Presentation on theme: "TRIDENT DEBT SOLUTIONS Stephen T. Craig Bankruptcy Attorney Professional Debt Negotiator 303-520-3414 www.boulderbankruptcy.com www.tridentdebtsolutions.com."— Presentation transcript:
TRIDENT DEBT SOLUTIONS 2 My law practice has been limited to debt counseling and debt relief since 1994. I have represented more than 3,000 individuals and small businesses in the U.S. Bankruptcy Court. I founded Trident Debt Solutions, Inc., in 2000 in order to help individuals achieve debt relief through non-bankruptcy means.
TRIDENT DEBT SOLUTIONS 3 The goals of this class are to: Explain all of the different options for getting out of debt and the pros and cons of each option Discuss the most common money mistakes people make — and how to avoid them Teach you how to turn the tables and go from debt to prosperity In addition, you can also sign up for a free consultation on how to create your personal strategy for becoming debt-free.
TRIDENT DEBT SOLUTIONS 4 Unsecured Debt: Debt that has no collateral associated with it. Examples include credit card debt, medical bills, and bounced checks. Secured Debt: Debt that is secured by collateral. Examples include mortgages, home equity loans, and car loans.
10 What seems like “just a couple bucks” here and there can add up to more than you think!
TRIDENT DEBT SOLUTIONS 11 Skip the $5 latte three times a week: save $15/week — $780 a year Coffee Shop Skip eating out $15 twice a week: save $30/week — $1,560 a year Diner Resist the urge to buy a paperback in the grocery store checkout: save $8/week — $420/year Check-Out Just by cutting down a little bit on your Starbucks habit, taking your lunch to work a couple days a week, and dusting off your library card, you can save almost $2,800 a year! 11
TRIDENT DEBT SOLUTIONS 12 Keep monthly recurring expenses as low as possible Insurance Rent Premium cable Phone bills Car payment and related auto insurance Taxes: increase your exemptions if you usually get a refund — get more cash on your paycheck Don’t be “house poor” — reduce these payments if you can
TRIDENT DEBT SOLUTIONS 17 Almost no one, but it can be okay for someone who… Makes an average income Has credit card or medical debt of less than $20,000
TRIDENT DEBT SOLUTIONS 18 A debt-reduction strategy that involves systematically paying off debts by attacking the smallest ones first. Each month, make your minimum payments on larger debts and make as large a payment as you can on the smallest debt. Because it’s smaller, it will be paid off quickly. When that debt is paid off, take the money you had been using to pay it off and add it to your monthly payment on what is now the smallest debt. Continue in this fashion until all your debts are paid. * Coin phrased by Dave Ramsey, see www.daveramsey.com for more info A related method is to systematically pay off your debts beginning with the one with the highest interest rate first. When that card is paid off, take the money you had been using on that debt and apply it to the debt with what is now the highest interest rate, and so on. (All while continuing to make your minimum monthly payments on all your other debts.)
TRIDENT DEBT SOLUTIONS 21 Also referred to as debt negotiation, debt settlement is the art of negotiating with your creditors so they will accept less than the full amount of the debt owed to them, generally 50–65 cents on the dollar, in full satisfaction of the debt.
TRIDENT DEBT SOLUTIONS 22 Trust Account Instead of continuing to make payments to your creditors, you fund this account with either a lump sum of money, monthly payments of at least 3% of your total debt, or a combination of both. Negotiation With the funds in your trust account as leverage, your debt settlement attorney negotiates with your creditors to get them to accept less than the total amount they are owed. Lump-Sum Payment Once a settlement agreement is reached with your creditors, the funds in your trust account are used to pay the agreed-upon amounts in a lump sum.
TRIDENT DEBT SOLUTIONS 29 Also referred to as a “liquidation” bankruptcy, Chapter 7 bankruptcy involves filing a petition asking the court to discharge your unsecured debts. Chapter 7 bankruptcy is usually a good option for people who have high debt and limited income or assets. It is intended to give individuals a fresh start. “Exempt assets” — you can keep limited assets when their value falls below pre-established thresholds.* “Non-exempt assets” — assets that exceed the allowed values — are sold, and the proceeds are distributed to creditors. Any debts that remain after the assets are liquidated and creditors paid are then discharged by the court. IRAs are exempt and cannot be attached by creditors. * http://www.thebankruptcysite.org/exemptions/colorado.html
TRIDENT DEBT SOLUTIONS 30 After meeting with your attorney, you stop making your unsecured payments. You attorney gives you a packet to fill out, which will detail your income, expenses, assets, and liabilities. From this packet, a Voluntary Petition is filed with the U.S. Bankruptcy Court. 6 weeks later you have a short hearing with the court-appointed Bankruptcy Trustee. 60 days later you receive a discharge order relieving you of your unsecured debts.
TRIDENT DEBT SOLUTIONS 34 Often referred to as “reorganization” or “repayment” bankruptcy, Chapter 13 bankruptcy is a federal court process in which individuals are able to repay all or some of their debts through an interest-free payment plan over a three- or five-year period.
TRIDENT DEBT SOLUTIONS 38 This should be your mantra Live simply and your wealth will grow If you can’t pay for it in cash don’t buy it Don’t borrow to look rich Example: $2,000 TV – financed at 29.9% interest at $60/month — really costs you $4,300 Compare that to a craigslist purchase Use student loans with caution
TRIDENT DEBT SOLUTIONS 42 Don’t be “car poor” Using cash to buy cars is a common denominator among wealthy people Having a high car payment is a common denominator among people filing for bankruptcy Depreciating assets (cars, mobile/motor homes, boats, ATVs, etc.) are not “investments”: by the time they are paid off, they have lost a large portion of their original value
TRIDENT DEBT SOLUTIONS 43 If you must have a credit card, never have more than three Avoid approaching the credit limit on your credit card or line of credit Pay the full balance every month Dispute any item you do not agree with Must dispute with all three credit-reporting bureaus Experian TransUnion Equifax Focusing on FICO score: the old way of thinking
TRIDENT DEBT SOLUTIONS 44 Refinancing your home to pull out cash Asking someone to co-sign a loan; being a co-signor on a loan Getting friends involved in your finances (borrowing money from them, loaning money to them) Cashing-out your IRA — consult an attorney and/or CPA first Taking advice from a commissioned sales person “Investing” in depreciating assets such as mobile homes and cars Owing the IRS Taking out a “payday loan” Assuming spouse debt Maintaining an “overdraft” line of credit Having more than three credit cards
TRIDENT DEBT SOLUTIONS 47 Invest the maximum amount allowed by law, every year Employer-matched 401(k): it’s a “no-brainer” Do not cash them in to pay off credit cards Tax consequences of early withdrawals The amazing one-person 401(k) for self-employed Don’t put more than 20% of your 401(k) in your employer’s company stock
TRIDENT DEBT SOLUTIONS 49 Pay for cars with cash Pay yourself first Have two to three sources of income (look for “passive” income) Make additional payments on mortgage principal Invest in education, other ways to increase earning capacity Reinvest profits Get paid for results not by the hour Think long-term rather than short-term Keep monthly overhead low — w atch small expenses Avoid debt like the plague!