Debt Settlement vs. Bankruptcy: The Basics

The functions of debt settlement and a bankruptcy declaration are very different.

What is Debt Settlement?

Debt settlement is a form of a “financial workout” for consumers. It generally involves a repayment plan where the debtor consolidates his or her payments into small, affordable monthly installments and ultimately pays less than he originally owed to the creditors. Debt settlement companies employ experts in this field who will negotiate with creditors on your behalf and reduce your debts. Unlike bankruptcy, your credit report will indicate favorably that your debt was “settled” or “resolved,” rather than “unpaid.“

What is Bankruptcy?

Bankruptcy is a legal procedure where a petition is filed in the bankruptcy court to discharge your debt entirely. There are two types of bankruptcy methods for individuals: Chapter 7, and Chapter 13.

A Chapter 7 bankruptcy is the most frequent type of bankruptcy filed by consumers. It is a liquidation arrangement, where all debts are wiped out completely. This form of bankruptcy is available to individuals, married couples, those in partnerships and corporations.

A Chapter 13 bankruptcy includes a debt repayment plan available for individuals and married couples who have debts that fall within a specific statutory amount. Chapter 13 allows debtors to repay either some or all of their debts from their projected future income over a 3 to 5 year period

Debt Settlement Services: A Closer Look

Debt settlement services are a simple debt reduction method that will help you achieve financial liberation. To settle your debt, you can hire the services of any number of debt settlement companies, or you can settle your own debt with a “do it yourself” debt settlement plan.

Using a debt settlement company like Legal Helpers Debt Resolution (LHDR)-Help LLC, you can benefit by having an expert negotiate with your creditors on your behalf. They will generally approach the creditors (typically banks) with a larger amount of debt that is created by bundling together the various debts of many clients and using that leverage to ultimately obtain a greater debt reduction for the whole group. For the best results, make sure to find a debt settlement company you trust.

No debt can be settled without the mutual consent of the debtor and creditor. Whenever you fail to pay your full obligation to your creditors, your credit is negatively affected. However, once your individual accounts are settled your creditors are required to report this information to all major credit reporting bureaus. This updates your individual credit report and allows you to start rebuilding your credit right away.

Declaring Chapter 7 Bankruptcy: A Closer Look

When you file for Chapter 7 bankruptcy, it stops all collection actions by creditors, including foreclosures, repossessions, and garnishments. If you have filed bankruptcy with an attorney, she or he shields you by handling all inquiries from creditors. However, you will lose all your credit cards and you may have to give up some luxury possessions. You will also need to complete a credit counseling session before filing a petition in the court.

You may be able to discharge your unsecured debt by filing bankruptcy, but the stigma of bankruptcy remains on your credit report for up to 10 years. This makes it extremely difficult to acquire credit, buy a home or car, get life insurance, or even get a job. A recent bankruptcy also makes it nearly impossible to get a mortgage, although it will likely become easier after five years.

The Chapter 7 bankruptcy procedure is usually completed within 6 months, whereas it can take 3-5 years to complete a repayment plan under Chapter 13.

Evaluating Debt Settlement vs. Bankruptcy

When you hire the services of a debt settlement company, your payment plan will incorporate a fee. That fee generally amounts to 15-17% of your total debt. On average, the typical debtor will reduce his debt to 55 cents on the dollar (including the debt settlement company fee).

When you file a bankruptcy petition in court, you are required to pay several hundreds of dollars in filing fees. Your attorney will also charge a consultation fee, which is imposed before any services are rendered.

When it comes down to debt settlement vs. bankruptcy, it’s best to analyze your financial situation carefully in order to choose the course of action that’s best for you and your family. We hope this overview helped you make the right decision!

Medical Malpractice Attorneys Are Not to Blame

The argument that medical malpractice attorneys are to blame for these spikes in insurance rates seems to be unfounded. Many people claim that there are too many malpractice lawsuits and as a result, they are driving up the cost of insurance premiums; however, with a close examination of the facts this is just not the case. For instance, medical malpractice insurance rates have risen less rapidly than medical inflation. Medical costs have gone up 113% since 1987; meanwhile, the total amount spent on medical malpractice insurance has gone up only 52%. This is less than half the cost of medical inflation. In short, the cost of insuring against medical errors is going down.Additionally, according to the National Association of Insurance Commissioners claims are down. These facts show that medical malpractice attorneys are not accountable for the crisis.

