Tag Archive: free consultation

  1. Which Chapter of Bankruptcy Is Best for You?

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    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. 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.

     

  3. Save For Retirement Now, Benefit Later

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    Start Your Retirement Investments Now to Better Your Financial Future

    When is the best time to start saving for retirement? The answer is simple: as soon as possible. But like most things in life, that is easier said than done. Given the job market, high student loan payments and other personal situations, the last thing young adults want to do is sacrifice a portion of their retirementhard-earned paycheck for a retirement that is not happening for at least 30-40 years.

    A recent Pittsburgh Post-Gazette article highlights how putting away even as little as $20 a month can compound and grow into much more by the time retirement rolls around:

    Click for Post-Gazette Article

    As the article explains, saving money takes discipline and financial planning. Our financial expert, Matt Herron strongly believes the only way to acquire wealth is through saving and earning interest, not paying interest. So take advantage of your automatic deduction 401k plans to help save without effort. Additionally, avoid borrowing and taking withdraws from you retirement or 401k. Your 401k is not a checking account. Early withdraws and loans are expensive and will dilute your ability to compound money.   If debt is keeping you from making your best effort to save call us to eliminate your debt and develop a plan to start saving your financial future depends on it.

  4. To Co-Sign or Not??

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    Adding a co-signer can make a loan more attractive to lenders, but can cause serious repercussions if the co-debtor defaults.

    A common question many of us face is whether to co-sign for a loan. Initially, co-signing a loan seems like a nice and supportive gesture. But helping a close family member or friend by co-signing can have major impacts on the future of your financial health.

    Before you co-sign on a loan there are a few important things to consider:

    • First, in the event the person you co-sign for cannot pay the loan, you will be the one who is responsible.  By becoming a co-signer, you are essentially taking on someone else’s debt. You are putting the future of your financial health into someone else’s hands.  If they are unable to pay off the loan, you will be completely responsible to pay it off for them.
    • Next, co-signing can have a negative impact on your credit.  Because of the debt you have taken on, your credit score can drop.  Additionally, it will be harder for you to qualify for loans you need because of the increase in your debt-to-income ratio.
    • Lastly, although co-signing can make a loan more attractive to lenders, there are serious repercussions if the co-debtor defaults. This is the worst-case scenario and negative impacts may include you having to pay the money back in its entirety, a lower credit score and your bank account could be frozen.

    Overall co-signing is a long-term commitment to take on someone else’s financial debt.  This is where The Debt Doctors can play an important role in helping you to decide if you should co-sign or not. You can schedule a free consultation today and receive the guidance you need to make the best decision for your financial future.

  5. Restoring Your Credit Following Bankruptcy

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    The goal in bankruptcy is to have your debts discharged. Your discharge will remain on your credit report for 10 years. However, you can rebuild your credit in two to four years. During this time, you will receive offers for credit cards and car loans from lenders because you are determined to be a good risk. Following a bankruptcy discharge, creditors know you have few debts and you can’t file for bankruptcy for eight years.

    When banks lend, they examine your last two years of credit history. After your bankruptcy discharge focus on obtaining new credit by opening three new accounts that you can pay on time for 24 months. If you plan to buy a car be sure you can afford it. Coming out of bankruptcy, you will be charged a high interest rate so buy a cheap car that can last for two years; you can trade it in once your credit improves.

    I advise most clients to open three new credit card accounts, or two accounts and a car loan, and to pay the balance every month to avoid the high interest rates. Do not incur debts and carry a balance. If you can do this for 24 months, you can restore your credit and then consider buying a home or buying a car at a good interest rate. After bankruptcy, with careful monitoring of your spending, you are able to restore your credit much sooner than you would assume.

    If you’d like to learn more, I offer a free consultation. I can be reached by filling out the contact form on our website or by calling our office at 1-877-332-8369.

The Debt Doctors

607 College Street, Suite 101
Pittsburgh, PA 15232

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