If you've been speaking with a debt settlement company, you may have heard some fantastic claims. It's not uncommon for debt settlement firms to lure potential clients in with promises of reducing their debt by 50 percent. Some claim they can help you eliminate your debt problems within 36 months. In many cases, however, these debt settlement companies aren't selling anything more than snake oil.
Although some debt settlement firms will deliver on their promises, in some cases, the process of getting you a favorable debt settlement may not entirely clear-cut or easy. There are some real risks associated with the process.
It will hurt your credit rating. Your credit card accounts could become delinquent when you start paying your money to the debt settlement firm. These delinquencies will stay on your record for seven years.
Your accounts will get hit with interest and penalties. Interest on your debts will skyrocket, and your debts will have large fees applied to them.
There are no guarantees. Some credit card companies and banks will refuse to negotiate with a debt relief firm. It's not unfeasible for your debt relief company to not get you even a single discount.
It only works in certain situations. The Center for Responsible Lending reports that the majority of consumers will have to settle approximately for debts before they will receive any net benefit from the process.
You'll pay fees. Your debt settlement company may charge numerous fees and expenses for managing your account each month.
You might get taxed. When debt gets forgiven, the IRS could tax you on the money owed that was forgiven.
Before working with a debt settlement firm, consumers are encouraged to understand the legal aspects of the agreement they are entering into with the debt settlement company. Fully understanding the agreement and investigating alternative debt resolution options, like bankruptcy, could save borrowers a great deal of money and headache.
Over the years, filing bankruptcy has become less of a taboo topic and more of a tool. For many people it helps to provide a chance to start over financially, in a sense.
If you are considering bankruptcy, it is essential that you fully understand the process. There are a few key steps to take after filing to ensure the completion of the bankruptcy.
Depending upon the area that you live, there are certain course requirements that you must complete in order to receive a discharge. In the state of Illinois, you must complete two courses:
These courses are not one in the same and are offered through different organizations. You must make sure that the courses you choose meet the set requirements.
The purposes of the two courses are related but still provide different services. The credit counseling provides an education on credit and effective means to eliminate debt, which may help to raise your credit score. On the other hand, debtor education helps you to understand how to budget, manage your funds and properly utilize your income so that you may stay out of debt in the future. Together, these two programs may help you to flourish once you receive your clean slate through bankruptcy.
You must choose programs that have approval from the U.S. Trustee Program. Once you find the accredited institutions in your area, you may select the program that works best for your situation. The trustee overseeing the bankruptcy monitors all aspects of the process, including the completion of the course requirements. If you have any questions, you may consult with the trustee or a knowledgeable attorney to ensure that the process runs as smoothly as possible.
These are important aspects to address through the bankruptcy process. If you are looking to file for bankruptcy, you should take time to understand what all it entails and determine the best course of action to take.
Americans work and pay into the Social Security Disability Insurance program so if they become disabled before retirement age, they have some income to rely on. Unfortunately, due to the backlog of people waiting on disability decisions, they often have to wait an unreasonable amount of time if they are not fortunate to be approved at the onset.
During 2016 and 2017, according to Social Security Administration reports, 19,000 people passed away while waiting for a fully favorable decision on their benefits. This is a sad state for the Social Security Disability Insurance program to be in.
Many claims are denied at the initial levels and applicants have to request a hearing with an administrative law judge. The average waiting time from start (initial application) to finish is 605 days; in some areas of the country, it can be closer to 800 days. For someone who has worked hard and paid into this program and now can no longer work and needs the coverage, this is an unacceptable length of time to wait. By the time a person is approved, he or she is often at the poverty level.
SSA claims the backlog may not subside before 2022. This is despite the fact that they have hired additional judges and staff and endowed additional funding.
For serious conditions, such as cancer and other diseases that have a poor diagnosis of improvement, there is a Compassionate Allowance program, which is supposed to fast-track claimants' cases through the system. However, the U.S. Government Accountability Office declared that the program needs improvements, not to mention that many people are not even aware it exists.
If you are disabled, you should seek a disability attorney to represent you in your case. The GAO report also shows that claimants are three times more likely to be approved if they are represented. This is partially because most people do not understand what is needed for a favorable decision.
