Paying Off Student  Loans Early May Be a Big Mistake

Student Loans Start Off Well-intended

Student loans are great.  They allow you to seek out your dreams and pursue your passions.  Most importantly, they enable you to earn more money so you can provide a better life for yourself and your family.  But student loans come at a cost – literally.

Student Loans – The Cost

The average student in the class of 2016 had $37,172.00 in student loan debt.  That’s a down payment on a house or a brand new car.  If you’re actively repaying those student loans, you are not buying a new car or putting a down payment on a new house.  That means there is one less car being made and a whole slew of professions/industries that aren’t benefiting from a new house being purchased (construction, appliances/electronics, roofers, lawn care, etc.).  When you spend money, other people around you make money – then they spend money and other people around them make money.  Its not rocket science.

Student Loan Payments Leach From the Economy

However, when you have a whole swath of the wage-earning American population spending huge portions of their income to repay student loans – that money goes nowhere.  Correction – it goes to the federal government – which might as well be nowhere.  That money then gets folded back into the federal budget to get spent on projects like solar-powered beer, llama farmer regulations, or the search to find North Carolina’s best fiddler.

Ok – What’s the Solution?

The solution to the student loan problem may be this – don’t pay them.  Well, don’t pay all of them.  Current legislation says that if you use a certain type of repayment plan through the William D. Ford Program, then you may be eligible to have your student loans forgiven after 25 years of payments.  That may seem like a long time.  However, if you cannot afford your current student loan payments, you may want to learn more.  If paying your student loans are preventing you from making the major life purchases (a house, a new car, a nice vacation), then you may want to learn more.  If you simply want to minimize the amount of money you give Uncle Sam and maximize the amount of money you get to keep, you may want to learn more.

Learn More

Contact The Law Offices of Dax J. Miller, LLC today to learn how we can help you manage your student loans.  If you qualify, we may be able to help you get a lower payment and, eventually, get those student loans forgiven.

How Does Bankruptcy Affect My Credit Score?

Generally speaking, most people try to protect their credit score.  Having a decent credit score allows you to finance a home, a car – any expense you cannot afford to pay for all up front.  But what if you are considering bankruptcy?  How will bankruptcy affect your credit score?

Bankruptcy May Positively or Negatively Impact Your Credit Score

Everyone assumes that filing bankruptcy is a death knell to one’s credit score.  That is rarely the case.  Consider the following examples:

Example:  Bob Smith

Bob Smith lost his job about six months ago.  He is in an industry where he knows it is going to take 4 – 6 months to find another decent paying job.  He has been trying as hard he can to find another one – he just can’t.  As a result, all of his medical bills have gone into collections, his credit cards are behind and he even lost a car to repossession.  About 30 different bill collectors call Bob everyday demanding payment.  Bob is now getting sued in Court.  Bob’s credit is probably sitting right around 450 or so.  Bob has gone to numerous banks to try to get a car loan so he can get transportation so he can get a job.  The banks won’t touch Bob because of his credit score.

Bob files bankruptcy.

After Bob’s bankruptcy is over, Bob’s creditors are now forced to report “Discharged in Chapter 7 Bankruptcy” on his credit report.  Now, when Bob goes to get that bank loan, the bank knows that all of the bad debts that used to be on Bob’s credit are now gone.  The bank knows that those creditors cannot collect on those old debts – that makes the bank feel more optimistic about actually receiving their monthly payments from Bob going forward.  Moreover, the bank knows that Bob cannot file another bankruptcy for quite some time (up to 8 years in some instances).

As far as Bob’s credit score goes, bankruptcy generally affects your score like this:

If you have really good credit, like an 850, your score will likely come down 100 – 150 points.

If you have an average score, like a 650, your score will likely fluctuate up or down by about 50 – 100 points.

However, if you have a poor score, like Bob’s 450, your score will likely increase by 75 – 150 points just because you are almost immediately eliminating all of that ongoing negative reporting to your credit.

Example:  Robert Smythe

Robert has had a great job for 15 years.  He has a perfect 850 credit score.  However, Robert just found out that after 15 years, he is being let go with no notice.  Robert is also in an industry where he knows it is going to take 4 – 6 months to find another decent paying job.  Robert does not have the savings to service all of his debt during that 4 – 6 months.  He knows, as a certainty, that bills will not get paid and his credit will begin to suffer.

While Robert is not currently behind on anything, he knows its coming.  He bites the bullet and files bankruptcy.

