debt planning 101

Presenter: ROCHELLE N. BELNAP,

Attorney at LawOctober 2013

WHAT IS BELNAP & FORBES, PLLC?

We are a consumer advocacy law firm in Tempe, AZ.

We practice in consumer debt & credit issues like:

• Debt Settlement

• Targeted Credit Restoration

• Credit Counseling

• FCRA & FDCPA Litigation

We are attorneys but we want:

• To change the way you think about attorneys;

• To make complicated things, simple;

• To be efficient and cost-effective;

WWW.BELNAPFORBES.COM

Belnap & Forbes, PLLC 700 E. Baseline Rd. Ste. C-3 Tempe, AZ 85283(480) 907-6088 [email protected]

WHAT YOU SHOULD KNOW ABOUT BELNAP & FORBES

Who are we? Rochelle Belnap & Chris Forbes

What we do? We both practice in consumer debt and credit issues

Where did we meet? We met in law school and have been best friends ever since.

When did we start our practice? In February 2012

Why and How did we get into this area of law? The $50,000 Mistake



DEBT PLANNING 101!



What do we mean by debt planning?

Debt Planning is the process of evaluating your liabilities and figuring out how to manage them and reduce your monthly expenses.

Today we are going to discuss the big 3!

CREDIT CARDS! MEDICAL BILLS! 2nd MORTGAGES!

BUT FIRST…

How do people get into trouble? LIFE!

Divorce

Unemployment

Bankruptcy Illness

Lost Home in Real Estate Crash



CREDIT CARD DEBT & CREDIT REPORTING

Did you know your credit score is based, in part, on your credit card debt.

1. Maxing out your credit cards is bad for your credit.

2. Making payments late is bad for your credit.

3. Having no open or active credit cards is bad for your credit.

4. Closing your credit cards can be bad for your credit.

How many of you don’t have a credit card?

If you don’t have a credit card, a secured credit card is a good option. Make sure the bank is reporting to all 3 credit bureaus EVERY month! If you need a recommendation for a good companies to use email me. [Subject: Secured Credit Card]



CREDIT CARD DEBT: THE BASICS

How much credit card debt should I have?

It depends. But in general, the total amount you pay on your credit cards each month should be less than 10% of your monthly income.

Example:

Bob makes $3,000 a month after taxes. Then Bob’s total credit card payments should not be more than $300 a month.

Tell me, how many of you don’t follow this rule?



CREDIT CARD DEBT?: SCENARIO 1

Are you on time, but feel like you are not making a dent?

• Option 1: Pay more money than the minimum payment. Prioritize, Budget, Pay Down, Repeat. Need help figuring out the fastest way to pay them off? Your financial planner aka your insurance guy can help- for FREE.

• Option 2: If you can’t afford to pay more than the minimum payment, you can call your credit card companies and ask if they have a forbearance program.

• PRO: Stop charging you interest.

• PRO: May reduces your monthly payment so you may pay it off faster.

• CON: They may close the account, or you may be unable to use the card during the forbearance.



Stressed but managing

CREDIT CARD DEBT?: SCENARIO 2

Scenario 2: You are currently late on your payments by less than 6 months.

Shocked by what you owe.

Option 1: Forbearance Plan

Option 2: Debt Consolidation: a loan from a debt consolidation company.• PRO: 1 payment a month • CON: Loan is either a Mortgage or a Car Loan. • CON: Low % of completion • CON: Not many good companies

Option 3: Debt Settlement: a company, like us, who help you settle the debt for less than what you owe.• PRO: The card is paid off• CON: The account is closed• CON: The credit card company may not negotiate with you until the debt is

in collection status



CREDIT CARD DEBT: MYTHS AND TRENDS

Scenario 3: The credit card debt is in collection or has been “Charged Off”

Common Misconceptions: • The meaning of “Charged Off”• What is a 1099-C?• I can settle for pennies on the dollar• “Settling the account will hurt my credit”

Overwhelmed and hoping it will go away!

Current Trends: • Charging you the default interest rate, finance charges,

and attorney fees.• Debt Collection companies are being replaced with

Debt Collection Law Firms. • Law firms are suing for credit card debt – years after it

was charged off.• Reporting the account every month on your credit

report.



