Tag Archive for: Debt Settlement

Hard Money Lenders And Debt Settlement

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Debt Settlement With Hard Money Lenders

Hard money loans serve a very specific purpose and fall under alternative lending. They provide cash quickly. Typically, they are used for a real estate investment or some other investment where the investor expects a return in excess of the principal and interest charged by the hard money lender.  When the investor reaches a crossroads and can’t make the monthly payments, one option is debt settlement with the hard money lender.

In exchange for a loan without a minimum credit requirement and a quick closing time, investors can expect a hard money lender to charge high interest rates and to pursue the investor aggressively if they stop making payments. Much like a perfect storm, the conditions may align such that the lender employs an attorney to file a civil lawsuit against the investor in hopes of obtaining a judgment in favor of the lender. With the judgment in place, the lender has much greater power to collect, including wage garnishment, bank account garnishment, and attaching to assets like real property. If you receive a Notice Of Right To Claim Exemptions form or a Writ of Execution, you need to act urgently to respond to it.

Debt Settlement Attorneys And Hard Money Lenders

Our firm routinely settles debts with hard money lenders and more traditional lenders like credit unions and credit card companies. Because we are a bankruptcy law firm handling Chapter 7, Chapter 13 and Chapter 5 filings, we can assess all of your options before reaching out to the hard money lender on your behalf. This assessment will serve you well in negotiations with any lenders but particularly with hard money lenders. If a lender knows that a debtor is considering bankruptcy, their willingness to negotiate almost always increases. Debt from hard money lenders is dischargeable in bankruptcy like any other unsecured debt. When your lender is faced with the possibility of receiving nothing in a bankruptcy filing, your settlement offer often becomes more enticing to the lender.

The Debt Settlement Process

After reviewing the loan documents—if available—and the history of payments, our firm will make initial contact with any lender with which you would like to negotiate. If a lawsuit has been filed against you, we can request a routine extension for time to answer the lawsuit, which will give us time to negotiate the debt. In most cases you do not ever have to make a court appearance.

The negotiation process is different with each lender, but we keep you informed every step of the way, and the ultimate decision to settle or not is always yours. If a settlement can be reached, we assist in facilitating payment and obtaining paperwork regarding settlement of the debt. If a lawsuit has been filed in the matter and we are able to resolve it, we make sure the court system is notified of the settlement and all records are updated.

Debt Settlement And Your Credit Score

While we are not credit score experts, we can request the lender report the debt settlement in a favorable way regarding your credit score. Most lenders are bound to very specific reporting of settled debts; however, almost all of our clients understand that by taking a few simple steps to improve their credit, they can out-weight any negative ramifications of having a settled debt show on their credit report.

Speak With A Debt Negotiation Lawyer Today

If you are dealing with an aggressive hard money lender and wish to speak with an attorney regarding debt settlement, we are happy to assist. The initial consultation is free, and you will come away from the phone call with a firm understanding of your options. To schedule a consultation, click HERE, or call us at 704.749.7747. We’re here to help.

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Debt Consolidation For Credit Cards

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Debt Consolidation For Credit Cards

If you are considering debt consolidation for credit cards, you need to read this blog post. First, it is important to know there are a few ways to consolidate your credit card debt. Each program being offered will be different. In any case, first, we will quickly go over the different types of debt consolidation, and then discuss a few pitfalls and other options.

Types Of Credit Card Debt Consolidation

Balance Transfer – When you do a balance transfer you are essentially transferring several credit card balances to one credit card. It could be due to a low introductory rate, or some other special terms, which are more favorable than the prior card or cards.

Debt Consolidation Loan – Some banks will offer you a loan that you can use to pay off your credit card debts. You will be left with one balance on the loan, and usually at a lower interest rate than the credit cards you paid off.

Debt Management Program – This is the most traditional form of debt consolidation. In this instance, you work with a credit management company. They establish a payment structure for you and a timeframe. The credit management company negotiates with your creditors to lower your balances. Usually, the negotiated amount is contingent upon you completing the consolidation plan.

