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Have you accumulated traffic tickets you have been unable to pay? You may be able to eliminate the debt in bankruptcy with a few exceptions to the rule. Usually in bankruptcy certain debts related to government fines and penalties may not be eligible for discharge in Chapter 7 bankruptcy. But, Chapter 13 bankruptcy may help [...]
Solving your debt problems can be as tough as a blind man trying to describe an elephant.
In the story of the blind men and the elephant, three blind men all come together to describe the animal.
The men are blind, so their descriptions are limited solely to the area of the elephant they touched. One man says the beast is like a tree trunk, another claims the elephant is like a snake.
It’s only when a sighted man walks by and sees the entire elephant all at once do they realize that they’re all wrong. Without perspective and the ability to see the full picture, they’re doomed to incorrect solutions.
Same with your bill problems.
You’ve got a mountain of debts and no clear way of paying them. You can start throwing money at the problem, but without seeing the full picture there’s a good chance you’re not going to get very far.
Let’s put together another plan of attack instead.
Take A Step Back
If you’re too close to the elephant, all you see is grey skin. Take a step back and you’ll notice the rest of the animal.
So, too, with your debts. Look solely at one bill then you don’t have a sense of your entire financial position.
Your credit cards may be up-to-date but your student loans in default. Rather than worrying about the student loans, take a look into ways you can handle the credit card debt.
Step back even a bit more and consider why you need to use those credit cards in the first place. Is your cell phone plan too expensive, which eats into your grocery budget and requires you to use plastic?
Looking at your entire financial picture gives you the perspective you need to get to the heart of the matter.
Brainstorm Ideas
When you’ve got a problem, you come up with the same short list of solutions. But what about something totally off the wall?
For example, about a decade ago I found myself in a financial bind. Business was terrible, my local economy was in shambles, and a major referral source had gone out of business. My debts were spiraling and things seemed hopeless.
Then I brainstormed by sitting down with a pen and a pad of paper. No solution was off-limits, no matter how insane (so long as it was legal and ethical, it was on the table).
After hours of frustration, I came up with a workable plan. I gave my car back at the end of the lease and started using public transportation. I cut my cable service. I sold some extras books and CDs online (remember, this is before iTunes and Kindles).
In the end, I was able to keep afloat until business turned around. Without brainstorming, however, I would likely have been in deeper trouble.
Say (A Theoretical) Yes To Every Option
There’s no single solution to a problem. Rather, there are many ways to get the job done.
Debt reduction can come in many forms, from cutting up the credit cards to credit counseling to smarter budgeting and more. The problem is that we view each of those options from behind the filter of our own biases.
For example, let’s go back to the cell phone plan. What would happen if you switched carriers or plans? Would you lose your phone and, if so, what options are out there for you? If there’s a termination fee, run the numbers to find out when the cost savings evens out.
With credit card debt, pretend you enter a credit counseling program and play out the long-term impact on your finances. How much would you pay each month, and for how long? What’s the impact on your credit score, and will any negative effect be outweighed by your ability to save money for the future?
Run the options by saying YES so you can see how it all plays out.
Be Your Own Best Friend
Let’s say your best friend comes to you with a financial mess.
You’ve done all your homework, brainstormed for the best ideas, and know the pros and cons.
What solution do you recommend?
Going through this exercise helps you keep from going through life like the blind guys checking out the elephant.
Do What You Need To Do
Perspective is useful, but only as an academic exercise – unless you take what you’ve learned and use it.
Whatever solution you find to your debt problems, you need to go out and fearlessly execute on it. Without action, you’re just wasting your perspective and dooming yourself to hanging around with an elephant.
