Bankruptcy Versus Debt Consolidation: The Pros and Cons

Bankruptcy QuestionsDo your debts have the best of you?  Once you make the decision do something about it, you usually contemplate debt consolidation or bankruptcy.  They are both valid options for you to consider. Below we have explored some of the benefits and drawbacks of each.

Debt consolidation can take many forms, but for this blog we will look specifically at companies that take some or all of your debts and negotiate a settlement with your creditors.  This agreement allows you to make a single monthly payment to the debt consolidation company who then distributes payments to your creditors.  The negotiated settlement percentage is often agreed to in advance between the debt consolidation company and your creditors.  The debt consolidation company then makes your monthly payment to the creditors.  This sounds great, so are you ready to move forward with debt consolidation?  We suggest you closely look at the pros and cons.

Pros:

You make one single payment each month for your debts to the debt consolidation company.

You may lower your overall monthly payment.

You can avoid bankruptcy.

Cons:

The debt consolidation company is unable to negotiate with all of your creditors leaving you to negotiate with some creditors on your own.

Creditors report negatively on your credit since you are not paying the full amount owed each month (this is frustrating since they agreed to the reduced amount).

The debt consolidation company may not pay your creditors timely, and sometimes not at all, each month resulting in derogatory impact on your credit.  This can stay on your credit report for seven years.

A surprise lawsuit is served on you by the Sheriff’s office when you discover one or more creditors have not been paid as part of the debt consolidation.

Creditor sends a 1099C to you for the forgiven debt, a/k/a taxable income, resulting in taxes owed to the Internal Revenue Service.

Your monthly payment is only slightly lower than before entering debt consolidation.

Duncan Law, PLLC believes that debt consolidation is a viable and appropriate approach for some individuals.  However, be careful who you choose since there are scams and questionable companies marketing as debt consolidation or credit counseling organizations.  We recommend you contact the Better Business Bureau or your local United Way to see who they recommend.

Bankruptcy is the legal approach to consolidating or eliminating your debts.  Depending on your income and your personal situation, you may want or need to file a Chapter 13 bankruptcy which consolidates your debts.  Similar to debt consolidation, you pay a percentage of your unsecured debts (credit cards, medical bills, personal loans, foreclosures, repossessions, etc.) back over a period of time.  The percentage paid back to unsecured creditors varies by client but is usually between 10% – 20%.  In some situations, Chapter 7 bankruptcy is the correct approach and it will completely eliminate debts on credit cards, medical bills, personal loans, foreclosures, repossessions, etc.  So you think bankruptcy is the best approach?  Again, we suggest you look at the pros and cons.

Pros:

In a Chapter 13 bankruptcy, you make a single payment each month to a Trustee that makes the payments on your behalf.  The Trustee is appointed by the federal government and payment made by the Trustee are scrutinized and audited.  This payment plan is a minimum of three years and a maximum of five years depending on your specific situation.

A Chapter 7 bankruptcy will eliminate unsecured debts while allowing you to retain your home and car in most cases.

Once the bankruptcy is filed, a “stay” in enacted which keeps your creditors from suing you, repossessing or foreclosing on your property, or taking further legal action against you.

You are not taxed by the Internal Revenue Service on the debt forgiven in bankruptcy.

You are able to obtain a fresh start once the bankruptcy is complete, and obtaining credit after bankruptcy is much easier than you would expect.

Cons:

Not everyone will qualify for a Chapter 7 or Chapter 13 bankruptcy.

Bankruptcy will be on your credit report for seven years from the date of filing in a Chapter 13 bankruptcy and ten years from the date of filing in a Chapter 7 bankruptcy.

In a Chapter 13 bankruptcy, you must obtain approval from the bankruptcy court for the purchase of cars, homes or other items that cause you to incur additional debt.

Bankruptcy is viable option when a fresh start is needed.  Depending on the individual’s circumstances, bankruptcy can provide a repayment plan, a Chapter 13, or a debt elimination plan, a Chapter 7.  If you are considering bankruptcy, please contact Duncan Law, PLLC to discuss your options.

What is the Difference Between Secured Debt & Unsecured Debt?

A secured debt is what’s commonly known as “collateral debt”.   In other words, the creditor can come and take property that is tangible and use that property as payment if you default on any payments.  The most common examples of this would be either a house or car.  If you were to fall behind on these payments then the creditor could come and repossess or foreclose on the property and take it from you.

