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Considering bankruptcy? Follow these 4 tips

4 bankruptcy tipsMost of our clients come to us, struggling with massive debts that have spun out of control. One unforeseen bump in the road (a sudden job loss, an accident, a medical condition) is all it takes to send most families into a downward debt spiral. We have shared lots of tips in the past for avoiding debt, but it is also important to get advice from a financial advisor or bankruptcy attorney before you decide to file.

According to John Rao, a bankruptcy attorney with a Boston-based consumer advocacy group, you should “first explore opportunities to resolve problems outside of bankruptcy. Bankruptcy isn’t going to help everyone.”

Typically, you will want to consider bankruptcy if:

  • Most of your debt is “unsecured” (such as credit card bills or medical bills)
  • You are hounded by calls from collection agencies at home and at work
  • You have had wages garnished or your bank account frozen after a judgement
  • You have been sued

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Should I File For Bankruptcy?

Filing for bankruptcy is a huge decision, and usually it has to be made under pretty extreme stress. Your circumstances are unique – so the best way to know if you should file is to call us at 214-760-7777 for a free consultation. The pandemic and ensuing lockdowns have made the situation even more stressful for many DFW area residents. This post will help answer a few high level questions, but it is always better to talk to an expert to get answers about your specific situation.

In general, these are a few of the most important questions to consider before filing for bankruptcy:

  • Can you pay back your debts outside of bankruptcy?
  • Are creditors suing you to collect their debts?
  • Are you facing foreclosure or repossession of your property?
  • How much property do you own?

Can you pay back your debts outside of bankruptcy?

Before you decide to file for bankruptcy, think about the types of debt you are trying to eliminate – and consider whether you can pay off those debts outside of bankruptcy. For example, if your main struggle is credit card debt, determine whether you can really afford to pay it off. If you make enough money to pay back your credit cards, you could consider consolidation, where you combine them into a single loan or settle your debt with the credit card company. (more…)

By |May 25th, 2021|Bankruptcy, Personal Finance, Texas Bankruptcy|Comments Off on Should I File For Bankruptcy?

Should you keep your car after bankruptcy?

should-you-keep-your-car-after-bankruptcyIt’s a question we hear all the time – after a client files their bankruptcy case, they ask us “Should I keep my car?”

Many times, if you’re filing for bankruptcy, you’ve been struggling with debt for quite a while, so it’s likely that you were behind on car payments. Now that the bankruptcy case is filed, you’re wondering if keeping the car is a good choice to make.

In most cases, your car is an absolute necessity – you’ve got to use it to get to work, or to handle everyday errands. In some cases though, the amount owed on your auto loan might not make sense after your bankruptcy case.

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6 Tips to Avoid Holiday Debt

6 tips to avoid holiday debt on Black FridayThe holiday season is upon us again, with Black Friday and Cyber Monday just a few weeks away. The holiday season, and Black Friday in particular, are designed to get Americans to spend as much money as possible. This year, the COVID lockdowns will change the way people shop for the holidays. The doorbuster shopping events won’t happen this year – everyone will be shopping from home.

Shopping online can be more dangerous for your debt situation, since you’re not physically at the store and paying attention to the prices of the items you’re buying. Plus, credit cards give you the illusion that you can spend more money than you currently have, so many Americans fall deeper into debt during the holiday spending season. Making matters worse, gifts bought on credit cards end up costing far more than if you paid cash, once you factor in interest rates and finance charges. There’s also the fact that if you max out your credit limit, your credit score will drop.

Once the holiday season is over, the warm fuzzies disappear, and you’re left with even more debt. This year, we thought we’d share a few holiday spending tips to help you avoid over-spending, and hopefully help you avoid any more debt. Once you realize that Black Friday is specifically designed to get you to spend more money than you planned on spending, it’s easier to avoid the holiday credit card blowout.

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Bankruptcy and Divorce – What You Need To Know

bankruptcy and divorce in DallasMany times, financial difficulty leads to stress in a marriage. In cases where the financial stress leads to divorce, the issues often lead to bankruptcy filings.

