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Bankruptcy—It Affects Famous People, Too

by Jack Morrison on July 17, 2013

Money mis-management is a chronic issue that affects people of every age, race and social status. Debt can happen to anyone and doesn’t discriminate between low income, middle income and high income individuals. Just think of all the celebrities and athletes you hear about in the news that have had to file for bankruptcy.

If you’re thinking of filing for bankruptcy in Massachusetts, you won’t be the first to do so and you certainly won’t be the last. Your current financial problems won’t ruin your life forever. Hopefully you’ll feel a little bit better about your future when we share this next fact.

You’d probably never guess that these well-known figures have undergone bankruptcy and bounced back in a big way: P.T Barnum, Walt Disney Henry Ford, Larry King. These individuals had filed for bankruptcy but recovered so that it was only a blip on the radar of their life.

And what about athletes who receive huge signing bonuses worth millions of dollars? How in the world do they lose so much money so quickly? Just check out these statistics from SportsIllustrated.CNN.com:

• By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce.

• Within five years of retirement, an estimated 60% of former NBA players are broke.

Wouldn’t you think someone making all that money could control it? Unfortunately, too often the wealthy don’t understand debt, income and credit. Just like the rest of us.

There are two primary misconceptions that individuals in debt have about money. First, they think they’re alone. As the economy took a nosedive during the recession, jobs were lost, hours were cut, unemployment benefits stopped and bills kept piling up. This affected millions of Americans across the country. You’re not alone. Second, they think that filing for bankruptcy signifies the end. In fact, many people who have filed will tell you that it’s actually a new beginning. It gives them a chance to start over, make changes and learn how to effectively manage their finances.

If you want to sit down and talk with a knowledgeable professional about your situation (who won’t judge you), then you might want to sit down with a Worcester bankruptcy lawyer for a free consultation. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form. 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.

Money: Why Is It So Difficult to Talk About?

by Jack Morrison on November 2, 2011

The illusion of money is so alluring. Just look at the magazine rack and you’ll see covers of attractive, celebrities, athletes and icons. You see people every day who appear successful and well-off. They have the trendiest clothes, the biggest house, the nicest cars…but this doesn’t necessarily mean that they’re financially better off.

Although it might seem like your neighbor down the street (who owns the nicest house in the neighborhood) has it all, he may be up to his ears in debt and thinking, “Can someone please help me?” 

In reality, the perception of money is a façade. The fact that you have money doesn’t mean you’re good with it. Like any learned skill set, you must control what you have.

Unfortunately, our society’s “must have it now” obsession means that people want instant gratification. Even if they can’t afford something, they buy it anyway. This gains the immediate satisfaction they’re looking for. In their quest to get something instantaneously, they ignore the repercussions. This is an important topic that you, your spouse and your kids should discuss together.

In fact, experts say that couples who fight about finances once per week are over 30% more likely to get divorced. This NY Times blog post, Money Fights Predicts Divorce Rates, says that money disagreements are the biggest predictors of divorce, over chores, in-laws, spending time together and sex.

The bottom line is, you need to come to a consensus on money and work together toward a shared philosophy. If you need a professional to act as an intermediary, then reach out to one today. Find a counselor, therapist, or Worcester Bankruptcy Attorney.

Go On a Money Diet
When your eating habits are out of control, you go on a diet, right? Well, the same concept works for your financial overspending problems. Put yourself on a money diet. Tighten your belt to reign in your expenses.

Recognizing that you have a problem is the first step. You must be conscious, and meticulously aware as to where each dollar is being spent.

Are you interested in talking to a knowledgeable, understanding professional about your finances? Then you might want to sit down with a Worcester bankruptcy lawyer for a free consultation. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form. Thank you.

Time to Make Changes

by Jack Morrison on November 2, 2011

October is a time for change. The leaves change colors, the weather cools, and the busy holiday season starts to approach.

What changes have you made in your personal life? How about your financial life? Simple changes can make huge impacts if you make them consistently. If you sit down to actually track where your money is going, I bet you’d be surprised at how small purchases here and there add up.

