Atlanta Bankruptcy Attorney Blog

It takes more than a budget to shop smart this holiday season - it takes open eyes.

Stores everywhere are offering discounts for opening credit card accounts. For instance, they'll knock 15% off your purchases when you sign up. At first glance, it seems like a bargain. Hey, you've got to buy gifts anyway - why not get them for cheap? But look a little deeper and you'll see it's less of a deal and more of a scam.

Store cards are notorious for having high annual interest rates - sometimes 30% or more - and very low minimum payments. With that combination, your bill payments are mostly covering interest rather than your principal. Without paying down your original purchase, you'll be obligated to keep paying interest year after year. Do you really want to spend decades paying for this year's shopping spree? And that's not all. Every time you apply for and/or open a new account, your credit rating is negatively affected. The more cards you have, the worse for your score. Closing them doesn't help - you'll get dinged for that, too.

Rather than fall for a store's gimmick, why not get a real bargain?

Continue reading "How Store Credit Cards Can Hurt Your Finances" »

The most popular - yet elusive - Christmas gift this year is too big to wrap. In recent months, potential homebuyers have been scrambling to take advantage of the temporary homebuyer tax credit of up to $8,000 before it expires on Nov. 30.

But you don't have to rush into buying a house before you're ready (if you'll recall, it was too much debt that got us into this mess - and a house is about the biggest, albeit most important, debt you can take on). Nor do you have to feel that you missed the boat if your financial situation won't allow you to plunk down a down payment right now. Here's why.

First, Congress is currently debating whether to extend the credit through March 2010, then phase it out slowly. Second, mortgage rates are at record lows and affordable homes are at record highs. Third - and maybe most important - there's another way to save big bucks on that down payment. And you don't have to wait for government approval to get it.

Continue reading "Temporary Tax Credit Isn't the Only Way to Save on Your Mortgage" »

Looking for a good scare this Halloween weekend? Just drive to the nearest gas station.

Summer might be long behind us, but it seems to have left us with a souvenir - high gas prices. In the past couple weeks, the price at the pump has climbed more than 20 cents a gallon. It's a jump typically seen during the warmer months when people are on the road for vacations and oil is in high demand, not after the kids are back in school and traveling has calmed down.

With money already tight, retailers are worried the unexpected inconvenience will cause consumers to be more careful with their money this holiday season. And they might be right. A few more bucks might not seem like a big deal, but with most folks barely scraping by on the mortgage, credit card bills and groceries (not to mention taxes, medical bills, car repairs or any other unexpected costs) any small change could be the last straw. Fortunately, there's a way to ensure that pricier gas - or utilities, milk and bread, you name it - doesn't get the best of you.

Continue reading "Fight Back Against Scary Gas Prices with Bankruptcy " »

Even as headlines herald the end of the recession, it's hard to block out lingering negativity.

For instance, unemployment - currently at 9.8 percent, the highest in nearly three decades - isn't expected to peak for another six months. Call it a lag effect, if you will. Foreclosures have risen 5 percent since summer. Costs of health care, gas and groceries continue to increase. And in a recent Gallup Poll, the majority of respondents said they thought the economy was actually getting worse.

But there's still plenty of reason to be optimistic - even if it doesn't make the 5 o'clock news. First, realize that people naturally tend to think the worst during the bad times - just like we tend to be overly optimistic during the good times. I know I can get kind of gloomy on rainy days, while I'm generally happier on sunny days. It's so simple, but it makes sense. Second, as BusinessWeek puts it, recessions can pave the way for future growth by weeding out weak businesses and letting new and improved ventures thrive - sort of a survival of the fittest.

Third, there's something so motivating about a clean slate.

Continue reading "End of Recession Or Not, Get a Fresh Start" »

Halloweens shoppers this year will spend billions of dollars on spooky costumes, gruesome props, and spine-tingling horror movies in order to scare ourselves silly. But I bet none of our creepy exploits will induce as much dread as we get opening the mail box and seeing (blood-curdling shriek) our credit card bill!

Or mortgage bill. Or, worse, a notice of foreclosure. You fill in the blank. But despite our fears, many of us refuse to consider a solution that can free us financially, like bankruptcy. Why? Because, as anyone who's ever been afraid of the dark can tell you, it's what we can't comprehend that frightens us the most.

