Credit Card Debt

Filing for bankruptcy: it’s a raw, emotional, devastating personal decision. I can attest to this personally as I have clients who come to me daily in bad shape. Bankruptcy involves real people with real problems. Financial problems that, regardless of how they happened, are not going away.

To humanize bankruptcy and shed some real light on what someone goes through, I’d like to share with you a story of a real person, a Chapter 7 bankruptcy client named Alan (of course, I changed his name to protect privacy).

Before Filing for Chapter 7 in Massachusetts…
Alan is a 45-year  old single man who lives here locally in Worcester County. When Alan came to me, he was emotionally drained. He was “throwing in the towel.”  Ever since his work hours were cut, debt started mounting. While he was barely living month to month before, now he was deep in the red. He had been dealing with harassing phone calls from collection companies at all hours of the day. Along with not being able to pay his credit card bills in four months (with their current incredibly high interest rates), he was about to forego making car payments too.

Alan’s debt was around $25,000. Although he considered going to a debt consolidation company, he was distrustful and had heard the overall experience was not positive. He needed more than a temporary fix. And, he didn’t want to lose his car which he needed to get to work.

Finally, Alan decided to search around for a bankruptcy attorney in Worcester County. He called, and we set up a meeting to discuss his finances and lay out his options.

What Our Bankruptcy Explorations Entailed…
A common misconception is that when you approach a bankruptcy lawyer, you have to be ready to file for bankruptcy immediately. Not so. I always talk to the client first to find out their goals, get an idea of their debt, their assets, and then we look at options.

Alan admitted that it took him a long time to take this step and look for a lawyer because he was hoping for a miracle. Unfortunately, that miracle never materialized, so he was ready to get a plan to eliminate his debt.

This is exactly what Alan and I did. We discussed several things, two of which included:

  1. The pros and cons of calling his credit card companies to see if they would work out a payment plan with him. However, Alan decided to forego this option once I explained that most companies won’t reduce the amount you owe unless you’re 3-4 months behind. And, it’s really only worth it if you can pay a large sum of money up front. Unfortunately, Alan didn’t have access to cash.
  2. The pros and cons of taking money from his 401k. I rarely, rarely advise pulling from retirement accounts. Unless Alan was getting threatened by collection agencies with bodily harm, which thankfully he wasn’t. (which, of course, is illegal) So Alan decided to hold on to what he had worked so hard to build up, as it is his legal right and this money is protected.

Armed with information and a set of options (with repercussions) clearly presented to him, Alan felt empowered for the first time in a long time. Alan decided to wipe the slate clean; although it was tough decision, he decided to go ahead and file.

Here’s what happened to Alan after filing Chapter 7 Bankruptcy:
Alan filed for Chapter 7, went through the process, and 4 months later received his discharge. The discharge legally wiped away his $25,000 in credit card debt. And, he had a clear plan for making car payments, so he gets to keep his car.

The constant worry of how to get money to pay the credit card debt was gone. The phone calls stopped. Alan told me, a few months later, that this was a total relief. He was free again. And he vowed never to get in the same position again. He’s now living his “new normal”: paying cash for purchases, building back up his credit, and putting a small amount of savings aside every month. Alan’s quote to me was, “If I had known how easy this was, I would have filed a lot sooner.”

Does Alan’s situation sound a lot like yours?

My name is Jack Morrison and I am a Worcester bankruptcy lawyer. If you want to explore your options, call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form. There’s no obligation and the call is free. If bankruptcy is not the best option for you, I’ll let you know straightaway. Thank you.

When you’re experiencing debt or financial difficulty, inevitably the idea of hiring a debt consolidation company has crossed your mind. Because so many people come to me asking my opinion, I wanted to share a little bit more about them here.

Basically, debt consolidation companies will negotiate with your creditors to arrive at a payment plan or settlement. How most are structured is that you sit down with them, explain your financial picture— home payment, mortgage payment, car payment, etc.—and based upon your income, they come out with a feasibility plan. It should be something you can realistically pay over a period of time. In most cases, what they do is set up a monthly payment plan.

