Dubiln Packard

Financial Healing

Financial Healing

When financial stress becomes overwhelming, it's time to take action. We'll help you explore all your options and find the best thing to do first to alleviate your situation. Our experience covers everything from negotiating with creditors, stopping collections, helping get loan modifications, refinancing, closing on short sales or deeds-in-lieu, debt consolidation, second mortgages, and a host of other financial issues.

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Credit Counseling Classes For Bankruptcy

Todd Murphy NJ Bankruptcy LawyerA recent amendment to the Bankruptcy laws requires everyone to take two credit counseling classes for Bankruptcy.

Two Credit Counseling Classes For Bankruptcy are required:

Pre-petition credit counseling: A credit counseling class must be taken BEFORE you file;

Post-filing credit counseling: A financial management class must be taken AFTER you file but before your case is closed.

Take Online Or By Phone.

The classes can be taken on-line or by phone.  The first class must be taken before you file, or you will not qualify for bankruptcy. The second class is taken after you file but before discharge in a Chapter 7 Bankruptcy or plan confirmation in a Chapter 13 Bankruptcy.

We Make It Easy.

In both cases, we will provide you with a pre-paid, secure, link to take the courses.  We also make sure the required certificates of completion are sent to the Court as necessary.  You don’t have to worry about finding an approved course and using a credit card to pay for the course.

We Are Here To Help You.

Considering bankruptcy?  Todd Murphy, a NJ Bankruptcy Attorney, is the New Jersey Bankruptcy Lawyer people have trusted for over 15 years for Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.  Our office is conveniently located to serve all of Essex County, Bergen County, Passaic County, Hudson County, Union County, Morris County, and Middlesex County.

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Medical Expenses Is Still The Number One Reason Why People File Bankruptcy

After a year-upon-year tally of the many bankruptcy cases I do each year, I have found that the number one reason why people file bankruptcy is still medical expenses.

Having extraordinary medical expenses is still the number one reason why people file bankruptcy my research shows.

A 2005 study by Harvard University showed then that 62% of bankruptcy filers filed bankruptcy due to their inability to pay enormous medical expenses after a significant illness or injury.  My own records show this still to be true.

Cancer Takes A Financial Toll.

Of the most financially devastating diseases, cancer reigns supreme. The American Cancer Society estimates that the 2010 total cost of cancer in the U.S. rose to $263.8 billion. So perhaps unsurprisingly, a new study by the Fred Hutchinson Cancer Research Center shows a close link between cancer diagnosis and personal bankruptcy. Compared to the general population, bankruptcy rates are nearly twice as high among cancer patients one year after diagnosis.  Of the bankruptcies caused by a cancer, a surprising 78% reported having some form of health insurance.

Many Are Covered By Health Insurance.

Overall, three-quarters of the people with a medically-related bankruptcy had health insurance.

I found a very high percentage of people who filed had health insurance, but many of them were bankrupted anyway because there were gaps in their coverage like co-payments and deductibles and uncovered services.  Other people had private insurance but got so sick that they lost their job and lost their insurance.

Many middle-class Americans feel insulated from these growing costs by medical insurance, but often when serious medical problems arise, that safety net either disappears or proves to be full of holes.

For Most, Health Insurance Is Employer Based.

For most, medical insurance is employer-sponsored. That means the insurance can disappear when illness or injury makes working impossible.

Although COBRA laws allow the employee to extend the insurance coverage by assuming payments, that solution falls short for many. COBRA can be very expensive and coverage is limited in duration, so an illness or injury that prevents work in the long-term will ultimately outlast those benefits.

Even people with active medical insurance coverage often end up with large bills as co-payments, non-covered services and other out-of-pocket expenses mount.

Although many policies include “catastrophic” provisions that limit out-of-pocket expenses, the cut-offs are often so high that policyholders are bankrupted by the medical expenses that fall in the gap.

These radically mounting medical bills haven’t been absorbed easily by the average American family.

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Are Credit Settlement Companies A Good Deal?