Three Common Pitfalls To Credit Card Debt Consolidation

Fees And Costs – Whether the fees come in the form of high interest or third-party fees charged by your credit card management company, it is important to understand what fees you are being charged. The lengthy contracts consolidation companies provide you with can be difficult to sort through. The point is you are paying for a service. You are entitled to know how much the service is costing you. This way, you can comparison shop and set your bottom line for how much it is costing to eliminate your debt.

Dropping Out Of The Consolidation Program –

Many debt consolidation agreements are contingent upon your completion of the term. The term may be for three or more years. During that timeframe, anything could happen which might prevent you from being able to make your payment on time. You want to be aware of the penalty for late or missed payments, and get confirmation that you will not lose the progress you made along the way by making consistent on-time payments in the program.

Worrying Too Much About Your Credit Score –

It is important to be concerned about your credit score. You should think carefully before spending thousands of additional dollars for the sole purpose of sparing a few credit score points. As a bankruptcy attorney, I speak with clients every day who are worried about their credit score. I do my best to help them see the full picture. Often, those clients already have a reliable vehicle and own a home. If that is the case, I encourage them to look at the upside to eliminating the debt—no matter how they choose to do it—instead of obsessing over how it will affect their credit score.

What Other Options Are There?

Bankruptcy is worth considering. Both Chapter 13 and Chapter 7 are options in consumer bankruptcy. Every bankruptcy attorney I know in Charlotte, North Carolina will give you an honest answer as to whether you should file bankruptcy or not. This means you should consider having a free consultation with a bankruptcy lawyer to make sure you understand the cost of bankruptcy versus the cost of debt consolidation. If a client can eliminate $25,000 of unsecured debt by filing bankruptcy for under $3,000, it is going to be difficult to justify a debt consolidation program that charges $525 a month for 36 months.

Debt settlement is another option. Because we are a bankruptcy law firm, we obtain good results for clients attempting to settle the debt. When you are settling a debt with a creditor, you are proposing to pay them a small portion of the debt in 90 days or less, in exchange for forgiveness of the remainder of the debt. To accomplish this, you must have access to a lump sum of money to pay the creditor. It is not uncommon to receive a dramatic reduction from the outstanding balance in exchange for timely payment of a small percentage of the debt. In a prior post, we have discussed how a debt settlement affects your credit score.

Speak With A Bankruptcy Lawyer Today

If you are considering consolidating credit card debt, you deserve to understand all your options. We would be happy to discuss bankruptcy, debt settlement, and credit card consolidation with you. Then, we can help you make the decision that will work best for you. Sometimes, just one phone call is all it takes to discover you have more control over the situation than you thought.

If you would like to speak with a bankruptcy attorney, call us at 704.749.7747 or click HERE to request a phone consultation. Consultations are free and answering questions is part of our job. We are here to help.

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Negotiating Small Business Debt

Negotiating Small Business Debt

If you are a small business owner facing mounting pressure from creditors, it may be time to consider negotiating small business debt. While our firm handles small business bankruptcy filings, there are times where a business owner prefers negotiating debt settlements with creditors. In that case, we implement a strategy for successfully negotiating small business debt with your small business creditors.

Why Not Bankruptcy?

Whether you should file a small business bankruptcy or negotiate your business debt will depend on several factors. In many cases, the driving factor for negotiating the debt is that you want to keep that particular business running because it is generating income. You may also own a business which has a recognizable brand name which has value going forward. Negotiating the debts of the business allows you to preserve your brand, whereas filing a small business bankruptcy will typically involve dissolving the LLC or business entity and starting over with a new business name.