Bankruptcy has frightened consumers for ages. Usually, they're afraid bankruptcy will tarnish their reputation or wreck their credit. And maybe it did in the olden days - back when women were considered risqué for showing their ankles and people only bathed once a month - but fortunately our culture has become a lot more sophisticated now.

Continue reading "Get Over Your Biggest Financial Fears This Halloween" »

For every two steps forward, credit card companies just have to take one step back.

You've probably already heard about the new credit card legislation going into effect to protect consumers from hidden fees and unfair rate hikes. As of February, that means no more double-billing cycles. No more confusing fine print. No more raising your interest rate unless you're at least 60 days late on a payment - and even then, restoring your original rate if you prove that you can pay your bills on time.

That's the good news. The bad news? Creditors say that they'll have to make up for their lost income by punishing all of their customers - good credit or not - with annual fees and higher interest rates. And they mean business. Bank of America recently announced plans to test a $29 annual fee on its rewards cards.

Continue reading "Creditors Add New Fees Before Card Reform Takes Effect" »

Imagine this: Just when you thought money couldn't get much tighter, you receive a notice from your credit card company - they're lowering your lifeline, i.e. your credit limit, even though you've been working your butt off to get a good credit score. Sound like a bad dream? It's not.

At least 33 percent of credit card holders had their credit limit cut between October 2008 and April 2009, according to a recent FICO study. And the majority of those people had good credit.
So how can companies justify limiting your line when you've been paying the bills on time and following all their rules? They'll tell you that it's about risk. With more folks than ever defaulting, they're lowering limits across the board.

Now, a reduced limit is both good and bad news. First, the bad. Obviously, your new number is going to be easier to exceed. But you don't even have to overspend to damage your credit. See, one of the things credit bureaus judge you on is debt-to-limit ratio - how much you spend each month compared to your limit. If you have a $5,000 limit and you spend $2,500, then you're using up half of your available credit - a 50 percent ratio. But if your limit gets lowered to $3,000, your ratio automatically shoots up to 80 percent even though you're not spending a dime more. And that makes you a higher risk.

Continue reading "Atlanta Bankruptcy Attorneys Find That Less Credit Can Help You Keep More Money" »

Too little, too late might be the best way to sum up the $75 billion government initiative to reduce foreclosures by encouraging lenders to modify loans.

Obama's plan certainly meant well - and to be fair, it did help some folks - just not everyone. The plan recently reached its goal of helping 500,000 troubled homeowners by Nov. 1. Sound like a success? Maybe not when you realize Uncle Sam had set out to help 4 million foreclosure-bound homeowners. That adds up to a success rate of just 12 percent. And there are a couple other things to consider. First, there are millions of other homeowners who face foreclosure, but wouldn't have qualified for the plan. And second, even the lucky 12 percent able to modify their mortgages aren't free and clear yet. About half of them will redefault on their loan - even after it's been modified.

See, loan modifications just address the most obvious part of a homeowner's financial problems. You can't afford to pay your mortgage, so your lender makes it a little lower. But that doesn't address the reasons behind your inability to pay the mortgage.

Continue reading "How Bankruptcy Can Stop Foreclosure, No Lender Approval Needed" »

Yes, I know that April 15 has long come and gone. But 11 million taxpayers requested a six-month extension for their 2008 taxes, which means that - for many Americans - the real do-or-die deadline is this Thursday.

With money tighter than ever, it's understandable that so many of us are wracking our brains, trying to figure out how we're going to pay that tax bill. Or maybe we were able to scrape enough together to pay our taxes on time - but we're not sure we'll be as lucky less than six months from now when we do the tax dance all over again.

But here's some advice - even if you don't have the money, file anyway and worry about how you'll pay later. If you don't file, you'll start racking up penalties immediately after your deadline - sometimes up to 25 percent of what you owe. In the best case scenario, you'll owe a lot more money. Worst case scenario, you could wind up in jail. You're better off filing and only paying what you can afford, whether that's half your payment, 10 percent or - for the moment - nothing at all. The IRS can be surprisingly lenient. No, they won't forgive your debts - but they may let you work out an installment system or a way to lower your penalties.