Debt consolidation amasses the cash you can pay; once they’ve accumulated 60-70%, they go out to your creditors to see if they’ll agree to a lower payment. For example, if you owe $2,000, they might settle for $1500.

It’s important to note that while this process is going on, credit card and collection companies can contact you and they can still take you to court in order to obtain that debt. So hiring a debt consolidation company is only practical IF there’s a realistic timeframe of paying back all your debt, such as 3-5 years. If it will take any longer, you should seriously consider alternative methods.

To recap, debt consolidation companies contact your credit card companies, set up a monthly payment schedule and in turn pay your credit cards.

Advantage: Unfortunately, some people are too attached and emotional to effectively negotiate with their credit card company. Hiring a debt consolidation company is a great way to have someone else step in and lend a hand.

Disadvantage: Most people have 5-7 credit cards. Debt collectors only take 3-4 credit cards. So, the debtor still has to deal with the other creditors on their own and will still be left unable to pay.

My take? Many times, hiring a debt consolidation company is like putting a Band-Aid over a gaping wound. Let me give you a reality check and a very quick way to know whether or not you should hire a debt consolidation company: if you can’t pay your debt back within 5 years, who are you kidding?

Do you want to talk out your situation? Then sit down with a knowledgeable, understanding professional. I am a Worcester bankruptcy lawyer and encourage you to call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form. There’s no obligation and the call is free. If bankruptcy is not the best option for you, I’ll let you know straightaway. Thank you.

When you’re struggling to pay your bills on a consistent basis, there’s a lot on your mind. You’re beginning to think that you need to look into filing for bankruptcy. Although this is not an easy decision, it’s a decision that has worked for thousands of Americans to help them get back on their feet financially. One of the factors about bankruptcy that you’ll want to consider will involve your assets. That’s why it’s critical you understand the difference between secured debt and unsecured debt. 

In bankruptcy, you must classify your debts as “secured” or “unsecured.” In simple terms, here is the difference: 

  • Secured debt is debt that’s guaranteed by an asset. This asset can be a car loan or a mortgage. Secured debt is also known as “collateral debt,” because your collateral is tied to it. If you don’t make your payments, the bank will take the asset back through foreclosure or repossession. When you file for bankruptcy, the choice is yours: you can either stop paying and allow the creditor to take back the asset or you can continue making payments.
  • Unsecured debts are treated very differently than secured debts. In bankruptcy, unsecured debts mean that the creditor cannot obtain any collateral or take back any assets. Unsecured means that there has been only a “promise” made…and filing for bankruptcy will erase that promise. Common examples of unsecured debt are credit cards, personal loans, payday loans and medical bills.

So if you decide to speak with a Worcester, MA bankruptcy attorney, he or she will ask you about your secured and unsecured debt, among other financial matters. That’s why it’s important you hire a trustworthy, understanding professional who understands Massachusetts bankruptcy law. 

Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form. As a Massachusetts bankruptcy attorney in Worcester and Clinton, I advise clients every day on bankruptcy and financial strategy.

 

 

Your tax refund couldn’t have come at a better time. After all, your next credit card bill is on its way and your mortgage payment will be due again soon. Many look at a tax refund as “new found wealth.” And if you’re depending on your tax refund to provide some short-term relief, you’re not alone. According to a Bankrate.com poll, 84% of Americans receiving funds intend to pay down debt. Here are some more interesting statistics about Americans’ 2011 tax refund from CNNMoney.com

  • $2,753 is the expected average refund amount for 2011
  • In 2010, 43.9% of Americans planned to pay down debt, 40.3% planned to put their refund in savings, and 28.8% planned to use the money for everyday expenses.
  • In 2009, 48% of Americans planned to pay down debt, 38.9% planned to put their refund in savings and 26.7% planned to use it for everyday expenses.
  • In 2008, 46.5% of Americans planned to pay down debt, 37.2% planned to put their refund in savings and 27% planned to use it for everyday expenses.  

As you make plans for your money, stop and think: is allocating your tax refund to pay down a small percentage of your debt your best option? You can use the refund to chip away at your debt—or hire someone to help you figure out how to get out of debt entirely.  