TOO MUCH CREDIT CARD DEBT?: SCENARIO 3

Scenario 3: The credit card debt is in collection or has been “Charged Off”



This doesn’t have to be you.

Option 1: Debt Settlement Belnap & Forbes, PLLC v. The “Competition”

Option 2: Bankruptcy. Chapter 7, 11, or 13. (Pros & Cons)

• Liability Assessment• Time: 3 to 6 mo.• Cost: 10% & 10%• Attorneys! We can represent you

in lawsuits

• Hate stipulated judgments

• Handle the credit report• Refer for BK if necessary

• No Liability Assessment• Time: 6 mo. to 3 yrs.• Cost: 15% to 20% • Not Attorneys • If lawyers, stipulated

judgments are good! • Who cares about credit?• Don’t refer for BK

CREDIT CARD DEBT: RECAP

If you have too much credit card debt you have options but it depends on whether:

• You are on time with your payments and whether you can afford to pay more than the minimum payment;

• You are late, but not in collections;

• You are in collections and you can afford to settle.

Don’t panic, and get a second opinion. (We offer Free consultations)



Now you can skip the maze!

MEDICAL DEBT: A CONFUSING TALE!



Does this sound this familiar?You go to the hospital and you see a few nurses, a physician’s assistant, maybe a doctor or two, and people take your blood, x-rays, ultrasound, cat scan, and/or MRI, and give you medicine, an extra blanket, and you may or may not stay overnight.

Then you get bills and statements that say this is “not a bill” or “pay this amount” but they contradict each other, and you get 5 from the same place, then you receive more from 5 or 10 different places and you wonder – what the heck is going on? Do you assume they will work it with your insurance company or that they will eventually send you a bill that makes sense?

MEDICAL DEBT: EXPLAINED & WHAT NOT TO DO



Why so many bills? The people in a doctors office or at a hospital may be independent contractors: • Have their own billing practices• Do not communicate with each other

Problems: If you don’t pay, it will go into “collections” after about 90 days. Every single contractor will have their own debt collector and each will report on your credit report! What not to do!• Panic • Pay it with your credit card • Not pay other bills so you can pay your medical debt

MEDICAL DEBT: WHAT SHOULD I DO?

DEBT SETTLEMENT!

• Why? You will pay significantly less than what they are billing you!

• Why not Bankruptcy?

Belnap & Forbes, PLLC v. The “Competition”

• Liability Assessment • Time: 3 to 6 mo. • Cost: 10%• No more phone calls or letters!• Attorneys• We review the bills and make

sure Insurance is billed!• Handle the credit reporting!

• No Liability Assessment • Time: 6 mo. To 3 yrs. • Cost: 15% to 20% • No more phone calls or letters!• Usually not attorneys• Do not review billing • Who cares about credit?



SECOND MORTGAGES: CAN I DO SOMETHING? Yes! But it depends.

If you are “upside down” on your property – meaning that what you owe is way more than what the property is worth- you may be able to do one of the following:

• Option 1: Save our Home Program- Principal Forgiveness! [Subject: Save our Home]

• Option 2: Negotiate a settlement to pay off the second mortgage.

• Option 3: A Chapter 13 bankruptcy may allow you to do “lien stripping” where you can discharge the second or third mortgage.

If you have “equity” in your property- meaning that what you owe is less than what the property is worth- you may be able to :

• Option 1: Negotiate a settlement to pay off the second mortgage.

• Option 2: Sell!

• Option 3: Refinance



SECOND MORTGAGES: THINGS TO CONSIDER

Can you afford to settle?

Is bankruptcy an option?

Tax Liability!

Are you headed for Foreclosure?



DIY DEBT SETTLEMENT PIT-FALLS

If you are going to try to do Debt Settlement on your own rememberthe following!

1. Verify, Verify, Verify!

2. Get it in Writing!

3. Don’t forget the Credit Reporting!

4. Don’t forget the 1099-C!

5. Don’t forget to rule out Forbearance Plans and Bankruptcy!

If you want more information, read our Blog! We have guides, DIY tips, and all sorts of information!



NOTE: Settlements will depend on your credit, financial position, the bank you are dealing with, whether you are current or delinquent, and many other factors!

Let us be your ace in the hole!

Special Offer: We will give you or someone you refer to us 25% off our debt settlement services if they come in for a free consultation by November 8th 2013. Code: Debt Planning 101

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