Your home is in foreclosure. You've missed too many payments. The bank is repossessing the home and they're going to sell it. A date has even been set and it appears that the sale is imminent.
Since your financial situation isn't what you'd like it to be and you're over your head in debt, you file for bankruptcy. Suddenly, that sale gets cancelled. It can't proceed while you're in bankruptcy, and you get to stay in the house.
You know that bankruptcy will likely take anywhere from one and a half to three months. When it's done, does the foreclosure process have to begin again entirely, with notices from the lender and everything else? Or does it just pick up where it left off?
Typically, it just starts again where it left off. That means the new sale date can be set far faster than it was the first time.
The key thing to note is that bankruptcy doesn't actually cancel the foreclosure process at all. It may have cancelled that sale date, but that's just because it put an automatic stay on the foreclosure. Essentially, this just pauses the process because the court must conclude the bankruptcy case first. When it's done, the automatic stay is lifted and other court cases, like foreclosure, can move forward.
Of course, bankruptcy may eliminate many unsecured debts. You could find that your home is affordable again when you're done. Just don't assume the automatic stay buys you more time than it really does, and make sure you know exactly how these two legal cases work together.
You got in over your head with debt, and a lot of it was due to your credit cards. You're thinking of declaring bankruptcy to get a fresh start.
If you do, though it may seem counter-intuitive, it may be wise to get a credit card after you file. Not only can you do this, but it can be a positive step.
The problem is that bankruptcy will lower your credit score. If you do nothing, it stays low. You have to take positive action to raise it, and that often means getting a credit card and paying it off each month. That shows lenders that you are reliable. After all, with your debt gone, you may be in the best financial shape you've enjoyed in a long time.
You may not qualify for typical cards, but you can often get secured cards. These require a cash security deposit. That ensures the lender that the risk is small. They report each monthly payment that you make, helping to raise your credit score.
Moreover, a lot of lenders don't look at credit cards as much of a risk in the first place. After all, they can limit you at $1,000 and know they won't lose more than that. You may not be able to get $40,000 for a car or $200,000 for a house, but the risk at $1,000 is minimal. You can then use the card to rebuild your credit until you can afford other loans.
As you move through the bankruptcy process, make sure you know exactly what legal steps to take to help secure your future.
Social Security Disability benefits may be warranted, but that doesn't mean the process is fast or easy. Experts warn that it can take months to apply and get a response initially, and it could take even longer if you're denied and have to appeal.
Does that sound daunting? It doesn't have to be. Here are a few tips that can help you during the process.
Cut back on your spending as much as possible. Eliminate extra expenses. Remember, even if you deserve the payments, you may not see them for six months or longer. Don't deplete all of the savings that you have.
Work with your doctor. It can help you tremendously to have a medical professional on board and willing to back up your claims.
Obtain copies of your own medical records. Get all of the documentation you can to give your claims a bit more weight. It's one thing to say you're disabled; it's another to prove exactly when the injury occurred and how it limits you.
Practice the application. The first one you fill out doesn't have to be the one you send in. Remember, a lot of people get rejected over very simple mistakes. You don't want to stall the process out because you forgot some basic information or left a critical box blank. Practice it and double-check the application before you submit it.
The process isn't meant to deter you from trying, but to ensure that those who really need and deserve benefits are those who get them. It's very important to know exactly what you should do through every step of that process.
People often think about social security as if it is a pension plan. You pay a tax, which is similar to a contribution. It goes into the plan. When you retire, you get payments. This is very similar to any other retirement plan and it's the reason people are sometimes glad to contribute, thinking that, as with other plans, their payments will be higher if their input is higher.
However, it's very important to remember that social security is not a pension and was never intended to be one. It was set up as a tax, not a retirement plan. That doesn't mean people can't benefit from it, but thinking of it the same way is problematic.
The system was established during the Great Depression, the hardest economic time to hit the United States. It was worse than the recent recession that began in 2008 and 2009, and many people were out of work.
