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Bankruptcy Warning Signs
Posted by Sep24, 2014 CommentsIf you are experiencing more than one of these warning signs and have accumulated debt you cannot afford to repay, you may be on the verge of bankruptcy.
1. You are living paycheck to paycheck and you have no savings.
If you are living from paycheck to paycheck, you are spending your money as quickly as you receive it, and you do not have any set aside for a “rainy day.” That means any unexpected event (i.e. vehicle repairs) can easily cause you to fall behind on your credit cards and other accounts.
2. Your debt-to-income ratio is high.
Your debt-to-income ratio is the percentage of your monthly income that goes towards paying your debts. For example, if your income is $2000 and your debts are $1000 per month, your debt-to-income ratio is 50%. Lenders use your debt-to-income ratio to determine if they will approve your loan application. Generally, they do not want to see that you owe more than 40% of your monthly income to your debts. So, a debt-to-income ratio of 50% is significantly high.
3. You can barely make the minimum payments due on your credit cards.
When you pay only the minimum payments due on your credit cards, only a small portion, if any, is applied to the actual principal you owe, and the remaining balance likely incurs additional interest. If you’ve been unable to pay more than the minimum payment on your credit cards or other accounts for an extended period of time, it’s likely you are nowhere near paying off the debt.
4. You owe substantial medical bills and expenses.
According to recent studies, nearly half of all bankruptcies nationwide can be attributed to substantial medical bills. If you have inadequate health insurance or none at all, you’re at risk of incurring substantial medical expenses due to unexpected injuries or illnesses. A significant rise in medical costs can ruin your personal finances, and force you to file bankruptcy.
5. You are unable to make your monthly mortgage payments.
Many homeowners are having a difficult time making their monthly mortgage payments. If you’re struggling to make your mortgage payments and are in risk of losing your home to foreclosure, you should consult a bankruptcy attorney immediately. In many instances, chapter 13 bankruptcy can prevent you from losing your home to foreclosure, or you may be able to get out from under a house that’s not worth what you owe on it via chapter 7 bankruptcy.
If you are experiencing one or more of the warning signs listed above, it’s time to evaluate your finances and see if you need the help of a bankruptcy attorney. Whatever you do, do not make your situation worse by putting it off. Call us today at (520) 743-2257 or email us at Kathy@kathyjohnsonlaw.com for a free confidential consultation to determine your options.
Some homeowners could get hit with a whopping tax bill if they accept help through Bank of America’s most recent settlement
Posted by Aug25, 2014 CommentsThe Department of Justice just announced a $17 billion settlement last week with Bank of America. The settlement is supposed to provide mortgage debt relief for troubled homeowners, but those who accept that help could be hit with a hefty tax bill later. According to the Attorney General’s office, here’s an example of how the settlement would work for a homeowner who owes $250,000 on a house that’s only worth $150,000. Under the settlement, the balance of the mortgage would be reduced to about $112,000. However, the roughly $137,000 forgiven under the deal could be a huge tax liability for the homeowner. Although the settlement is supposed to help offset this, it is not enough. Most homeowners won’t even realize it until its too late to do anything about it, and they will then have to deal with the IRS. (Forgiven debt is straight income per the IRS.) If you have a mortgage with Bank of America, or know someone who does, please have them speak to a bankruptcy attorney before they accept any offers from the settlement. Timing is critical to avoid the tax consequences. Please spread the word.
Here’s the full article: http://www.washingtonpost.com/blogs/wonkblog/wp/2014/08/21/some-homeowners-could-get-hit-with-a-whopping-tax-bill-if-they-accept-help-through-bank-of-americas-settlement%E2%80%82/
Are you a real estate agent doing short sales? Do you know someone who is considering a short sale or foreclosure?
Posted by Aug21, 2014 CommentsA lot of real estate agents are afraid to refer their clients to me for a bankruptcy for fear of losing a commission on a short sale. What most agents don’t understand is that a bankruptcy filed PRIOR to a short sale or foreclosure will take care of any tax consequence to the seller. A short sale can then be done after the bankruptcy. If you know any real estate agents dealing with this issue, or if you know anyone who owns a house that they don’t know what to do with, have them contact me for a free consultation. The critical point is that the bankruptcy has to be done first – otherwise any taxes owed as a result of one of those transactions will not be discharged in a subsequent bankruptcy. Contact me at (520) 743-2257 or email Kathy@kathyjohnsonlaw.com for a free consultation.
