Archive for the ‘Uncategorized’ Category

Bankruptcy v. Debt Reduction Programs

In Debt Relief, Uncategorized on April 1, 2009 at 2:49 pm

In a previous post I noted that a Debt Reduction Program I had reviewed for a client appeared to not be an avenue in which many peopled in a credit crisis should follow.  I received some comments inquiring how bankruptcy would be better.  With that in mind, I will try and convey more detail as well as include information from Liz Pulliam Weston’s book titled “Deal with Your Debt”.

Specific requirements of the Debt Reduction Plan:

  • Not continuing to make any payments to your creditors;
  • Making an application payment and then continued monthly payments to the Program;
  • If you miss a payment to the Program you are done, no excuses and no hardships;
  • Letting the Program negotiate with your creditors.

Problems with the Debt Reduction Program:

  • Your creditors are not required to cooperate with the Program to negotiate or settle your debt;
  • The Program would not be working to negotiate with your creditors for three to four months;
  • Your creditors are not receiving any payments;
  • The plan could take two to three years, maybe longer;
  • Your creditors will start collection actions and possibly file suit in the court system against you;
  • The Program will not assist you in court, you need to hire an attorney;
  • Your Credit Report and Credit Score will suffer considerably because of the collection actions and lawsuits;
  • You are still making monthly payments to the Program;
  • After a couple of years, depending on how effective the Program is, your debts may be completely settled, who knows;
  • You do not get any refunds from the Program.

Bankruptcy, on the other hand, freezes all collection actions including lawsuits and foreclosures.  You do not make payments to creditors until your bankruptcy petition is approved by the court.  You will need to pay your attorney and filing fees, but these fees tend to be fixed in amount, and are probably much less than what you will pay to a Debt Reduction Program.

Issues to consider:

  • In either a Chapter 7 or a Chapter 13 bankruptcy case, your creditors will be forced to negotiate or settle;
  • In a Chapter 7 bankruptcy, you may need to liquidate some of your assets to help pay creditors;
  • You are allowed many exemptions, within certain limits, for personal property, real property, cars, tools of the trade (need to check your state’s exemption requirements)
  • In a Chapter 7 you may reaffirm your mortgage and auto loans;
  • Your Chapter 7 case may be discharged as within four to six months from the date of filing your petition;
  • In a Chapter 13 case, a repayment plan is prepared and approved by the court;
  • The plan term is generally between three to five years;
  • You are still allowed exemptions;
  • Your secured debt (home and auto) is typically priority and the goal is to bring those current within the plan period;
  • Your unsecured debt (consumer debt) is paid off during the plan, but generally at a reduced amount;
  • Your payments are typically made to the bankruptcy trustee, who then distributes plan payments to the creditors;
  • Your creditors communicate with the trustee and your attorney (no more collection calls).
  • Flexibility, a Chapter 13 can generally be converted into a Chapter 7 in the event of hardships (loss of employment or income stream).

With all that said, which is better?  Why Bankruptcy? I prefer bankruptcy because it is certain and has some flexibility.  You know how much your attorney and filing fees will be.  You will know within a few months of filing your petition, how much you have to pay to your creditors and what your monthly payment will be.  You have the comfort of knowing that the collection actions and harassing phone calls will be suspended during your plan, with enforcement coming from your attorney and the Federal Court system.

Which will hurt your credit score most?  That depends and cannot be handled with a blanket statement.  Time is probably the most critical factor.  The Debt Reduction Program I reviewed indicated that it may take two to three years to complete the plan.  During this time your creditors who are not being paid will continue to report late payment history and collection activity on your credit report.  Obtaining new credit, to help repair your credit score may be very difficult.

With Chapter 7, your debts may be discharged in four to six months.  You can then begin rebuilding your credit score.  During a Chapter 13 plan, which runs from three to five years, your creditors are being paid and they are not reporting new collection activity.  With respect to your credit score, the following exerpt from “Deal with Your Debt” by Liz Pulliam Weston probably sums it up best,

“What people find is that bankruptcy isn’t the credit-killer it used to be.  Although the bankruptcy remains on their credit reports for up to 10 years, the growth of credit scoring and the sub prime lending industry means that those who have declared bankruptcy can get credit cards before their cases have ever been closed, auto loans within a few months, and reasonably-priced mortgages within two years.  Those who handle their finances correctly after bankruptcy find that they can restore their credit scores to near-prime status within four years of their filings.”

In other words, you can begin rebuilding your credit score within a short time after filing bankruptcy.  Under the debt reduction programs, you can work on improving your credit score, but you have no control over the existing debts which will hinder your improvements.  Also consider the fact that it may take two to three years after you sign on with the program for your debts to be settled, and there is no guarantee that they will be settled.  In my opinion, if you opt for a debt reduction program, you will lose precious time to rebuild your credit score.

