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Credit Card Debt Is On The Rise

Wednesday, January 4th, 2012

A recent survey indicates a disturbing trend in the spending habits of the American consumer. After two years of moderate credit card use, new figures from Card Hub show that credit card use has significantly increased during the past year.  Consumers are on track to end 2011 with a $64 billion increase in credit card debt.

Americans are also paying off credit card debt at a slower pace. During the first quarter of each year credit card debt usually declines, mostly due to annual bonuses and tax refund checks. In 2009 and 2010, consumers paid down more in the first quarter than they charged in new debt through the end of the third quarter. This year consumers kept the cash and kept charging throughout the year. Even more disturbing is that this year’s third quarter credit card debt total was 154 percent more than in the same period last year.

Carrying large credit card debt can create serious financial problems. According to the Federal Reserve’s credit card repayment calculator, a $5,000 debt at a 15% interest rate will take 7 years to pay off at $100 per month. During this time you will pay an extra $2,896 in interest charges!

If credit card fees are eating up your paycheck, it may be time to consider bankruptcy. During Chapter 13 bankruptcy you are able to structure an affordable repayment plan to pay credit card debt. Whatever you are not able to pay will be discharged after three to five years of repayment.

If you cannot afford to repay anything towards your credit card debt, Chapter 7 may be the answer. A Chapter 7, also called a “straight bankruptcy,” lasts about five months and nothing is paid to your credit cards. Most bankruptcy debtors are able to keep everything they own while discharging debts they cannot afford to pay.

When credit card debt has taken over your finances, consult with an experienced Haines & Krieger Las Vegas bankruptcy attorney and learn how the federal bankruptcy laws can help. Call us at 702-880-5554. Don’t let credit card debt hold your paycheck hostage! Bankruptcy offers powerful protection from creditors and can discharge overwhelming debts.

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4 good ways to increase your credit score after bankruptcy in Las Vegas

Thursday, April 14th, 2011

Won’t bankruptcy ruin my credit score?  Initially it will have a negative impact.  But over time you can rebuild your credit score.  Which is much more difficult to do if you never file for bankruptcy and remain under a large debt burden.

Here are 4 good ways to increase your credit score after bankruptcy in Las Vegas:

1.  Use your debit cards.

Instead of using credit cards, use debit cards for more of your purchases.  This makes it easier to do electronic transactions without having to incur debt and potentially high fees.  And making use of a debit card in a responsible way still reflects positively in your credit report.  Debt that you don’t pay back on the other hand will have a negative impact.

2.  Limit your credit cards

Never have more than one or two credit cards at the most.  One that you use.  And a second as a back-up in case you lose the first one.  We know it’s hard to function in today’s world without a credit card.  Some places don’t even take cash anymore.  And using a credit card responsibly does help improve your credit score.  But having too many just makes it easy to transfer balances and run up bigger debts with the thought that you’ll just deal with it later.  A perfect recipe for getting back into debt trouble.

3.  Cash is king

If you use cash, then there’s no borrowing, no interest, no penalties, no negative impact on your credit score.  It’s as simple as that.  Plus, when you use cash, you feel it.  You know you’re spending.  And that doesn’t always feel good.  But there’s a reason our bodies feel pain:  it’s a signal to stop doing what you’re doing.  Awareness is a good thing!

4.  Avoid the credit card way of life

One of the biggest debt problems comes from trying to keep up with the Joneses and live the high life, even when you can’t afford to.  Need a car so you can get to work?  That’s a loan you might need to take out.  Want to go out to a fancy dinner or on a nice vacation or buy the latest smart phone?  Don’t take out loans for these.  These need to be purchased with saved money.  Otherwise you risk fall right back into the debt trap that brought you here.

Questions about credit scores and what happens after bankruptcy?  Please contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation by calling 702-880-5554.

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Will my creditors still come after me if I file for bankruptcy?

Tuesday, December 7th, 2010

Once you file for bankruptcy, you’ll likely see an immediate change in the activity of your creditors.

This is partly because of the “Automatic Stay,” which forbids creditors from contacting a debtor directly (i.e., not through the debtor’s lawyer) once the bankruptcy case has been filed.  And partly because for some creditors it just may not be worth their time and money to pursue the debt.

