By: Bruce C. Truesdale, Esq.

Currently, Americans are in debt to banks on credit cards in the amount of approximately $856 billion dollars.  The average individuals credit card debt totals more than $15,000.00, trumped only by student loans.

Using a credit card is borrowing money, at a very very very high interest.  The banks are charging consumers as much as 56 times more interest on a credit card than they are willing to pay on a savings account.  Worst of all, the interest they are charging is “compound interest”.

Compound interest is your best friend when it is on your side and your worst enemy when it isn’t.  Compound interest pays interest on interest.  So as interest accrues on your credit card interest your payment keeps going up and up and makes paying off the debt nearly impossible.  This is why in putting together bankruptcy schedules I have clients who are shocked at how much they owe, stating that $14,000 is too high because they only charged $2500.00!

Compound interest can be your friend.  You can get compound interest working on your side in savings accounts, 401Ks, and IRAs, however you would have to be Warren Buffet to get back the interest rate that your bank is demanding on their outstanding credit card debt.

If your financial goal is to get “debt free” don’t start with the car loans or the mortgage, start with the credit cards.  This is the most expensive debt you have.  Create a plan with an excel spreadsheet or a financial tool, has a great one, and pay that first!  You can pay the higher interest ones off first or your can use the snowball method, in which you pay off the smaller amounts off first and than apply that payment to the next highest one and so on.

If your credit card debt is overwhelming or in collection, it is time to consult a bankruptcy attorney.  I have met many many people who are beyond the payoff methods, it would take them 35 years to pay off the debt.  A bankruptcy can offer a clean slate and a way to start over doing things the right way instead of spending the next 30 years digging out.

Interested in how we can help you out of overwhelming debt?  Give us a call at 732-302-9600 or fill out our online consultation form and we will call you.

There are stories all over the news right now about payday lenders behaving badly and a regulatory crackdown on them.

This isn’t news to the attorneys at Bruce C. Truesdale.  We find it more interesting that the regulators seem to be more concerned about putting the rates in big letters than they are about capping the abusively high fees in the first place.

The nutshell version: The feds want it to be clearer to you that you are going to be charged a big pile of fees, they aren’t going to stop you from being charged a big pile of fees.

But this is DC and they can’t be bothered with simple things like logic so we will give you the whole story on why payday lenders are a very bad thing for consumers.

A payday loan may seem like a good deal, you can even get “Deposit Advances” from your bank now lending some reputability to the practice, but AVOID THEM LIKE A PLAGUE.    Here is why:

1.  Unbelievably high fees.  Even the reputable ones through big commercial banks like Wells Fargo have 180% interest rates.  This means if you borrow 500 bucks and the bank is able to pay itself in a timely manner you will pay $900.00.  That is an insane return on a short term loan.  The less reputable lenders online charge upwards of 300%.

2.  You are handing over banking information and this can create an endless cycle of misery.  If you take your loan on November 1 and promise to pay on November 15, the lender will hit your bank on November 15th no matter what.  If you do not have the funds to pay that massive interest rate in your account you will be subject to overdraft fees AND fees by the lender.  Some of these lenders will hit your bank multiple times over several days/weeks causing you to incur hundreds of dollars in overdraft fees that are hard to dig out of and still pay your regular monthly bills.

3.  Their collection practices are BAD.  Payday lenders are not permitted in New Jersey so you are dealing with largely unregulated online institutions.  This means that when they call you they are hard to track down and because of this they feel like the federal rules on debt collection don’t apply to them.  They are going to threaten to arrest you at your job, send the cops to your house, and even take your house.  I have heard of one woman who had a payday lender threaten to kill her dog.  They can’t do any of these things but they can make life pretty miserable by threatening you constantly.

4.  They sell your phone number to scammers.  If I had a nickel for every time a client told me they paid a scam artist because they were afraid of the consequences I listed above I could retire.  I am hoping this post will help slow my road to retirement.   Let’s say you pay the payday lender on time.  But two days later you get a collection call from some agent saying you still owe money and you better pay it now or they will send the Sheriff to arrest you at your job.  The collection agent says that you have to pay them with a pre-paid debit card.  DO NOT DO THIS.  THIS IS A SCAM.  HANG UP ON THIS GUY RIGHT NOW (especially if he is Indian and says his name is Peter…that guy is bad news and calling half of New Jersey right now.)  If you pay this person you will never see that money again, it will pay nobody that you owe money to and the calls will just continue.

If you are thinking about a payday loan your money troubles are probably bigger than just that payday loan and taking one out could just take you even further down a bad financial path.

