Robert Collazo: Bankruptcy Lawyer Layton Utah

It does take careful thought and planning to budget your money. In today’s world careful financial management is not just sensible, it is be vital as more and more people take charge and make decisions about their retirement investments and daily living expenses.

Even if you are new to the job market you should be saving for your retirement years. As life expectancy continues to improve, many people discover that their retirement life could span more than 20 years. Yet many young people have only a hazy idea of how much it costs them to live. Many young Americans are reeling under debt. If you are like one of them, all is not lost. You may have options. It may be possible for you to get rid of your debts. That too through the court. Speak to an experienced Layton Utah bankruptcy lawyer to know more.

Credit card issuers make their money through the interest they charge. Typically, the issuer will allow a holder to pay a “minimum monthly payment,” a small percentage of the outstanding balance. As long as those monthly payments are made, the credit card issuer is willing to let the person keep paying off the debt in small chunks. That’s because the issuer will continue to collect interest.

The worst thing about debt is that it tends to snowball. Some people are able to get out of that predicament fairly quickly. They forgot to pay a bill on time and made amends as soon as they recognized the error. That’s simply an error. Even though the mistake may have cost them some extra money in penalties or late fees, it was correctable.

But when paying bills late or paying one bill and leaving others unpaid becomes habitual, it’s a sign of a much more serious problem: runaway debt. And like a runaway train, when that runaway debt gets on down the track, it gains momentum.

A mountain of debt can seem overwhelming. But it’s not hopeless. That’s what makes those stories about young adults who took their own lives as they sank further into debt all the more depressing. Too much debt is obviously a problem. It’s a sign that one needs help handling one’s finances. Do the responsible thing: take steps to reduce debt. If that means telling your parents you’ve made mistakes, do so. If it means finding professional help, do so. Don’t hold yourself back from picking up the phone and scheduling an appointment with an experienced Layton Utah bankruptcy lawyer.

Don’t think that you can hang on until it gets so bad you can just declare bankruptcy. Even though more than a million Americans do so each year, declaring bankruptcy should be an absolute last resort. Why? First of all, bankruptcy can stay on your credit record for 10 years, meaning that it almost certainly will become more difficult to qualify for a mortgage or other loan, and that the terms of credit cards will be much less appealing. Bankruptcy should not be seen as an escape hatch. Before you file for bankruptcy, you need to give it a serious thought. Sometimes it may be your best option. Consult with a Layton Utah bankruptcy lawyer.

For those who have some income, and have fallen into the habit of spending more than they’re earning, financial recovery may be a matter of imposing strict financial discipline. Such a change of heart might be difficult, but staring down the chasm can create crystal clear focus and initiative. If you can’t do it alone, there are professional credit counselors who can help you create a debt management plan to pay off your creditors.
First try some steps for yourself. Review all your outstanding bills and make sure they’re accurate. If you think any are wrong, contact the creditor immediately.

Organize Your Debts

Find out exactly what you owe to whom. Contact the creditors and let them know you’re having difficulty. This can be a hard step to take; most people would rather hide from their creditors than acknowledge their inability to pay. But creditors will have more respect for those who come clean. If there are circumstances, such as a recent job loss or high medical bills you’re paying off, let them know them that as well. “Managing Your Debts,” a booklet by a consortium of financial and consumer companies, gives the following advice: “Try to work out an acceptable payment schedule with your creditors. Most are willing to work with you and will appreciate your honesty and forthrightness. The Fair Debt Collection Practices Law prohibits a debt collector from showing what you owe to anyone but your attorney, harassing or threatening you, using false statements, giving false information about you to anyone, and misrepresenting the legal status of your debts.”

Create a Budget

Determine how much money you must pay every month for rent, utilities, and travel to and from work. Add to that the amount you’ve worked out with creditors to pay off the balance on debts. Then work to economize on the rest of your expenses. How much have you been spending on dining out? Cut it down to zero for a while so you can channel that money into debt repayment. What have your entertainment expenses been? Cut them. Vacations? Postpone them. These might seem like drastic measures at the moment, but the feeling of relief and accomplishment will soon outweigh the sacrifice. Put off all unnecessary expenses for a while. Take a look at your possessions. While selling off grandma’s jewelry probably isn’t a good idea, selling a second car, a second bike, or other accumulated and unused items might be.

Use Your Savings

While it’s generally recommended that you keep a savings safety net, high debt might be an exception to the rule. Look at the numbers. Your savings account in the local bank is drawing 4.5% interest. On your debts, you’re paying 14.5% interest. As soon as you’re able, you can start funneling money back into the savings account, but for now, you’re better off paying down the debt. If a CD is due to mature soon, it might be better to wait than pay the penalty for early withdrawal.