Here are 5 things that are likely to happen once you submit your bankruptcy petition:

1.  Thanks to the Automatic Stay, creditors must immediately stop all collection activity.  That means no more collection letters or phone calls to you.  Period.  It also means they can’t continue to garnish your wages.  And any lawsuits against you are put on hold and can’t go forward during your bankruptcy case.

2.  That said, some smaller creditors may still contact you because they’re unfamiliar with the bankruptcy laws and the automatic stay.  If you have any problems with them, simply instruct them to contact your bankruptcy lawyer.  (They may not be terribly thrilled with this suggestion, but that’s the way things work in bankruptcy and there’s not anything they or you can do about it once you’ve filed.)

3.  You may never hear again from some creditors, because they’ve weighted the costs and benefits of pursuing their claim and they’ve decided it’s just not worth it.  Perhaps they don’t expect to get anything back in the case.  Or they realize that the amount they would get back is less than the amount they would have to pay a lawyer to represent them.

4.  Other creditors (those with more at stake) will file what’s known as a “proof of claim” in the case.  This is each creditor’s way of trying to get as big a piece of the asset pie as possible.  Since the pie is limited to your non-exempt assets, the proof of claim is more about creditors competing with other creditors for their share of the pie.

5.  Your bankruptcy lawyer (if he/she is a good and experienced one) will keep you up to date on the parts of the case that you need to know about and where action is required by you.  Your bankruptcy lawyer should also patiently answer all of your questions to your satisfaction.

For a free consultation, contact Haines and Krieger at 702-880-5554.

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How to Protect Your Credit When You Are Broke

Wednesday, November 10th, 2010

Every so often a client will say, “I am hopelessly in debt, but I don’t want to ruin my credit score with bankruptcy.  It is still very good.”  This statement is just like the old joke, “I can’t be broke, I still have checks!”  A credit score is supposed to be an indicator of your financial health.  Unfortunately, many people assume that their financial health is indicated by the credit score.  Consequently, they continue to misuse credit, in many cases borrowing from credit sources to pay monthly credit obligations.  It is a vicious cycle of debt.

In today’s economy your credit score is not the only factor a lender considers when issuing credit.  Financial institutions are using new sources to profile their customers.  A recent article by Wall Street Journal writer Karen Blumenthal entitled New Ways Bankers Are Spying on You reports that banks are now examining rent and utility payments, bank deposits, as well as estimating your home’s value in order to gauge your financial health.  Blumenthal writes that in one case a bank customer was denied a credit after the lender reviewed his home loan records, determined that the value of his California home had declined, and noticed that his mortgage principal wasn’t declining—giving away that he has an interest-only mortgage.

Financial good health is living within a budget, using credit responsibly, controlling debt and excess spending, working towards short and long-term financial goals, and contributing to savings and investments.  It is difficult to manage just one of these aspects when a person is overwhelmed by debt.

Fortunately, the federal bankruptcy laws provide an answer for individuals living beyond their means and buried in debt.  Bankruptcy offers a legal means to restructure or eliminate your debts while protecting your family’s assets including real estate, vehicles, or retirement accounts.  During bankruptcy creditors cannot contact you directly and the vast majority of debtors do not lose any property.

If you are drowning in debt, don’t be fooled by a high credit score.  Your financial house is built on sand and it is time to rebuild on solid ground.  Consult with an experienced Haines & Krieger bankruptcy attorney and discover how the federal law can get you back on the path to financial health. Call 702-880-5554 to set up your free consultation.

