Posts Tagged ‘Debt’

When Will You Be Debt FREE?

Wednesday, December 23rd, 2009

To best answer this question, there are a few questions that must be asked.  First of all, how much debt do you have, secondly what is the interest rate(s) and lastly what amount of money do you pay per month toward the debt(s)?

Let’s say that a person has only one credit card with a $20,000.00 balance, 15% interest rate and makes a regular monthly minimum payment in the amount of $300.00.  Although that person is doing his/her best to pay off the debt in a timely basis, it will take them 95 years and 6 months to pay off the $20,000.00.  Further, that person will have paid the balance of $20,000.00 plus $86,974.31 in interest charges for a total payment of $106,974.31.  

If you are reading this blog, most likely you have debt of some kind.  I would advise you to follow the link below to the “debt reduction planner.” 

            http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp 

You will realize that there is probably not enough time or money to pay off your existing debt and a bankruptcy filing is most likely the quickest and least costly alternative to becoming debt free and getting the fresh-start you need. 

If there are any general questions or topics you would like to read about relating to bankruptcy law in the Philadelphia, Pennsylvania region, you may contact the Philadelphia Bankruptcy Lawyers at Sadek Law Offices, LLC at 215-545-0008 or email brad@sadeklaw.com. Thank you.

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Posted in Uncategorized | 4 Comments »

Got Debt? Bankruptcy may be your best option.

Tuesday, September 29th, 2009

debt-consolidation-services-cartoon

http://www.garvfinancial.com/wp-content/debt-consolidation-services-cartoon.jpg

Consumer debt is approaching $2 trillion and millions of Americans are in
serious financial trouble. Many are turning to debt consolidation services
due to television and other large scale advertising campaigns promising
lower monthly payments and interest rates. Consumers are drawn to such
programs to avoid filing for bankruptcy relief.   However, through the
course of my practice I have seen many clients who are far from satisfied
with debt counseling and debt consolidation and wish they filed for
bankruptcy much earlier.   Below you will find actual sample complaints
regarding debt consolidation.

Generally, in a debt consolidation plan one makes a monthly payment, which unfortunately is subject to change because it is not a court supervised plan.  This monthly payment is supposed to go into an account earmarked for future negotiation with the creditors.  However, as the consumer is paying into the debt consolidation account, the credit account balances continue to rise.  In most cases the credit account balances continue to rise faster, due to interest, penalties and late fees, than the consumer can save (especially after debt consolidation fees and costs).  Moreover, the creditor need not accept the proposed settlement and the debtor will still find themselves in collections and lawsuits. Therefore, the consumer who was promised lower monthly payments and interest rates, usually faces a larger amount of debt after commencing debt consolidation.  Government regulation is extremely lax regarding these companies and new laws need to be implemented to better protect the consumers.  Lastly, in some Philadelphia, PA bankruptcy cases tax debts and utilities are included, however, debt consolidation programs they are not.

Below you will find three complaints regarding debt consolidation programs and companies, thousands more may easily be found.  The complaints were submitted to and are posted on http://consumeraffairs.com/debt_counsel.

COMPLAINT #1
I contracted with this debt consolidation company to negotiate on my behalf with my credit card companies to enter into a debt reduction program. I was told payments were made, when in fact they were not, causing the accounts to go into default. This has resulted in the interest rates to increase by up to 13% and my payments to be more than they were previously. My credit has been ruined. They lied to me every time I called them regarding payments made. I had statements reflecting the fact that no payment had been made, but they told me they were. I had to speak to a different person each time because they do not keep employees over 1 week. I tried unsuccessfully to get at least some of my money back.
My credit has been ruined. My payments and interest rate are much higher
than they were before. I owe huge payments because of their defaults and
nonpayments. I have lost sleep. I am very stressed out because of the
financial consequeces of their actions

COMPLAINT #2
I’ve Been paying some of my debtors through American debt management one in particular is C.T.I. (CARE CREDIT). About every 3 months or so I get a call stating they haven’t received a payment since January yet every month they are debiting my checking account 370.00 for the past 4 years. Feel I’m being taken for a ride here

COMPLAINT #3
I entered in on an agreement with Freedom and ended up being late on all my credit card bills and now I owe more to my credit cards than I ever did
before. They did not settle any of my big amounts except for a Best Buy for
500.00. I was paying them almost 800 a month for nothing.

COMPLAINT #4
We enrolled with DebtFree America to try to help us with our debt. We have always had good credit and paid our bills but fell on hard times and
decided to get help with a credit counselor which was DebtFree AMerica. We were charged $539 up front and a monthly fee in return for them lowering our interest rates and helping us to get on our feet.
We discovered in about 2 months that not only didn’t they lower our
interest rates but actually ruined our credit by not sending correct amount
of money for the payments and being late which in turn cost us $70 in late
fees. We canceled the service but they refused to reinburse us our $539. We feel as though they didn’t live up to their promises and we should receive our money back. Damage Resulting: They have ruined our credit and cost us late fees.

A consumer facing debts should consider a free face-to-face initial
consultation with the Philadelphia Bankruptcy Lawyers at Sadek Law Offices, LLC before making any decision regarding their debts.

If there are any general questions or topics you would like to read about
relating to bankruptcy law in the Philadelphia, Pennsylvania region, you
may contact Sadek Law Offices, LLC at 215-545-0008 or email
brad@sadeklaw.com. Thank you.

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Posted in Bankrupcty Musings | 3 Comments »

How much is enough?

Tuesday, August 25th, 2009

carrying_debt

There is no minimum amount of debt required to file for bankruptcy protection in Philadelphia, PA or the surrounding areas.  However, it should be noted that bankruptcy fees generally start at $1,000.00 not including bankruptcy court filing fees or case costs.  Accordingly, if one has less than $5,000.00 total  in unsecured, non-priority debt, such as credit cards, personal loans, medical bills, etc., they may be better served working out a payment plan including an interest reduction with the creditors holding the subject debt(s).  
 Very generally speaking, for every $10,000.00 worth of debt, minimum payments, penalties and late fees add up to around $500.00 per month.  Meaning the $10,000.00 worth of outstanding debt costs the borrower (debtor) around $6,000.00 dollars per year, every year.  Unless a larger amount is paid  on a monthly basis in order to actually reduce not just “pay” the minimums.  Say a debtor is owing $25,000.00 to unsecured creditors (credit cards, etc.), using the same ratio as above, the debtor would be paying about $1,250.00 per month in minimum payments, penalties and late fees.  Once out of the credit trap, said monthly payments can be saved for the future and/or applied to a home, car, school tuition or other personal goals
 In summary, the amount of debt, unless extremely low is irrelevant.  The determining factor for a potential petitioner in bankruptcy shall be the cost of the debt(s) on an ongoing monthly basis.  If the cost of debt is unaffordable or monthly payments are not reducing such debt in a timely fashion, then one should consider their options in eliminating or reducing debt through a Chapter 7 or Chapter 13 Bankruptcy proceeding. 
 If there are any general questions or topics you would like to read about relating to bankruptcy law in the Philadelphia, Pennsylvania region, you may contact Sadek Law Offices, LLC at 215-545-0008 or email brad@sadeklaw.com.  Thank you.

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Posted in Bankruptcy Guide | No Comments »