Many of you may be wondering “Are credit settlement companies a good deal?”  Maybe you received a letter like the one pictured below.  Letters like this one arrive in your mail box looking very official so you will be compelled to open them.  And, once opened, the notice takes on a “government issued” look – something you can feel safe about and shouldn’t ignore. This organization calls itself the “New Jersey Assistance Center” “RE: Dept. of the Treasury Publication 4681” printed in bold on the top line.

But, what are these companies actually offering? And, are they a good deal?  Yes, that’s what these letters are: very aggressive sales offerings.  Let’s look closely at the offer below.  This one is not much different than many of the others being sent to people with credit issues.

First, how did you even get this letter?  Probably because the company has purchased a list of names of people with high credit balances and/or late payments on debts found on their credit reports.

Once opened, the letter pictured below starts off in bold on the top line “RE: Dept. of the Treasury Publication 4681.”  A Google search of Dept of Treasury Pub 4681 brings one to a page at the IRS.  See IRS Publication 4681.  The letter directs us to the “insolvency” section of publication 4681 which states in simplified form that if you are deemed insolvent, any debt cancelled by a credit card company or other creditor, may not be included in your taxable income. There is a worksheet to determine whether or not one is insolvent.

Next, the letter states that the person the letter is addressed to owes $48,928 and that the credit settlement company can settle the debt for $19,571.  They base this claim on “past results.”

Then, the hard sales pitch really ramps up as the letter states “your creditors have taken action by increasing your interest rates.”  And, that the company can help you “avoid any pending legal action from your creditors such as wage garnishment, levy of funds from bank accounts, or liens placed against property.”

All of this seemingly for no charge.  “The letter states New Jersey Assistance Center does not charge a fee for its services.”  Does that seem realistic to you?

Of course there is a deadline which is less than one month form the date the letter was sent to get you to call fast.

Credit Settlement Solicitation Letter

 

Here are some questions I would want to have answers to:

  1. While the publication referred to is legitimate, what does it really have to do with your credit problems?
  2. What guarantees are there to back up the claim of settling the debt for $19,571 which is more than half of the claimed balance?
  3. How long does it take?
  4. Can creditors still sue or take other collection actions while the company is settling your debts?
  5. What appears on my credit record after these debts are settled?
  6. Is there really no fee for your service?  That seems unrealistic.

Here are what I believe would be answers to these questions:

  1. The publication lets consumers know that if they do indeed settle debts, they won’t be taxed on the forgiven amount if they can be deemed insolvent.
  2. There are no guarantees that we can settle your debts for his amount or any amount.  We will try our best.
  3. We can negotiate with the creditors in a matter of weeks but you may be paying the agreed amounts for two or three years
  4. During the time you are repaying, nothing will stop the creditors from taking other action.  and, if you miss a payment, or stop paying completely, the creditors have every right to come after you for the original balance and unpaid interest at their very high rates usually +/- 30% plus late fees, lawyers fees.  And, they can get a judgment against you and garnishment of your wages, levy your bank account, or take other actions to collect their outstanding debts.
  5. Your credit will be affected negatively with notations about settlement.
  6. These companies ARE paid a fee for their services.  Sometimes they are paid a commission on how much they save you. These fees are paid as part of your settlement payment to the credit card company.

Are these credit settlement companies a good deal?

For most people, the answer is simply no.  While I can’t say these companies aren’t helping to negotiate the debts of some, they aren’t doing anything you can’t do yourself.  And, most importantly, they are not utilizing any of the protections available to an individual through the bankruptcy laws. Most importantly – the automatic stay in bankruptcy.

The bankruptcy laws guarantee that you will be protected form all collection actions by any creditor.  Whether you qualify for a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, the bankruptcy laws legitimately allow an individual to discharge certain debts, re-negotiate others and in all cases, you will not have to pay tax on any debts forgiven even if you are not deemed insolvent.

Bankruptcy is a very smart choice for most individuals who are having trouble with too much debt. It is a government sanctioned program designed to help you while giving you every protection available under the law.

Before you sign-up with one of these companies, call to investigate all of your options under the bankruptcy laws.

Call today: 800-285-1925.