An unsecured debt is a debt that is not combined with any piece of physical personal property or real estate.  When a person has unsecured debt, the creditors do not obtain any collateral, therefore making it harder for them to receive their payments.   They are only going by your promise to pay them back in the future.  The most common examples of unsecured debts are credit cards and store cards, medical bills, and some types of personal loans.

Knowing the difference between these two debts can be extremely useful in determining which type of bankruptcy will work best for you.   In order to file a Chapter 7 bankruptcy, you must be current on all house and car payments in order to keep them.  A Chapter 7 bankruptcy will wipe out any unsecured debt.  A Chapter 13 bankruptcy, on the other hand, is what’s known as a repayment plan.  If a person does not qualify under the Means Test or is behind on their house or car payments then a Chapter 13 will help the person keep their property while making monthly payments to the Trustee.

To learn more about which type of property we can protect for you during your bankruptcy contact us today to set up your free, on strings attached, consultation.

Why Do I Have to Take a Credit Counseling Course?

The courts require that you take a credit counseling course from an approved agency prior to your bankruptcy being filed. This is not a requirement from just our law firm, this is a requirement by the Court.

When the bankruptcy laws were changed in 2005, one of the changes included two course requirements. The first is that you take a credit counseling course prior to filing bankruptcy. You must take the course within 6 months prior to your bankruptcy filing. Another court requirement is that you take the course at least 24 hours prior to your bankruptcy being filed. The course is simple, and there are even approved agencies that allow you to watch a video online to complete the course.

The second change in the 2005 bankruptcy laws was the requirement of a financial management course. This is a different course than the credit counseling. Financial management must be taken prior to the discharge of your bankruptcy. You can also take this course online from an approved agency.

At your free initial consultation, we will explain both of these course requirements in more detail.

To find out more about how Duncan Law can help you, visit our website.

Duncan Law, PLLC

Charlotte Office:
4801 E. Independence Blvd.
Suite 1100
Charlotte, NC 28212
704-563-1224

Greensboro Office:
628 Green Valley Road
Suite 304
Greensboro, NC 27408
336-856-1234

How Will Bankruptcy Affect Someone Who Cosigned On My Debt?

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Chapter 7 Bankruptcy:

Person Filing Surrenders Property

Grandmother and Granddaughter HuggingFirst of all, keep in mind in order to file a Chapter 7 bankruptcy you must be current on everything unless you are willing to surrender the property.   Let’s consider the following example:  you owe on a debt such as a car loan, but are behind on the payments.  You come in for a free consultation, learn that you may be eligible to file a Chapter 7 bankruptcy, and decide you are going to surrender the property to the creditor since you are behind on payments.  However, someone has cosigned on the debt with you, and you are wondering what that is going to mean for the other person.  He or she (the cosigner) would still be responsible for the full amount that is owed to the creditor.  The creditor will typically sell the property an auction and the cosigner will be responsible for the deficiency balance.

If the debt is an unsecured debt (no property as collateral) then the creditor can go after the cosigner for the full amount owed on the debt.

Person Filing Keeps Making Payments

If the person filing the bankruptcy continues to make payments on the debt, the cosigner should not be impacted most of the time.  However, this means the person filing needs to keep making their regular payments on time, every month, in order to stay current.  If the property is not surrendered in a Chapter 7 bankruptcy, the cosigner should not be affected as long as the person filing is current on the property.

Chapter 13 Bankruptcy:

Person Filing Surrenders Property

If you are filing Chapter 13 bankruptcy and have decided to surrender property, the cosigner will be affected in regards to the debt.  Typically speaking, the creditor will still seek the amount owed from the cosigner and hold them responsible for the debt amount after it has been sold at an auction.  It’s up to the person filing whether or not to let the cosigner know that they are going to be surrendering the property.  However, it’s important to know the cosigner will be responsible for paying back the deficiency balance on the debt.

Person Filing Does Not Surrender Property

In a Chapter 13 bankruptcy, if the person keeps making payments on the property and decides not to surrender it, the cosigner will not be affected most of the time.  Chapter 13 bankruptcy is a repayment plan but as long as the person filing is making payments on the debt, the cosigner should not be impacted. However, there have been rare situations where we have seen someone who has cosigned on a debt with a person who filed a Chapter 13 bankruptcy and on the cosigner’s credit it shows they are one month behind on payments despite the fact that it is being paid within the Chapter 13 bankruptcy plan. Since the Chapter 13 bankruptcy Trustee does not make the full payment each month (they typically pay 1/60th of the amount owed over the course of 60 months) the creditor may report that the cosigner is behind a portion of a payment. This doesn’t happen often but we have seen it before so we wanted to be sure to make you aware of it.