See also http://tinyurl.com/czlyrz.  This post reinforces the above text.

Jeff Jackson, Bankruptcy Attorney, Central Ohio

Jones & Jackson, LLP

Delaware, Ohio


I provide Debt Relief. I help people file for relief under the Bankruptcy Code.



In Uncategorized on March 25, 2009 at 1:42 am

I am new to the whole social media craze taking place. I had started some of the items, like LinkedIn, but only recently joined Facebook and Twitter. It is addicting, however, I have been able to get my messages out, especially on LinkedIn, and had meaningful dialogue with a number of people. I even had a dialogue with an attorney in another country. It was great.

I have noticed that many talk show hosts are just now catching the social media train, especially twitter. Somehow I feel like I was one up on them.

Check them out if you are not using them. Keep it professional if that is your goal. Most importantly, be yourself.

Easy Money

In Uncategorized on March 23, 2009 at 2:46 am

Just finished reading “Easy Money” by Liz Pulliam Weston. This is a great resource if you would like to get a better handle on your household finances and find way to save money. Just a few of the topics covered are: Take Charge of Your Spending; Get the Most Out of Your Credit Cards; Retirement Investing; Saving for College; Insurance; and Buying Homes and Cars.

The author does a fantastic job presenting useful information in a very readable manner.

I plan on reading “Deal with Your Debt” next.

Jeff Jackson, Bankruptcy Attorney, Central Ohio

I provide Debt Relief. I help people file for relief under the Bankruptcy Code.

Job Search

In Uncategorized on March 16, 2009 at 3:55 pm

This is a message from Ken Lazar with the Scioto Ridge Networking Group.

“When I talk to you members at our chapter meetings, the conversation always ends up with some comment on how bad the news is.  It seems as though the TV and newspapers are all reporting the same blah..blah..blah.  Here is a great article that is a must need.  It puts it all into the proper perspective.

“To Find a Job, Ignore Doom-and-Gloom News, Experts Say” by John D. Sutter, CNN


If you’re unemployed, you know it’s a rough time to be on the job hunt.  There’s a huge pool of unemployed workers out there, and the unemployment rate continues to climb.  But if you want work, you need to block out the doom-and-gloom news about the economy, particularly this Friday’s federal jobs report, said John A. Challenger, Chief Executive Officer of Challenger, Gray & Christmas, a prestigious job-placement and consulting organization.


“Don’t listen to it,” he said. “It’s not relevant to any one person’s search.”  His advice: Go look for a job, any job — now.  “You have to get a fast start, and you have to stay at it in this kind of market, because there are more people searching for fewer jobs,” he said. “So you cannot let up.”


To get the jobs, applicants should be flexible, Challenger said.  “Be open to changing industries. Be open to moving for a job if you find one. Be open to a part-time job as an audition,” he said. These days, about 40 to 50 percent of successful job applicants have changed industries to get work, he said.


In such a competitive environment, Challenger said, it’s important for each job seeker to make his or her search unique.  “Always focus on your core skills. You are really defined by your function, not your industry,” he said.  It also may help to use a bit of common sense, he said.   Look to industries that you think everyone would need, even when their budgets have shrunk.

“There are some places that are OK in this economy: health care, education, government … core consumer products,” he said. “We’re going to all continue to go buy our Grape-Nuts and our coffee.”

I’m going to get a cup of coffee.  See you all this week.



Ken Lazar   

Your Credit Score

In Uncategorized on March 16, 2009 at 2:23 pm

Just finished reading “Your Credit Score” by Liz Pulliam Weston.  This book has a tremendous amount of useful information and “how-to’s”.  It is very easy to read and very beneficial.  Even if you are not in financial difficulties it is a book worth reading.  The credit industry is tightening its requirements for lending.  You might have had a good credit score last year, but today that same score might not qualify you for the best rates.

Jeff Jackson, Bankruptcy Attorney, Central Ohio

I provide Debt Relief. I help people file for relief under the Bankruptcy Code.

Hello world!

In Uncategorized on March 16, 2009 at 1:24 pm

I am an Ohio bankruptcy attorney. I help people overcome their financial difficulties. There are many tools available for consumers to find debt help. Bankruptcy may be a valuable option to find relief from unmanageable debt. When faced with mounting credit card bills or major, unplanned medical expenses resulting in missed car or house payments, filing for bankruptcy may be your best option.

I provide Debt Relief. I help people file for relief under the Bankruptcy Code.