If you just pay off some of your credit card debt on one of your many credit cards, you’re throwing away your refund. In other words, it’s like covering an artery bleed with a Band-Aid. If you’re really financially strapped, then your refund could be a resource for hiring a professional to analyze your debt. 

If you’re interested in having your financial situation analyzed and talking to a bankruptcy attorney in MA about your options, give me a call at my office at 508-852-7800. Even if you decide not to spend your refund on hiring a professional, you are entitled to knowing all your options. Then you can move confidently forward and know you’re putting your hard-earned refund money where it belongs.

Last month we offered a free credit card analysis. Basically, this analysis featured a limited time offer to Massachusetts residents struggling with credit card debt. As an experienced bankruptcy lawyer in Worcester, MA, I often give advice to clients about lowering or eliminating their debt. 

Here is a case study of one couple that benefitted from the analysis:

Scenario: A married couple had $13,250 in credit card debt on three different credit cards. The interest rates on the three cards were 7.9%, 11% and 18%.                                                                

Solution: I advised them to do the following:

  • Transfer the balances to the lowest interest rate credit card (7.9%)
  • Stop using all credit cards
  • Calculate a monthly payment for the balance to be paid in 2 years: $599/month for 24 months
  • Apply their income tax refund to the balance of the loan and lower the payoff time

Outcome: Although initially hesitant to talk about their money problems, the couple was happy to have a viable plan that would resolve their debt. They walked away from the analysis confident with the plan and ready to put it into action. 

To reach this outcome, these are the six steps I take with every client who comes to me for debt eliminating advice:

  1. Analyze your spending patterns and use of the credit cards
  2. Review of additional charges and/or fees incurred
  3. Discuss the timing of card use to maximize “other peoples’ money” theory
  4. Discuss how the credit card company makes money from you
  5. Have realistic repayment plan discussions  
  6. Provide alternative remedies to resolve your credit card debt  

Although the window for the free analysis has passed, that doesn’t mean I can’t still help you. As a bankruptcy lawyer in Worcester, MA, I have helped hundreds of clients, just like you, discuss what your situation is and what options you have available.

For more information, on a credit card debt analysis, call our office today at 508-852-7800. I look forward to speaking with you.

Can the Luck of the Irish Help You Get out of Debt?

by Jack Morrison on March 17, 2011

Are you relying on luck to get you out of debt? How great would it be to win the lottery or discover a pot of gold at the end of the rainbow? Unfortunately, reality has shown us that the only thing you’re likely to find is a pot of coal.  

Getting out of debt is not easy. It took you many years to get yourself into this situation, so there’s probably no quick remedy or single solution that will resolve your financial problems. Depending on the severity of your debt, there are dozens of ways you can get back on track. Here are a few suggestions from experts and authors: 

  • Cut out non-essentials like magazines, coffee and fast food
  • Make a budget and stick to it
  • Get a second job
  • Pay your bills on time
  • Use cash for everything

But what if you, like many others out there, owe tens of thousands of dollars and see no hope in sight? Small changes aren’t going to stop the creditors from calling. How much debt is too much before you get professional help and advice? Paying a few hundred dollars here and there on delinquent bills will only get you so far and could actually cause more harm than good. 

Instead of drowning yourself in sorrows and green beer this St. Patrick’s Day, perhaps you should talk to a financial advisor or MA bankruptcy lawyer

Don’t let the luck of the Irish dictate your financial future. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form.

Special February Promotion: Free Credit Card Debt Analysis

by Jack Morrison on February 25, 2011

Special February Promotion:

For the First 6 People Who Act Quickly: Free Credit Card Debt Analysis

If you are one of the thousands of Massachusetts residents struggling with credit card debt, then we have put together a special promotion that you will greatly benefit from.  It’s called the Free Credit Card Debt Analysis for MASSSACHUSETTS RESIDENTS ONLY.  An experienced Worcester Bankruptcy Lawyer, Jack Morrison will conduct a Credit Card Debt Analysis for the first 6 people. The details are below. 