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Las Vegas: Credit repair services. It might be a scam if…

Wednesday, September 8th, 2010

If Jeff Foxworthy were to warn you about credit repair service scams, he would say, “It might be a scam if…”

  1. They want you to pay money up front.  (Never pay money up front for any sort of credit repair service, debt relief or other non-lawyer credit or debt-related service!)  Under the Credit Repair Organizations Act it is against the law for any such services or organizations to seek payment in advance.  That, of course, doesn’t stop many credit repair services from trying to collect an up front fee from you.  So please just be careful.
  2. They guarantee removal of all negative info from your credit report.  This is not something anyone can guarantee.  It’s in the hands of credit reporting services (like Equifax).  The only way to guarantee getting rid of all negative marks on your credit report is simply to wait 7 to 10 years.  After that time, credit reporting agencies are required to remove negative information such as missed payments and bankruptcy filings.
  3. They suggest that you create a “new identity” so that you can create a new credit history.  Right, and while you’re at it you can also fake a kidnapping and spend a few years in Argentina.  Seriously, though, creating a new identity in that way is of course illegal and will only create more problems and complications in your life.  On top of that, you still bear responsibility for your outstanding debts.  If any credit repair service actually suggests this to you, just tell them you have a bridge to sell them to help pay their up front fee.

Getting back to reality, credit repair services are generally not a good option, regardless of whether they’re outright scams or not.  If you’re feeling overwhelmed by debts and looking for solutions, the best first step is always to talk with a trusted bankruptcy lawyer.  An experienced bankruptcy lawyer will be aware of all of the options available to you and will steer you in the right direction, whether that means filing for bankruptcy or exploring alternative strategies.

Please contact Haines & Krieger today at 702-880-5554 to start learning more about how we can help you.

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Las Vegas, what is credit counseling?

Monday, July 20th, 2009

If you’ve ever looked for bankruptcy information in Las Vegas, you likely have come across the term “credit counseling.”  But the question is, what does it mean?

If you’ve felt confused, you’re not alone.  The term credit counseling gets used in different ways that affect anyone who has ever contemplated filing bankruptcy in Las Vegas or anywhere else.

Let’s take a moment and go over the different uses.

First, there is the credit counseling course that is required under the new bankruptcy laws that were passed in 2005.  This kind of credit counseling, in other words, is a short, mandatory course that all individuals must take before they may file for bankruptcy, whether Chapter 7 or Chapter 13.  The course is typically no more than 2 hours long.  You can take it over the phone or on the internet.  And you can take it from any accredited provider.  The website for the Office of the U.S. Trustee has a full list of accredited credit counseling course providers in Nevada.  Of course, any good bankruptcy attorney in Las Vegas (such as Haines & Krieger) can provide you with trustworthy credit counseling course options as well.

But that’s not all there is to know about “credit counseling.”

“Credit counseling” is also the word used to describe companies that provide “credit counseling services.” You are likely familiar with these companies.  They advertise everywhere.  Promise to help you get out of debt or consolidate your debt.  Tell you that they’re non-profit companies.  Maybe include a nice photo of a helpful man in a suit and tie explaining everything to a nice couple.

Credit counseling agencies are, indeed, non-profit entities.  However, you better believe that they’re making a profit.  They require a payment in advance and they also typically earn revenue from the banks and credit card companies for whom they are essentially working.  The payment is often a percentage of the money that a client pays back to the bank.

Credit counseling agencies typically can only help with credit card debt.  And they certainly cannot provide Las Vegas bankruptcy help if that’s what you really need.

Adding to the confusion with the term “credit counseling,” many of the accredited providers for the credit counseling course are, in fact, credit counseling agencies.  But don’t be fooled.  There are two very different kinds of credit counseling.

One is the kind you have to do if you want to file for bankruptcy.  The other is the kind you should probably avoid.

If you’re considering filing for bankruptcy in Las Vegas, please contact us for a free initial consultation to learn all you need to know about credit counseling, Chapter 7 bankruptcy, Chapter 13 bankruptcy, debt consolidation, foreclosure, loan modification and all of your other options for dealing with your debt.

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Las Vegas Bankruptcy and Credit Scores

Monday, June 22nd, 2009

As credit gets tighter in general, more people are starting to worry about their credit scores.

More credit scores are slipping as people struggle with their finances and budgets in this tough economy.  And even keeping your credit score the same these days might not be enough to qualify for loans that were previously available.

According to an article titled Credit Score Shell Game that appeared in the Washington Post, there are a number of side effects to this trend that revolve around credit scores.  One of the main ones to be aware of is that those ads you see for “free credit reports” may not  be as helpful as you think.

