Charlotte, NC Bankruptcy Lawyer and Debt Settlement Legal Services

Posts Tagged ‘credit card debt’

Reality Check: There’s no “I” in Bankruptcy
The fact is that filing for Chapter 7 Bankruptcy is less about the person and more about the process. Let me say it a different way- there is no “I” in Chapter 7 Bankruptcy. Here are some examples of opening statements that have no relevance in the realm of personal bankruptcy.
1) “I want to…..”
2) “I think that ….”
3) “I feel that….”
4) “I don’t agree ….”
As a culture, Americans have become accustomed to services or items centered on their personal desires. Easy example? I-pod- the music and media that you want, when you want it, in the size that you prefer with lots of accessories to customize the product even more to each individual’s preferences. In the arena of bankruptcy, your personal opinions, preferences and beliefs have very little relevance or impact on the process at hand. And speaking from experience, clinging to those opinions, preferences and belief systems can escalate your financial troubles from bad to worse. Just because you think that the antique car you inherited from your Uncle Bob is exempt from personal property because it was a gift doesn’t necessarily make it so. Failure to list any asset can result in your petition for bankruptcy protection being rejected by the bankruptcy trustee, expose you to implications of perjury, and waste precious time and money that are hard to come by these days.
Here is another real life example. “I want to file for bankruptcy.” Just because you want to file to have your debts discharged and start over fresh, doesn’t mean that you can. There is a detailed test called the “means test” which will determine if you are eligible to file for bankruptcy. That’s right folks, just like you have to pass a credit check to apply for a mortgage or credit card, you also have to pass the “means test” to be eligible to file for bankruptcy. So regardless of what you think or your friends all tell you, there are certain criteria you must satisfy in order to file for bankruptcy. In many cases, our clients pass the means test and the bankruptcy makes financial sense, so we proceed. In other cases, we have to explore different avenues. With the last round of bankruptcy code overhauls, there are lots of things to consider.
The economy continues to creep along at an alarmingly slow rate, forcing many Americans into financial crisis. My advice to anyone who has given even a passing thought about filing bankruptcy. Get the facts from a licensed attorney or legitimate non-profit agency. Many bankruptcy attorneys offer complimentary consultations, verify the credentials of the firm or attorney with the NC State Bar Association and the Better Business Bureau, then take advantage of this opportunity to find out if bankruptcy is a viable option for your personal situation. DO NOT employ any debt settlement firms until you get advice. There has been more fraud than it’s worth in dealing with out of state debt settlement companies that promise the moon and the stars.
Sometimes in life, there are policies and processes bigger than us. Unfortunately, bankruptcy is one of them and legal guidance will significantly increase the likelihood of successfully navigating through the process. Make sure you get advice from a licensed attorney on whether you can file, whether you should file, or whether there are better options out there based on your own unique set of circumstances. A well-rounded professional may have some fresh ideas and good insight. Resolving the financial woes you are facing is a cooperative process. Fully disclose everything to your attorney. Participate and listen to the recommendations, and don’t commit anything to your creditors until you have a roadmap in place—then simply stick to the strategy.

