TOUGH financial times are pushing strapped consumers over the edge. Delinquencies and balances on delinquent credit cards are on the rise with no signs of slowing down. Faced with layoffs and difficult economic times, a lot of people are resorting to use of their credit cards in order to pay for basic living expenses such as food and housing. A lot of people tap into their credit cards hoping it’s nothing more than a temporary solution “until things get better”. The bad news is that credit cards come with a steep price tag attached- the sky-high interest rates, not to mention late fees and over-the-limit fees.
Once credit cards are maxed out, some people resort to even more desperate measures just to make ends meet. Lately, I’ve seen a lot of people going as far as getting some of these so-called “payday” or “emergency” loans, which are ten to thirty times worse than credit cards! In most cases, the interest rates on these loans can be anywhere from 390% to 900% APR if you continue to “roll over” the loan (i.e., ask for an extension of time to pay)!!! Can you believe that? I’ve seen clients have 2, 3 or sometimes more payday loans at the same time. No wonder that these people are broke before pay day even comes! The “loan sharks” often prey on people who have bad credit and are already overextended on debt.
If you are struggling with debt, perhaps you are finding it more and more difficult to catch up every month. If some of your accounts have been turned over to collections, this is even worse because this means that you can get sued by your creditors at any time. Once they obtain a judgment, creditors can then garnish your wages or levy on your bank accounts. Some people get paralyzed with fear and do nothing, hoping that somehow by ignoring their debt problems, creditors will simply give up. Get real. You can’t ignore your debt problems. If you do nothing, one of these days you will realize that your inaction has simply made your debt problems worse.
If you’ve done everything you can but nothing has worked up to this point, should you file for bankruptcy as a last resort? Bankruptcy can often be an option for a lot of people who can no longer afford to pay their debts. In Chapter 7, credit card debts, personal loans, medical bills and most types of unsecured debts can be wiped out. That means you can start over and rebuild your credit instead of having all your delinquent debts reported to the credit bureaus every month. Your fresh start begins the day your bankruptcy case is filed and creditors can no longer collect from you. For the first time perhaps in a very long time, you can finally breathe and feel like a human being again.
If you are able to pay a certain amount every month, you may also qualify for Chapter 13 debt consolidation in order to significantly reduce your monthly debt payments. In most cases, credit card payments can be reduced to half (or even less) of what you are currently paying. You also pay 0% interest on your credit cards and can get out of debt anywhere from 3-5 years, depending on how long your Chapter 13 plan is. If you are in foreclosure, Chapter 13 can also help you save your home and help you bring your payments current. If you have a second mortgage not supported with any equity, a “lien strip” may also allow you to completely wipe out the underlying debt. See an experienced bankruptcy attorney who can explain to you how this works. In a lot of cases, it is a lot better than doing a loan modification because you can significantly reduce what you owe on your property.
If you are in debt and need to find the best solution for your situation, call toll-free 1 (866) 477-7772 to schedule a free consultation.
* * *
None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped thousands of clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1 (866) 477-7772.