What To Expect

Creditors are usually willing to negotiate a debt with you. Keep in mind the creditor is incentivized to do so when you build your case for debt settlement with them. You can expect a creditor to inquire about your financial status. Our firm will help establish your financial picture with each creditor, and impress upon the creditor that debt settlement is the best option. As a bankruptcy law firm, we can communicate to the creditor with confidence that perhaps the only viable alternative to settling the debt is the filing of a bankruptcy. In most bankruptcy filings, creditors receive nothing, or pennies on the dollar.

Negotiating A Settlement

Our firm takes the lead on negotiations with the creditor. You will remain informed every step of the way. Negotiating small business debt also has urgency to it, and the creditor knows your resources are limited. In most cases, this leads to negotiated settlements that debtors are happy with, and creditors can live with. While creditors ideally desire to receive the negotiated settlement in a lump sum, our firm can work out payment arrangements over a period of months with most creditors, so that the settlement terms better meet your needs.

Speak With A Lawyer Today

Getting started with small business debt settlement is easy. We are happy to discuss further with you how unemployment can affect bankruptcy. You can call us at 704.749.7747 for a free consultation or click HERE to request a phone call. A lawyer will call you today.

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Loan Consolidation Or Chapter 7

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Is Loan Consolidation Better Than Chapter 7?

Loan consolidation or “Debt Consolidation”, is when a debtor combines their existing debt into one loan. Typically, filing a Chapter 7 bankruptcy will yield a much better result for the debtor and at a fraction of the price of loan consolidation. This is true even of an Emergency Bankruptcy filing.

A loan consolidation makes it easier for the debtor by allowing them to pay one creditor instead of numerous creditors. This typically results in a lower monthly payment due from the debtor. The loan consolidation company negotiates a lower balance on your debt for you, and in exchange you make your payments on an agreed upon schedule. When you have made your last payment, you will have a zero balance on each debt.

Pitfalls Of Loan Consolidation

Taxation On Forgiveness Of Debt— You will achieve dramatically different results regarding taxation, depending upon whether you choose loan consolidation or Chapter 7. In many instances, the lowered balance on your debt is considered forgiveness of debt. For example, if you owe $10,000 on a credit card and the loan consolidation company negotiates the balance to $7,500, you may have $2,500 of forgiveness of debt. The federal government considers this to be income. Come tax time, you will most likely receive a notice of $2,500 of income related to forgiveness of debt. You will then owe the taxes on that $2,500 just as if you had earned it as an employee. This comes as a surprise to many debtors and can undo the benefits of the negotiated debt. This is similar to the treatment of forgiven debt in a foreclosure outside of bankruptcy.

Default Penalties— The contract you sign with a loan consolidation company will be lengthy and complicated. Typically, it will include hefty penalties for failing to make your payment on time. In many cases, even one missed payment can result in you losing the benefits of the loan consolidation.

Exorbitant Fees— The fees charged by loan consolidation companies are a new element of your debt. Identifying the exact fees can be challenging due to the complexity of the contract you sign. In worst case scenarios, you may be sending more than 10% of your monthly payment to the loan consolidation company as a fee for managing your debt.

No Protection Against Creditors— Unlike Chapter 7 bankruptcy, you may find a creditor fails to cancel your debt in exchange for the payments you make through loan consolidation. You will also find the debt consolidation company often has no answer as to how to resolve this situation. You may end up arguing with a large lending institution about the balance on your debt. Without an attorney, this can be a tough fight often won by the creditor.

The Chapter 7 Bankruptcy Difference

One difference between loan consolidation or Chapter 7, is that in most cases, Chapter 7 bankruptcy involves a flat fee. As a result, you immediately know the total amount of money you are paying in order to receive a discharge of your debt. In most cases, the Chapter 7 bankruptcy fee you incur to receive a discharge of debt will be thousands of dollars less than the amount you would spend in a loan consolidation program.

Chapter 7 Time frame

While most debt consolidation programs will have a duration of 36 months or longer, your Chapter 7 bankruptcy will typically start and finish within 120 days. We provide clients with an estimated timeline for Chapter 7 when representation begins. During that time frame, you will typically only be required to attend one hearing called a 341 Meeting. Your attorney will attend that meeting with you.

