Bankruptcy? or Debt Consolidation San Diego ?
What are the little-known facts? The most misunderstood fact is that people like you even want to file bankruptcy, First of all, No one wants to file bankruptcy. It is an urban legend that people who file bankruptcy in San Diego are doing so lightly. They are not.
But you will likely here the advertisements for debt consolidation as you are driving down the road thinking about the money issues have. It sounds…well, pretty good, actually. “AVOID BANKRUPTCY!” is usually the ‘hook’. You wonder, should I try bankruptcy or debt consolidation. Which is better? I plan to help yo figure that out. Right here, right now. Because no one should be in the dark when it comes to debt consolidation in San Diego.
Bankruptcy or debt consolidation San Diego, here are my numbers.
It is true – debt consolidation can be better than bankruptcy for a very small fraction of the financially troubled. Read on to discover whether you are a member of that very small minority. After handling about two thousand bankruptcy cases in San Diego, I can say pretty categorically that filing bankruptcy is almost always going to accomplish a result better than debt consolidation. By the time people come to a bankruptcy attorney they are usually in such financial trouble and debt consolidation will just prolong the problem.
Financial problems that are serious enough to make one think about bankruptcy usually really are serious – they’re not imaginary.
Unbearable, unmanageable debt has a toxic effect on your financial health. And on you physically and mentally. I see debts like cancer. Unwanted, sometimes malignant they can poison every area of life, including relationships. Did you know that more marriages are disrupted by money problems than by infidelity? I’m no doctor, but I am a cancer survivor. Because I had someone who IS a doctor take radical steps to completely remove the invading tissue. prognosis isn’t good, so sometimes the best solution is to just cut it out. I actually do provide debt settlement services where the financial problem is fixed. But debt consolidation, never it only prolongs the problem.
So why do these debt consolidation services exist?
It’s the old axiom of supply and demand. Plus, the service provider doesn’t have to be a lawyer. Which also means, by the way, they can’t really competently advise their customers as to whether and why bankruptcy may be – and often is – a much better option. But people naturally want to avoid bankruptcy, which creates the demand. People still tend to feel that filing bankruptcy is “cheating”, taking the “easy way out” or somehow even immoral. The debt consolidation preys on those who will go to extraordinary lengths to avoid what the debtor sees as a morally inferior solution. Who wants to think of themselves as immoral, right? The prime candidate (for those selling consolidation services) is emotionally invested in building their own boot straps, then pulling themselves up by them. Problem is, they may be operating from an uninformed and emotion-driven position.
Understanding the fine print of debt consolidation.
What they don’t realize is that debt consolidation can actually hurt their credit worse and for longer than bankruptcy. Don’t believe it? Check out the published lending guidelines for FHA and VA mortgage loans: two years after the bankruptcy discharge, the borrower can get a mortgage loan on the same terms as those who never filed bankruptcy. I filed one case for a client whose judge denied her reaffirmation on her car. The judge thought the interest rate was too high (well, yes; it was almost 25%) and my client worried she would lose her car. Days later after that judge made his decision, my client got her bankruptcy discharge. Think she was shut out of the marketplace for buying another car? Far from it. Even her existing underestimated her options. They played hardball. Refused to lower her interest rate. As a result, she very soon took advantage of one of the many credits offers she got. Consequently, she was able to finance a different, newer vehicle at half the interest rate of the old one and simply gave the old car back to the lender, no strings attached. Sweet? You bet.
What Are Debt Consolidators Looking For in Their Ideal Prospect?
Borrowers who are attracted to debt consolidation have several things in common. The first is that they are lured into asking themselves the wrong question. Instead of asking the question, “To file or not to file?” (bankruptcy, that is), they are asking, “Should I try loan consolidation instead?” We would be foolish to underestimate the allure of a powerful message that promises the listener relief from shame and guilt. First, though, the debt consolidation industry must mislead its audience by insinuating that shame is an inevitable byproduct of bankruptcy to make their message meaningful. Is this an industry-wide problem? Regrettably, it seems to be.
