying our debts and maintaining basic necessities and unexpected emergencies.  If your level of debt has become unsustainable, contact the attorneys at Harmon and Gorove to see how we can help you achieve freedom from debt with a completely free consultation with one of our award winning attorneys.

Don’t let the fear of bankruptcy hold you back: It will get better.

Fear is a powerful thing.  Fear motivates people and holds other back. It’s true,  your life after bankruptcy may be different than it was before you went and made the best financial decision you’ve made recently. While its true that bankruptcy generally reduces your credit score, it’s likely that your credit was already not so great.  Bankruptcy can occasionally make it harder to get credit in the future, especially in the short term, but over time things get better.

Fear of bankruptcy and its aftermath isn’t a good reason to avoid using it when you need it. Bankruptcy is there for a reason and that reason is to help you in your time of need.  Bankruptcy can free up your finances and allow you to get through life without the need to take on more and more debt. With the financial freedom and stability bankruptcy provides, you may not even miss the credit lines you once had.

Recovery after bankruptcy: What happens next?

After a bankruptcy you’ll be considered, at least temporarily, a high risk borrower. Your best bet for rebuilding your credit is to make on time payments with your utility providers, especially cell phone and internet companies as they often report on your credit. With a Chapter 7 bankruptcy, you’ll have it reported on your credit report for the next 10 years and if you choose a Chapter 13 bankruptcy, it will stay on your credit report for the next 7 years. 

While you may have trouble getting loans or credit, most people are able to get credit for some kinds of purchases after only a year or two.

While you’re in the bankruptcy process you’ll encounter some minor difficulties on occasion. You may find it harder to rent an a place to live, buy a car or get a job.  If you already have a place to live and a good job or a reliable car, do your best to maintain the status quo. It could be difficult to get a car loan immediately after bankruptcy and while many landlords understand that people get in trouble sometimes, there are landlord who may exclude you if you have poor credit. 

After bankruptcy, the key things to do is remember to pay all of your bills on time. Stay current on them so that your new post-bankruptcy record stays clean and shows positive change from the bankruptcy moving forward. You may want to take out a credit card that requires a full deposit. These are available at many reputable banks and are usually available to people regardless of their credit history. This kind of card is designed to help you build your credit on one hand and it also keeps you protected by not allowing you to borrow more than you put down as a deposit. 

These are some things to think about with bankruptcy. We are always up front with our clients about he way their life will change. Your life may change after bankruptcy, but you will be able to move on and have a life without debt that overwhelms you. If you’re interested in scheduling a free consultation to discuss your options, contact the compassionate attorneys at Harmon and Gorove for a free consultation today. 

Chapter 7 is often a better choice than debt consolidation

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

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.