The question that we hear the most often from clients regarding divorce is “What should we do first – the divorce or the bankruptcy?”

There’s actually no easy answer for that question. Every situation is unique, so if you’re asking the same question, you should consult with an experienced bankruptcy attorney. Your attorney will be able to look at all the factors and suggest the route that will work best for you.

In general, if certain conditions are present, filing for joint bankruptcy before the divorce will be the fastest, most cost-effective option:

  • Both spouses know that they’re going to file bankruptcy
  • There are few, if any, assets that would be exempt under bankruptcy laws, so not much will be divided in the divorce
  • The emotional situation isn’t so hostile that the spouses wouldn’t cooperate in a bankruptcy proceeding

If one spouse won’t agree to joint bankruptcy

If your spouse won’t agree to a joint bankruptcy, you can still file bankruptcy on your own. When your debt is discharged, the creditors would then start collection efforts for the entire debt against your spouse (since the debt is the responsibility of both spouses). (more…)

How To Pay Your Bills On Time

how to pay your bills on timeSometimes the simplest things in life can be the hardest to do. The concept of paying an invoice on time is fairly simple, but with life throwing you unexpected curve balls, getting a check in the mail or making a payment on time is sometimes the last thing on your mind. Especially during the huge unknown of COVID, it’s important to stay on top of your bills so you don’t get behind.

Even though paying bills is a mundane task, doing so on time results in several positive effects:

  • You avoid late fees. You don’t have to part with more money than you should.
  • You keep your lights on. If you don’t pay your bills, the companies will eventually cut off their service and you could be left in the dark.
  • You keep your credit score in good standing.
  • You get peace of mind. Save yourself from worrying about what will happen if you don’t pay your bills on time.

If you’d like to achieve these results, here are a few tips to help you get on schedule with your bill pay system.

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By |August 28th, 2020|Money Management, Personal Finance|Comments Off on How To Pay Your Bills On Time

4 Tips to Avoid Bankruptcy

For many Americans, debt is a way of life. When that debt continues to pile up, many people think that filing for bankruptcy is the only way to solve their financial problems. While bankruptcy can definitely help erase debts and start you on a fresh path,  it’s not always your only option. Many times, your financial situation might not be as hopeless as you think it is.

You should start by looking at your overall debt situation and assessing the status. If you’re not too far gone yet, these four tips can help you reduce your debt load and avoid bankruptcy. They’ll take time and dedication, but with some patience and hard work, you’ll be able to climb out of your financial hole and start over again.

1. Don’t add any more debt

When your debt spirals to the point where you can no longer pay it off, bankruptcy becomes your only option. The trick is to stop the downward spiral before it’s too late. Don’t add any more debt to your current load – no new loans, no new credit cards… nothing. If you need extra money, consider selling a few minor assets instead of taking out a loan or opening a new credit card.
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8 Holiday Shopping Tips for 2019 To Avoid Racking Up Debt

The 2019 holiday shopping season is almost upon us. Notoriously, holiday shopping is one of the largest contributors to increased credit card debt – people get in the holiday spirit and spend much more than they should.

This year, you can shop smarter and still get gifts for everyone on your list, all while avoiding additional credit card debt. With a bit of planning and a smidgen of self control, you won’t have to be afraid of this year’s holiday shopping season. (more…)

7 Tips for Saving Money and Avoiding Debt

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As we’ve mentioned in the past, the easiest way to avoid bankruptcy is to avoid accruing debt in the first place. Millions of Americans live with thousands of dollars in debt, and a single bump in the road like a car accident or the loss of a job can send them spiraling towards uncontrollable debt.

The sooner you form responsible spending habits, the sooner you’ll build a solid foundation that will help avoid the possibility of bankruptcy. If you follow these 7 simple tips, you’ll be able to save money and avoid accumulating debts that you struggle to pay off.