The main standard for credit scores is called FICO (which comes from Fair-Isaacs Corporation, the company that created the formula).  In theory, that should mean that there’s one number that everyone uses for evaluating how credit-worthy a person is.

In reality, the scoring is much less straight-forward.  For example, you know those ads for “free credit reports” where you pay $14.95/month for credit-monitoring services (e.g., FreeCreditReport.com and TrueCredit.com)?  It turns out that the score provide is often inflated in certain ways.  It’s also not necessarily the same as the score that lenders are using.

As a result, consumers risk getting a Fake-O score rather than a FICO score.

To make sure you’re getting an accurate credit report (which is different from your credit score) from each of the three credit bureaus, your best bet is AnnualCreditReport.com, which is approved by the FTC. This is the only site that doesn’t require you to sign up for monitoring service.  (e.g., FreeCreditReport.com requires that you give them a credit card and makes you sign up for their monitoring service.  They say you can cancel before the end of the 30-day trial period, but it’s not as easy to do as you might think.)

To actually get your credit score you will need to pay money (around $15.95). The best option is MyFICO.com. This is the real FICO score and not the Fake-O score that you might get from Transunion or Experian.

Of course, the best way to improve your credit score is to pay your bills on time over a period of time and just generally to be responsible with your credit.

If you’re having trouble with bills, credit card debt, medical debt, mortgage, foreclosure or anything else that affects your credit score, and you think you might need a bankruptcy attorney in Las Vegas or bankruptcy information in Las Vegas, you can always contact Haines & Krieger for a free initial consultation with one of our experienced attorneys.

We’ll answer all of your questions and provide staight-forward Las Vegas bankruptcy help.  That means figuring out the best strategy for you, whether that means working outside of bankruptcy or using the bankruptcy laws to your advantage.

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Beware of credit counseling services

Sunday, May 17th, 2009

This post is just a friendly reminder to beware of credit counseling services as well as debt settlement companies.

Why bring this up today?  Because last week the credit counseling industry launched another contrived attempt to persuade people that it’s a good idea to use a their services.

A press release was put out by an organization called the National Bankruptcy Research Center announcing the results of a Credit Counseling Value Study.  They say the study indicates that, “Consumers who received pre-bankruptcy counseling exhibited significantly improved credit profiles in as little as two years in comparison to consumers who did not receive pre-bankruptcy counseling.”

The problem is that the study was created by the credit counseling industry.  The other parties to the press release are the Money Management International Financial Education Foundation along with Experian, a credit scoring company (i.e., one of the companies responsible for your credit history).

With a couple click-thrus, it’s clear that the National Bankruptcy Research Center and the Money Management International Financial Education Foundation are just front organizations for the credit counseling industry.

Yet, on Credit.com, a site created by the credit counseling industry to convey a “helpful” image, a blog post makes a point of echoing the research findings as if they’re set in stone.  The findings, however, are not set in stone.  They’re simply part of a strategy to make their services look more beneficial than they really are.

The reality is that most credit counseling services charge high fees and cannot reduce your debt load.  Their model is only applicable to people with credit card debt, and they get fees from the banks based on the amount of money they get you to pay to the banks.  Frequently people end up with higher debt loads after working with a credit counseling service.  And credit counseling services have no legal authority to help you file for bankruptcy.

If you need bankruptcy information in Las Vegas, the best approach is always to find good bankruptcy attorneys in Las Vegas.  A bankruptcy lawyer can advise you as to all of your options, whether you need credit counseling, a debt consolidation lawyer, avoiding foreclosure or help figuring out whether to file for bankruptcy.

Lawyers have to be licensed by the state bar association, so they can be held accountable for unethical actions or wrongdoing.  And a good bankruptcy lawyer always offers a free initial consultation.

If you’re facing difficult decisions and not sure where to turn, find a bankruptcy lawyer with a good reputation and with whom you feel comfortable.  That’s always the best option for figuring out all of your options.

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Do as the credit card companies say, not as they do

Thursday, May 14th, 2009

It’s definitely ironic.  Back in 2005 when the credit card industry was getting the new bankruptcy law passed, they paid lobbyists and influenced members of Congress to lecture Americans about their obligation to repay debts and to stop being so irresponsible.  (Even though data clearly showed that was not the source of most bankruptcy filings.)