When people come into my Worcester, MA bankruptcy legal practice, I always first recommend that they determine two things: their income and expenses. It’s easy to determine income; you look at your paystub (minus taxes and benefits). The challenge here is determining your expenses.

Make This Change Today: Determine Your Expenses
Most people are not 100% sure of where their money goes. And if you have a family, there is an additional layer as your family spends money too. If you have a child, chances are you’re paying quite a bit for clothes, activities, sports and entertainment. But when finances are tight, parents are guilted into continuing to pay for these items knowing that their mortgage payment might be late or their credit card statement might not get paid that month.

My task to you: track every dime that leaves your pocket for a minimum of 2-4 weeks. Take every penny spent by everyone in your family—that morning cup of coffee, afternoon snack, quick drink—and write it all down. Once you get an idea of where your money is going, you can figure out any potential leaks that are causing your hard earned money to flood out. You may find that you can save $20-30+ a week to either 1) put in savings or 2) put additional money towards debt. This money adds up. Over a year that’s $1,000. Over time this makes a big difference.

The moral of the story? Control your spending and keep track of where your money is going. 

Are you interested in talking to a knowledgeable, understanding professional about your situation? Then you might want to sit down with a Worcester bankruptcy lawyer for a free consultation. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form. Thank you.

 

If you’re severely in debt with no hope of resolving your finances in the foreseeable future, you’re stuck in a very real hell. But like most people, you’d rather experience a root canal without morphine than file for bankruptcy. Why is that?

The social stigma and reputation of the “b” word: bankruptcy.

No one takes bankruptcy lightly. But chances are, your situation is not going to get resolved. And probably you’ve already beat yourself up enough. Bankruptcy could be just the salvation you need.

The truth is, how can bankruptcy have such an unpleasant reputation if it provides people with an opportunity to start over financially? Let’s take a look at what bankruptcy can really do for the average hard-working American who has come upon some really bad luck. Bankruptcy eliminates your responsibilities to pay the debt that’s owed. Credit cards, deficiencies on mortgages, wage garnishments, etc. can be erased by filing. Other than paying your debt in full, bankruptcy is the most efficient, permanent method of resolving outstanding financial debt.

But negative portrayals in the media and misinformation leads people to think the worst. Bankruptcy’s bad reputation comes from society’s (and possibly friends and family) suggestion that people who file for bankruptcy are taking advantage of the system. There is a misperception that people who file for bankruptcy are outcasts, that they lived a good life and don’t have to pay for that advantage. Those who are financially solvent just can’t put themselves in your shoes.

In reality, the majority of us who file for bankruptcy are not bad people trying to evade the system. You never once imagined you would be in this situation. But if you’ve fallen on financially troubling times, you are not alone.

Are you interested in talking to someone trustworthy and understanding about your situation? Then you might want to sit down with a knowledgeable Worcester bankruptcy lawyer. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form. Thank you.

Back To Basics Education Series: Reaffirmation and Bankruptcy

by Jack Morrison on September 23, 2011

This is the third week in our special “Back to Basics” education series in honor of back to school. Understanding the four basic topics of bankruptcy covered in this series is important. As a Worcester bankruptcy attorney, these critical concepts are important to help my clients understand their financial situation and make decisions about moving forward. The topics are:

  1. Chapter 7
  2. Chapter 13
  3. Reaffirmation
  4. Life After Bankruptcy

Now let’s explore our next topic: Massachusetts bankruptcy and reaffirmation. 

Massachusetts Bankruptcy and Reaffirmation
When you file for bankruptcy and receive a discharge, it means that you’re not legally responsible to pay the debt listed in your petition. The discharge in Bankruptcy gives you a fresh start financially.

A Reaffirmation is a legal concept that re-establishes your obligation to pay, even after you file Bankruptcy and receive your discharge.

Let’s use an example to explain this.