The lack of general economic stability made things very hard for those who had already retired -- likely thinking they'd do very well after the prosperity of the 1920s and before the stock market crash -- or those who were disabled. No one had enough to go around, and they certainly did not. As such, social security focused on taxing those Americans who were in the workforce, creating a benefits program for those who were disabled or retired. This is still the primary focus today, though there have been changes over the years, but it's not a pension plan.
When considering social security disability benefits, it's important to know exactly what legal options you have.
You're considering bankruptcy and trying to plan for the future. You're already thinking about how you can build your credit back up after you file, and you know that using credit cards responsibly is one way to do it. You have to prove you can pay off debt properly.
However, one of your friends mentioned that you'd likely be a subprime borrower in the wake of a bankruptcy filing. What does that mean?
Generally speaking, it means that lenders think of you as a relatively high risk. You may get an interest rate that is higher than the normal one offered. If you miss a payment and get default penalties, they could also be higher.
That said, there are also upsides to filing for bankruptcy, as the lenders see it. For one thing, you can only use Chapter 7 bankruptcy every eight years. If you just used it, they know for a fact that you can't do so again for nearly a decade. Other borrowers can.
Plus, the liquidation process eliminates your debt under Chapter 7. This means your debt-to-income ratio actually looks pretty healthy to the lender. Yes, you may have struggled financially in the past, but they'll feel better about lending you money if that loan is going to be the only debt you're responsible for.
It's good that you're already thinking of the future as you consider bankruptcy. The more you know about the process and your potential options, the better. Remember, bankruptcy is a tool that you can use, and it may help you get where you'd like to be if used correctly.
When you are in debt and considering your options, bankruptcy may stand out from the rest for its ability to significantly reduce your debt. Filing for bankruptcy comes with many benefits, from stopping creditor harassment to allowing you to keep certain assets. It gives you the fresh financial start you need with the opportunity to rebuild better credit quickly.
However, the process is not free simply because you are running low on funds. Eliminating debt costs money, and knowing how much can help you prepare for it.
You must file for bankruptcy at a federal bankruptcy court near you, which charges you fees of over $300. Whether you file for Chapter 7 or Chapter 13 will determine the exact amount. You can apply for a fee waiver or payment plan if you meet the requirements. Other actions, such as filing an appeal, also come with court fees.
Another expense is attorney fees. Hiring a lawyer may seem unnecessary, but paying for professional help to do it right the first time can save you from paying avoidable penalties later or from the court dismissing your bankruptcy case altogether.
Other costs to consider
In addition to the upfront costs, you need to factor in other uses of your time and money. You may need to take off from work to appear at court and ensure you have transportation. The bankruptcy process also requires you to attend financial courses before and after filing. Gathering information and speaking with your lawyer also take time. It can be wise to begin better financial practices now to help you pay for your bankruptcy.
Do not let the cost deter you from going through with filing. The price you will have to pay is little compared to the long-term cost of staying in debt, falling prey to a debt-relief scam or losing assets you could retain through bankruptcy.
Waiting for an administrative law judge to rule on your Social Security Disability (SSD) claim can be quite long. Sadly, as reported by the inspector general for the Social Security Administration (SSA), in 2016, 7,400 claimants died while waiting for a ruling on their cases.
The average wait time for million-plus Americans awaiting their hearings is two years. Some areas of the country have shorter wait times, and others can be even longer.
Can you speed up the process?
Sometimes. The more dire your circumstances, the quicker your case could be heard. Those who may qualify for an expedited hearing include:
Those living without utilities
Claimants living in shelters or vehicles
Those staying with relatives/friends
Terminally ill claimants
Those who are suicidal
While you aren't required to retain an attorney to file for Social Security Disability, it's usually best to do so to make sure that your application is filed correctly. It's also wise to begin the process as soon as there is a need rather than delaying it. If your condition improves, you can return to work and withdraw your application.
Being proactive and gathering and managing your medical records is also important. Don't leave out anything that is germane to your case. If your doctor is retiring and closing his or her practice, make sure that you arrange to get copies of your chart before the business is shut down.
You should also realize that initial claims are denied frequently and must be appealed. That process can also be lengthy, so anything that you can do to move your case along should be done.