Cut up your credit cards

Enough said. If credit cards are what got you in trouble in the first place, stop using them. At a minimum, stop using them for everything except emergencies. Above all, don’t apply for new credit cards. This is not the time to get creative with borrowing from one card to pay another. It’s time to get serious about repayment.

Where to find help

Determine if you qualify for any government or private assistance. Government assistance includes unemployment compensation, Aid to Families with Dependent Children (AFDC), food stamps, low-income energy assistance, Medicaid, and Social Security including disability.

If you can’t do it alone, there are professional credit counselors who can help. An experienced Utah bankruptcy lawyer can guide you to a professional credit counselor. The counselor will work with you on developing a budget. The counselor can also negotiate a financial management plan with creditors who are pressing for repayment.

The lesson of money management is really quite simple: Save as much as you can as often as you can. Having a cushion of savings and some money invested means your money is working harder for you. That means that your goals are more easily within reach. Financial security transcends having a savings account, however. Knowing that you’re on the right path so that money will be there when you need it provides emotional and psychological security as well.

So before making that next big purchase–or even the little ones that add up–ask yourself the following questions: Do I need this? If I do need it, do I need it now? Delaying purchases can often save lots of money.
Technological improvements in computers, for example, often mean that you can get more computer for the same amount of money. Delaying the purchase until you have the full amount, or close to it, in cash also saves money. Since you’re not buying with credit, you’re saving interest charges. And you’ve achieved the satisfaction of planning for a purchase and saving toward that goal.

Delaying or passing up larger purchases also helps get you in the habit of passing up smaller purchases. Saving money doesn’t mean self-denial. It’s trading one pleasure for another. If the goal is to buy a new entertainment system, it might mean passing on lunches at the nearby café every day. Think about it. If those lunches cost nearly $10 a day, you could have almost $200 saved up in one month. It’s a relatively painless way to get to the goal.

How do you decide where you can cut? Keep track of your spending. Pull out a notebook and write down all your expenses. Especially keep track of those smaller ones–the $5 for coffee, the $15 for a midday snack at the vending machine. At the end of the month, look at where the money’s gone. What were your good decisions? What were the bad ones? Try to cut out those expenses.
Be careful with credit cards. They’re wonderfully easy to use, but their major attraction is also their major downside. They can be too easy to use. It doesn’t feel like spending money when you say, “Charge it.” But each time you charge, you are spending money–and it’s an expensive loan if you let charges build up without paying them off.

Remember that overusing credit cards–especially when you start transferring balances from one to another–is in direct contradiction to the goal of saving. And if you get into trouble with credit card debt, let someone know right away. The sooner you start working to solve the problem, the sooner you can be on the right path.

Whatever your financial goals are, there’s a way to get there. If the goal is a long time away–retirement, for example–you can afford to take greater risks with the investments allocated toward that goal. If the goal is to save $250 in the next month so you can buy a new phone, tuck it in an account where you won’t touch it. It’s awfully hard to keep money in your checking account earmarked for something more than a few days away.

Filing Bankruptcy

As a last resort, bankruptcy is a legal procedure to provide a fresh start. There are two types of bankruptcy filings:

• Chapter 7 (so called because the rules governing these types of filings are found in Chapter 7 of the bankruptcy code) is a “straight” or “liquidation” bankruptcy, requiring that the debtor liquidate or sell all assets that are not exempt in that state.

• Chapter 13 is known as a reorganization plan. It allows debtors to keep property, such as a house or car, that they might otherwise lose. These types of filings often allow debtors to pay off an existing loan, over three to five years. This type of plan can work for people who have consistent income and need time to pay off debts, as well as relief from creditors while they’re trying to pay their debts down.

Both types of bankruptcy filings may get rid of those debts to which creditors don’t have specific rights to properties. They can stop foreclosures, repossessions, garnishment of wages, utility shutoffs, and debt collection activities.

Bankruptcy can adversely affect your credit score. Credit score is a tool that’s designed to enhance a lender’s ability to determine the likelihood that a consumer will repay a loan. It’s based in part on credit scoring “models,” which are computerized systems that look at a variety of factors (sometimes hundreds) relating to many consumers’ credit histories and personal information, such as age, income and level of outstanding debt.
Scoring systems collect this data to try to predict a consumer’s willingness and ability to pay future debts. Credit scoring systems usually produce a numerical score–a credit score. Lenders use these scores as tools to help decide if a loan should be made and to set repayment terms.