Chicago Bankruptcy Lawyer Blog

I had to chuckle at my bank this week. They called twice to offer me a new low-APR platinum credit card. Like I’m going to open another account right now when I’m struggling to pay off the few I already have? I could barely conceal my laughter from the sales rep.

Credit card companies are scrambling to make up for the millions of Americans who have defaulted on their bills. But the way they’re going about it is a little sneaky.

While they are offering lower rates on some cards, like the one they tried to sell me, they’re also hiking the rates of current customers—particularly anyone with large debts. Since laws next year will limit the tricks creditors can pull—such as sending out bills really close to the due date, suddenly lowering credit limits  and sneaking in fees here and there—they want to pull those antics now, while they still can.

I understand creditors are in trouble. When a customer can’t pay up, they’re stuck with the bill. But if you and I are still managing to scrape by—and just barely making it—why should we have to bear their burden?

So what can you do about it? Be more vigilant than ever about reading the fine print on your credit card statements. Most creditors reserve the right to change rates any time, for any reason. They can suddenly shorten your grace period or quietly raise your minimum payment and then sock you with a fee if you unwittingly write a check for the old amount.

And when you get offered that shiny new low-interest card? Try to turn it down. Because though that rate might look appealing now, it won’t last long. They’re trying to make money off of you, remember? I visited my bank’s website and read the fine print about the card they had offered me—the low rate expires in a year, doesn’t apply to cash advances and will more than triple if I make a late payment. Doesn’t sound so nice now, does it?

And if creditors are sneaky when you sign up for their cards, they’re absolutely relentless when you get behind on your payments. When you can’t pay your bill, they’ll call you at home, call you at work and otherwise make your life a living hell. That’s why when you’re caught in their cycle, Chapter 13 is often the smartest way out. By filing for bankruptcy, your debt payments can be lowered significantly (so can your mortgage payments, if a proposed bankruptcy bill is passed this year). As long as you keep up those payments, you will be protected from creditors. So will your house, as any foreclosure proceedings will be stopped.

Chapter 13 might seem like a complex process, but you don’t have to be an expert to use it. Making it easy for you is our job. When you fill out our debt evaluation form, we’ll schedule a free one-on-one meeting with one of our debt relief experts. We’ll help determine what option best suits your needs, be it bankruptcy or just a tighter budget. Credit card companies might be playing a game with you, but that doesn’t mean you can’t beat them at their own game.

Watching the news lately, I feel torn. While on the one hand I’m truly saddened by the shocking number of the layoffs and business closings, I also see hope in the meltdown.

Take the story of Starbucks, for instance. The company just announced they will be closing 300 stores and cutting 6,000 jobs. I certainly feel for any worker who is laid off. But I realize this also means we’re making a lot of progress. Americans are saying no to our coffee habits so we can spend money on more important things, like paying the mortgage, paying down debt and increasing our savings. We’re choosing not to put $20 on the credit card every week if we don’t need to. And that’s significant.

In a perfect world, there would be no sacrifice involved. Government would spend our tax money on helping us, and banks and automakers would figure out how to survive on their own. But that’s not reality. And though the economic crisis will help a lot of us emerge stronger and smarter in the long run, people will get hurt along the way. Fortunately, Uncle Sam is starting to do more to minimize the hurt. Yesterday, Congress OK’d the economic stimulus bill that, for the first time since this crisis began, will actually help Main Street.

But keep in mind that $825 billion might look like a lot on paper, but it really isn’t that much in action. We can’t expect the stimulus package to save every house or job—or even the majority of them. So we need to take action ourselves.

If you’re scrimping and cutting coupons and you still don’t have enough to pay off the debts that are eating up your paychecks, don’t wait until Uncle Sam’s handout trickles down to your neighborhood. Who knows how long that’ll take? Start looking at your finances now. Find ways to scale back and reprioritize. Don’t be afraid to ask for help. When you sign up for our free one-on-one debt analysis, we’ll take a look at your specific situation and draft a personalized plan for you to get back on track.

If you’re one of the millions of Americans who faces foreclosure because of debt, you’ll need to act even faster. The only sure way to stop the foreclosure process is Chapter 13 bankruptcy. Fortunately, Congress is poised to pass a new bankruptcy bill that will make the process even more beneficial. Is your mortgage too high? Has depreciation caused your home’s value to sink far below your mortgage? You’re in luck—when the bill passes, a judge will be allowed to adjust your mortgage, potentially reducing your total payment to the current value of your home. On top of that, bankruptcy will still allow you to lower your other, non-mortgage debt payments. So you can spend far less on paying the creditors and more on the stuff you need right now—like groceries, gas, and health insurance—and the stuff you need for the future—like savings and investments.