Insurance Reform is What is Needed

Insurance corporations control the health care system and premium prices in the United States; therefore, it is the insurance companies that are to blame and not medical malpractice attorneys. The under-regulated, powerful, international insurance industry has seized control of America’s health care system and is driving up prices for everyone, everywhere, not just for doctors. In the 1990s, the insurance industry underpriced rates and sold policies at a loss, then as early as 1999 they started telling doctors that rates were overdue for a radical hike. Rates were called “irresponsibly low” and the blame was placed on competition for market share. Now the scapegoats are the victims whose lives have been ruined by medical errors.

Joshua Just, a former attorney in New York City, has over 20 years of experience as a lawyer.

A Medical Discount Card Program is similar to a dental or vision or prescription discount card, but promise discounts on a broader array of health care needs. A medical discount card program can be used for doctor visits, hospitalizations, laboratory testing, and other health care services.

Should I sign up for a Medical Discount Card Program?

Signing up for a medical discount card program, such as Valued Health, is great for many people because they offer lower rates on countless health care services. Not only that but a medical discount card program will save you and your family money and offer you great benefits that you can’t get with regular health insurers.

What’s important to remember is that a medical discount card program is NOT health insurance. So don’t expect it to protect you from those terrible medical costs.

However, some people who are unable to obtain affordable health insurance have found using a medical discount card program helpful, as they do lower the price on many doctors’ visits and prescription costs. So if you’re looking to save money, a medical discount card program could be for you.

How Does a Medical Discount Card Program Work?

A medical discount card program does not pay claims for any medical services. This is why we said upfront that a medical discount card program is NOT health insurance. However, a medical discount card program will negotiate with health care providers to get you the cheapest rate possible on almost any service you require. Although enrollees must pay a monthly fee, the fee is inconsequential to the total amount saved from doctors visits, prescriptions, etc. They’re practically paying you to join!

Where can a find a great Medical Discount Card Program?

One medical discount card program is Valued Health, a company I have recently become a partner in. Not only is it extremely reliable, but the monthly fee you must pay is inconsequential in comparison to its competitors. For just $89.99 for a monthly individual plan and $99.99 for a monthly family plan, you’ll be able to get nearly every medical resource available.

TASC Supports New Mandates on Debt Restructuring Firms

Lawyers for the FTC have succeeded in arguing for several new restrictions on debt settlement companies, culminating in a new policy making legislation coming from the government.

Starting on October 27, 2010, for-profit companies that sell debt relief services over the telephone may no longer charge a fee before they settle or reduce a customer’s credit card or other unsecured debt.

In addition, the lawyers have successfully argued for mandated enhanced disclosure requirements. These are modeled on current and proposed standards from the industry’s leading trade association, TASC (The Association of Settlement Companies). TASC already offered guidance and regulations for debt restructuring companies, something I talked about in my earlier post: What to Look for in a Trustworthy Debt Settlement Company. before FTC lawyers and legislators got involved.

TASC originally opposed one key part of the proposed legislation: the prohibition of debt settlement companies from accepting fees from a consumer for debt settlement services prior to the actual settlement of the consumer’s debt.

As TASC argued (and I reiterated in my post, Federal Government Lawyers and the FTC Get It Wrong on Debt Settlement and Telemarketing, this kind of thinking ignores the large amount of preparatory research and client management that goes on within a debt settlement case before any liability or balance is discharged. The flipside of this argument, from the lawyers standpoint, was that customers were being unfairly charged before the agreed upon service was actually being executed.

