Tag Archive: credit card debt

  1. Which Chapter of Bankruptcy Is Best for You?


    Find the Right Chapter for You

    Considering filing for bankruptcy? You are most likely going to file a Chapter 7 or Chapter 13. But how do you know which bankruptcy option is best for you and your situation? The Debt Doctors are here to explain the major differences between Chapter 7 and Chapter 13 and help you decipher which case would be most appropriate.

    Types of Bankruptcy for PA Residents

    There are several types of bankruptcy, but only two are common for individual debtors. Chapter 7, which is a liquidation process. And Chapter 13, which involves restructuring debt into a long-term plan

    Chapter 7 Bankruptcy in PA

    In a Chapter 7 bankruptcy, you essentially wipe out your debts and get a fresh start. Chapter 7 is a liquidation where the trustee collects all the debtor’s assets and sells any that are not exempt, (click here to see PA Exemptions.) The trustee sells the assets and pays the debtor any amount that is exempt. Then, the net proceeds of the liquidation are distributed amongst your creditors.

    However, certain debts cannot be discharged in a Chapter 7 bankruptcy such as alimony, child support, fraudulent debts, certain taxes, etc. You can read more on PA’s Non-Dischargeable Debts here.

    In many Chapter 7 cases, the debtor has a large amount of credit card debt, other unsecured bills, and very few assets. In the vast majority of these cases, Chapter 7 bankruptcy can eliminate these debts.

    Chapter 13 Bankruptcy in PA

    Under a Chapter 13 bankruptcy, the debtor proposes a 3-5 year repayment plan. This plan goes to the creditors that are offering to pay off all or part of the debts from the debtors future income. Chapter 13 can be used to:

    • prevent a home foreclosure
    • make up for missed car or mortgage payments
    • pay back taxes
    • stop interest from accruing on your tax debt
    • keep valuable, non-exempt property, and more.

    As long as you stick to the terms of your repayment agreement, all your remaining dischargeable debt will be released at the end of the plan.

    Several factors go into the amount that is to be repaid, like the debtor’s disposable income. This is usually determined as part of the Pennsylvania Means Test. In addition, the total amount paid to creditors in the Chapter 13 plan must also be as much as creditors would receive if the debtor filed a Chapter 7 bankruptcy instead.

    To file a Chapter 13 bankruptcy, you must have “regular source of income” and some disposable income to apply towards your payment plan.

    Chapter 13 bankruptcy is generally used by debtors who want to keep secured assets like a home or car. When they have more equity in those secured assets, they can protect them with PA’s bankruptcy exemptions.

    Which Chapter is the Right Fit for You?

    Understanding the ins and outs of filing for bankruptcy can help you decide if it’s the right path for you. Chapter 13 bankruptcy is a reorganization and restructuring of debt. Whereas, Chapter 7 bankruptcy is a liquidation. If you are unsure which chapter is best for you and your situation, contact us for a free consultation. Making the right decision now can enable future financial success and eliminate sleepless nights.

  2. Tax Refunds and Chapter 7 Bankruptcy

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    Can I Keep My Tax Refund in Chapter 7 Bankruptcy?

    With some simple planning, you can either keep or use your tax refund to rid your debt by filing Chapter 7 bankruptcy.

    If you’re expecting to receive or have already received a tax refund but are considering filing for Chapter 7 bankruptcy, you probably want to know if you can keep your refund. The answer is yes!

    A tax refund is part of your bankruptcy estate

    When a debtor files for Chapter 7 bankruptcy, all their assets become part of the bankruptcy estate. In order to protect these assets, we need to claim an exemption or use that assets prior to filing.

    In Pennsylvania, we utilize the Federal Exemptions, which allows for an $11,850 wildcard exemption. What does that mean? As long as your refund is less than that amount you can keep it. If it’s more, we can plan to utilize the refund to retain the value it provides.


    If you are thinking of using your tax refund to pay off some of your debts, give the Debt Doctors a call. We will be able to see if we can protect your tax refund and eliminate all of your debt with a Chapter 7 bankruptcy. Any firm can file your bankruptcy paperwork, but we believe our job doesn’t end there. A lot of our work focuses on counseling you through the stress and uncertainty that goes along with being in debt. If you’d rather inquire online, click here.

  3. Student Loans and Credit Cards

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    Is It Possible To Manage Both Credit Card & Student Loan Debt?

    Going off to college comes with new found financial freedoms, and for many students that means their first foray into a world of credit and debt.

    The Credit CARD Act of 2009 restricted students under the age of 21 to open a card without a co-signer and direct promotional card offers on college campuses. This helped reduce the number of cards issued to students, but unfortunately only made a small dent in decreasing debt for those graduating.

    According to an Experian College Graduate Survey conducted in April 2016, 58 percent of soon-to-be-graduates said they had a credit card, while 30 credit cardspercent said they had credit card debt with an average balance of $2,573. Another survey found 63 percent made purchases without having funds to pay the bill.

    It’s no secret that average student loan debt has been steadily growing. In 1993-94, about half of bachelor’s degree recipients graduated with debt averaging more than $10,000. Two-thirds of the Class of 2017 graduated with debt and the average student loan debt was at $35,000 after graduation. This number more than tripled in two decades.

