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Is Debt Consolidation Right for You?

There are many reasons why people are struggling with debt and seek options that will help them get out of it. Your Marietta Debt Consolidation attorney Matthew Cherney can help lower and pay off any current unsecured debts that you have. If you are looking for a way to get out of debt, debt consolidation may be the best option.

Reasons Behind Debt

You will need to figure out when you started accumulating debts so that a solution can be found. There are several reasons why people experience debt such as:

  • Unemployment
  • Emergencies
  • Medical bills
  • Student loans
  • Auto loans/Repossession
  • Overdue mortgages/Foreclosure
  •  Bankruptcy
  • Among many other reasons

The best thing to do while going through the process of debt consolidation loan is to make a budget plan so that your bills and creditors will be paid on time. It is also important to remember that you should not spend more than what is within your means.

What is Debt Consolidation?

One of the first things to understand is knowing what debt consolidation is and learning how it will help to clear your debts. Debt consolidation is a legal opportunity that allows debts to be lowered, grouped together, and paid with a consolidation loan. You will be able to pay off debts by paying a fixed amount every month until your credit is cleared. Debt consolidation is an option that is open to everyone, and this even includes those with secured debt with collateral or unsecured debt.

Applying for Debt Consolidation

Having the option to pay off accumulated debt by applying for a loan can seem easy at first, but not everyone is eligible. Lenders require a certain credit score before they will approve an application. A low credit score is considered a risk to lenders, so there is a chance you may not be approved. The higher your credit score is, the more likely a consolidation lender will approve your application.

Another factor that is considered by lenders is the total amount of debt you have. If your debt is too low and does not reach the minimum threshold for a consolidation loan, a lender is less likely to approve the loan. A debt consolidation lender will also consider the amount of the loan to be paid back, monthly fees, and how long it will take for you to pay back the loan.

How does Debt Consolidation work? 

It is important to keep in mind that a debt consolidation loan can help relieve debt, but it is not an overall solution. You will still have to pay back the loan through a debt consolidation lender in addition to paying any recurring monthly bills such as a mortgage, rent, electricity, water, or cable bills. It is necessary to know if you can afford to pay off the loan and still live fairly comfortably; you should not have to struggle unbearably while paying off your debts.

Debt consolidation can be a perfect option if you are well organized and can follow a budget plan that will help avoid overspending. This alternative solution to clear your debt should be considered as a temporary aid. It is designed to provide a better start for managing your financial difficulties.

Making A Budget Plan

Having a budget plan will help keep financial transactions well organized so that creditors will be paid on time. It is also a good idea to consult a professional financial lawyer or advisor for help. An attorney can help you devise an effective plan to remove debts as quickly as possible.

By assessing all of your spending habits, it will be much easier to determine the crucial spending necessities. Once a spending pattern has been observed, a financial plan can be made so that you can pay off the consolidation loan as soon as possible.

Learn More About Debt Consolidation

By understanding what debt consolidation is and how it works, the better the chances to get out of debt. It is not a good idea to wait until you are almost bankrupt to apply for a consolidation loan, but instead, identify the problem at an earlier stage where debts are more manageable. Take the time to decide if this type of loan is right for you and consult a professional Marietta debt consolidation attorney to find out what steps you need to take to start your path towards financial recovery.

Don’t Fall Victim To Illegal Debt Settlement Companies!

Anyone who is in deep debt could be especially vulnerable, which is one reason why they may seek aid at the end of his or her wits. Most of the time it is debt adjusters who answer and provide assistance.

It would be nice to say debt adjusters were always honest, but that is not always the case. Some of the companies do not pay on time and violate the Debt Adjustment Act that says creditors must be paid within 30 days after receiving the money.

Of course, the consumer now has the right and should definitely pursue legal action against the debt adjuster for blatant violation of the Act.

The company may be forced to return all fees that you ended up paying or charges that resulted from their negligence. The violation itself could also award you a restitution, which could be as high as $5,000, and that is a helpful amount no matter what.

How Debt Collecting Companies Lure Customers In?

The debt adjustment industry is growing dramatically, which is making room for illegal debt settlement companies. It is no secret that many Americans are suffering and looking for solutions, which is what these companies take advantage of.

