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Washington DC Bankruptcy Law Blog

What is an unsecured debt?

As someone living in Washington, D.C. and contemplating bankruptcy, you've likely heard these two terms before: secured debt and unsecured debt. But what exactly is unsecured debt? What does it mean for you if you have unsecured debt?

The Balance states that lenders cannot collect collateral on unsecured debts, which is the primary difference between these two types of debts. Your assets cannot usually be captured, and there is no collateral that's taken before the loan is given out. This makes them high-risk for lenders, as they have no way of ensuring that you'll be able to repay what you owe. For this reason, delinquent unsecured debts are taken quite seriously.

The door may not be closed on your foreclosure situation

If you live in the Washington DC metro area, you are likely no stranger to the economic challenges that have plagued this area, as well as surrounding regions, for more than a decade. In fact, there's probably not a major city (or rural area, for that matter) that remains untouched by the roller-coaster economy that some say is finally beginning to stabilize. Hopefully, things are looking up in your corner of the world, but if you're one of many still facing financial disaster, you are not alone.

In fact, many people received mortgage loans in recent years based on questionable lending practices that took advantage of the desire to own a home. Maybe you were one of those people, and now you're left holding the bag on a debt you are completely unprepared to meet. Perhaps securing a loan was no problem, and making payments was going along just fine, until extenuating circumstances occurred to throw your finances off-balance.

Are these bankruptcy alternatives for you?

Washington, D.C. residents who are struggling beneath piles of debt may be looking into bankruptcy alternatives. While there isn't anything wrong with filing for bankruptcy if you need to, there may be other methods of finding your way out of personal debt that could work for your unique situation better than bankruptcy could.

U.S. News echoes this sentiment as well, stating that bankruptcy is not the be-all end-all that it's often made out to be, but that there are also bankruptcy alternatives that are sometimes overlooked in favor of immediately turning to Chapter 13 or Chapter 7 bankruptcy. For example, they advocate getting financial help if it's necessary and you're in a position to do so. If you're holding back for the sake of pride or not wishing to be burdensome, you may want to consider it a second time.

Can filing for bankruptcy get you back your license?

Bankruptcy can be beneficial in numerous ways, from the obvious alleviation of financial debt and the stress that goes with it to much lesser-known benefits, and we at Ammerman & Goldberg Bankruptcy Law Office will shed light on both. For example, residents of Washington, D.C. who have had their license suspended may actually have a solution in filing for bankruptcy.

There are certain situations in which a suspended license may be restored by bankruptcy. Minor traffic violations count, for one. For example, unpaid parking tickets or driving without a license can result in your license being suspended. In the case of a parking ticket, you can regain your license for 4 months and then work out a payment plan that works for you in order to pay off the ticket. The payment plan can take place over a period of 3 to 5 years.

Will you lose everything if you go bankrupt?

If you're struggling with the possibility of bankruptcy in Washington, D.C., you may be wondering exactly what you'll lose. There are plenty of bad rumors about bankruptcy that could turn anyone away from it, but we at Ammerman & Goldberg Bankruptcy Law Office are here to help you separate myth from reality.

Exemptions exist in many cases, and you may find more of your property protected than you initially believe. A common misconception about bankruptcy is that the person filing for it will lose everything. This can include their car, house, or even personal possessions with great sentimental value. Horror stories can be found across the internet detailing tales of people who claim that they sold wedding rings or prized family heirlooms for bankruptcy.

How can you pay off your mortgage early?

Washington, D.C. residents like you who have mortgages to pay are surely waiting for the day when you make that final payment and no longer have to budget around it. However, there may be ways that you can pay your mortgage off more quickly, thus shaving years off of your payment plan and allowing you to enjoy a mortgage-free life sooner.

As an article on MoneyTalksNews highlights, there's one main way to pay your mortgage off early, and that's by paying more than the minimum amount that's due every single month. This can seem daunting, but it's the easiest and surest way to get through your mortgage payment faster. If you budget in advance, you'll be able to afford higher payments every month without the risk of going into debt or being unable to keep up with these higher amounts.

Can you get a better mortgage rate without refinancing?

Residents of Washington D.C. like you may be looking into refinancing your mortgage in the hopes that you can cut down on some of your monthly costs. But are there better ways to land a new mortgage that doesn't involve having to jump through the hoops of refinancing?

Fortunately, there is a way to get a better mortgage without having to fully refinance. This is good news for all homeowners, because refinancing can come back to haunt you in the future if you're not extremely careful in the way you go about it. Forbes states that reducing your mortgage rate is a possibility that many homeowners overlook, but that it can be exactly what's necessary to help someone avoid refinancing.

Keeping your property, even in bankruptcy

One of the most common concerns voiced by individuals who are considering bankruptcy is over losing important personal property. While you may have to relinquish certain assets if you file for Chapter 7, a popular choice for Washington D.C.-area bankruptcy applicants, this does not mean that you will have to give up everything.

You may be surprised to learn that, in many cases, people who file for Chapter 7 bankruptcy protection are able to keep much, if not most, of their personal property. While Chapter 7 also goes by the name of liquidation bankruptcy, it does not mean that you will lose everything just to get out of debt.

What are signs you may be falling into debt?

Residents of Washington D.C. who are struggling financially have likely also asked themselves whether or not they should be filing for bankruptcy. At Ammerman & Goldberg, we work to show you the warning signs of debt by providing you with a debt test that can be used to determine just how dire your financial situation may be.

Your money situation should be the first thing you examine. For example, have you been out of a job recently, or has your payment been decreased? Have there been any surprise emergency situations that have cost you money, like a sudden illness or hospital stay? Do you struggle to make credit card payments or other bill payments? These could all be signs that you're heading toward a financial crisis, as they indicate your expenses are outweighing the money you make.

Pitfalls to avoid when repairing your credit score

Residents of Washington D.C. who are struggling with credit card debt are also likely looking into ways to manage, restructure, and combat their financial problems. Part of recovering from credit card debt is repairing one's credit score, which has likely been substantially damaged. However, people seeking to fix their credit score should keep their eyes out for potential pitfalls that can actually do more harm than good.

FICO suggests a few common credit score repair mistakes that should be avoided. This includes opening additional credit accounts to increase the available credit, and closing unused credit accounts as a temporary boost to the overall credit score. Both of these strategies may seem like good ideas in the short term, but that's about all they're good for. In the long term, these practices can actually lower a person's credit score even further, because they can be seen as red flags of unreliable financial behavior.

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