Continue reading "Don't Wait Until It's Really Too Late To File Taxes " »

It sounds too good to be true. You don't need a bank account. You don't need a good credit score. You just load your paycheck onto a pre-paid debit card, and you can pay without the hassles of a credit card or the inconvenience of cash.

You've probably started to see pre-paid debit cards in stores - maybe you've even received one as a gift or purchased one for yourself. There's a lot to be said for pre-paid plastic, but unfortunately the old adage pretty much sums it up--if it sounds too good to be true, it probably is. As with bank accounts, regular debit cards and credit cards, banks have found a way to profit from our quest for convenience, according to the New York Times.

How? By charging you for everything under the sun, including activating the card, making purchases, checking your balance, going to the ATM and even just possessing it - it's called a monthly maintenance fee. Banks can also charge you for not using the card - an inactivity fee. As you can imagine, you can lose your money in fees faster than you can spend it.

Continue reading "The Expensive Truth Behind Prepaid Debit Cards" »

The bad news: more consumers are filing for bankruptcy. The good news? More consumers are filing for bankruptcy.

Personal bankruptcy rates were 41 percent higher this September than they were a year ago, according to the American Bankruptcy Institute. Now, a surge in bankruptcy filings certainly isn't something to jump up and down about because it indicates the economy isn't doing so hot. But we all knew that already. Yes, unemployment is approaching 10 percent. Millions of homeowners - some who have already had their home loans modified - are facing foreclosure. What's new?

So let's focus on the good news. More folks turning to bankruptcy means more folks getting the debt relief they so desperately need.

In the past, people have notoriously avoided bankruptcy at all costs - including the loss of their home - because of a myth that bankruptcy is a last-ditch effort that does as much bad as it does good by damaging credit and your good name. But if there's a silver lining to this recession, it's that people are starting to realize what a useful - and effective - tool bankruptcy can be.

Continue reading "Bankruptcies Increase as Americans Seek Debt Relief" »

Forget the jack-o-lanterns. Visit almost any retail store right now, and you'll notice that it's beginning to look a lot like Christmas.

With just a bit more than two months until Dec. 25, stores are already decking their shelves in red and green. In my opinion, it's an annoyance. And not just because I'd like to celebrate Halloween before I start hearing Jingle Bells.

Christmastime makes me think of friends and family - no problem there. But then I think of the gifts I'll need to buy friends and family. Which reminds me that gifts cost money - which, in turn, reminds me that I don't have very much money to spare. And I'm not alone. Millions of Americans nationwide are wondering how they'll manage their annual holiday shopping spree on this year's tight budget.

But there might be a way to save money this season. See, the way you pay can dictate how much you pay.

Continue reading "Layaway, Cash Can Save Money on Holiday Shopping" »

The recession might be bad for your spirits, but it turns out it might actually benefit your health.

It appears that periods of recession have the potential to increase lifespan, according to a study recently released by the University of Michigan. Researchers found that people who lived through the Great Depression actually lived longer than previous generations. In case you think it's just a coincidence, researchers found similar results across decades - including recent recessions in the 1980s and 90s - and countries.

They're not sure exactly what leads to the longevity, but it could be that people unwittingly adopt healthier habits when economic growth is slow. During a boom, it's all about keeping up with the Joneses. There's a lot of pressure to put in time at work. You manage to pay for gas and your car loan, so you drive everywhere. Maybe you've got some money to blow on stuff you don't necessarily need, like alcohol and cigarettes. You get the picture.

When times get tough, life is still stressful - maybe even more than before - but it slows down.

Continue reading "Recession Bad For Finances But Good for Health?" »

Some people look at today's economy as a curse. But more and more, I'm starting to see it as an excuse - a scapegoat that's holding us back from financial freedom.

In all fairness, I will admit that the state of the economy has an effect on our finances. It can contribute to a lost job (or trouble finding a new one), a home loan worth more than your house or the drastic decrease in the value of your investments. But it isn't the only effect. You know how good memories tend to strengthen with time, while the bad memories fade? Well, I think that's what has happened with the recession. We tend to forget that many of us had financial troubles before the economy went to hell in a handbasket.

Life wasn't always peachy prior to the recession. And it won't miraculously become peachy once the economy recovers (which could be soon, according to this Atlanta Business Journal story). But, believe it or not, that's actually a good thing.

Continue reading "Focus on Your Finances, Not the Economy" »