Special Promotion: Free Credit Card Debt Analysis**

Who: Massachusetts residents with credit card debts of $10,000 or more who are not able to resolve their debt. You will receive an analysis with Worcester, MA bankruptcy attorney Jack Morrison.
What: Free Credit Card Debt Analysis

FREE 6 Point Analysis of your current credit card debt to determine what you can do to lower and/or eliminate your debt.   This is what to expect when you call to set up the appointment.

  1. Analyze your spending patterns and use of the credit cards.
  2. Review of additional charges and/or fees incurred
  3. Discussion of the timing of card use to maximize “other peoples’ money”  theory.
  4. Discussion of how credit card company make money from you
  5. Realistic repayment plan discussions  
  6. Alternative remedies to resolve your credit card debt.

The best part? At the conclusion of the meeting, you will receive a detailed analysis of your current credit card debt resolution plan.    
Where:  Through email and at scheduled times over the telephone.   
When: This promotion is available for 14 days (March 11, 2011) OR until the first 6 people respond to my office by email, mel@jackmorrison.com or telephone (508)852-7800.   (The reason why I am limiting this to the first 6 is because I only have 6 hours in my schedule over the next 2 weeks to squeeze in these appointments).  So don’t delay!  
Why: Take the steps to get back in control of your finances and resolve your debt now. As an experienced bankruptcy lawyer in Massachusetts, I have helped hundreds of clients resolve their debt.
How: Call our office today at 508-852-7800 and ask to speak with Mel. Or email her at mel@jackmorrison.com. She’ll respond quickly and will get an appointment set up.
Cost: there is no cost to participate in this credit card debt analysis.

 **This promotion is limited to the first 6 callers or emailers – so reserve your spot now! Don’t hesitate.

This analysis is free, so what do you have to lose? Don’t lose out on this rare opportunity. After the phone call, you’ll rest easier and will know what options you have available so you can make confident decisions. Call our office today at 508-852-7800. This promotion is worth your time—just see what our bankruptcy clients have to say about us here, or read some of our rave reviews below:

“Jack (Morrison, Esq.) was compassionate, friendly, and non-judgmental. I was completely comfortable with him because of his honesty about a bad situation, yet he always gave me hope.”
Donna J., Worcester, MA 

“Mr. Morrison was very polite and professional, always reassuring. He never made people feel inadequate.”
Priscilla M. Auburn, MA“You (Jack Morrison) were very helpful, but in no way condescending. (we had some less than great experiences with other lawyers)”
Cindy G. MA

“Attorney Morrison made us feel very comfortable with the process and helped to put us at ease with our situation.”
Nate and Elizabeth C. Shrewsbury, MA

“Attorney Morrison made me feel better about myself. I was embarrassed about my situation. Jack gave me peace.”
Mike P. West Boylston, MA

 

Like many others out there experiencing financial difficulties, you probably feel overwhelmed and anxious by the burden of your credit card debt. However, by taking a proactive role with your creditors, you can often get them to work with you on your payments. 

Negotiating with creditors can be difficult—but not impossible. There are ways to do it successfully, whether you’re dealing with a collection agency on behalf of a creditor or dealing with the credit card company directly. You’ll want to make a list of options to offer. That can include lowering your monthly payments, waiving late penalties, deferring a payment or reducing the balance.

You’ll also want to consider these three important tips: 

  1. To negotiate, you have to be behind on your payments. You also have to have a solid understanding of where you are financially and what you can realistically pay.
  2. You get more bang for your buck, deeper discounts and more negotiating power if you have cash to pay the debt off in one lump sum.
  3. If you settle, get it in writing. The creditor could come back later saying that you only gave them a partial payment even though it was the total payment you negotiated on the phone.

There is one more important point you need to consider: make sure you get all your debt combined. Do all or none. Otherwise, you’re not going to resolve the problem. You’ll be putting a band-aid over an artery bleed. If $15,000 cripples you, you might want to consider filing for bankruptcy.

No matter how intimidating this process might be, you owe it to yourself to get your financial future back in order. If you want to speak with a professional about your options, I am an experienced Worcester attorney who helps people with financial matters. Call my office today at 508-852-7800 for a free consultation. I have worked with hundreds of clients in debt and have helped them negotiate with creditors and get back on their feet financially.