Interested? Order our Financial Toolkit for the latest information on Chapter 13, as well as other pertinent financial advice. To find out if bankruptcy is right for you, sign up for our free debt evaluation.

I don’t mean to sugarcoat the painful realities of the recession—but as they say, no pain, no gain. Thinks of the recession as a dark tunnel. We're all passing through it, but what lies at the end will vary depending on our actions today. Take this time to make sure it’s sunny when you come out on the other side.

Members of the mortgage industry are doing their best (or worst!) to stop a bankruptcy bill that could save millions of homes from foreclosure, but I’m optimistic that the odds are stacked against them.

All it takes is a look at the statistics to see how badly we need this new bill. Data released in November shows housing prices 18% lower than a year earlier. There were a whopping 81% more foreclosures in 2008 than in 2007. And consumer confidence just dropped to 37.7%--the lowest it’s been since 1967. Clearly, we’re in need of a change. And the Chapter 13 bill is just what the doctor ordered.

For the first time, it would give judges the right to change mortgage terms on a bankruptcy applicant’s loan—possibly lowering them to match the current value of their home. The timing couldn’t be better. As housing prices sink ever lower, a growing number of homeowners are left paying mortgages up to twice (or more!) the current value of their homes. What’s worse, many of them were talked into especially risky mortgages—often with no money down and adjustable interest rates that later reset much higher (Who convinced them to go for these mortgages? The same lenders who now oppose helping them out now!)

What lenders are too greedy to realize—or admit—is that the real estate market affects the entire economy, from construction to retail to the auto business. By stopping foreclosures, real estate values will finally be able to rise. Homeowners will have more equity and money in their pockets to buy cars, clothing and other goods. Employers will have less need to lay off employees. There will be a need for commercial construction again. Yes, it’s a bit of an oversimplification, but all of these things truly are connected.

Even President Obama has lent support to the Chapter 13 bill (although he recently asked that it be removed from the upcoming economic stimulus package and voted on separately, so as not to stall the much-needed stimulus bill).

Whatever the outcome, don’t forget that Chapter 13 bankruptcy is already an option—and your constitutional right. It’s the only guaranteed way to stop foreclosure. When you file for bankruptcy, a judge can grant you lower payments on non-mortgage debts, freeing up more money for your house payments. When the new laws are passed, they will only make the process even more effective, lowering your mortgage bill as well.

Find out more about the changes to Chapter 13 by ordering our free Financial Toolkit or visiting our bankruptcy page. Want to know how bankruptcy can help you personally? Sign up for a free one-on-one debt evaluation with one of our bankruptcy experts. Remember, if you lose your house, the lenders win. Don’t let them—instead, put up a fight. We’re on your side. And, together, we can save your home.

Despite the fact that it’s cold as heck outside—and winter (depressingly) won’t end for another two months—I’m doing some spring cleaning this weekend. Not traditional housework, mind you, but a sort of purging of my financial files in preparation for tax season.

Normally I’m a major procrastinator, but not when there’s money on the line. And since I’ve got my fingers crossed that I’ll be eligible for a tax refund this year, I want to file as soon as possible. While I’m at it, I’ve been looking over my receipts and credit card statements. It’s a reminder of all the things I’m spending money on—and all the ways I might be able to cut back. Though it’s a bit painful, I’d definitely recommend it. It’s a lot easier to curb your spending weaknesses when you bring them out in the open.

But there’s another reason why now is a good time to get your finances in order: so you can prepare to take advantage of new bankruptcy laws that will make keeping your home a sure thing—even if you’re headed for foreclosure.

If you’re drowning in debt and behind on your mortgage, 2009 is the year you can get back on your feet. Thanks to new Chapter 13 bankruptcy laws that will be passed with President Obama’s economic stimulus package (tentatively on schedule for mid-February), just about anyone with an unaffordable mortgage will be able to avoid foreclosure.

You see, filing for bankruptcy currently means that your non-mortgage debts are lowered—but you still have to make the same high house payment. Once the update is passed, though, a judge will have the authority to change your mortgage terms. So if your loan is deemed unmanageable, it can probably be lowered—maybe by a lot. For instance, if your home has depreciated by $50K, a judge can choose to devalue your mortgage by a similar amount. It’s a small change, but it could stop millions of foreclosures.

