Finance Tips

Are you looking for a good bankruptcy attorney in Scottsdale? There are a few questions that need to be answered before choosing an attorney. Given are common FAQs pertaining to bankruptcy.

Commonly asked Bankruptcy Questions in Scottsdale

1. What are the total number of bankruptcies you handle?

You should first find out the total number of cases an attorney handles on an annual basis. Similarly, you should find out the total experience of the attorney in this field i.e. bankruptcy. You will require an attorney who has knowledge of the filing process.

2. What are the filing charges?

Keep in mind that the costs for filing bankruptcy vary from state to state. It is better that you confirm the costs with your legal advisor. You can also pay the court in installments if you cannot make a lump sum payment. Similarly, you can request the court to exclude the filing fees.

However, this does not include the attorney fees.

3. How to file a bankruptcy claim?

You will have to contact a credit counseling agency within 180 days. The counseling agency will help you in figuring out your options. You will have to get a duly-filled completion form from the agency. This form should be submitted to your attorney. He will then begin with the filing process.

4. What property can I retain?

In case of chapter bankruptcy, you can retain any property which is exempt from the creditors according to the law. Ensure that you check the state exemption well in advance. These exemptions vary from state to state. Some states allow selecting one between state and federal exemptions. You also have the option of keeping back your home if equity is exempt.

5. Will I be able to resolve my debts?

Yes, bankruptcy takes care of most debts barring a few exceptions. Some of the exceptions are as follows:

Student Loans Alimony

Such bankruptcy questions will give you a clear picture of the entire process.

Debt Negotiation happens in two basic ways: by a professional, or by yourself.

Here are a few strategies the professionals use when handling a debt negotiation on your behalf.

In this discussion, we are only looking at “unsecured debts”, which includes credit cards or medical debts most commonly. It simply means any debt which has no collateral, such as a car loan, home loan, boat loan, etc.

Before you start any debt negotiation, you should expect that you’ll take a “hit” on your credit score. Any creditor who lent you money is not going to just let you get out of paying any less than the full balance and let you retain perfect credit.

That said, all credit automatically repairs itself when all future payments are made on time. In many cases someone can suffer credit damage from a debt negotiation and within two years, provided all future payments are made on time, have an excellent “A+” 730+ fico score.

In addition, many people confuse credit “Score” and credit “ability”. If you have a perfect 850 fico score, but do not qualify for more financing because you are carrying too much debt already relative to your income, then you have zero credit ability. Frankly, the creditors have worked hard to make you believe these are the same, so that you keep paying. If you are looking for debt negotatiation, you are probably carrying too much debt. If you’re willing to stop using your credit cards for a while and don’t plan to buy a home or car in the near future, then it may save you many thousands of dollars.

The most common strategy the professionals use is to stop making payments, and instead save the money up so that a single lump-sum payment can be offered.

In addition to this, a debt negotiation professional will also prepare a specially formatted letter containing a legitimate reason why you could afford the debt before, but cannot afford it any longer, and if things continue, it will end in bankruptcy or charge-off. This usually contains a factual story, referred to by professionals as a “hardship”. This can include medical events, loss of job or income, dramatic increase in expenses due to some sudden unforseen reason i.e. divorce or adjustable mortgage changes, or a natural disaster.

There are a few reasons why a debt negotiation professional can reach a better, lower debt negotiation settlement offer than you doing it yourself.

First, debt negotiation companies deal with thousands of clients at a time, so they’re able to reach higher up the chain of command. A consumer will usually reach a lower-level technician, who is not authorized much leeway for debt negotiation. An attorney or non-attorney professional can speak with a vice president because they are offering sometimes hundreds of thousands of dollars spread over many accounts based on certain status and net discount amount.

Second, debt negotiation companies know how to say and how to package what needs to be said, at the right time, to the right people.

Third a debt negotiation expert knows the system and averages for each company. A creditor has the legal right to sue you in court for non payment, which could result in a legal judgement, which can mean garnishment of wages directly from your employer, additional court fees, and more credit damage. A professional debt negotiation company can minimize the risk of being sued while still reaching a settlement around 42 cents on the dollar.