What to Bring to My Free Bankruptcy Consultation

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Thank you for your interest in our firm. We know the decision to pursue bankruptcy was not easy for you. Our goal is to make the process as simple as possible for you and your family. We also want your free consultation to be helpful to you. As a result, we have a list of items for you to bring to your free consultation. Although you are not required to bring every document below, the more information you are able to bring to your consultation, the more precise we can be in determining your eligibility for bankruptcy.

What If You Suspect Nursing Home Abuse or Injury?

Unfortunately, all too often, our loved ones are injured or neglected while in a nursing home or assisted living facility. Nursing Homes often times are understaffed and are unable to provide the resources necessary to protect our loved ones. These insufficiencies naturally lead to preventable injuries and even deaths.

Our firm has seen too many cases where elderly loved ones have suffered from fractured bones, dehydration, urinary tract infections, sepsis, sexual assault and other injuries due to the neglect or abuse of nursing home employees. The Department of Health and Human Services Centers for Disease Control and Prevention estimate that 1,800 people die every year in nursing homes due to fall-related injuries.

If you believe that a loved one is being neglected or abused while in the care of a nursing facility then there are certain steps that should be taken:

First, if appropriate, contact local law enforcement to notify them of the abuse and neglect.

Second, contact your local Division of Aging and Adult Services and follow the process that they will lay out.

Third, after contacting the appropriate authorities, a nursing home abuse and neglect attorney may be able to help you pursue further courses of action against the nursing home.

In addition to taking these steps it is always a good idea to take good notes of what is occurring, who you have spoken to, their responses, and actions taken. Be sure to include dates and times of the day. Also, pictures of the injury caused by the neglect of the nursing facility are always helpful.

What Are the Stages of a Bedsore or Decubitus Ulcer?

Decubitus ulcers, or bed sores ,are one of the most common forms of nursing home neglect. They are often caused when a patient is not turned on a regular basis resulting in pressure on the bony prominences of the body. The pressure reduces the blood flow to the area causing the surrounding tissue to die. Decubitus ulcers are usually located on the lower back near the tail bone, upper back near the shoulder blade area, buttocks, heels, knees, elbows, and sometimes ankles.

There are four generally accepted stages of bedsores; however, a fifth stage is sometimes used to explain exceptionally deep decubitus ulcers. The descriptions are as follows:

Stage I – A Stage I decubitus ulcers usually appears as a red spot on the skin that fails to disappear once the pressure from the area is relieved. It may appear as a small rash. Stage I decubitus ulcers can usually be eliminated with proper treatment and turning by the healthcare provider.

Stage II – A Stage II decubitus ulcer may appear as a small blister or slightly broken skin. A Stage II should be carefully monitored by the healthcare staff. The staff may provide additional conditioning of the skin and may request an air mattress to alleviate the pressure on the affected area. Stage II decubitus ulcers are sometimes unavoidable depending on the patient’s condition and co-morbidities.

Stage III – A Stage III decubitus ulcer usually appears as an open wound on the patient and looks like a crater in the skin. The skin is open and the depth is usually a quarter of an inch or more. Immediate medical attention and treatment should be provided to the patient. It depends on the overall health of the patient, but the patient’s healthcare provider may be negligent if they allow a decubitus ulcer to progress to Stage III.

Stage IV or Unstageable – A stage IV decubitus ulcer is characterized by having passed through the skin into tendons, muscles and bones. A Stage IV decubitus ulcer requires immediate wound care and usually surgery to debride or rid the wound of the dying tissue. Often a thick black, dry tissue will cover the wound causing it to be unstageable. Amputation may be necessary if the ulcer is on an extremity. One of the major complications of a Stage IV decubitus ulcer is sepsis or a whole body infection that attacks the organs of the body and which can lead to death. Usually, the healthcare provider is negligent for allowing a patient’s decubitus ulcer to progress to Stage IV.