And there’s jut one simple requirement—that you show you first made a good faith effort to seek a loan modification from your lender (in other words, you don’t have to secure one—just show you tried). Modifications haven’t been very effective at stopping foreclosure because they don’t address unsecured debts (namely, credit card debt) and only make minor changes to a mortgage. Thankfully, the new Chapter 13 stands to solve that problem because it addresses everything—most of your major debts as well as your house payment.

Before you file, though, consider doing a little spring cleaning. Just like you wouldn’t go to a court appearance wearing your sweatpants, you shouldn’t enter the bankruptcy process without spiffing up your finances a bit. Hence the loan modification requirement.

So how else can you show a good faith effort? Maybe you can’t pay off your debts, but you can stop adding to them. Shelve the credit cards for a while, if possible. Start a budget. You don’t have to totally overhaul your spending habits—I realize we’re all sort of scraping by right now—but if you can find a way to save a few bucks, it will go a long way towards impressing the judge. For more ideas on making saving easy, check out our Financial Toolkit. Or sign up for a free one-on-one debt analysis with one of our debt relief experts. To stop foreclosure, you want to prove to the court and your creditors that you’re committed to making a change. We’re committed to helping you do just that.

I’ve been talking a lot about Chapter 13 lately, and for good reason. That’s why I want to make clear what the new bankruptcy laws mean for you (and me, and our neighbors, friends, co-workers—and basically every average Joe across the U.S.).

When passed, anyone with an unaffordable mortgage will have a good shot at being spared the misery of foreclosure. Previously, filing for bankruptcy meant lower non-mortgage debts (a good thing!) but the same high house payment (not so good). With this year’s revision, though, a judge will have the authority to change your mortgage terms. So if your loan is deemed unmanageable, it can probably be lowered—maybe by a lot. If your home has depreciated thanks to the shaky real estate market, a judge can take that into account, too. Say you bought your home for $200K. But now it's only worth $150K. She can choose to reset your mortgage to $150K to match.

This little update has the potential to save millions of homes. The only requirement is to show you first made a good faith effort to seek a loan modification from your lender (in other words, you don’t have to secure one—just show you tried). Now, loan modifications haven’t been very effective at stopping foreclosure because changes are usually minor and don’t address unsecured debts (namely, credit card debt). That’s the beauty of the new Chapter 13. It addresses everything—most of your major debts as well as your house payment.

Since there is no time limit to file, you’re not obligated to rush. But this doesn’t mean you should be idle either, especially if your home is at risk (remember, bankruptcy is the only guaranteed way to stop the foreclosure process). Truth is, whether and when you file for bankruptcy depends on your particular needs. And the best way to evaluate those needs is to talk with a bankruptcy expert.

You can read about stopping foreclosure or check out some videos on the subject at our website. Or sign up for our personal debt analysis—a free, no-strings-attached hour with one of our professionals—for advice tailored to you.

Live near Atlanta or Chicago? Consider joining our free community workshops (the next ones are Jan. 22 in Atlanta and Jan. 29 in Chicago). You’ll have the opportunity to meet one-on-one with a debt relief expert, chat with a mortgage specialist and get tips and advice from founder Rob Semrad. As if that’s not enough, we’ll also be giving away a free laptop and a GPS system. Not local? You can still order our free Financial Toolkit—a goody bag chock full of info from budgeting basics to the do’s and don’ts of bankruptcy.

Seem like a lot of info? I’m using it to make something crystal clear—you don’t have to fall victim to foreclosure. Chapter 13 changes—and all of us here at DebtStoppers—are prepared to save your home.

Newly-inaugurated President Barack Obama didn’t mince words when he took office today. Among the challenges he pointed out was our “badly weakened” economy, what he called the “consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age.”

In other words, we can point fingers at certain individuals, but it’s up to all of us to fix our country’s mistakes. If we want to move forward—out of this bleak economy, out of wartime, out of our nation’s history of inequality—it’s up to all of us to make better choices.

It’s taken me a long time to admit this, though.

See, I spent most of my life as a pro whiner. As a kid, I’d blame my parents when I got a bad grade (they were too busy to help me with my homework—it wasn’t fair!). When I was older, I’d blame them for my carefree spending habits (they lived paycheck to paycheck—why would I do otherwise?). In college, I whined that my professors were too hard. At my first job, I complained I was underpaid. When I caught a cold, I resented the person who I suspected gave it to me.

I used to think whining actually made me feel better (“It’s venting!” I told my boyfriend). Until one day he asked me a simple question that changed my life: “Does it make you happy?” I had never thought about it that way. And the truth was, it didn’t.

Sure, it made things easier because I didn’t have to take responsibility. But it also made me sad, because I felt powerless. By not acknowledging that I was the one responsible for my crazy-high credit card bills, I felt that I couldn’t do anything about them.