The Outcome of the FTC Ruling

In the end, the lawyers were able to successfully argue to the FTC that the pros outweighed the cons. In a great letter of support for the intents (if not all the tactics) of the FTC ruling, and a bolstering round of optimism for the industry and its members, TASC issued the following statement last week:

“We recognize that the Federal Trade Commission attempted to strike an appropriate balance between improving consumer protections and ensuring continued viability for the majority of ethical, well-managed debt settlement companies….The only significant difference between TASC and the FTC was the proposal that the collection of fees be delayed until debts are actually settled, a position that, we believe, ignores the fact that services are provided throughout the customer life cycle, not just at the time of settlement. ”

The Joshua Just Take? The Lawyers Still Got It Wrong But Let’s Move On

Basically, I agree with TASC’s position: that the Federal Government Lawyers still got the tactics wrong but that overall their intention was good. The end result, regulation and support by the government adds validation to settlement companies claim to be a legitimate, transparent industry that is providing a valuable public service. Consumer protection laws can and should be a part of our conversations. And though it remains to be seen how debt restructuring firms will need to restructure their own businesses in order to “keep the lights on” while they attempt to settle balances for their clients, as an industry we’ll emerge stronger from this. Now it’s time to get back to work.

About Joshua Just

As a managing partner of DebtLogic USA, a debt restructuring firm in New York City, Joshua Just is attuned to the legislation happening around the industry. If you’re looking to help settle your debts, you can visit www.debtlogicusa.com.

Five Groups of Americans who could Benefit the Most from Affordable Comprehensive Medical Care

1. Age group: 18-24 – Americans, ages 18-24, are the age group that is the most uninsured and would benefit the most from affordable health insurance. Under Obama’s new health bill, this age group will now be allowed to stay on their parents’ policies until they turn 26.
2. Race: Hispanic ­­– Hispanic Americans are the most uninsured race in the United States and the most in need of comprehensive medical care. In 2008, nearly 31% of Hispanic Americans were uninsured.
3. Household Income: Less than $25,000 – The poorest Americans are the most uninsured in the country. Nearly 25% of Americans who made less than $25,000 in 2008 were uninsured. This cohort could benefit the most from affordable health insurance.
4. Residence: Inside Principal Cities ­– Americans living in metropolitan areas were more likely to be uninsured than Americans living outside of metropolitan areas. In 2008, approximately 18% of Americans living in principal cities were uninsured and in need of affordable comprehensive medical care.
5. Work Experience: Unemployed – In 2008, 26% of Americans who did not work were uninsured and in need of affordable health insurance.

It is the goal of the new health bill to insure the millions of Americans in these five groups who could most benefit from affordable health insurance.

If you or someone you know has been injuredthen you are going to want to hire the best personal injury lawyer to take on your case.Finding the right personal injury lawyer to handle your case can be a difficult task. That is why we’ve put together some tips to help you choose the best personal injury lawyer for your specific needs.

Selecting the Best Personal Injury Lawyer

1. Contact the American Bar Association – Go online to the ABA website for a referral list of the best personal injury lawyers in your area.
2. Get Recommendations – Talk to friends and family members if they know a good lawyer. A friend’s recommendation is very valuable because you know you can trust their opinion.
3. Ask for Referrals­– While friends are great for a recommendation, your current lawyer can also refer you to colleagues and lawyers that specialize in personal injury cases.
4. Search Online – Once you’ve got a list of personal injury lawyers, go online and look up any information about the lawyer or their law firm. Do they appear to have expertise in the field? Does their website have any information that is helpful to you?
5. Interview Several Lawyers –After you’ve done your research and narrowed down your list, set up appointments with the remaining lawyers, and ask them about their experience, your specific case and what he or she recommends. Make sure you would get along with the lawyer before hiring them.

Finding the best personal injury lawyer to handle your case may take some time and research, but with sensitive cases like these, you will want to take your time and make sure you have the best fit for you.

Joshua Just, a former attorney in New York City, has over 20 years of experience as a lawyer, which gives him unique insight to many legal matters.

If you are planning to file for Chapter 7, first consider the pros and cons of retaining a bankruptcy attorney and going through with it. Take a look at this list of the pros and cons of bankruptcy and decide what is the right move for you in your current financial situation.

