Unsecured Debt

Unsecured debt could be credit card debt, medical bills, student loans, personal loans, or even unpaid taxes. Too much unsecured debt can make it increasingly difficult to pay other bills each month.

Credit card statement reporting changes made in early 2010 demonstrated to the consumer what a trap credit card balances can be.  Making only minimum payments each month may mean that the credit card will not be paid off for decades, if at all.  In addition, many credit card companies raised interest rates to 20% or more, regardless of whether the card holder was ever late on a payment.

Another recent phenomenon has been for consumers to pay the credit card bill each month, even if it means missing the mortgage payment.  Many financial experts were perplexed by this trend, until they found out why this was happening.  If a card holder had more room on his credit limit, paying on the card allowed him another month of treading water, even as the house was falling into foreclosure.

For ideas on what can be done about out of control unsecured debt, please see the Solutions section of this website.

Foreclosure (Mortgage and Tax Liens)

For most individuals, the mortgage payment is the largest and most important bill of the month.  It can also be a very large nut to crack each month.  For some, the motivation to keep paying is not there as they see property taxes and insurance premiums continue to rise every year, at the same time the value of the house continues to fall.

The good news is that so many homeowners are in the same boat, that there has never been a better time to be able to keep one’s house – if the homeowner is willing to act.  For information on fighting foreclosure, please see the Solutions section of this website.

Income Taxes

Everyone, including me, is afraid of the IRS.  That doesn’t mean that there are not reasonable, even compassionate,  people at the IRS, and reasonable methods for dealing with tax debt.  For many people, the financial problems came before the tax problems.  Sometimes, there was not enough money to pay the self-employment taxes.  Sometimes, a 401(k) or IRA was raided to pay debt, only to find the IRS waiting when the next year’s tax return was filed.  Often times this was a double-edged sword – withdrawal penalties and forgiveness of debt income.

Some tax debt may be discharged in bankruptcy, and there are ways to negotiate with the IRS.  See the Solutions section of this website for further details.

Law Suits

Once a person gets behind by a couple of months or more on a debt, a law suit is a very real possibility.  The law suits can turn into judgments and garnishments very quickly, particularly if the debtor does nothing to fight the law suit.  When a person is served with a summons for a law suit, it is time to get professional help.  Often times, the cost of defending the suit is very small compared to doing nothing.

Garnishments

Once a creditor gets a legal judgment from a law suit, they have the right to garnish a debtor’s bank account or wages.  Unfortunately, garnishments seem to bring the most pain to the debtor, but the most business to the bankruptcy attorney.  This is sad, because if a person had acted sooner, the creditor may not have gotten any of the pay check or bank account.  Often, once a garnishment has arrived, bankruptcy is not far behind.  If you are facing a garnishment or law suit, contact us as soon as possible.