In a Ch 7 bankruptcy process, if you have a car loan and can’t make your car payments, you have 2 choices: either you get current with your car payments, or you surrender the car. In either case, under a Chapter 7, you have no legal obligation to pay the debt. You can surrender the car and don’t have to worry about a deficiency ( a deficiency is when the auto loan company repossess your car, sells it, and sues you for any outstanding loan balance). IF YOU WANT TO KEEP YOUR CAR, YOU HAVE TO MAKE TIMELY PAYMENTS.  Otherwise, the auto loan company can ask the Bankruptcy Court for relief from Bankruptcy Court and repossess the car.

The reaffirmation is an agreement between you and your creditor that legally obligates you to repay the loan…even after you filed Bankruptcy. The creditor can’t force you to sign the reaffirmation agreement.   If you have an attorney representing you, your attorney must sign as well. The Bankruptcy Court has to approve all reaffirmation agreements.

I NEVER have a client sign a reaffirmation agreement.  It’s not in their best interest to do so. I always tell my clients, “if you want to keep your car, keep making regular timely monthly auto loan payments.”

Next week, stay tuned as we discuss life after bankruptcy.

Do you have questions about your financial situation? Then you might want to sit down with a knowledgeable Worcester bankruptcy lawyer. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form. Thank you.

When you think of the word “bankruptcy,” what emotions does that stir up in you? Probably guilt, shame, embarrassment, frustration and pain.

I’m here to tell you: there is no shame in filing for bankruptcy. You should actually pat yourself on the back for taking positive steps to finally getting your life back on track. But you may not initially feel that way. If you’re considering filing for bankruptcy, fear of public scorn, embarrassment and scrutiny might make you hesitate and take a step back.

You may think bankruptcy is the worst possible thing you could ever do. This is simply not true. Think of it like you’re being financially reborn at 18 years old again. You’re establishing new debt. Filing for bankruptcy does not mean that you’ll never re-establish credit…or that you’ll be denied future employment…or that you’ll never receive a loan again. Starting over may be hard, but not impossible.

Ask yourself a serious question: is what’s holding you back from bankruptcy the shame of thinking of other people’s reactions? Don’t let anyone judge you— they’re not in your shoes. So letting shame affect what could be the smartest decision you’ve made in awhile is just senseless.

When you file for bankruptcy, my clients all tell me the same thing—a weight lifts off their shoulders. So if you’re burdened by the heaviness of struggling to pay your bills, avoiding harassing phone calls from creditors and tossing and turning at night, then you owe it to yourself to talk to a financial professional to see if bankruptcy is right for you and your situation. And, use bankruptcy as a positive step in your life: make sure you don’t duplicate what you did to get into this situation.

Get your financial situation resolved once and for all. Sit down with a knowledgeable Worcester bankruptcy attorney. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form.

Have you ever been burned by a professional you thought you could trust? If this situation hasn’t happened to you personally, it has probably happened to someone you know. Once trust has been compromised, it’s hard to get back again.

Trusting is especially difficult when it comes to confiding in someone about your money problems. Here are a few reasons why:

  • You hear all the time about how innocent consumers are taken advantage of by unscrupulous individuals or companies promising to help reduce debt.
  • We were taught early on money is a taboo topic which should never be discussed.
  • Money problems are one of the main causes of fights in a marriage so you may feel like you’re betraying your spouse by confiding in someone else (let alone a stranger).

When you seek out a professional to help you sort out your debt, you know talking about your problems will be tough. You may be concerned that you will be judged negatively. You’ve probably already come down hard on yourself, so you need someone to be sympathetic to your needs and understand where you’ve come from. If you trust that the person on the other side of the table is looking after your best interests, the conversation becomes easier.

As a bankruptcy attorney in Worcester who has helped hundreds of clients overcome their financial difficulty, I know trust isn’t something that’s built up in one discussion—it’s built up over time. When looking for an attorney, find someone who can help you understand details like how to save your house. Also, who will help look for alternatives to filing for bankruptcy or consolidating debt. Bankruptcy is a last resort; that’s why it’s critical you speak to a professional who will help you create an effective financial recovery plan. You don’t want to waste any more time, money or resources than necessary.