However, a recent article in the NY Times helps further demonstrate the hypocrisy of the credit card industry, which is now struggling to get its own finances in order.  According to the article, there’s historically been a correlation between the rate of unemployment and the amount of credit card payments that go unpaid.  However, in the current economy, the rate of non-payment is starting to grow faster and higher than the unemployment rate.

As a result, credit card divisions of banks are having their own financial problems as they have to write off more and more debts.  And now Congress is getting ready to pass new legislation called the Credit Cardholders Bill of Rights, which will place additional limitations (finally!) on what credit card companies can do to squeeze money out of customers.

The take-away is that, when it comes to credit cards and acting responsibly, the credit card industry does not practice what it preaches.  They’ve tried to paint the issue with a big moral brush.  But in reality, it’s just a transaction to them.  And you can bet your bottom dollar (which may be all that many people still have today), that if the credit card companies needed to, they would happily file for bankruptcy and avoid paying back their creditors to the extent possible.

That’s how they see it.  And that’s how you should see it, too.

We all should all strive to be moral people and pay back our debts, which most Americans do.  But when it comes to credit card debt, it’s important to realize that you’re part of something bigger going on in this country.  And you should not feel ashamed to use the rights given to you as an American citizen to seek protection under our bankruptcy laws when it’s necessary.  Because the credit card companies are certainly using all the rights that have been available to them for their own advantage.

If you need Las Vegas bankruptcy help and good bankruptcy attorneys in Las Vegas, get in touch with us for a free consulation.  Whether you need payday loan debt help, a debt consolidation lawyer, or you’re considering filing bankruptcy in Las Vegas, we can help.

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Las Vegas, which one is right for me credit counseling or bankruptcy

Wednesday, April 22nd, 2009

In a recent post, we discussed why debt consolidation is not a recommended alternative to  bankruptcy.  In this post, we’ll discuss credit counseling as an alternative to bankruptcy.

First of all, it’s important to note that the new bankruptcy laws require every individual to complete a credit counseling course before filing for bankruptcy.  Our bankruptcy lawyers have a list of authorized credit counseling agencies in Las Vegas.   The course, which should last about 60-90 minutes, will include an evaluation of your personal financial situation, and can take place in person, on the phone, or online.

If you choose to continue with credit counseling as an alternative to bankruptcy, you may be able to manage your debt by lowering your interest rates and consolidating your payments.  Unfortunately, there are some downsides to these programs.  Here are a few examples:

  • Your creditors will need to agree to any repayment plan you propose. What this normally means is that you’ll be required to pay back your debt in full, and your creditors may offer only minor interest reductions.  As a result, you may not be saving much money.
  • Your creditors are not beholden to the repayment plan. If you miss one payment, your credit card company can demand out, increase its interest rates, and reinstate any applicable late fees.
  • Your participation in the credit counseling program will be noted on your credit report for almost as long as a bankruptcy is noted — and you won’t have the benefit of erasing as much debt as you would in a bankruptcy.  In fact, many lenders consider your credit rating after a bankruptcy discharge to be better than your credit rating after entering a credit counseling program.
  • It may take several months to set up the credit counseling repayment program.  During this time, you are not protected from the automatic stay as you would be in a bankruptcy.  Rather, you’ll have to continue to pay your creditors at the risk of lawsuits or bad credit reports.

To sum up, the problem with credit counseling as an alternative to bankruptcy is that you’ll end up with some of the same credit issues that someone who has gone through a bankruptcy will need to deal with, but you will not have had the benefits of a bankruptcy.  For example, you won’t be protected from credit harassment and lawsuits, and you won’t be able to reduce your debt as substantially.

If you are encountering financial difficulty, contact our experienced and knowledgeable bankruptcy lawyers at 702-880-5554 for a free consultation.  If you are calling from within Nevada, you can also reach us at 702-880-5554.  We’ll help determine whether a bankruptcy filing is right for you, or whether you might benefit from another alternative.

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