Last, because a debt negotiation company has either attorneys on staff, or non-attorney trained negotiators on staff (depending on your state’s laws, and your file), they know the creditor’s tricks. The credit card industry makes literally billions of dollars per year in profit, and they don’t make this by being nice. However nice the customer service representative may seem on the phone, they have one agenda: to get as much money from you as possible. Most typically, for anyone in a bit of debt trouble, the creditor will suggest “Credit Counseling”.

The dirty secret about credit counseling is that “Credit Counseling” was invented by the credit card companies. They want you to feel like they’re helping, but when you enroll in these programs, you’ll repay 100% of your debt plus interest, suffer credit damage, and they’ll often collect a monthly fee on top of it ($49 a month x 48 months, for example is $2,352 in fees, not including interest). They usually won’t tell you this, but they also get a 15% “fair share fee” from the credit card company, so the IRS has revoked the “non-profit” status of many of these companies.

Like plumbing, taxes, or fixing your computer, you can handle debt negotiation yourself, or you can hire a professional. Those willing to educate themselves to learn how to do it right can definitely save some money. That said, for the reasons stated above, often times the settlement amount offered on a debt negotiation you conduct yourself may not be as discounted as what a professional may get, and therefore the service in almost all cases pays for itself. For example, if you get offered $.80 on the dollar, but a professional gets $.42, then it’s actually cheaper even with the cost of service to have a debt negotiation service handle your case.

One dangerous byproduct of staying in debt is not having enough time to invest for retirement. Most people don’t know exactly how much money they’ll need to retire. Do you? The sooner you use debt negotiation to clear your debts, the sooner you can build your investments to ensure you can retire the way you want – instead of living your golden years as a burden on family, with lower standard of living, or working past retirement.

Once a debt has been sent to collections, the original creditor writes off the debt and takes an accounting loss. The collection agency earns between 25% and 60% of what it is able to collect but, in order to earn, the agency must collect something. There exists a strong incentive for the collection agency to settle the debt for what it can now and move on. This little known fact opens the door to negotiating with an agency attempting to collect a debt.

While the agency has strong motivation to collect 100% of the debt owed, they will consider almost any reasonable offer. Remember, it is in their best interest to collect something now in order to get paid rather than risk being paid nothing and having the account pulled by the creditor and sent to another agency. Make the offer sweet enough and the agency will settle with you.

Let’s say you owe $750 and you are able to pay half of the amount, or $375, today. Don’t offer the whole amount you are willing to pay simply because if the agent you are dealing with smells a deal they will assume that you are able to pay more than you say you can pay. It is, therefore, to your advantage to offer less than the top figure you are willing to pay. So offer between 60% and 75% of your top dollar figure. In this case you should offer something between $275 and $281. I suggest that you don’t end your initial offer in an increment of $5. Offering $280 or $295 sounds like a best guess at what you are able to pay. Offering $277 or $277 leaves the impression that you have given some thought to what you can actually afford to pay now. By using precise dollar amounts in your offer you are more likely to get a lower counter offer from the agent. But you will get a counter offer–you can go to the bank on that.

Never let the agency know the source of your money. Don’t tell them that you are getting help from your parents, that you have a friend that is willing to help, or that you have just won the lotto. If the agent even smells an external source of funds you are less likely to settle the debt and they will press for the full amount. So don’t tell them anything they do not need to know, they don’t ask, and always try to answer their questions with concise answers.

Once you have reached an agreement over the phone you must send a confirming letter to the agency. The letter should include the following information:
The creditor has agreed to accept the negotiated lump-sum payment as payment in full for the entire amount owed. That cashing the enclosed check in the amount of $327, when cashed, is explicit acknowledgment of payment in full on this account. Include the account reference numbers, both the creditor’s numbers and the agency’s numbers.

On the check itself write something like the following in the endorsement space on the back of the check:

This instrument is payment in full of any debt owed by me to the XYZ Corporation pursuant to our agreement of August 23, 2007. Depositing this check represents payment in full for my outstanding debt.