Bankruptcy myth
Posted by Jul10, 2014 CommentsI know there are a lot of people out there that believe that if they file bankruptcy, they’re never going to be able to get credit again. Hogwash I say!
Bankruptcy does not have the stigma it once had. I have had numerous clients who filed bankruptcy even just 2 years ago that have now re-qualified for a new mortgage and have excellent credit. Please don’t believe the myth that bankruptcy will ruin your credit forever. It is simply untrue!
If you or someone you know has financial problems, please come talk about your options. I do free initial consultations. You may contact me at (520) 743-2257 or email Kathy@kathyjohnsonlaw.com.
The Dire Consequences of Financial Stress
Posted by Jun20, 2014 CommentsI had a very unsettling situation happen this week. I met with a potential client who was having some serious financial problems. He had recently lost a $100,000 a year job, and he’d never been in a situation where he could not pay his bills. We met for about an hour to discuss his options. He came into the office feeling distressed but left feeling a little better knowing that he had some options and time to figure out what to do. I received a call the next day from one of his relatives and was advised that this prospective client had had a massive heart attack and passed away the night of our meeting.
Needless to say, this event has been a major eye-opener for me.
Finances are a leading cause of stress. It’s not unusual for potential clients coming into the office to describe that they can’t sleep, they’re anxious and afraid to answer their phones, they’re depressed, they have chest pain, and on and on. However, I’ve never had it be an “in your face” moment with something major happening to someone I had just met.
Numerous studies have shown the correlation between stress and health-related problems, including heart disease, high blood pressure, depression, and anxiety, among other things. If you have stress in your life, or are worried about someone else who is under a lot of stress, please don’t take it lightly. Tell them this story. Don’t ignore the physical symptoms. Whether you see a physician, therapist or attorney, or take up meditation or yoga, be pro-active in dealing with the situation. If you don’t, stress can literally kill you.
Bankruptcy myth that you’ll never get credit again
Posted by Jun12, 2014 CommentsI got a call last week from clients who filed bankruptcy in 2009. At that time, they were upside down on their house and a car, and had about $25,000 in credit card debt. Between the 2 of them, they were making about $4,000/mo. They didn’t want to file bankruptcy but they couldn’t keep up with their bills any longer. They also thought that they would never own a home again because they had to let it go through the bankruptcy. They called last week to tell me that they had just closed on a new home. They wanted to thank me for helping them decide that bankruptcy was the right option for them. They also wanted me to tell other clients that it really does happen, i.e. getting credit after filing a bankruptcy. Bankruptcy is not the end of the world – it really is a new beginning. If you know someone who thinks that if they file bankruptcy, they’ll never get credit again, please pass on this information to them. Have them contact my office to review their options for free. They can call (520) 743-2257 or email kathy@kathyjohnsonlaw.com.
Do you know someone struggling with debt?
Posted by Jun03, 2014 CommentsMost people don’t want to talk about their debt situation to friends or family. Some people have paid their bills on time their whole life, and now are struggling to keep up. Some people have had significant events happen in their lives that have affected their ability to pay their bills – divorce, death of a spouse, disability or lost job. Some people have just put their heads in the sand knowing they owe debt but they think that the creditors will go away.
What each of these individuals has in common is that they feel like they have somehow failed; they’re embarrassed to ask for help, and they are scared of the word “bankruptcy”.
The reality of the situation is that bankruptcy is right for some but not all. Other options may exist that can help you deal with your situation. However, you won’t know if it’s right for you unless you take that first step and seek professional advice about your situation. I know it’s hard, but I guarantee that once you get some advice, you will have some peace of mind knowing what options exist for you.
For a free, confidential consultation with an attorney who is compassionate and nonjudgmental, call (520) 743-2257 or email kathy@kathyjohnsonlaw.com. You will be glad you did.
Dealing with the emotions of bankruptcy.
Posted by May27, 2014 CommentsFiling for and following through with a bankruptcy can have an effect on one’s financial condition, but it can also very well affect one’s emotional balance. The emotional rollercoaster can span from happy as a result of being free of burdensome debt to shear terror at the idea of not being able to get a loan or even a credit card. But it goes even deeper where sadness and depression may linger and try to get the best of an individual.