Most people who are having trouble paying their debts often consider bankruptcy as an option. However because of many misconceptions of bankruptcy, debt collecting agencies can play upon that fear. Debt adjusters often times advertise themselves as an alternative solution, claiming that they could clean up your credit in a short period of time.

Debt settlement companies have been know to tell clients to stop paying all unsecured creditors. The client is then told to send all the money owed to debtors to the debt settlement company itself. The fees for the company’s services are collected upfront before any debtors are paid.

Most of the unscrupulous actions taken by debt settlement companies were declared illegal by the Federal Trade Commission since October 27 back in 2010. This was probably done because many of these solutions are riddled with discrepancies that are withheld from the client.

The Part that is Withheld From You

What makes debt settlement companies potentially bad for you is that working with them does not guarantee that the credit cards companies that you owe money to won’t file a debt collection lawsuit to get their money from you.

Some credit card companies do not go after you and decide to bundle up all the money you owe into a portfolio that is labeled uncollectable. This does not mean your debt is gone. In fact, sometimes, it is sold off to junk debt buyers for a fraction of what is owed. These junk debt buyers are a shady bunch who make it their business to collect what is owed. They do this by filing derogatory credit entries against you or by making harassing calls to you. These calls are so bad that they usually violate the Fair Debt Collection Practices Act.

Of course, it is possible that the debt settlement company you hired ends up paying off your bills, but this also means you may be issued an IRS 1099-C. Consumers have to report any debt that has been forgiven if that debt exceeds $600, which may end up hurting you.

Furthermore, at least in the state of Georgia, these debt settlement companies have been made illegal. So, the first lie they are telling you is that they are still a viable option in this state. Those who have fallen victim to these companies should consider fighting with your Marietta Debt Relief attorney at Cherney Law Firm. Do not fret, the free consultation offered comes with no strings attached.

Top Reasons Why You Should Consider Bankruptcy

Whether you’re upside down in debt because of being unemployed, too much spending, medical bills, college tuition or anything else, you should know that you’re not alone!

Last year, almost 773,000 individuals found themselves in the same situation.

You at one point or another might have considered filing for bankruptcy.  Bankruptcy can help those in financial distress get a fresh start and start over again.

Does Bankruptcy Really Work and is it the Right Fit for You?  Here is what you need to know

When is a Good Time to Consider Bankruptcy?

Anytime your income is insufficient to pay your debt while also maintaining your household expenses, bankruptcy is an option worth looking into. Matthew C. Cherney, a bankruptcy attorney, says that a good rule of thumb is to take a good look at the total amount of debt that you owe.  If the monthly expenses associated with servicing the debt comes close to, or exceeds your monthly income, then you may be an ideal candidate for filing for bankruptcy.

Some debts such as child support, income taxes and student loans cannot be discharged in bankruptcy, so one should really consider monthly figure as an expense, rather than a debt.

In Georgia and other states, the bankruptcy laws require many different forms and schedules to be filed with a bankruptcy .  These forms also depend on the chapter of bankruptcy.  Some of these forms are Chapter 7 and Chapter 13.  Let’s explore these in detail.

Chapter 7 Bankruptcy

Chapter 7 is commonly referred to as a “liquidation” bankruptcy.  Chapter 7 is oftentimes associated with what people think of when they think of bankruptcy.  A business bankruptcy would be a Chapter 11.

After your bankruptcy attorney files your paperwork, the judge will appoint a “trustee.”  The trustee’s job  is to investigate your financial affairs search for any assets, and, if appropriate, sell, or liquidate these assets, and pay any monies to your creditors.

You are allowed certain exemptions to protect your property, and this situation only becomes relevant when the value of your assets exceed your exemptions.  If that is the case, you may want to consider a chapter 13 bankruptcy in order to protect your assets.

Did you know?

Abraham Lincoln filed for bankruptcy in 1838.  Prior to the Civil War, Abraham Lincoln had considerable debt associated with the purchase of several general stores.

Chapter 13 Bankruptcy

If you do not qualify for chapter 7, or are attempting to protect your assets and have regular income, chapter 13 may be a better solution for you.  In chapter 13 one can propose a plan to pay back their debt (or a portion thereof) over three to five years.

Another benefit is that Chapter 13 can treat certain debts that are not dischargeable in chapter 7.