Don’t continue putting a Band-Aid over an open wound. Get your financial situation resolved once and for all. If you’ve come to grips with the fact that financial matters are getting worse, not better, than sit down with a Worcester, MA bankruptcy lawyer. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form.

This Monday, on the 4th of July, we’ll celebrate the liberation of our great country from unwanted oppressive rule. Today, we can take away a valuable lesson from those American heroes who led the way long ago: be courageous enough to seek financial independence. Liberate yourself in order to get a fresh start. 

Did you ever imagine you’d be in this situation? You’re entrenched in the worst financial crisis you’ve ever faced in your life. Your unemployment is about to run out…the bank is threatening to foreclose…and you can’t scrape together enough money to move out and start fresh. BUT—there is a way to recover. This year, commit to focusing your efforts on financial independence. 

To establish a financial recovery strategy, you have to assess where you are and determine two things: 1) your income and 2) your expenses. If you currently have no income, it’s easy to do the math. But, you are also in a very challenging predicament. Get creative to figure out how you can get some income. Find a side job, start a business, or borrow money. In fact, about 565,000 people started businesses each month in 2010 throughout the U.S. 

Once you’ve established some income, your next step is to determine your expenses. There are two types: those expenses you can control and those you can’t. You can control most discretionary spending choices for food, clothing, transportation and entertainment. Most people in financial troubles are good at controlling their own spending. 

The more difficult expenses are those they have no control over, such as fixed expenses or challenges controlling their spouse and children’s spending. Often, family members may not know about any money issues. This is especially true when it comes to children.  When you try to do better for your children than you had for yourself, you end up skimping on your own needs in order to maintain the lifestyle your children are accustomed to. But controlling this is one step in your overall progression to eliminating debt. 

Make 2011 the year you free yourself. If you’ve come to grips with the fact that financial matters are getting worse, not better, than sit down with someone knowledgeable in financial matters. I am a Worcester bankruptcy attorney and assisst clients with these matters every day. Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form.

Although you didn’t come to the decision lightly, you’ve finally taken a step forward to resolving your financial difficulties: looking into filing for bankruptcy. But the sheer amount of information out there is overwhelming. Especially when deciding whether to file for Chapter 13 or Chapter 7. 

As a Clinton and Worcester, MA bankruptcy lawyer, I advise clients every day on which bankruptcy option is best for their situation. Here is the difference between the two types and how to know when choosing Chapter 13 bankruptcy would be the most beneficial for you and your situation: 

  • Chapter 13 bankruptcy offers what is commonly known as a repayment plan. This means that you have sufficient income needed to repay creditors over a 3-to-5-year period. Chapter 13 is beneficial because certain debts can be paid as a priority. These priorities get paid first before unsecured debts get paid.
  • Take taxes, for example.  Some taxes are not discharged in a Chapter 7 Bankruptcy – taxes that are owed within 3 years of filing. Conversely, Chapter 13 allows you to pay those tax debts over a specified time frame. Interest and penalties won’t accrue, which is the main benefit of filing a Chapter 13 over a Chapter 7. Overall, you’ll get better terms when filing for Chapter 13.
  • Let’s say you owe $15,000 in taxes for 2009 and 2010. If you file Chapter 7, you can’t discharge the $15,000.   You still owe $15,000 to the tax entities. If you file a Chapter 13, you can pay the tax over a 36 or 60 month period (with 10% going to the bankruptcy trustee) which equates to approximately $458 per month, or $275 per month, respectively. No penalties or interests accrue.  

Every person considering filing for bankruptcy is in a unique situation. That’s why talking to an experienced, trustworthy bankruptcy attorney is a good idea. As a Clinton and Worcester, MA bankruptcy lawyer, I advise clients every day on bankruptcy and financial strategy. 

Call my office, the Law Office of Jack Morrison, today at 508.852.7800 or reach out via our contact form.