    We wouldn’t be overreaching to say there is a correlation between higher student loan and credit card debt. As a new grad, you’re facing some tough financial decisions as you begin life in the real world. For instance, which debt do you pay off first?

    Credit card interest rates are typically higher than student loan interest rates, which means this debt is more expensive. For example, a $10,000 student loan at a 6.8 percent APR paid over 20 years would cost $8,321 in interest. A $10,000 credit card balance at 17 percent APR paid over 20 years would cost $25,230 in interest, and that’s assuming both interest rates remain fixed over that payment period. The long-term interest cost goes up if the interest rate increases.

    In the end, both student loans and credit cards can keep you in debt for many, many years and it’s easy to get overwhelmed by them if you’re only making minimum payments. What it comes down to is making the proper decisions to meet your financial goals. Making the a few smart decisions when your in 20’s could set you up financial success instead of struggling with debt for years.

    This is where The Debt Doctors can play an important role in helping you decide what is the best financial plan for you to manage your debt. To receive the guidance you need for a brighter financial future, you can schedule a free consultation today.


  4. Things Millennials Should Know About Credit Cards

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    Image courtesy of 3 Style Life

    Getting a credit card is a great way to start building credit, which is crucial for several important life decisions, including securing loans and getting the best insurance rates. Despite this fact, many Millennials are still foregoing credit cards all together—approximately 31% have never applied for a credit card. Additionally, according to a recent study done by NerdWallet, Millennials have the lowest average credit score—28.1% have scores below 579—and the shortest credit history of all age groups. What you have to realize is that not using credit is as bad as having bad credit. Banks want you to use credit, because that’s how they make money.

    Here are a few of the things that Millennials should know about credit cards so they can make smart decisions and build healthy credit:

    Your Credit Score is Important, but it’s Not Everything
    Keep in mind that your credit score rewards you for behaviors that the banks want you to engage in. If you are using credit only to build your credit, it is best to use it only for small purchases and pay it off every month. It’s important to use your first credit card wisely because it will likely have a high interest rate. Once you establish some credit keep in mind that your high credit score doesn’t necessarily mean you have a healthy financial situation—a good credit score can never make you rich, it can only help you get into debt. The best indication of a healthy financial situation is having the ability to save and having money in the bank, which isn’t a factor considered on your credit score, because it’s a behavior that mostly benefits you.

    Don’t Apply for the Wrong Credit Cards
    One of the most important discoveries made by the NerdWallet study was that Millennials are often applying for the wrong types of credit cards. Many Millennials with low credit scores are actively seeking new credit cards, but are often rejected by issuers because their credit score is not within the appropriate range for approval. Rejections can damage a person’s low credit score further, as each denied application elicits a hard inquiry on their credit report. The more inquiries a consumer has, the riskier they appear to lenders.

    To avoid rejections and inquiries, Millennials need to make sure that they are applying for credit cards within their credit score range. Look for secured or student cards, as these types of cards are designed for people with low credit scores.

    Avoid Late Payments
    Failing to pay your bills on time is a big credit card misstep that many people often make. It may not seem like a big deal, but when you pay your credit card bills late, credit card companies may penalize you with two surcharges on one delinquency. These can come in the form of a late fee and a penalty rate, which is an interest increase that can quickly raise your APR to incredibly high rates.

    For Millennials with bad credit, it’s important to be aware that a large portion of your credit score (35 percent) comes from your history of making on-time payments. A good tip for making sure you make payments on-time is to set an alert—whether it’s a text, email or calendar reminder—so that you’ll never miss another deadline again. Over time, the negative marks on your credit report from late payments will be eroded by the positive information you create by making payments on-time.

    Fixed Rates Aren’t Really Fixed
    Many Millennials are quick to believe credit card advertisements that boast low, fixed rates. But the reality is that credit card issuers can raise your APR whenever they want. Although this information isn’t a secret, it’s often hidden so deeply in the fine print of your agreement that card companies think that you’ll miss it. Knowing this, it’s important that Millennials understand the terms of their agreement before committing to a card in order to avoid surprises down the line. And once you do sign on to a card, be on the look out for notices about a raise in APR, so that you’re able to prepare.

    Millennials can avoid many of the pitfalls of applying and using a credit card by doing enough research in advance. Picking the right credit card and managing it responsibly will help you build a healthy credit score in the long run. Additionally, always remember to only use credit to supplement your finances not as the basis of your finances, because the only way to build wealth is by having money in the bank.

  5. Growing your Wealth through Smarter Strategies

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    No matter your current financial situation, you can take some simple steps to begin building wealth. In a recent Mad Money segment, host Jim Cramer discusses some of these strategies such as carefully researching any investment purchases, taking some calculated risks, paying off your credit cards, and savings towards retirement. While his tips are specifically geared for young people, investors of any age could benefit from these retirement lessons.

    One key takeaway is that credit will never help you acquire wealth; rather, it will stifle any progress towards that goal. Do you want to be better off financially now and into the future? It can only be done through savings and earning interest rather than paying interest on credit cards. In many cases, you can’t save and earn interest until you eliminate debt. If credit card debts or too much house are keeping you from saving call us and take your 1st step toward “life after debt”.

    For a free consultation we can be reached at httpss://thedebtdoctors.com/contact/ or 1-877-332-8369.

The Debt Doctors

607 College Street, Suite 101
Pittsburgh, PA 15232

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