The Pros of Bankruptcy:

Hiring a bankruptcy attorney can be a debt management tool to help solve your financial problems.

1. Fresh Financial Start – The biggest advantage of having a bankruptcy attorney file your claim is obviously the hope of obtaining a fresh financial start once your debts have been discharged.
2. Automatic Stay on Debts – Creditors must stop their collections efforts when you file for bankruptcy. All collection actions from creditors will be stopped including: foreclosures, repossessions, and garnishments. If they haven’t, contact your bankruptcy attorney immediately to bring the matter in front of a judge.
3. Protection of Essential Property­– In most states, your home, car and other essentials are exempt so your bankruptcy attorney will ensure you do not wind up homeless or unable to get around.

The Cons of Bankruptcy:

It is important to note that filing for bankruptcy is a last resort option and is not something that should be entered into lightly.  Any bankruptcy attorney you hire should make the following list of some important ramifications very explicit to you:

1. Credit Score – Filing for bankruptcy will severely damage on your credit score for up to ten years. This will make it difficult to acquire credit in the future, buy a home, car or obtain life insurance.
2. 2. Inability to Obtain a Mortgage – Because filing for bankruptcy affects your credit score, it will be difficult to obtain a mortgage until at least five years has gone by.
3. 3. Lose Credit Cards – You will lose all of your credit cards. Think of it as no new trips, clothes, or furniture purchases for you for the next decade without cash in hand.
4. 4. Embarrassment – When you declare bankruptcy, your name will be in court records and may also appear in the newspaper. Additionally, you and your bankruptcy attorney will need to explain to a judge how you ended up in this financial situation in the first place.
5. 5. Not all Debt is Discharged –Certain debts will not be discharged such as: past due child support, alimony payments, debts from a divorce settlement, student loans, income taxes that are less than 3 years past due, and debts incurred by fraudulent means. Your bankruptcy attorney should be able to tell you which of your debts are not eligible for Chapter 7.

Before you file for Chapter 7, consider the pros and cons of Bankruptcy. Though bankruptcy attorneys will often paint this as an easy solution to mounting financial pressures, its not that simple. Assess your financial situation before you file and make sure you have exhausted all other alternatives to bankruptcy, such as debt settlement companies, before you make a decision.

Joshua Just, a former attorney in New York City, has over 20 years of experience as a lawyer, which gives him unique insight to many legal matters.

In many cases knowing when you need a lawyer is a no brainer, such as when you are being sued or if you’ve been arrested. However, there are other legal matters in which you will to need a lawyer that are not as obvious. From real estate transactions to child support cases, there are many circumstances in which you should seek advice or expertise from a lawyer. The following are just a few of the common legal matters that should be discussed with or handled by a lawyer.

Common Legal Matters that Need a Lawyer

1. Real Estate Transactions – When buying or selling real estate, you will need a lawyer to guide you through the process. If you are selling a piece of property, a real estate lawyer will help you draw up and negotiate the terms of the contract of sale. You will also need a lawyer at closing time whether you are buying or selling the property. Your lawyer will make sure that all of the documents that you are signing are in your best interest.
2. Drawing Up a Will – For an important legal document such as a will, you will need a lawyer.Important declarations such as who will be the guardian of your children are made when drawing up a will, and you will want to seek legal advice before you make these decisions.
3. Party to a Lawsuit – If you are a party to a lawsuit, you will need a lawyer who can look out for your best interests and/or defend you. Your lawyer will be able to advise you on how to resolve the case.
4. Divorce – There is no legal requirement that you need a lawyer to handle your divorce; however, it is in you best interest to hire an attorney to help you deal with the legal issues. A lawyer is important when you and your spouse have been many married for several years, have minor children together and your ownership of assets have become intertwined.
5. Probate and Estate Settlement – In some circumstances, you will need a lawyerif a relative or someone close to you has died to handle probate and estate settlements. There are two types of probate lawyers: transactional lawyers who handle the administrative side of probates and probate litigators who represent clients in fights over who gets the estate.
6. Child Support/Custody Matter – After a divorce, important issues over child support and custody will need to be dealt with. You will need a lawyer who can provide you with the necessary information and assistance to resolve child support and custody matters so that you can rest assured that your child will be taken care of financially or otherwise.