Tax Implications In Chapter 7

One of the most meaningful differences between Chapter 7 and debt consolidation, is with regard to tax implications. In Chapter 7, you receive a full discharge of the debt in question. Additionally, federal bankruptcy law dictates that you will not owe any taxes on the discharge of that debt. This is a meaningful difference when compared to the tax consequences that can result from forgiveness of debt in debt consolidation, as discussed above.

Chapter 7 And Your Credit Score

You should anticipate your credit score will drop more as a result of your Chapter 7 than as compared to debt consolidation. This drop in credit score is minimized if your credit coming into debt consolidation and Chapter 7 is already less than perfect. On an equally important note, improving your credit score after bankruptcy is faster and easier than you might think. The primary reason for this is that the filing of a Chapter 7 dramatically decreases your debt. Your credit score is determined by many factors. One of those is your debt to income ratio. When your debt decreases and your income stays the same—as it does when you file Chapter 7—the result is a better debt to income ratio for your credit score. We have written on an article about Chapter 7 and your credit score, which may be helpful.

Chapter 7 And Protection Against Creditors

One amazing and powerful benefit of filing Chapter 7 is the Automatic Stay. The Automatic Stay goes into effect the moment you file your bankruptcy, and it prevents creditors from taking action to pursue collection of their debt. This means foreclosure proceedings come to a halt, as do court cases, phone calls, and letters from creditors.

The rights of creditors in Chapter 7 are dictated by the federal bankruptcy code. Unless you have too many assets or too much income for Chapter 7, there is virtually nothing your creditors can do to prevent a successful Chapter 7 filing. Your Charlotte bankruptcy lawyer will make sure to review your case with you from these perspectives, well before filing.

Speak With A Charlotte Bankruptcy Lawyer Today

If you are considering filing bankruptcy, it’s important that you speak with a Charlotte bankruptcy attorney. The call is free and you will come away with a much better understanding of your options. You can reach us at 704.749.7747 or click to request a FREE CASE EVALUATION, and we will be in touch shortly.

Further Reading

If this article regarding loan consolidation or Chapter 7 was helpful, you may find other helpful articles on our Bankruptcy Blog. Thank you for visiting the website—we hope it has been helpful.

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Bankruptcy Or Consolidation?

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Bankruptcy Or Consolidation?

If you are overwhelmed by the choice between bankruptcy or consolidation, there is great news: you have options. Most individuals wait much longer than they should before exercising their options regarding debt—do yourself a favor and act now. The solutions are powerful and the relief is immediate.

Debt Consolidation

Clients who have one looming debt, or smaller debts which are causing problems can consider bankruptcy or consolidation. Generally, debt consolidation combines your debts into one loan. You can accomplish this on your own with a personal loan or a home equity line. You can also hire a debt consolidation company to handle bundling your debt into one payment. If you enter into an agreement with a debt consolidation company, you will typically pay one party each month—the debt consolidation company. However, there are pitfalls associated with working with debt consolidation companies.

Pitfalls Of Debt Consolidation

Debt consolidation companies offer confusing, lengthy contracts which often promise very little to you. We consistently work with clients who believed their debt consolidation company had bundled all of their debt, only to find out it wasn’t true. Those clients make consistent payments and hold up their end of the deal. At the end, they find out there are still one or more credit card balances that remain unpaid. This is a horrible result! Finally, debt consolidation companies consistently remind you they are only estimating the arrangements they can reach with your creditors. In the end, their promises often go unfulfilled.

How Is Debt Settlement Different From Debt Consolidation?

One option in addressing debt is debt negotiation which leads to debt settlement. As a bankruptcy law firm, we have had success negotiating debt for our clients. Our strategy is to show the creditor that we are working with the client to file bankruptcy, which is true. However, in many cases the client would rather settle a debt than file a Chapter 7 or Chapter 13 bankruptcy. This is also true. In the end, the creditor is faced with the option of getting paid little to nothing in bankruptcy, or reaching a fair negotiated agreement with our firm.