Make payment by cashiers check or money order in order to protect your bank account number from the collection agency. Never pay in cash. Do not pay the original creditor unless the agency instructs you to do so in writing. Keep all paperwork for at least 4 years but no more than 7 years.

So there you have it. You can negotiate with collection agencies but never agree to pay more than you can afford to pay today. Protect yourself by keeping records of all paperwork. You are creating a win-win situation for the collection agency and getting an obligation off your plate.

Do you have several credit cards that have reached their limits and you find that paying the minimum monthly requirement is getting difficult? If you add the expenses of car payments, insurance, and mortgages on top of your mounting debt this can lead to a feeling of being financially overwhelmed. The way a debt reduction service operates is when you owe a particular balance to a creditor and negotiate to pay a lower balance. This differs from debt consolidation in that when you consolidate you pay a lump sum to an agency that then disperses the monies to the creditors that you owe. Creditors will agree to debt reduction if they believe that it is in their best interest.

Typically, those who request debt reduction services are individuals who are considering the option of bankruptcy as a form of clearing out their debt. Certain situations affect the pay off amount that creditors will offer. They will look at your credit report to see how you are paying your other debts. If it appears, you are paying everyone else in a timely fashion and neglecting them, they will most likely offer a high settlement based on the fact you appear to have the finances to be faithful to your other obligations. On the other hand, if they notice that your credit report shows you are not paying anyone they may offer a lower settlement. If their offer is in your opinion to high, then you can gather your financial information, including all incomes received and outgoing expenses to negotiate for a lower settlement offer.

When you have received a settlement offer either through a company you have hired or through negotiating yourself the creditor expects you to pay off the settlement with a one-time lump sum payment. There are exceptions to this rule such as if your debt is significantly high the creditor may consider payment arrangements over a short period. Usually they will offer up to six months. Another option is in using a debt reduction service that can negotiate for the settlement payments to stretch over a period up to four years.

The idea of using debt reduction services as a form of reducing your debt in and of itself sounds like a great idea. There are some points to consider if you are an individual who has good credit and has found himself or herself in a difficult spot financially, consider carefully before engaging in a debt reduction service. Once you do use this method, it will significantly lower your credit score, making obtaining credit more difficult. If you, on the other hand, are someone who has had a history of poor credit actually using a debt reduction service can change your bad credit rating from poor to good thus enhancing your credit status.

A reverse mortgage is a loan specially designed to help people in their retirement to utilize the equity in their homes to their benefit. The program is specifically designed for people aged 62 or older that have considerable amounts of equity in their home or whose home is already paid off.

When you obtain a reverse mortgage, the lender provides the home owner a lump sum or monthly payment based on the available equity in the home. If the home is not paid off at the time of application, proceeds from the reverse mortgage will be used to pay off the home. A reverse mortgage can be the only lien on the home at any given time.

Recipients can use the reverse mortgage payments as a way to supplement their retirement income, or they can take the lump sum payment to pay bills or purchase a new home.

There are no monthly payments required on a reverse mortgage loan. Payment is made on the loan by selling the home after the owner leaves its possession. This may come through moving to a new home or passing away. After the owner is no longer in residence, the lender will place the home up for sale to recover the amount, plus interest, it had lent the former owner.

During hard economic times it may be difficult for the lender to recoup all of the loan from the sale of the home. In this event the lender may look to the heirs for the remaining balance of the loan. This scenario can be avoided by purchasing mortgage insurance through the Federal Housing Authority (FHA) at the time the loan is made.

All applicants will be required to go through credit counseling before they are approved for the loan. While credit worthiness is not a factor in being granted a reverse mortgage, because there are so many different types of reverse mortgages available, the applicant must be educated on their specific loan. It is a consumer protection rule that has helped many avoid selecting the wrong type of reverse mortgage.

Realtors may recommend using a reverse mortgage to purchase a new home because it allows the borrower to purchase their new home without having to wait to sell their old property. The borrower can simply move from the old home and the lender assumes the home and all responsibility to sell it to cover the loan.