Starting the New Year Free From Debt

ImageAs I sit here finalizing my plans for 2013 I realize that for many Americans part of those plans include the search to eliminate debt and to get their financial lives back.  Although our economy  is on a slow crawl back from the recession it is still a long way from good for most people.  Job loss or work reduction has forced many to rely on credit cards or pay day loans.

It seems like the paid programming stations are filled with financial gurus at this time of year telling you how to manage your budget and invest your money wisely.  The problem of course is that if you don’t have the money to meet your basic needs all the planning in the world won’t help!  I am a huge fan of Suzie Orman and Dave Ramsey but for most of the people I counsel their advice cannot help until AFTER they have filed for bankruptcy.

If I read one more article that advises consumers having money problems to call the credit card companies to see if they can lower rates and allow lower payments I think I will scream.  That advice is SO old and outdated.  The typical scenario that I hear from my clients is that they are maintaining their credit card payments because they are aware that if they default their rates will increase and additional fees and penalties will be applied to their account adding even more debt to their budget.  When clients call the credit card companies to see if their interest rates can be lowered the first thing they are told is that because their account is not in default they cannot assist them.  While some credit card companies MANY drop your rates temporarily, there is not guarantee that will occur.

Creditors are also feeling a pinch in this economy and are taking to more aggressive measures in order to collect on unpaid accounts.  I see lawsuits for just a few hundred dollars filed and clients now faced with the possibility of having a judgment on their credit and their paycheck garnished.

Due to the real estate crash that almost all Georgians gave experienced, most second mortgages on homes are completely underwater.  With no clear rebound in sight for the real estate market here is Georgia I am filing many bankruptcy cases for the sole purpose of removing the junior liens on the home.  For many clients, removing a $70K or $40K second mortgage allows them to see possible equity recovery in their home in the next few years.

When looking forward to 2013 I would advise all potential clients to first focus on what is essential.  Your home, reliable transportation, and food.  Those are the basics.  If the rest of your debt is preventing you from moving forward then meet with a bankruptcy attorney to review your options and see what 2013 could be the year that you get your financial life back.

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