Once I started making changes—like doing some minor budgeting and switching to a job that I enjoyed—it was like a weight was lifted off my shoulders. Of course, it didn’t solve all my problems. I still have to fight my tendency to overspend (and whine about it). But I know it’s something I can overcome. If I end up in a hole, I trust I can dig my way out.

In today’s economy especially, whining won’t get you anywhere. What it will do is distract you from the opportunities coming your way. Along with the upcoming stimulus package, we’re about to have far more favorable bankruptcy laws. Homeowners who file for Chapter 13 will have the chance to change their mortgage terms, meaning permanently lower bills and a way to keep their house. And if you’re behind on your mortgage, don’t wait for the law to come to you. You’ve got to come to it.

But just because you need to own up to your responsibilities doesn’t mean you have to do it alone. If you want to stop foreclosure, DebtStoppers can guide you through the process. Maybe you think you can avoid bankruptcy, but need a hand at building the budget that will help you start saving. You’ll find the strategies you need in our Financial Toolkit. Unsure of where you stand financially? We offer a free one-on-one debt analysis that will clear things up—and get you started on the path to a debt-free future.

Like most of the country, I have high hopes for our future with President Obama. But just like we can’t blame one man for all our problems, we can’t expect one man to fix them. If we want to see change, it’s time we stop whining and start taking responsibility.

I’ve got good and bad news. First, the good: New Chapter 13 bankruptcy laws are about to make it easier than ever to avoid foreclosure (check out the last few posts on this blog to see what I mean). Now, the bad: Millions of Americans risk missing out on this golden opportunity because of some unfortunate myths that persist about bankruptcy.

With foreclosures at an all-time high, it’s time to put those misconceptions out to pasture. Read on for the reality behind the most common Chapter 13 questions. For even more myth-busting info, stop by our online video library and bankruptcy solutions page.

Myth #1: Bankruptcy will ruin my credit and/or reputation

Not true. Look at it this way. What’s your credit like right now? If you’ve been missing mortgage payments, chances are you’re late on other bills as well—not good for the FICO. Even if you’re making minimum payments, you’re still in debt. And that hurts your credit score.

Here’s the truth. Yes, creditors will see that you filed for bankruptcy. But this means they’ll also know you’ve been making an effort to get out of debt. By token, this will make you less of a risk in the long run. Remember, once you complete your bankruptcy payments, all remaining debts are cleared. It’s a fresh start, which goes a long way towards repairing credit.

As for your reputation, ask yourself what you would rather risk. Having your family/friends/boss find out you’re using bankruptcy to overcome debt or having them watch the bank kick you out of your home? I think they’d be a lot more concerned (and you’d be a lot more embarrassed) about the latter.

Myth #2: Bankruptcy is some kind of scam

Far from it. Unlike many get-out-of-debt schemes by so-called credit counselors and nonprofits, bankruptcy is actually sanctioned by the U.S. Constitution. It’s your right as a U.S. citizen, and for good reason. In our current society, creditors often have the upper hand. They can call you day and night, repossess your assets, foreclose on your home and otherwise make your life a living hell. But when you file for Chapter 13, you are protected from creditors under law, so long as you keep up payments (which will thankfully be much lower once the new laws go into effect). Bankruptcy gives you peace and quiet from creditors—which will lead to peace of mind.

Myth #3: Bankruptcy is not the best solution

Bankruptcy is often the best choice, but it depends on your personal situation. If you’ve missed mortgage payments and are headed for foreclosure, then by all means, yes! Bankruptcy is the only certain way to stop the foreclosure process once it’s started. When a court has approved your “reorganization” plan, you will be protected from creditors until you finish paying off debts.

That said, if you’re not in dire straits yet, you do have some less drastic alternatives. Say you’re managing the mortgage bill just fine, but are concerned because you’re living paycheck to paycheck. It might just take a little brainstorming or budgeting to give your bank account some breathing room. For tips on finding more cash, building a budget and beating the recession, consider ordering our free Financial Toolkit.

Hopefully this clears up some confusion about bankruptcy. But there’s one question I haven’t answered yet: Is bankruptcy right for you? To find out, simply fill out our free debt evaluation. Our bankruptcy experts will analyze your finances and give you an honest opinion—no strings attached. Whatever path you take, we’ll make getting out of debt a reality.

What if I told you there was a no-fail way to stop foreclosure dead in its tracks? And, that, while you’re at it, you can lower your mortgage payments forever? I know it sounds too good to be true, but it’s within your grasp if proposed changes to the U.S. Bankruptcy Code are passed this year—and if you play your cards right.

