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Bankruptcy Fears
By Micheal Bolinske on 19-Nov-09 11:47.Consumers who contact my office regarding bankruptcy often do so as a last effort. After years of struggle to pay down debt many are concerned how bankruptcy will affect them. The concern can be boiled down to four primary areas: 1) will bankruptcy really discharge my debts; 2) will I be able to keep my belongings and assets; 3) will bankruptcy ruin my credit; and 4) will my friends and neighbors find out.
Creditors do a great job of scaring people away from bankruptcy. Most of the above concerns are a result of a public relations campaign by creditors to misinform individuals about the benefits of bankruptcy.
The question will bankruptcy really discharge my debts is often asked because it seems too good to be true. Many individuals have struggled for years and have been burned by creditors, debt settlement companies, credit counselors or all of the above. Generally an individual who qualifies is entitled to a fresh start which entails the discharge of debts.
The question about retaining assets and belongings is another scare tactic. Bankruptcy is not intended to wipe a consumer out, rather bankruptcy is intended to give individuals a fresh start. To accomplish a fresh start there is a certain amount of exempt property. Many individuals keep all of their belongings and their assets.
The concern about credit score represents another scare tactic. News reports are ripe with the importance of a good credit score. What the reports don’t tell individuals is that a credit score will remain low for years while a individual struggles to pay off the debt. Beyond that most individuals who have missed even a few payments have a very low credit score anyway. Individuals who have filed bankruptcy can begin to repair their credit immediately.
Finally the fear of social stigma, my friends, relatives, and neighbors will find out. A recent statistic has revealed that one in ten people in the United States have filed bankruptcy. Likely the very same friends, relatives and neighbors have also filed bankruptcy. Bankruptcy is a mater of public record but individuals would have to seek out that information. Bankruptcy filings are not routinely accessible. Even beyond the facts, I always remind individuals that the most important thing to consider is the future. Saving face by avoiding bankruptcy because of the stigma at the expense of saving for retirement, education, homes, etc...
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Doug
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Reply #1 on : Mon November 10, 2008, 21:31:52
The problems with debt settlement companies
By Chad Bolinske on 17-Nov-09 10:34. In my time working as a bankruptcy attorney and an attorney for creditors I have come to the conclusion that you need to check out your debt settlement company carefully before giving them your hard earned money. The reason being is often the companies promise to get people out of debt but do not deliver on that promise. Instead what happens is the debt settlement company is only interested in extracting exorbitant fees from their clients. The debt settlement companies actually make a bad situation worse by getting many of their clients sued by the creditors resulting in judgements and garnishments.I have talked to a number of clients and the fees charged by the debt settlement company ranged from 50% to 90% of the total monthly payment. In many cases the client would have been better off consulting with a bankruptcy attorney to determine if that would have been a better option. In many cases the fees charged by a bankruptcy attorney will be lower than the debt settlement fees. A good article discussing this is found at http://online.wsj.com/article/SB122394458494631223.html.
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Anonymous
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Reply #2 on : Sat October 10, 2009, 18:40:06
Doug
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Reply #1 on : Mon November 10, 2008, 21:31:52
Debt Settlement
By Micheal Bolinske on 13-Nov-09 15:20. Out of court settlements are one of the few truly viable alternatives to bankruptcy. Such settlements are generally private contracts between the debtor and creditors. In exchange for a certain amount paid by debtor, creditor will discharge the remaining liability. When settlement works it works. The problem is all too often settlement does not work.What debt settlement companies do not tell consumers is what is in the fine print. The fine print can include withholding payment by the debt settlement company until the creditor agrees, which can take months if at all. In the meantime creditors are free to continue their collection methods including but not limited to: harassing phone calls, dunning letters and lawsuits aimed at obtaining judgment.
The problem has gotten so bad that a recent article in the Wall Street Journal, found here: http://online.wsj.com/article/SB125763415390436265.html?mod=WSJ_hpp_sections_personalfinance
details the troubles with the debt settlement industry. The article basically paints a picture of the wild west where unscrupulous debt settlement companies promise the moon but in actuality have less than a 10 percent success rate.
As a result, the Federal Trade Commission, States Attorney Generals and Congress have taken up the issue. Your best bet to protect yourself is to know all your options. The following websites can offer some guidance: National Foundation for Credit Counseling (www.nfcc.org); Bolinske & Bolinske (www.bolinskebankruptcylaw.com); and Credit.com (www.credit.com).
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Anonymous
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Reply #2 on : Sat October 10, 2009, 18:40:06
Doug
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Reply #1 on : Mon November 10, 2008, 21:31:52
Credit Card Interest Rate Hikes
By Chad Bolinske on 12-Nov-09 10:30.Credit card companies are raising interest rates in advance of the new federal legislation limiting credit card interest rates and fees. The raising of interest rates is happening for most of the credit card companies customers. They are raising interest rates for even the most credit worthy individuals. The raising of the interest rates can make credit cards all but impossible to repay on a monthly basis. Many consumers are seeing interest rates in excess of 30.00%. The credit card companies are rushing to increase rates before the new federal law goes into effect in February. At a 30% interest rate even a $20,000.00 balance equals payments of around $6,000.00 per year. Is it any wonder that people need to file bankruptcy given these types of interest rates and repayment schedules? This is a link to an article discussing the changes in a bit more detail http://www.bankrate.com/finance/credit-cards/8-major-benefits-of-new-credit-card-law-1.aspx.
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Anonymous
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Reply #2 on : Sat October 10, 2009, 18:40:06
Doug
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Reply #1 on : Mon November 10, 2008, 21:31:52
Alternatives to Bankruptcy
By Micheal Bolinske on 09-Nov-09 10:30.Given the current poor state of the economy it is of little surprise that a new credit counseling service seems to start everyday. I have often wondered whether many of the individuals involved in the home mortgage are the same people who are now starting credit counseling services. Business tends to go where the jobs are and there are currently plenty of jobs providing assistance to consumers in financial trouble. The point is, some of the same bad behavior that created the mortgage meltdown has migrated to credit counseling services.
Although I am a bankruptcy lawyer, not every person who walks into my office is in need of a bankruptcy. Some can be helped by a reputable credit counseling service. The trouble is determining which credit counseling services are reputable and which ones are just trying to make a buck at your expense. The internet is full of credit counselors who promise debt relief but fail to deliver.
Credit counseling at a minimum should include preparing a proper budget that determines whether an individual will be able to pay back the debt through a structured payment plan. If the budget does not balance, bankruptcy is in all likelihood the best option. Even in cases where bankruptcy is the best option, good credit counseling can be invaluable to teach individuals how to properly manage their money in the future. In completing a bankruptcy for our clients our goal is to give them a fresh start.
The best bet for a consumer looking for a reputable credit counseling service is to check with the Minnesota Attorney General’s Office, the Federal Trade Commission and the Better Business Bureau
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Anonymous
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Reply #2 on : Sat October 10, 2009, 18:40:06
Doug
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Reply #1 on : Mon November 10, 2008, 21:31:52
Posts: 2
Reply #2 on : Sat October 10, 2009, 18:40:06