Joshua Just, a former attorney in New York City, has over 20 years of experience as a lawyer, which gives him unique insight to many legal matters.

Questions for a Lawyer

The following are some of the top questions for a lawyer that you should ask before you put him or her on retainer:

1. What is your experience in this field? There are many types of lawyers and it is important that you chose one with extensive experience in the field in which you require legal advice.
2. Have you handled matters like mine? Ask for specific examples of cases your attorney has handled in the past so that you can be sure this lawyer will know how to handle your case.
3. What are the possible outcomes of my case? It is important that you and your lawyer are on the same page when it comes to the outcome of your case. Make sure your attorney believes that you can get the best possible outcome.
4. What are my alternatives in resolving the matter? Ask a lawyer how he or she plants to resolve your case. There are many ways your legal matter can be handled and it is important that you understand all your options.
5. Approximately how long will it take to resolve? Legal matters can take a long time to resolve, which can be quite expensive. Get an approximate timeline, so you are not unprepared for a long legal process and so that you can prepare for the costs.
6. What are your rates and how will you bill me? It is important that you know what your attorney charges, not only so that you can make sure you can afford his or her services, but also so that you are not surprised by any hidden fees. Legal services can be expensive and many attorneys charge differently. You don’t need the added stress of worrying whether or not you will be able to afford your lawyer fees so ask upfront what the rates will be.
7. How will you keep me informed of progress? Some lawyers are very involved with their clients and others tend to work on their own and only update their client when they feel it is necessary. Decide how involved you want to be in the case and talk to your lawyer about how they typically work with a client.
8. Who else in the office will be working on my case? If you are considering hiring a lawyer who works in a large firm, there may be several people working on your case. Find out who specifically is handling your legal matter. If you chose to go with a lawyer who works for a smaller firm or has their own practice, there may only be one or two people handling the case. Make sure you are comfortable with who will be handling your case on a day to day basis.

Joshua Just, a former attorney in New York City, has over 20 years of experience as a lawyer, which gives him unique insight to many legal matters.

What Loss of License Means For A Lawyer

According to Mass.gov, loss of license means you are completely 100% shut down from doing any business as a lawyer and in any job remotely related to law. After loss of license, it becomes exceeding difficult for a lawyer to get his or her lawyer license back. Attorney misconduct is the number one reason for loss of license.

What Constitutes Attorney Misconduct?

As in most professions, lawyers are held to a particular level of conduct and professionalism. Attorney misconduct can range anywhere from bribery of a judge to criminal actions like fraud. When the ethics of how a lawyer gives and receives attorney fees comes into question, one must ask if the punishments for attorney misconduct are fair.

What the ruling against a lawyer referral fee doesn’t resolve is what truly constitutes as attorney misconduct. Bribery, extortion, fraud: these all seem like good reasons for someone not to be a professional representative of the legal system. Unfortunately, for those who do pay referral fees to non-lawyers, they can be accused of attorney misconduct.  This is something happening every day across America, while more serious offenses go unnoticed.

So, Is a Loss of License the Appropriate Punishment for This Type of Attorney Misconduct?

The Take from Joshua Just?  Attorney Loss of license is a pretty harsh punishment for something as inconsequential as a referral fee. If someone receives excellent legal advice – even though someone else was compensated for helping bring in a new client – who is the victim?  More often than not, business associates and former clients are the ones recommending their lawyers. From tanning salons and gyms to banking deals to job referrals, there are incentives for recommending a particular firm or establishment over another.  They are housed under many names— “loyalty programs”  and “finders fee” come to mind – but the idea is the same.

What do you think? Is loss of license a fair punishment for misinterpreting lawyer referral fees?

Joshua Just, a former attorney in New York City, has over 20 years experience as a lawyer, which gives him unique insight to many legal matters. Joshua Just blogs at his website here, and has written several other articles about lawyer issues as well.