Currently, Chapter 13 bankruptcy can lower your non-mortgage debt payments, but it can’t change your mortgage terms. On the upside, you’ll have more money left to pay your sky-high mortgage bills. The downside? Your mortgage bills will still be sky-high.

When the new and improved Chapter 13 goes into effect, however, a judge will be able to adjust your mortgage. For instance, say you’re paying off a $300,000 loan, but your house is now only worth $150,000 thanks to that annoying real estate bust. A bankruptcy judge could agree to bring your loan down to $150,000 as well. So now all of your debts—including your mortgage—are reduced.

It’s enough to get you jumping for joy, right? Especially if the bank is after your home. But don’t get too excited just yet. You wouldn’t run a marathon without training first, right? Well, the same idea can be applied to bankruptcy. You’ve got to get in shape before filing. For the most part, qualifying for Chapter 13 is a no-brainer. But keep in mind that you do need to have a court approval. Don’t worry, the judge won’t expect an overnight financial makeover—if you could manage that, you wouldn’t be filing in the first place (and I’d probably be asking for your advice). But they do want to see evidence that you are making an effort.

If you’ve been missing payments, start communicating with creditors. Ask for a loan modification that will lower your rates and payments. The point isn’t for them to grant it—the point is to build a record that proves you’re doing everything in your power to pay your mortgage. It also helps to be on your best behavior. Obviously, this is not the time to max out credit cards or take out new loans—creditors aren’t afraid to point out to the judge that you’re spending an awful lot for someone who can’t make existing bills. However, show the judge that you’re a responsible person who has fallen hard times, and you’re a shoe-in.

Yes, it does take a little work. But that’s where our team of professional bankruptcy attorneys comes in. We’ll guide you through the process. Not only are we experts in current bankruptcy law, but we’re keeping tabs on the latest developments—and how they can benefit you. Sign up for our free debt analysis to get started. When the Chapter 13 changes arrive, you’ll be ahead of the game.

I saw something rare on the news recently: a story actually featuring good news. Even more unlikely, it was good economic news. I couldn’t believe my eyes.

According to the press, a bill designed to make Chapter 13 bankruptcy laws more debtor-friendly is picking up steam. Not that bankruptcy wasn’t good for debtors before—if you’ll recall, filing for Chapter 13 is the only guaranteed way to stop foreclosure—but laws passed in 2005 had tipped the scales in favor of banks, not debtors. This tips them back.

Known as the Helping Families Save Their Homes in Bankruptcy Act of 2009 (try to say that five times fast) the bill was introduced by Illinois Senator Dick Durbin as part of president-elect Obama’s stimulus plan. And on Thursday, it was endorsed by longtime opponent Citigroup—definitely a good indicator of future success, in my opinion.

As mentioned earlier, Chapter 13—sometimes called debt reorganization—is already a good deal. Here’s what you can expect when you file under current law—foreclosure is stopped, you get to keep your house and, since most non-mortgage debts are either reduced or eliminated (the “reorganization” part), your payments will be a heck of a lot more affordable. But there’s a catch. To get these benefits, you have to reaffirm your mortgage—you know, the same huge mortgage that got you into this mess to begin with!

Under the proposed changes, however, a bankruptcy judge has the authority to modify your mortgage, updating the terms and value. Meaning that if your house is now worth half what you paid for it, your mortgage payments will be cut approximately in half.

For hundreds of thousands of people, this could mean a light at the end of this dark tunnel of an economy. Not only will it keep homeowners in their houses, but less foreclosures in badly-hit neighborhoods will lead to higher property values—a boon for the housing industry, which could in turn buoy the country’s overall economic health.

As always, though, there are a couple of caveats. For instance, the new law as written now only applies to pre-existing loans and—maybe most significantly—might only be available to people who have sought a loan modification. In coming posts, we’ll keep you updated on how the pending changes could affect you and what you need to know about foreclosure and bankruptcy (P.S.—click here for information on how we can stop foreclosure). Looking for advice tailored to your individual needs? Contact us for a free one-on-one debt analysis.

If passed, it’s been said this bill could keep a half-million or more people in their homes. Wouldn’t you like to make sure you're one of the lucky ones?

According to the U.S. Bureau of Labor Statistics, more than half a million jobs were "lost" in December.  I really feel for those people because, for me at least, losing something and finding something to replace it was never at an even par.  I'm one of those people who, if I lose something, it stays lost.  I'm sure other people are luckier than I.   They have to be.

