Tag Archive: private loans

  1. 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.

     

  2. A Letter to Small Business Owners…

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    Dear Small Business Owner,

    Having been a small business owner myself, I have a passion for helping other entrepreneurs like me. Businesses are a puzzle that require finding the right mix of a good product(s)/service(s), finding the right people to work in the business, finding the right customers, and controlling your expenses to make a profit. After 13 years of working with and in both successful and unsuccessful businesses, I have had a lot of valuable experiences that can help business owners.

    However, because I am a bankruptcy attorney, most business owners will avoid talking to me until it’s too late. Most people would think that seeing a bankruptcy attorney is the end of their business, but I see my job as the opposite. Good bankruptcy attorneys help businesses survive. I always remember the words of one of my colleagues: “As bankruptcy attorneys, we perform resurrections, not funerals.”

    Here are some of the ways a bankruptcy attorney can help your business:

    • We can help you structure your business to protect personal assets.
    • We can assist in selecting the right corporate structure for asset protection and tax planning.
    • We can eliminate personal guarantee liability.
    • We can lower your debt service by eliminating or restructuring debt.
    • We can develop a plan to reallocate resources to pay off secured debt or taxes.
    • We can help identify quality professionals that help with accounting, bookkeeping and efficiency.
    • We can prepare your business for sale.
    • If necessary, we can wind down an existing business while preserving value to start a new business or transitioning into a new career.

    Many of these strategies can involve solutions that may not include filing for bankruptcy. Even if you did have to file for bankruptcy you would be in good company as some of America’s greatest businessmen have utilized bankruptcy prior to building some of America’s iconic brands, including Milton Hershey, H.J. Heinz and Henry Ford.

    When is it time to see a bankruptcy attorney?

    • When you are considering taking a loan that includes collateral or a personal guarantee. Some careful planning at this point can help you avoid taking on an onerous debt obligation. Careful planning can help you protect personal assets and give you options if your business experiences a downturn or fails.
    • When your income is insufficient to cover all of your monthly bills.
    • When debt service is keeping you from making a profit.
    • When you begin to have internal issues with investors or business partners.
    • When you are considering taking a factoring or accounts receivable loan. (These are the business equivalent of check cashing loans and should be avoided at all costs.)
    • When you have a tax debt you can’t pay.
    • When you are unable to pay trust fund taxes like payroll and sales. Business owners and some employees could potentially face personal liability and criminal sanctions for failure to pay these taxes.
    • When your bank stops lending or declares you in default.
    • When you or your business receive a law suit.
    • When you can no longer take a salary or draws for your hard work.
    • When you lose your passion for the business to continue.

    As small business owners and entrepreneurs, our job is more than a place we work. Our jobs become part of us.

    It is not a 9-5 job and in good times and bad we stay up at night thinking of ways to grow our enterprise or navigate the next big challenge. If you get to the point that you need help, I can be an excellent resource for thinking out loud about creative solutions to common issues you face.

    Personally, I love helping small business owners – at all phases of building a business – and in many cases these opportunities give me a new perspective to help future clients, or incorporate into my practice.

    So, don’t hesitate to call. I offer a free consultation. An hour with me can uncover a new path forward to increase profitability, restructure your business, or put past difficulties behind you so you can reignite the passion for what you do. Most of all, please do not wait until it is too late.

     

    Sincerely,

    Matt Herron

    Managing Attorney

    The Debt Doctors at Quatrini Rafferty

     

     

  3. The White House Explores Student Loans and Bankruptcy Options: What You Need To Know

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    87801562The Wall Street Journal reported recently that The White House is looking into ways to help people who are burdened by insurmountable student debt to alleviate some of that stress through new bankruptcy options. Currently, neither federally backed or privately-issued student loans can be discharged in a bankruptcy, but through the Chapter 13 Process you can force an income based payment on your student loan servicer for 5 years.

    The plan that the White House is exploring could go a step further than this. However, there are few things you should know about the plans that The Obama Administration is exploring, and points to consider if you have crippling student loans.

    1. This Would Only Cover Private Student Loans.
      It is likely that this plan would only cover the privately issued student loans from financial institutions, not the federal student loans that most college graduates have. As noted in the Wall Street Journal Article, these private loans account for somewhere around 10% of the loans out there, so it’s nowhere near a majority of the population.
    2. It Would Likely Help with Debt for Unaccredited or For-Profit School
      Many of the private loans that are taken out by students who are attending unaccredited institutions, and for-profit schools. Because of issues in recent years with these schools using Federal Student Loans to make a profit, private loans have become a bigger part of paying for these kinds of degrees, which in many cases aren’t worth what borrowers pay for them.
    3. Private Loan Servicers can be Ruthless
      Part of the reason this may be a helpful choice is that the servicers of private student loans can be ultra-aggressive in their collection efforts. They know that these loans are non-dischargeable and fully use all options available to them including wage garnishments.
    4. Many Private Student Loans include Parents as Co-Signors

    While a borrower may have ensured the benefit of their education, student loan servicers don’t differentiate between parents and students when collecting their debt. This measure would help to lessen the burden on parents that have co-signed for private student loans. However, be aware that filing a Chapter 13 Bankruptcy now for student loans can help protect co-signors from collection because the Court can enter an order protecting co-signors if one of the parties files a Chapter 13 Bankruptcy.

    Unfortunately, while this bill may add some additional tools to our arsenal for managing student loans this relief may never actually pass the Republican controlled Congress.

    Until we find out what is going to happen, there are still options; if you have federal or private student loans from creditors who are being overly aggressive, or if you can’t afford your student loan payments, or even if you just want some options, call us at 1-877-332-8369. We will give you a consultation and you can find out more about how the Debt Doctors can help you manage your student loans and help you prepare “for life after debt”.

     

     

     

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