1. Plan all of your meals

Eating out is the biggest monthly expense in most households. If you plan all of your meals each week and cook at home, you’ll save money – and you’ll probably eat healthier as well.

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How are credit scores computed?

how are credit scores calculated?Credit, by definition, is your ability to borrow money. Information that is included on your credit report could sway a potential lender one way or another in deciding whether to extend credit to you.

There are 3 major credit reporting bureaus:
Equifax
1-888-548-7878
www.equifax.com

Experian
1-888-397-3742
www.experian.com

TransUnion
1-800-916-8800
www.transunion.com

Under Federal law, you are entitled to a copy of a free credit report from each credit bureau each year. The credit bureaus have established a website in which to obtain a free copy of your credit report at www.annualcreditreport.com.

A credit report is more than just a list of the lenders and a person’s payment history. Credit reports contain information that can be used to help lenders determine whether to extend credit to you.

Here is a list of some of the things a credit report may list:

  1. Anywhere you have applied for credit
  2. Your name, Social Security Number, and your spouse’s name
  3. Your current and previous addresses, name and address of your employer, as well as your income level
  4. Information regarding lawsuits, foreclosures, repossessions, and whether you have filed for bankruptcy

Why are all these pieces of information listed on your credit report? Companies want to know whether you can be counted on to pay back your debts. Not only do lenders look at your credit report, but insurance companies look for risk factors on it, employers can use it to screen applicants, and landlords can use it to screen tenants to determine if they are likely to pay the rent on time.

Lenders use all of the information on your report to derive a credit score on you. A credit score is a number used to rate your credit worthiness. There are a number of different scoring systems. One scoring system is known as the Fair Isaac Corporation (FICO) Credit Score. This score ranges between 300 and 850. According to FICO, 40% of the population score at 690 or lower, while 40% score 745 or higher, with just 20% above 780.

Lenders want to know whether a borrower will repay a debt once a loan is extended. Then, the lender can use the score to determine how much to lend you, and what interest rate to charge you. Lenders assign points to the various aspects of your credit report.

Five factors are weighed most heavily when making this calculation:

  1. Debt to income ratio. This is the proportion of how much total debt you have relative to your income level. This is the single largest factor that creditors consider in determining whether or not to extend a loan or other credit to you. Even if you have no balance on a credit card, your credit limit is still added to the debt side of your debt-to-income ratio.
  2. Payment history. This factor considers whether you have paid your debts on time, including mortgages, car notes, credit cards, store accounts and loans.
  3. Length of credit history. Lenders look to see how long you have paid on your debts. Good past payment history can help sway a lender to loan you money if you’ve had recent issues that could negatively affect your ability to get the credit.
  4. Recent credit or applications for credit. If a lender sees that they are the tenth place this month that you are trying to borrow from, it could send up red flags.
  5. The type of credit for which you are applying. Lenders that will retain a security interest in collateral, such as a car or mortgage company, may be more willing to lend money to more ‘at risk’ borrowers when the lender knows that they can always take back the collateral in the event of default on payments.

Other factors that lenders look at to determine who is a good credit risk are:

  1. Education level. The higher the better.
  2. Length of time at current residence. If you move around a lot, you lose points, but if you relocate for a better job and show your income is higher, that helps get you points.
  3. Length of time at your current job. The longer you have been at your job, the better risk you appear to be.
  4. Homeowner v. Renter. Homeowners are considered better credit risks than renters.

Creditors like stability. If you can show you are a stable, reliable person who has the ability to repay your debts, you will be a much better credit risk to a potential lender.

Everyone should always review his or her credit report periodically. Errors can be and are made. Just a few points can make or break your ability to acquire new credit. Therefore, it’s crucial to have an accurate credit report. Over the last few years, identity theft has become a bigger and bigger problem as well. An uncorrected error can cause years of stress and frustration. The credit reporting bureaus must correct any inaccurate information on your credit report, but you need to bring the inaccurate information to their attention. Once corrected, the bureau is supposed to send you a free copy of the credit report showing that the inaccuracy was corrected.

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