If you're one of those people who lost a job in December, or any time last year, you've no doubt been actively looking for another.  But finding a new job can be tricky in this economy; there are fewer jobs available, and a lot more people - often over qualified people - anxious to fill them.  If you've found a job to replace the one you've lost, you'd better thank your guardian angel.

But what scares me only slightly less than losing a job in the first place, is finding one that looks promising, only to have my hopes dashed by the dreaded "credit check."  More and more employers are using credit checks as part of their hiring criteria - not just banks and insurance companies, as in the past.  I admit it, my FICO score is not all it could be.  Then again, whose is, these days, right?  Heh heh.  But I used to think that my credit report was between me and my creditors.  No more.  Employers justify the requirement of a credit check with the claim that your credit worthiness speaks to your integrity.  I beg to differ.  Affluence, or lack thereof, does not imply trustworthiness or otherwise.

Still, employers are within their rights to request a credit check.  But, you, as a potential employee, also have rights.  You have the right to be notified if your potential employment is contingent upon your credit score.  You also have the right to deny a potential employer permission to obtain your credit report.  If you don't give a potential employer permission for them to peak, and they don't tell you that the reason you didn't get the job was because your FICO score is only in double digits, then they are violating the tenets of the Fair Credit and Reporting Act.  Even so, and even if you're not job hunting, it couldn't hurt to make an effort to improve your FICO scores - pay your bills on time, pay more than the amount due, close dormant accounts - that kind of stuff all helps to push your scores up a bit.

Now, you also might be wondering about that bankruptcy you're thinking about filing.  Can you be denied a job or even fired, just because you've filed bankruptcy?  The answer is a vociferous NO.  Bankruptcy is a difficult enough decision to make, without factoring in its affect on your employment.  Fortunately, the U.S. Bankruptcy code prevents discrimination against a debtor by an employer or potential employer.

Now, you've got no more excuses for not filing bankruptcy, if you were considering it at all.  For more information on bankruptcy, take a few moments to view one of our bankruptcy videos in the DebtStoppers Video Learning Center.  Or arrange to speak to one of our DebtStoppers bankruptcy and debt relief attorneys and we'll show you what your options are.

The other day, a group of friends and I found ourselves pondering why some people make it out of debt, while others don’t (yes, thanks to the recession, we actually sit around and discuss this stuff).

Together we came up with a theory. We decided there’s a misconception about what it takes to get out of debt. Some people will tell you discipline is the most important tool in the process. Or persistence. Maybe patience. But you know what we think it is? Honesty.

Honesty is Step #1. Because if you aren’t honest with yourself about your financial situation, how can you improve it? And if you hide it from others, how can they help?

We all suffer from a little financial denial. I fess up—I’ve hidden quite a few purchases from my boyfriend in my day.  I’d yank the tags off, throw away the bag and receipt, and then casually start wearing the item as if I’d owned it forever. “Hey, what’s that you’re wearing?” he’d ask when I’d debut a new skirt or sweater. “Oh, this old thing?” would be my reply. “I guess I haven’t worn it in a while.” My friends, to their credit, confess to shredding credit card statements and erasing telling messages from the answering machine.

It’s a double form of denial. We’re denying the truth to other people while we deny to ourselves that we have a problem. And it’s not until we confront our behavior that we can overcome our debt burdens. It takes an open mind to critically pore over a credit card statement or take out a pen and start mapping out everyday spending—and places to cut back.

Financial honesty is never more crucial than when you’re faced with foreclosure. Thousands of homes could have been saved last year if homeowners just acted faster. But instead of taking action, they lived in denial of the bills they couldn’t pay, denial of the foreclosure notice in the mail, and denial of the step that could save them—bankruptcy.

There are a lot of myths about Chapter 13 bankruptcy—many fear it will damage their credit or reputation—so people just don’t consider it an option. Unfortunately, it’s often the only option. Bankruptcy is the only guaranteed way to stop foreclosure. Not only that, but it offers legal protection, a lowered payment plan, and it immediately makes you current with your creditors. Ultimately, it’s a fresh start all around.

Find out more about why you should get over your bankruptcy fear in our free Financial Toolkit, an arsenal of advice to help you turn over a new leaf this year. Or drop into our online library to check out a few videos on foreclosure and bankruptcy: DebtStoppers can stop your foreclosure today!, Will personal bankruptcy ruin my credit? and Is personal bankruptcy just an easy way out?

For a full look at your finances, fill out our free debt evaluation form. We’ll tell you the honest truth. And then we’ll show you the answers.