While there are good people who work in the industry of debt consolidation, it is the industry itself that is so badly flawed. I suspect that I speak for more folks than just myself when I tell you that I believe that many of these ads are misleading. That the services provided don’t live up to the hype. Too many do more harm than good. The industry is largely unregulated. As a result, consumers have few remedies except to sue when they are misled or outright cheated. Debt consolidators will typically charge a sizable up-front fee for their services. No work is actually done until they are paid in full. Fair enough. But what’s happening while the borrower is shelling out hundreds or thousands of dollars to the “agency?” The bills aren’t getting paid, and the borrower’s credit goes further into the toilet.
So, when is debt consolidation a good idea When is bankruptcy a good idea?
My threshold determining factor is: Will the borrowers have a lower monthly payment over the next five years in their proposed debt consolidation than in bankruptcy (Chapter 13, that is)? If the answer is yes, they should consider debt consolidation. For some clients, they may be unable to qualify for Ch. 7 or even a 13 (i.e would have to be in a Ch. 11!). There may be other reasons bankruptcy would have serious and unwelcome consequences like sacrificing property the borrowers own. If any or all of these conditions exist, they should consider debt consolidation in San Diego. Disqualifying (from filing bankruptcy, that is) factors can be that the borrowers are over the debt limit for a Ch. 13. Yes, there is a debt limit for Ch. 13. Two limits, actually; one for secured debt and one for unsecured. [Chapter 7 has no debt limit.] Those are the two conditions under which I refer a potential bankruptcy client to a debt consolidator. Otherwise, typically a Ch. 7 bankruptcy gives the client a fresh start, and the problem can be solved years earlier than other options.
When you’re ready to end your bill problems once and for all, contact me call 619-235-4095 to set up a free, no-obligation meeting to talk about how I can help you.
Will I ever be able to pay off my debt?
Bankruptcy can make it unnecessary to pay off some debts (in Chapter 7). In Chapter 13, it’s possible to pay them off at a discount if you’ve got some spare cash flow in Chapter 13. There are some debts which don’t get discharged in filing bankruptcy, but that’s a question better answered elsewhere on the site. In Chapter 7, all your “general unsecured debt” goes away.
Do I qualify for bankruptcy?
While it’s true that not everyone qualifies for bankruptcy, many people do qualify and don’t realize it. It can be tricky to figure it out. Most of us really need professional help thinking through whether or not we qualify for a Chapter 7 bankruptcy. If the answer to that question turns out to be “No”, then the logical next step is to see whether you qualify for a bankruptcy filing Chapter 13.
What is Chapter 7 bankruptcy filing?
Most Chapter 7 filers are individuals or married couples who are living fairly modestly and still don’t have enough income to pay their “reasonably necessary” living expenses. Or they can just barely pay those reasonably necessary expenses there is nothing left over to pay their unsecured creditors. (Credit cards are one example of unsecured debts.) But if after measuring those “reasonably necessary” living expenses there is some money left over, the debtor may be in Chapter 13.
Is my credit score ruined forever?
NO. Forget what “…everybody knows…” The current recovery time for your credit score after finishing your bankruptcy is two years. That’s enough time for anyone to get his / her credit score back up to the mid-to-high 700s. It’s the new normal. Yes, your bankruptcy filing can stay on your credit report for ten years. But after two of those ten, lenders seem not just ready, but anxious to get you back in a borrowing state of mind.
Is bankruptcy filing the right choice for me?
It’s impossible to know without a thorough conversation about your particular situation. That’s why Paul offers an exhaustive first meeting at no charge. He figures his clients like certainty as much as he does. In fact, he guarantees his clients they’ll get a discharge or get their money back. In over twenty years in practice, he’s never had to make a single refund.
Can I get the debt collectors to stop harassing me?
Yes – depending on who the creditor is and what you’ve done to protect your self. First, the bad news: “in-house” collection departments for the original creditor have more rights than third-party “debt collectors.” The easiest definition for debt collectors is collection agencies. So if Bank of Billions’ collection department wants to call you every day during permissible hours, it can do so. But if Bank of Billions sends your account to ABZ Collection Agency, the rules change. The federal Fair Debt Collection Practices Act kicks in. You can tell ABZ to pound sand, stop calling, stop writing and ABZ has to comply. That’s worth something.
Should I consider debt consolidation or debt settlement?
Maybe, but without adding too many qualifiers here, neither is likely to get as good a result as bankruptcy.