Multitude Of Emotions
The good news is that it is perfectly fine to file for bankruptcy if it is indeed right for your particular case. It is also fine to have a multitude of emotions that are associated with filing for what can really be a financial lifesaver. Remember, the bankruptcy laws are in place for one reason and that is to help those in dire financial straits. By definition, bankruptcy is simply a tool that one may or may not choose to use as a way to better manage financial matters that have gone amiss.
Half Empty Or Half Full
Even more alarming is the fact that filing for bankruptcy can add stress to a relationship. Conversely, filing can in some cases lighten the stresses in a relationship brought on by financial hardship. It is a classic example of the glass being half empty or half full. One must simply consider whether or not the stress of an out-of-control financial situation is more or less troublesome than the alternative – Bankruptcy. In many instances stress and negative emotions come from not fully understanding the mechanics of bankruptcy. That is where and experienced bankruptcy attorney comes in very handy.
Should Be Viewed As A New Beginning
Because those that finally do file for bankruptcy have likely been grappling with overwhelming debt for a long time, they have become accustom to money related stress. In some instances this deeply embedded stress will transfer to a new situation – bankruptcy. However, again it should be mentioned that stress should be managed and bankruptcy should be viewed as a new beginning. Filing can easily be viewed as a new and exciting chapter in life affording the opportunity to start a new business or downsize or spark new relationships. In short, like everything else in life bankruptcy is what you choose to make of it. Contact the Law Office of Kathryn L. Johnson for a trusted name in Tucson bankruptcy assistance.
Do you know someone who is afraid to answer their phone because they don’t.want to be caught by a bill collector?
Posted by May23, 2014 CommentsThere are a lot of people that know they owe large debts, but they don’t want to think about it. If they do, they think that if they ignore the bills and calls, the debt collectors will go away. Debt collectors do not go away. They can sue you and get a judgment, and renew it every 5 years for life. They can garnish 25% of your paycheck and collect other ways until their debt is paid.
If you know someone like this, have them contact me for a FREE consultation. I can give them peace of mind knowing their options – all in a compassionate and nonjudgmental setting.
Bankruptcy essentials
Posted by May20, 2014 CommentsWith increasingly challenging national and global economic conditions continuing to affect more and more people, bankruptcy is becoming a more attractive option for many. There are a number of benefits to filing for bankruptcy that should be discussed with a professional bankruptcy attorney. However, with that said there are a few basics with regard to pre-bankruptcy and post bankruptcy requirements that should be mentioned. It is important to note that each bankruptcy case is different and that every state has different bankruptcy laws. Consult with your attorney to be sure.
Personal Budget Plan
One bankruptcy-essential that must take place before any bankruptcy can be considered complete is something known as pre-bankruptcy counseling. This involves having a counseling session with an organization that is considered an approved credit counselor. A typical counseling session involves a detailed evaluation of a filer’s financial situation as well as a discussion covering alternatives to bankruptcy. Another important aspect of pre-bankruptcy counseling includes formulating a personal budget plan. In most instances a routine counseling session will last between one hour and 90-minutes. These sessions can be conducted over the phone, online or in person.
Credit Counseling
Generally speaking, this type of counseling costs around $40-$50. However, there are provisions for free counseling when a fee waiver is completed. Credit counseling organizations are mandated to provide free counseling to those that are unable to pay for this type of counseling. Once counseling has been completed, a filer then receives a certificate of completion. After all pre-bankruptcy counseling requirements have been satisfied an individual may then proceed with the bankruptcy filing process. Similar to the counseling that occurs prior to filing for bankruptcy, debtor education courses offer information on how to better manage money and how to use credit in a more responsible way.
Debtor Education Course
The post-filing debtor education counseling courses can also be completed by phone, online or in person. In most cases post bankruptcy courses will last about two hours or slightly longer in duration than pre-bankruptcy type counseling. In addition, the fee for an approved debtor education course is usually slightly more in cost as compared to pre-counseling. Filers can expect to pay up to $100 for this type of course. There is also a waiver option for this type of educational counseling. Once completed a certificate of proof is provided to the filer. Contact the Kathryn L. Johnson Law Firm for more information on Tucson bankruptcy procedures.
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