That’s what my mom always told me growing up, anyway. Work with what you’ve got. She’d unleash that saying whenever I would whine because I didn’t have a fancy enough bike, couldn’t afford the latest toy or outfit, or, later, when I didn’t have enough to go to my favorite college. It used to frustrate me to no end. But the woman had a point—which I’ll get to in just a minute.

In my last post, I talked about credit card debt. If money is supposedly the root of all evil, then lack of money—credit card debt, more specifically—is a close second. It’s not just the debt, but the interest that kills you—once you’ve spent more than you’ve got, it’s all too easy to keep using the credit card to pay off your purchases. How else are you supposed to do it, unless you win the Lotto or suddenly receive a massive inheritance, right?

But there is a way! You just have to—you guessed it—work with what you’ve got. And if you can master that, solving the rest of your money woes will be a breeze (alright, maybe not a breeze, but it will be a heck of a lot easier).

The fastest way to save is to cut back on your (gulp!) favorite vices, e.g. shoes, coffee, techno gadgets, beauty products, etc. If you’ve got an addiction to it, you’ve probably already got a stash that can tide you over. I recently cleaned out my bathroom and realized I had seven different kinds of shampoo, each about ¾ full (did I think each new bottle was a miracle product that would cure my frizzy hair? Did I think the bottles were pretty? I don’t know). I vowed then and there to not buy another hair product until I had used every drop of what I already had. The same goes for my lipstick, lotions and other beauty potions.

If you clean out your closet, I’m sure you’ll find plenty of shoes that haven’t seen the light of day for a while—pretend they’re new! Lusting after the latest cell phone or PDA? Hold off for awhile. You know you’ll be itching to replace it six months later, when it’s already outdated. Are the kids begging for new toys already? Explain to them why it’s important to appreciate the stuff they already have—probably some of which they just got for Christmas. Once you start working with what you’ve got, you might even savor the breather from material things. When the economy took a dive last year, it’s like it held up a mirror to our culture for the first time—and it was a little bit scary. But now that we know what we don’t like about ourselves, it’s time for a makeover.

Now, along with the material stuff, you’ll probably have to brainstorm other ways to cut back. This is the hard part. If you’re using cash (good for you!), try putting all of your loose change into a jar. Every month, turn it in and put it towards your debt. Maybe you can turn the heater down a few degrees, carpool to work or go jogging in your neighborhood instead of paying for the gym. You’ll find a lot more ideas in our Financial Toolkit (which you can order here, or get by signing up and attending one of our free workshops). A little bit here and there will add up without feeling too restrictive. But if it doesn’t add up enough, don’t give up. Instead, reach out. Get your worries off your chest by talking to a friend or relative. And get help by working with an expert—what you’ll get when you sign up for our free personalized debt analysis. We’ll show you how to work with what you’ve got to get where you need to go.

So, what was your New Year's resolution?  Still keeping it?  Hah!  I didn't think so... me neither, if truth be told.  Resolutions aren't quite as resolute as they used to be, but of course life isn't exactly like it used to be, either.  We're all different people than we were just a year ago.  Last year at this time, we all had a simple inkling that "things" were going to get very very bad in 2008.  And now, a year later, we know it was far worse than we ever expected.

Yes, we're different people than we were.  But, we're stronger people, too.  You've heard the expression "that which doesn't kill you makes you stronger," right?  Well, I'd say the majority of Americans are probably capable of bench pressing a couple of hundred pounds right now.  I'm stronger, but I'm also smarter.  And that's more important, I think.  I'm smarter because I'm never going to allow myself to get into the same dire financial predicament ever again.  And here are a couple of things that I'm going to do (or not do) to stay out of trouble.

1.         I'm not going to hide my head in the sand.  I'm going to open up every bill and credit card statement that I get, when I get it - no more hiding it in the drawer and ignoring it, ‘cause it just doesn't go away on its own.  If the amount due is more than I can pay, or if it's past due, I'm going to swallow my pride and call the company to work out a repayment plan.  And I am going to make the payment on time; no more late fees for me - those things add up.

2.         I'm not going to fall for the gimmicks and marketing tricks that the stores, car dealerships and banks got me into in the first place.  "No money down," "Low introductory rate," or "Free toaster with purchase" are not going to be enough to convince me that I need a new car, a new mortgage or a new plasma screen television.  Nor am I going to feel guilty for not buying the things my kids "insist" we need.

3.         I'm not going to use any credit card, line of credit, store account or charge card; they're all going to be put out to pasture for a long while and paid off, albeit slowly but definitely steadily.  If it's not green and crisp and has a picture of an ex-president on it, I'm not going to use it.  Cash only, baby, you better believe it.  The only exception I will make to the plastic menace will be a debit card, but even then it will be used exceptionally judiciously so there are no surprises in my bank statement.

