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Month: April 2019
How to reduce credit card costs

On Behalf of O’Brien Law Firm, LLC

Posted on: April 29, 2019

Credit card debt is one of the most pervasive forms of debt in American society. In 2017, the total amount of credit card debt in the country exceeded $1 trillion. The average adult in the United States has over $6,000 in debt from credit cards.

Filing for bankruptcy is available to those unable to pay off such debts. However, before that happens, you should do everything in your power to get your debt under control, so the court will see you actively attempted to pay it off on your own. You may want to consider performing the following actions prior to bankruptcy to see if they will help you.

Call to get your interest rate reduced

Many people do not realize that if they simply called their credit card company, they could probably get some leeway. Many companies have no problem reducing the interest rate for people who have trouble paying. You should not expect a major reduction with this instance. For example, if your current interest rate is at 20%, then it likely will not go down to 3%. However, even if it only goes down a little bit, it still helps.

Pay off high interest cards first

Many people have credit card debt spread across several different cards. A good strategy is to pay off the card with the higher interest rate. If you delay paying off this card, then the interest rate will only grow larger over time, forcing you to pay off a higher amount. Once you pay off that card, you can turn your attention toward cards with lower rates.

Stash your credit cards for the time being

If you continue to purchase items on your credit cards, then you will just have more interest to pay off. You should stick with a debit card or cash until you pay off the debt. Only after exhausting all options should you look into bankruptcy.

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Mortgage modifications during Chapter 13 bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: April 27, 2019

Filing for bankruptcy can be a powerful tool to aid people in gaining a firm financial standing. For this reason, more people are considering this option.

For those who own a home, there are a few ways that a chapter 13 bankruptcy may affect you. In particular, your mortgage lender may offer you a mortgage modification. There are a few important things to know about this option.

Mortgage modification

In short, a mortgage modification occurs when a lender, or mortgagee, works with a mortgagor to restructure a mortgage loan to fit within the mortgagor’s financial restraints. It is important to understand that a mortgage modification is not a refinance. The focus of a refinance is to allow mortgagors to finance the loan again, usually at a lower interest rate. On the other hand, a mortgage modification is a change to the current mortgage repayment, to make it easier for the mortgagor to meet the terms of the mortgage. During this process, the monthly premium may go down, but the lifetime of the loan will increase.

Possible benefits

Particularly in the case of bankruptcy, a modification can help the mortgagor in his or her financial adjustment after the bankruptcy process and allow the party to maintain the home. This tends to be the greatest draw of the option. Depending upon the terms of the modification, the interest rate of the loan may be low for a few years, and when it does increase, it will not rise above the rate that was set before the modification. The process is usually smooth and quick, seeing as it involves a loan that is already in place.

The cost

Loan modifications come with some possible setbacks. The greatest possible disadvantage is the length of the loan. Many people do not realize that the restructuring of the loan comes with a new loan term. This increases the length of the loan, which in turn increases the amount the party will have to pay back. It is important to weigh the possible pros and cons as they apply to your situation.

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Bankruptcy reform proposals highlight student loan debt

On Behalf of O’Brien Law Firm, LLC

Posted on: April 23, 2019

Many Mississippi residents are struggling under piles of insurmountable debt. The sources of these debts may include everything from credit cards and auto loans to medical bills and student loans. While many of these debts can be discharged through personal bankruptcy, people struggling with significant student loan debt have faced particular difficulties. In the past, the bankruptcy code was amended on multiple occasions to make it harder for borrowers to find relief from their student loans. At the same time, the cost of university has gone up dramatically, leaving Americans with $1.5 trillion in student loan payments.

A new report by prominent bankruptcy judges, lawyers and academics is urging changes to the law to make it easier for people to find relief from crushing student loan obligations. The report aims to address issues that are preventing people in debt from filing for bankruptcy. There are two main types of personal bankruptcy options: Chapter 7, where assets are sold off and a person’s debts discharged, and Chapter 13, which aims to restructure debts through a payment plan. Bankruptcy filings hit their lowest point since 2007 in 2018. However, many note that people are still struggling with insurmountable debt but do not file for bankruptcy due to other concerns.

The commission offered a range of proposals, including allowing student loans to be discharged in bankruptcy seven years after they became payable. While student loans can currently be discharged in cases of “undue hardship,” this has been a difficult barrier to reach. Some say that judges could interpret the law differently to help people find relief.

Of course, many people are struggling with credit card bills and medical debt, both of which can be discharged normally through personal bankruptcy. An individual who is struggling with excessive debt could consult with a bankruptcy attorney about their options to seek relief.

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How to rebuild credit after filing for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: April 17, 2019

After Mississippi consumers have filed for bankruptcy, they may be concerned about rebuilding their credit. However, they should be wary of companies called credit repair agencies that offer to help with this.

Under the Credit Repair Organizations Act, it is not legal for a company to charge for this type of service until the repair has been done. Some credit repair agencies will send out letters to people who have filed for bankruptcy, while others will advertise online or on TV. The companies claim to be able to establish a new credit identity for people who have filed for bankruptcy, but some of them suggest applying to the IRS for an Employer Identification Number. People are then instructed to use this number in place of their Social Security number. However, this number is intended for business use, and using it in this way can be illegal.

A bankruptcy can remain on a credit report for up to 10 years, but there are other steps people can take to repair their credit. One is applying for a secured credit card. This allows a person to deposit a certain amount to cover the credit offered and establish a regular payment record. The person can then transition to regular credit cards. Another way is to apply for a bad credit car loan.

How to reestablish credit is one of several concerns people may have when considering bankruptcy, but being unable to keep up payments for debt also hurts a person’s credit. An attorney may be able to outline debt relief options, including bankruptcy. Depending on a person’s income and other factors, it may be possible to file for either Chapter 7 or Chapter 13 bankruptcy.

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How to deal with debt collection tactics

On Behalf of O’Brien Law Firm, LLC

Posted on: April 11, 2019

Mississippi residents with mounting debts often get phone calls from debt collectors. Some of these threatening callers may not be following regulations on debt collection procedures. In fact, debt collectors are sometimes accused of harassing debtors. According to the Fair Debt Collection Practices Act (FDCPA), collectors have limitations as to what they are permitted to do when attempting to collect debts. The same regulations apply to credit card debts, missed payments on mortgages, vehicle loans and medical bills.

The Consumer Financial Protection Bureau (CFPB) states that the FDCPA forbids debt collectors from using unjust methods to collect debts. For example, debt collectors aren’t allowed to use foul language during calls. The FDCPA covers calls made by lawyers and third parties. However, legal regulations do not enforce these rules on the original creditors. Per the official FDCPA guidelines, debt collectors aren’t legally permitted to call debtors prior to 8 a.m. or later than 9 p.m.

Debt collectors cannot call people at their jobs about missed payments if the debtors previously requested them to refrain from calling. Furthermore, debt collectors aren’t allowed to harass debtors. Harassment includes making several phone calls within a 24-hour period. Debt collectors must honor written requests asking that they cease making phone calls and sending texts regarding the payment of debts.

Debt collectors aren’t allowed to divulge confidential information to other people (except for a spouse) about a person’s debts. In addition, a debt collector is not permitted to make a threat of repossession. If a debtor has hired a lawyer, collectors must contact this attorney instead of the debtor. Bankruptcy offers a legal solution to a pressing problem.

Sometimes, even the best intentions to pay back debts involve severe financial repercussions. That’s why an individual facing heavy debts may want to consult with a bankruptcy attorney.

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