What is the Immediate Benefit of Bankruptcy?

The one thing that ALL forms of bankruptcy have in common is the wonderful feature known as the “Automatic Stay.”

Immediately upon filing bankruptcy,  the automatic stay prevents most creditors from collecting any outstanding debts.

This means:

  • No more lawsuits;
  • No more harassing phone calls;
  • No more “Final Demand” letters sent to your home;

Instantly all of these things that keep you up at night, as well as any outstanding debt- are all washed away, or “discharged,” in legal terms.

Read more about Automatic Stay

What is the Negative Impact of Filing for Bankruptcy?

After filing, your credit score will be impacted.  However, if your credit score is already rather low, the impact will be nominal.  Bankruptcy will remain on your credit report for a period of years (depending on the chapter); however, this time frame may pale in comparison to the length of time necessary to pay back your debt.  You will also be surprised at the amount of credit card offers you’ll receive after your bankruptcy is discharged.  When used responsibly, a credit card is an excellent way of building your credit back up.

So is Filing For Bankruptcy a Good Thing?

The thought of bankruptcy may be unpleasant, but you will not believe the relief you feel after filing.  Filing with a trusting attorney should make it a pleasant experience.  Nobody ever wants to end up filing bankruptcy, but it can be a better alternative to harassing phone calls, intrusive letters, lawsuits and garnishments.

If you or someone you know is going through hardships due to outstanding debt, give our office a call today and speak with attorney Matthew Cherney of Cherney Law Firm, LLC.

Vehicle Repossession and Chapter 13 Bankruptcy

One reason for the overwhelming increase in vehicle repossessions is the rise of sub-prime vehicle loans. Sub-prime borrowers account for nearly 1/3 of the new car loans. Sub-prime borrowers are sure to be saddled with the highest interest rates (15% – 20%), and the longest loan terms (60 months – 72 months). Inability to maintain payments may result in repossession. A chapter 13 bankruptcy will stop a repossession, and allow the borrower an opportunity to pay the loan back over a period of 3-5 years, oftentimes at a significantly reduced interest rate.

Is Fear Holding You Back from Filing for Bankruptcy?

People often hold out for a hopeful solution, even while their debt is mounting fast. They cling to other solutions besides bankruptcy- getting a raise, selling their house, and so forth. Why is bankruptcy the “worst case scenario” and something that causes individuals to drag their feet in trepidation? Continue Reading

Keeping Your Home in Bankruptcy

Depending on your income and debts, bankruptcy can actually help you stay in your home. While saving your house is possible with Chapter 7 bankruptcy, Chapter 13 (also known as reorganization bankruptcy) is normally a more advisable option when faced with foreclosure. How can you know which is right for you? Continue Reading

Do I Qualify for Bankruptcy? Which Chapter?

The first question for many people considering bankruptcy is “do I qualify?” In order to determine whether you qualify for bankruptcy, you should consult with a Marietta bankruptcy attorney. As a general rule, almost everyone qualifies for bankruptcy. Find out more about qualifying for bankruptcy here. The real question is, “What Bankruptcy is Right for Me?” Continue Reading

Is Filing for Bankruptcy Going to Hurt My Credit?

Usually, those who are filing for bankruptcy already have a bad credit score because they have been unable to pay their debts. Filing for bankruptcy can help those who need to get their debts discharged and get a fresh start on life. Most find that their credit scores begin to improve after they have filed because they are able to pay off their newly decreased debt, rather than watching it continue to accrue. Continue Reading

Roswell Bankruptcy: Discharging Debt in Chapter 7

The federal bankruptcy laws allow certain debts to be discharged. If you receive a discharge, you will no longer be legally obligated to pay back that debt. Certain debts cannot be discharged. These include child support, spousal support and most income taxes. Generally speaking, debts that can be discharged are unsecured debts, such as medical bills, credit card bills and personal loans. Continue Reading

Reaffirmation Agreements Explained

In some situations, a person filing bankruptcy may want to continue paying a particular debt, even if that debt can otherwise be discharged. In most circumstances, this debt is tied to either a home or car. In order for this debt to survive discharge, you will need to sign, and have filed with the court, a reaffirmation agreement. Continue Reading

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