Remember when it was encouraged to borrow more and acquire additional credit cards? Consumers were told that having credit card debt was actually a “plus” as the monthly payments they made demonstrated the willingness to pay as well as established a history of responsible, timeliness. Almost everyone was approved for some type of extended credit by which they could indulge themselves with purchases outside of their immediate financial means. When individuals exceeded their credit limits, typically a simple phone call was all that was required to have the issue resolved and the limit increased. Sometimes, the credit card company would automatically increase the limit as a “courtesy” to the client. Other courtesies extended by credit card companies to their card holders included “skip a payment” coupons and special checks to make use of their credit lines with retailers or service suppliers that did not accept credit cards.
Just like the tech bubble and the housing bubble, the unlimited credit bubble has burst. Suddenly, consumers are feeling the pain of getting too close to their credit card limits as well as the burn of owing to Citibank, Chase, Capital One, Bank of America, American Express, etc, etc, etc….. Debt to Income formulas have overrun the credit card landscape and the results for consumers include massive interest rate increases, over the limit fees, jumps in minimum payments, sudden drop in credit limits and drastic dings to their credit score. Here is an example to illustrate what is happening to many Americans.
Meet Jane. Jane has 7 credit cards with balances on all of them. Jane has been making the minimum payments plus extra whenever she can. Jane’s salary is $50,000 a year, plus bonus, yet her credit card companies have extended to her lines of credit totaling $98,000. On a few of the cards Jane is very close to the credit limit. Jane has two credit cards with several thousand available in credit that she keeps as her “emergency” credit cards. Due to the increased cost of living, Jane has used her credit cards more heavily for daily expenses than in past years.
Jane was planning on paying off some of her credit cards when she receives her annual bonus. Unfortunately for Jane, she learns at a town hall meeting that due to the weak economy and drop in production, there will be no annual bonuses as well as no merit or cost of living salary increases for 2010. Jane is disappointed but tries to be positive and is thankful that she still has a job while so many Americans are unemployed.
Then Jane’s car breaks down. After dealing with the ordeal of getting the car towed to the dealership, calling her employer to let them know she will not be in until later, Jane is presented with a large repair bill. She attempts to pay using her “emergency” credit cards only to discover that the credit limits have been decreased. As Jane must have a can to get back to work, she is forced to write a check. This unexpected expense now puts Jane in the situation where she does not have enough cash to pay her mortgage on time this month and cannot make the minimum payments on her credit cards.
Next month, Jane opens her mail to find that the several credit cards have escalated the interest on her cards to 30% and applied several penalty fees, her minimum payments have doubled in some cases. Jane calls customer service to find out why her credit limits were decreased as well as why her interest rates were increased. She is told that her debt to income level is too high. Jane tries her best to make the new minimum payments, cut back on spending and look for a part time job to supplement her income. Due to the increased interest rates, her debt continues to grow faster and faster, her monthly payments make no difference. Jane attempts to refinance her home but is told that her debt is too high and her credit score has been severely impacted by the late payments and level of debt.
Does Jane’s story ring any bells for you? Many Americans are currently walking in Jane’s shoes and frustrated by the new rules and realities. Clearly, this is not a situation that an individual can solve by themselves. If you are facing similar financial hardship due to reduction in income and soaring unsecured debt, seek the guidance of a licensed attorney or legitimate non-profit credit counselor so that you can change your current path and get back on track towards financial wellness.

I consider myself one of the “small people” that the leader of BP condescended to “ care about”. Raised with 6 other children on a teacher’s income, as a boy, I trimmed hedges and mowed lawns to buy tennis shoes. Later on, I worked fulltime, attended business school and law school in the evenings, and repaired everything from cars to dishwashers with whatever I could find in my garage. So from one small person to another, here is my best advice.
Don’t Wait!!
The cost of waiting is too high. There have been over 50,000 payment claims filed and only 26,500 paid. Passively waiting is the kiss of death and can thrust you and your family into financial crisis, spiraling credit card debt and even bankruptcy. Don’t wait for the date to come, start following up ahead of time and keep detailed records of calls, names, dates, etc.. Consult an Expert.
Not a relative or a friend of a neighbor who once knew someone in a similar situation 20 years ago. Seek out a licensed and credentialed resource (see below) that is knowledgeable about the current legislation and changes to direct you & establish a plan of action. Once the plan is in place, follow it. Ask questions when you are unclear and ask for everything in writing.

Below are the websites and contact numbers for the Bar Associations and some suggested guides for Gulf Disaster Victims seeking Legal Assistance.

www.floridabar.org
www.lsba.org
www.msbar.org

Call the Florida Bar toll free
1.866.854.5050
Call the Louisiana Bar toll free
1.800.421.5722
Call the Mississippi Bar
1.601.948.4471

Helpful Guides:

Mass Disaster: A Victim’s Guide
A Consumer Guide to Client Rights
Guide to Find Lawyer

Remember to verify the lawyer’s credentials before agreeing to representation or handing over any payments. Look for address, Bar number, area of expertise & eligibility to practice law in that state.