The downside to debt settlement is that not all clients have the funds available to successfully engage creditors in negotiations. To reach your best negotiated agreement, the creditor will want the new lower balance paid off very quickly. They are not interested in lowering the balance AND accepting a series of monthly payments extending more than a few months.

Bankruptcy Is Often The Way To Go

If you’re trying to choose between bankruptcy or consolidation, let us help. Filing bankruptcy is one of the most powerful options a consumer has at their disposal. The amount of money you will spend to negotiate one credit card will often exceed the full bankruptcy fee to your bankruptcy attorney. Additionally, you address numerous debts at once. While clients have concerns about credit scores and keeping vehicles or homes, a free phone consultation usually puts the client at ease.

Final Thoughts On The Bankruptcy Or Consolidation Decision

First, we understand bankruptcy is foreign to most individuals. Second, we know there is stress and anxiety associated with debt and the mystery of filing bankruptcy. Lastly, we have seen over and over how our client’s lives change for the better simply by deciding to file bankruptcy. In fact, bankruptcy will change your life for the positive.Most bankruptcy filings usually end with the client giving the lawyer a hug—that should tell you a lot about the relief you will experience if you decide to file.

Speak With A Bankruptcy Lawyer Today

If you’d like to speak with a Charlotte bankruptcy lawyer today, we’re here to help. We are happy to discuss bankruptcy, debt consolidation, or debt negotiation. Part of the job is answering questions. You can reach us at 704.749.7747 or click for a FREE CASE EVALUATION. We know you have choices. We hope you choose to Recover With Us.

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Debt Settlement

Debt Settlement in CharlotteDebt settlement and bankruptcy go hand in hand. As a result, I routinely speak with clients about pursuing both options, depending upon the specific circumstances.  Depending upon the client’s needs, we may choose to pursue debt settlement over bankruptcy. My goal in each of those conversations with a client is to understand what’s at stake for the client, their objectives, and how likely we are to succeed in debt settlement or bankruptcy.

Is Debt Settlement An Option?

Debt settlement is always an option. The question is whether the creditor agrees with your valuation of the debt. You’re obviously asking them to settle the debt for less than “full value.” Depending upon the creditor, the amount, and their tendency to settle, you’ll get different answers from different creditors.

One impediment to settling debt is your ability to send the creditor a lump sum payment. We are able to generate the best offer from the creditor when we can guarantee them they will have their funds quickly after settlement. While some creditors will agree to a reduced amount to be paid over time, most creditors involved in a debt settlement negotiation require a lump sum payment in full. One exception to this is where a creditor will accept a portion of the reduced amount quickly on the heels of the settlement, with the remainder to be paid over  time in installments.

Do I Need To Qualify For a Chapter 7 Bankruptcy?

No. While a Chapter 7 bankruptcy is a complete liquidation of debt, even a Chapter 13 bankruptcy—which is available to almost everyone—gives the creditor a result where they are only getting paid a small percentage of the debt over time. As compared to having their debt put into a Chapter 13 bankruptcy, most creditors will offer a reasonable reduction in the amount of the debt.

What If We Can’t Settle The Debt?

The firm typically simultaneously negotiates with creditors while preparing bankruptcy documentation for you. If we are unable to successfully negotiate a debt settlement, we can proceed with a bankruptcy filing provided it meets your objectives.

Are There Tax Consequences To Debt Settlement?

While the standard answer is “You should talk to your CPA,” generally speaking, when a lender cancels or forgives a debt, there is a possibility that forgiveness of debt will generate taxable income due to the IRS. Generally, clients find that the benefit of the reduction in the principal amount of the debt, combined with settling the debt once and for all with the creditor outweighs any potential for taxable income resulting from the debt settlement.

If you have a question about debt settlement, give us a call at 704.749.7747. We’re here to help.

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