Stage V – A Stage V decubitus ulcer can be any size and is known for the depth it has penetrated into the underlying bone and possibly other organs. A Stage V decubitus ulcer is almost impossible to heal.

If you think you have a loved one suffering from bed sores contact us immediately to see how we can help stop this unnecessary neglect.

What is Sepsis?

Sepsis, or septicemia is a potentially fatal illness that occurs when the body reacts to infection that has spread throughout the body. Sepsis is most commonly seen in the elderly or in young children, but may occur at any age.

Symptoms

Symptoms of sepsis usually include, but aren’t limited to: fever, increased heart rate, decreased urine output, pain in joints, confusion and low blood pressure. Sepsis may be seen in patients who have had pneumonia, urinary tract infections, ruptured appendix and meningitis. It is critical that if signs of sepsis are seen to notify the appropriate medical personnel.

Causes

The most common cause for sepsis is an infection that spreads. The body’s reaction to infection is inflammation. Usually the body will create the necessary chemicals to fight the inflammation and infection. However, in patients who become septic their entire body may become inflamed causing the body to overreact. This overreaction causes small blood clots to form throughout the body. The body works harder to break up these clots but when unable to do so the body’s organs lack the necessary oxygen and begin to fail.

Treatment

Early detection of sepsis is key to survival. If identified early enough, sepsis may be treated with the use of intravenous fluids (IVs), antibiotics and removal or sanitation of the infected area and source. Without proper treatment sepsis can become severe and eventually lead to septic shock causing death.

According to the National Institute of General Medical Sciences , “every year, severe sepsis strikes about 750,000 Americans. It’s been estimated that between 28 percent and 50 percent of these people die—far more than the number of U.S. deaths from prostate cancer, breast cancer, and AIDS combined.”

If you believe a loved one has died or been seriously injured by the failure of a medical facility to properly diagnose sepsis or other illness, contact us today to see how we may be able to help.

For further information on sepsis visit:

U.S. National Library of Medicine
The Mayo Clinic

What Happens After My Free Bankruptcy Consultation?

After your free bankruptcy consultation, you may choose to sign a contract.  We will thoroughly explain each section of the contract, answer any other questions that you may have and allow you as much time as necessary to review our work agreement.  At this time we can set you up on an easy payment plan, which allows you to give us an estimate of a time frame of when you expect to file and allows you to make payments toward the attorney fees.

We will then give you your paperwork, along with an example of the paperwork as a quick reference guide.  We will explain in detail the documents needed to file, and the process of turning them in.  Lastly, you’ll get an email contact of someone in the office should you have any further questions.  No matter what, we want you to be as informed as possible and we want this process to be smooth and efficient for you!

In other words, you choose what the next steps are after your consultation.  You may choose to file bankruptcy with our law firm or you may wish to think about some of your options.  Again, we are here to answer questions as they come about.  We hope we get the opportunity to earn your business and we look forward to working with you. Contact us to get your fresh financial start today!

The Basics of Worker's Compensation

Workers' Compensation Doctor Looking at X-RayWorkers compensation is a practice area that can best be handled with the guidance of a workers compensation attorney. Below is a simplified introduction to workers’ compensation law. More detailed explanations of workers’ compensation laws will follow in future blog posts.

Workers’ compensation laws were developed to be beneficial to both the employee and the employer. The employee has the ability to receive compensation for lost time and medical expenses while the workers’ compensation laws ensure that the employer is safe from a lawsuit in a traditional court. The goal of the workers’ compensation laws is to fairly compensate those who are injured, develop an occupational disease, or are killed at work.

When an employee is injured at work they should notify their employer immediately and in writing. They must notify their employer within 30 days of their injury. If after being notified the employer fails to report the injury, the employee should file a claim with the Industrial Commission. That claim may be filed by using Form 18.

After reporting the injury, the employer should pay for the employee to see a medical doctor to determine the best steps for treatment. Once the doctor believes the employee has reached maximum medical improvement they will assign a disability rating.

The amount of compensation that an employee is to receive is based upon two main factors: average weekly earnings and disability rating. Those two factors are used together to determine what fair compensation would be for the employee. With the assistance of a qualified attorney, the employee may be able to obtain what is called a “clincher”. This clincher will ensure that any future expenses that arise from the workplace injury will be included in the final settlement.

To learn more about how Duncan Law, PLLC can assist you and your family with a workers’ compensation claim contact us today!