4.         I will not buy anything on impulse.  Rather, I will make lots and lots of lists:  Lists of things I need now, things I want later, and still more things I think I may want some time in the future.  Then I will put those lists away and look them over a few days later, to see what is still important.  Remember, priorities change, some times minute by minute.  The list will help me prioritize.

5.         I recognize that sometimes, despite all other efforts, I might need a little help, a "personal bailout," if you will.  (Heck, if the Big 3 Auto Makers can ask for it, why can't I?)  And I won't be ashamed to ask for it, either.  And I will go to the people who I know can help me, either by offering me a sympathetic ear or some expert advice.

If it's expert advice that I'm looking for, I'll look no further than DebtStoppers bankruptcy and debt relief attorneys.  They'll listen carefully and then they'll tell me exactly what I need to do to fix my financial problems.  I'm sure they'll advise me that their free Personal Debt Analysis is the first step to fixing my problem, so that's what I'll do first.  And then they'll invite me to come to one of their regularly scheduled free Financial Workshops, where I'll be able to meet with others in my community who are in the same (apparently big big) boat as me.  And after I leave that Financial Workshop, I'm pretty sure that I'll be walking away from there with new friends, a full belly and a free, no strings attached, no gimmick gift from DebtStoppers, the Financial Toolkit, a info pack chock full of advice and help that I'll wish I had had a year ago.  I might even order one of those free Financial Toolkits now, just because they are so cool, and just in case the Workshop is booked full (but I'll be determined to go to the next one, that's for sure!).  I'll leave the Workshop with all those things, and one more - hope - for a better, debt-free, New Year.

And if I'm only looking for a sympathetic ear, I'll call my mom and she'll make the appropriate noises and I'll feel better.  And then I'll call the experts and get real help.  Mommy's powers are limited, after all... but don't tell her I know that.

If you’re anything like most Americans, money is at the root of your New Year’s resolution. Most of us bid goodbye to 2008 with our wallets a bit thinner and our spending a bit humbler. Maybe you’ve pledged to cut back on expenses, get out of debt, or start saving for a house or your kids’ college education. Here at DebtStoppers, we’ve got the tools to make 2009 the year you reach those goals.

To help jumpstart your resolution, I thought I would devote a few posts to some finance basics. Over the next week or two, we’ll look at why it’s so important to pay off your debts, how much you should be saving and where to find the money, what to do if you’re in danger of losing your home and more.

For today, let’s start with credit cards—more specifically, credit card debt. I have it, you have it—in fact, the average American carries nearly $10,000 of it. It was a huge factor in last year’s economic meltdown and it’s also the reason most of us struggle to pay our bills.

But don’t take a pair of scissors to your wallet just yet. Credit cards aren’t exactly evil. Well, maybe they are, but they’re somewhat of a necessary evil. If you didn’t use one at all, you wouldn’t be able to build up a credit history. And without a history, lenders wouldn’t trust you enough to loan you the money to buy a car or house or to pay for a college education.

The problem arises, however, when we use credit for everyday purchases. Because plastic doesn’t require cash upfront, it’s tempting to spend a little extra at the grocery store or on gifts for the kids. And it’s hard to say no to credit when the car or heating unit needs repair. Why wait until you get the money, right?

But unlike cash, check or debit, credit comes with strings attached. Creditors aren’t giving you a waiting period to pay out of the kindness of their hearts. For the “favor” of loaning you money, they want something in return—interest. So that $1,000 flat-screen TV you just put on your card? At 25% interest annually, it will actually cost $1,250 (well, probably more because most interest rates are not flat, but compounding—but that’s another story).

Most cardholders get caught up in a vicious cycle. You want to stop spending more than you make, but you’re paying so much in interest that you can’t afford to make necessary purchases without your card—therefore you continue to rack up debt.

So what can you do to break free? Start paying down your debt—it will be much easier to wean yourself off the plastic if you do. I can’t guarantee the process will be painless, but it can be done. And it will save you money and stress in the long run.

Best yet, you don’t have to do it alone. We can walk you through it. You’ve already discovered this blog—keep reading for a wealth of tips and advice. Consider signing up for a free debt analysis with one of our debt relief attorneys. Or get a crash course in money matters at our free community workshops, Jan. 15 in Chicago or Jan. 22 in Atlanta (you’ll also be eligible to win a laptop or GPS system). This can be the year you free yourself from debt. Let’s get the ball rolling.