Robert has avoided the inevitable negative reporting to his credit.  He has avoided the phone calls, the collections letter, the lawsuits and being turned away by potential lenders.  Yes, Robert’s credit score of 850 has fallen to around a 700.  However, had Robert not acted when he did, all of those creditors would have started negatively reporting.  Robert’s score would have gone from an 850, down to a 750, down to a 650 – and, before you know it – Robert and Bob would have been right there together sitting at a 450.

The bottom line is that filing bankruptcy is not the end of your credit.  Usually, it’s just the beginning.

Check your credit score for free here and then act now. 

Contact your local Evansville Bankruptcy Lawyer at The Law Offices of Dax J. Miller for free unlimited consultations.

You heard right – Barbie might need a Bankruptcy Lawyer.  Toys R Us’ Chapter 11 Bankruptcy rocked Mattel toys, makers of Barbie and Hot Wheels.  Toys R Us filed Chapter 11 Bankruptcy last month as a result of a substantial decrease in sales and increase in debt.  Mattel had previously pulled back on shipping Barbie and Hot Wheels to Toys R Us.  Unfortunately,they were not prepared for the subsequent drop in sales.

Chapter 11 Bankruptcy vs. Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is reorganization bankruptcy for consumers.  It allows you to take all or most of your debt and consolidate it into one pool overseen by the Bankruptcy Court and Chapter 13 Bankruptcy Trustee.  A Chapter 13 Bankruptcy typically lasts three to five years but can be much shorter depending on several variable.  How your Evansville Bankruptcy Lawyer structures your plan of reorganization, whether your creditors actually get to file a claim against you and how much of that claim ends up being allowed all play into how long you are required to stay in the Chapter 13 Bankruptcy.

Chapter 11 Bankruptcy is reorganization bankruptcy for businesses OR for consumers with more than $1,184,200.00 in secured debt or more than $394,725.00 in unsecured debt.  Toys R Us filed Chapter 11 Bankruptcy to reorganize and barter down its $5 billion debt.  Chapter 11 Bankruptcies are not limited to the max five year plans in Chapter 13 Bankruptcies.  Chapter 11 Bankruptcy can last mere months or it can last off and on for years and years.  The duration of the plan depends on many factors including how favorable the plan treats the debtor-in-possession and whether the debtor-in-possession is able to consistently comply with the plan after it is confirmed by the Bankruptcy Judge.

Barbie’s Bankruptcy Lawyer

So unless Barbie racked up more than $1,184,200.00 in secured debt or $394,725.00 in unsecured debt (buying all those convertibles and beach houses), then she would likely file Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.

Needless to say, Barbie would benefit from speaking to a Local Bankruptcy Lawyer.

If you have questions about the different chapters of Bankruptcy, contact us today.  We offer unlimited free consultations and Bankruptcy Fee Options to fit your budget.

Who is the best Evansville Bankruptcy Attorney?

Choosing the right Evansville Bankruptcy Attorney probably seems like an overwhelming task.  You know you want to make a good decision but you’re concerned because there are so many to choose from.  Some firms boast what sound like too-good-to-be-true attorney fees. Some firms are large and you worry you might become just another number to them.  Other firms may practice in multiple fields of law like family law or criminal law.  This may result in a lack of expertise in Bankruptcy law.

Be your own advocate

The best advice I can give you is “Be Your Own Advocate”.  Know what you want in an attorney and seek that person out.  You may have to speak to more than one law firm. You may have to hold more than one consultation. But at the end of the day, filing bankruptcy is one of the most important decisions you may ever make.  You want to hire an attorney that will zealously represent you and has the knowledge and skill to do so.

Read attorney reviews about your Evansville Bankruptcy Attorney

One of the best resources for choosing an attorney are attorney review websites.  Sites like Avvo and Lawyerratingz allow you to read what other clients have said about an attorney.  Obviously, an attorney with more good reviews might be a better choice than an attorney with few or poor reviews.

Get a second opinion

Getting a second opinion when it comes to bankruptcy is simply a smart decision to make.  In many, if not most instances, our firm may counsel against filing bankruptcy.   We explore all possible solutions before advising in favor of bankruptcy.

Some firms only have a hammer – so everything they see needs to be a nail.

At The Law Offices of Dax J. Miller, we use every tool in our tool belt to address your problem.  Moreover, we do so in the most cost-effective, streamlined way so that we may pass the savings on to you.  Call today for a free consultation. Better yet, if you’ve already spoke to an attorney at another firm, call today for a free second opinion.  We offer UNLIMITED FREE CONSULTATIONS so you can be confident in your decision.

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