While watching the ongoing coverage of the BP Oil Spill in the Gulf, Americans residing in areas outside of the Gulf may naively assume that only those individuals residing and working in the affected geographical areas will be financially impacted. Not true. Many American wallets across the country will be pinched and feel the painful costs in the aftermath of the oil spill.
A simple explanation of the Butterfly Effect metaphor; the concept is based in chaos theory and refers to the far reaching “ripple effects” that are created from the changes which occur once a butterfly flaps its wings. This theory is studied at length in both semi-classical and quantum physics. The Butterfly Effect also appears in popular culture, typically in time travel fiction and films such as drama, “The Butterfly Effect”, starring Ashton Kutcher.
Picture a giant green and yellow BP butterfly covered in dollar sign tattoos., flapping its wings furiously. Here is a preliminary list of who will be affected financially from complete to partial loss of income, reduction in spending or use of services, organizational cost cutting and finally increased cost of goods and services. This is by no means a full compilation, more like the tip of the iceberg.

1) Residents of the Gulf employed by fishing industry
2) Residents of the Gulf employed by hospitality and tourism industry
3) Small Businesses Owners in the Gulf such as diners, gas stations, and franchises
4) Residents of the Gulf employed by small businesses
5) Shareholders who rely upon BP stock dividends as part of their annual income.
6) BP employees
7) Vendors & Sub-contractors doing business with BP
Banks doing business with all of the previously listed
9) Insurance Companies, their employees and shareholders
10) Individuals and Businesses faced with higher insurance premiums
11) Individuals and Businesses who purchase gas and seafood products….
Due to spatial constraints, I end the list and trust that the point is made; the damage is not limited by geographical proximity. BP has set up a $20 billion trust for reparations, as of Day 65, over 51,000 lost wage claims were filed but only approximately 26,500 claim payments were actually issued by BP. Therefore, it is safe to assume that the other claimants are in some degree of financial crisis, with escalating credit card dependency and diminishing cash reserves. Chapter 7 or Chapter 13 Bankruptcy may be the only option for some individuals. Remember though, these are the people that are covered by BP’s $20 billion dollar trust fund, what about everyone else?

WARNING: The Latest Internet Scam is Credit Card Debt Termination.

Too good to be true because it is 100% False.
Consumers be warned- “credit card debt termination” scams are spreading like wildfire right now on the Internet. It usually goes by the name “Credit Card Termination or some variation on that name, and victims are paying thousands of dollars for this bogus service with the false belief that their debt will dissipate and their credit scored will not be damaged. By presenting a phony interpretation of banking and accounting laws, these con artists claim that they can legally terminate all of your credit card debt. They will go as far as hosting phony arbitrations and presenting victims with fake court documents.

This scheme has its roots in the income tax protest movement of the 1970s, where people were claiming that paying taxes was unconstitutional. Among professionals in the collection industry, the “Credit Card Termination” scam is called the “monetary protest movement.” The common theme with these programs is that our banking system prohibits banks from lending out their own money. So how does a credit card bank extend credit then? The protesters claim that the credit card agreement itself becomes a form of money the moment you sign it. Their premise is that the bank “deposits” your agreement as an asset on their books, and then any credit you use is offset as a liability against that asset. The scam promoters claim that all you need to do to wipe out your debt is demand your original “deposit” back from the bank, which will be offset against what you borrowed. THIS IS NOT TRUE or LEGITIMATE!! Just as the IRS shut down the tax protesters, the Attorney General’s Offices are actively prosecuting businesses and individuals for their participation in these fraudulent “debt termination” services.

Individuals in financial crisis may be tempted and lured in by the false promises and bogus testimonials advertised on the web pages of these, only to find themselves in worse trouble and greater debt. As I have advocated in other articles, investigate the credibility of any debt service providers you are considering. Are they licensed attorneys? Do they belong to the Better Business Bureau? Is there a physical office and address you can verify? Though you may feel stressed out, hopeless and think that things could not get any worse- trust me, get involved with one of these bogus “debt termination” scams and things will get a lot worse as your creditors, assuming that you have blithely ignored them, come after you.