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Like others in Fresno and the central valley, you’re considering the benefits of chapter 7 bankruptcy. The holidays are over and you are avoiding or delaying your bankruptcy for the perceived negative impact it is going to have on your life.Good and bad – there will be consequences for filing bankruptcy. Here are 3 ways your life will change after you file your bankruptcy case:#1 Stress Will Go AwayMost of my bankruptcy clients delay filing for bankruptcy for years – even though they need it badly. Month in and month out you have endured the humiliating and harassing phone calls; will you be sued? Will your wages be garnished? I have watched clients come in the door with crazy with debt. They don't know where to begin...they do not know who or how much they owe. You can’t sleep. Your mind is filled worry. Worried about the present, worried about the future. Don't know where to go. Bankruptcy does not eliminate all of your worries. But it will phone calls, stop the worry about wage garnishment, and bring order to the financial chaos you have been enduring for way too long. And the less stress and worry you have, the more sleep you will get. Finally.#2 – Credit Card Debt Disappears Many people I help fall into the cycle of paying off one credit card with a second credit card – robbing from Peter to pay Paul. This can’t go on forever.Bankruptcy stops you from using credit cards. Best practices dictate to stop using credit cards 3 months before filing bankruptcy. I often get asked if it is possible to keep a credit card after filing for bankruptcy. You can't ... and that is a good thing.Many of the people I help have not used credit cards for years before filing bankruptcy because they stopped paying on their cards. They have learned already how to get buy on a cash basis. This is a good thing. Being forced to only buy those things that you can pay for now is a good habit to get into and will help you in never having to hire a bankruptcy attorney like me again.Some will think this is a good thing, but I don't: soon after you file for bankruptcy you will get flooded with credit card offers. These will be credit cards with terrible interest rates. I don’t recommend that my clients get any of them. It will be too easy to fall into old habits – only this time you will be paying super high interest rates and won’t have bankruptcy to fall back on; you won’t be able to file another chapter 7 bankruptcy for eight (8) years.If you must have a credit card I would recommend a secured card where you have to put money down as collateral before you will be issued a card. This can be a great way to re-build your credit after bankruptcy.#3 – You Will Get Back Control of Your LifeWhen you are in serious debt you lose control. You lose control of your phone. Every time the phone rings you have a physical reaction. You lose control of your bank account. You try to deal with the pressure that the collection agencies are putting on you by agreeing to payment plays where the creditor automatically debits your account each month.But it never stops. Every day you wake up not knowing what type of payments are going to be taken out of your account and worse if you will have the money to cover it.When you file for bankruptcy your creditors can no longer take money out of your bank account. They can’t garnish your wages. They can’t even call you on the phone. Think of that – actually answering your phone without fear of who is on the other end.I never try to sugar coat that bankruptcy can’t solve all your problems and absolutely has consequences when it comes to getting credit in the near future.However, for many dealing with serious debt problems bankruptcy will not only bring order back to your life – you may not be able to start rebuilding your financial life without it.Photo Credit: http://www.flickr.com
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Country music star Eddie Montgomery, known as one-half of the country duo Montgomery Gentry, ended 2013 by filing for Chapter 7 bankruptcy. The filing comes after the singer accumulated millions of dollars in liabilities following a divorce and failed business venture. The filing will be used to help pay off his liabilities while continuing performances [...]
The answer depends on what is the situation in your life right now. You may be struggling with credit cards, medical bills, personal loans or any other type of debt. Sometimes you have creditors calling you on the phone, harassing you at work or just sending you letters making your life miserable. At other times,+ Read MoreThe post Will Filing For Chapter 7 Bankruptcy Save My Life? appeared first on David M. Siegel.
People who file for bankruptcy and look for the credit counseling provider with the lowest price could be getting more than they bargained for.
Start Fresh Today, a company that offers Credit Counseling and Debtor Education bankruptcy courses, announced on December 11, 2013 a new product called SFT Plus Pak. According to a press release put out by the company, the product “helps advertisers get their marketing message directly to these very consumers who are rebuilding their financial lives.”
To read the press release, click here.
Among other things, SFT Plus Pak offers to marketers the ability to reach by direct mail approximately 100,000 Start Fresh Today consumers – those folks who put their faith in the company for their bankruptcy credit counseling and financial management certifications.
Here’s the video they released to talk about this wonderful product:
The company is giving marketers who target people coming out of financial difficulty access to Start Fresh Today customers.
When you get out of bankruptcy, your goal should be to remain debt-free and build up your financial position. Rather than facilitating this goal, Start Fresh Today is happily throwing you to the wolves in the name of further profit.
I get that the industry is experiencing a race to the bottom in terms of pricing, and that some excellent providers have gone out of business because of the downward pressure on pricing credit counseling and financial management certifications. Bankruptcy filings are down nationwide as is, and some providers are charging as low as $5 to do a certification.
Even if one company were to be able to do 100,000 certifications per year at $5 each, there’s very little profit after overhead and employees. It’s a bad business, and I sympathize.
That said, selling your list of bankruptcy customers to companies that specifically target them as subprime borrowing candidates leaves a bad taste in my mouth.
Maybe you’ll be disciplined enough to throw out the mail and resist the temptation of easy post-bankruptcy credit. Perhaps you’ll delete the emails and text messages from lenders who want to help you dig yourself back into the hole of debt.
I sure hope so. I hope you’ll take some smart steps to rebuild your credit after bankruptcy.
Related:
- Your Bankruptcy Was Discharged – Now What?
- How Long Does Bankruptcy Affect Your Life?
- Credit After Bankruptcy And The Five-Year Commitment
I know a lot of bankruptcy lawyers who have encouraged their clients to use Start Fresh Today for their credit counseling and financial management programs in the past.
The company has always done a fine job as far as I know, providing reasonable services at a reasonable price.
In spite of this, I won’t be using them anymore – nor will I recommend their services to other lawyers and people filing for bankruptcy.
Looking for a good provider of bankruptcy-related credit counseling and financial management? Here are a few that I trust and respect:
Buyer beware …
Picture is a screenshot of the YouTube video.
While having the ability to make payments on debt obligations is enough of a struggle alone, some debtors have to deal with an ex-spouse who has yet to start paying their share of the debt. You may have a divorce agreement that details that is responsible for making payments on certain debts, but it may [...]
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