If you need help getting back on the right financial path, call us instead of going to a payday loan service.  We will talk to you about how we can help you get back on the right financial track through a bankruptcy case.

Interested in talking to us?  Give us a call at 732-302-9600 or fill out our online consultation form and we will call you.


Have you received a letter from your mortgage company stating that you are eligible for a mortgage modification recently?  Does it list shockingly specific payment terms and include coupons?

A new streamlined mortgage modification process may explain the mail you have been getting from your mortgage company about a possible modification.

The new streamlined process that was started back in April is designed to shift the burden from the borrower to request a mortgage modification and provide the proper paperwork over to the servicer to offer a mortgage modification and work with the borrower to make it happen.

Eligibility for the program is as follows:

1.  You must be between 90 days and 24 months behind on your mortgage;

2.  This will only apply to a first mortgage that is worth more than 80% of your home and has been modified less than twice;

3.  The loan must be at least 12 months old;

4.  The loan must be a Fannie or Freddie Loan.

These modifications, when granted, would reduce the payments on the home an average of 30% but WILL NOT result in principal reductions.  Ever.

Our office’s experience with the program so far can be best described as sub-par.  I had a client send the payments in and deliver all of the required documentation and than some and was denied for failure to submit all of the documentation.

It is just like every other mortgage modification program out there, a complete run around that rarely resulted in a modification for a qualified buyer.

The New Jersey bankruptcy court now offers an excellent mortgage modification program within a bankruptcy proceeding.  This offers struggling homeowners a direct link to a modification representative, contempt of court proceedings in the event the mortgage co does not respond in a timely fashion, and stays any foreclosure proceedings so that all parties are working on the same goal at the same time, instead of the mortgage company working on a foreclosure and a modification at the same time (which all of you in loan mod programs should know…if you are behind they are working on a foreclosure.  I don’t care if they tell you they aren’t…rest assured they are).

Interested in talking to us about how to stop the foreclosure on your home?  Give us a call at 732-302-9600 or fill out our online consultation form and we will call you.

The Sheriff just knocked on your door and handed you lawsuit paperwork.

There it is in big bold print:  YOU ARE BEING SUED!

What do you do?

Our associate, Sarah J. Crouch, has made this very helpful video about what to do and what not to do when you are being served with lawsuit papers.

More questions for Sarah?  Give us a call at 732-302-9600 or fill out our online consultation form and we will be happy to talk about all your bankruptcy questions.

The Student Loan Debt Series: Part 1
Where We Are Right Now

Most of us have them.  Most of us try really hard to pay them.  Most of us don’t understand our rights when it comes to them.

No, I am not talking about credit cards or medical bills.  I am talking about student loans.  Student Loans recently beat out credit cards as the largest portion of consumer debt out there, topping 1 trillion dollars.

That is trillion, with a T.

But while the amount of student loan debt Americans are taking on may be distressingly high, what is more distressing is that student loans are incredibly difficult to deal with when the borrower is struggling financially.

Student Loans are only dischargable in bankruptcy in cases of extreme hardship.  In New Jersey, the borrower has to quote a Chapter 7 trustee at a recent conference “in an iron lung.”  Some other states have slightly more generous standards for student loan borrowers in bankruptcy, but here in New Jersey a bankruptcy is probably not going to help you.

The federal government doesn’t offer much in the way of assistance either.  Federal student loan borrowers can defer their student loans but only in cases of unemployment or pursuing other degrees and these deferment are limited in time.  Once the deferments are used up debtors can go into a forbearance but during this time the interest will toll and debtors are limited to under two years of forbearance.  Neither of these options reduces the debt owed or solves the lack of affordability problem.

The government response has been to create extended repayment options, income based payments, and income contingent payment options.  This means that a borrower will pay less each month but will be paying the debt for twenty to twenty five years.  So if the debtor starts out making not much money and this is the only way he or she can pay for the time being there are some options.  However, remember that if the borrower’s income goes up so will that payment and often income based repayment can be problematic for borrower’s living in high cost areas like New Jersey and New York.  These income based models are not going to take into account the fact that rent in the Garden State can top $1000.00 a month.

As far as general hardship waivers, the federal government only offers a true hardship waiver in cases of severe disability.  Borrowers who are permanently disabled can have student loans waived but must remember that if they take this option they will be ineligible for more federal student loans down the road.

The other thing to remember about the above two options is that they are available for federal loans ONLY.  These are not options for those private student loans taken out by some borrowers when the rates were low.

Adding insult to injury in the student loan world are the punishments for default.  Defaulting on a student loan can be devastating to your financial existence.  A defaulted student loan can drop a credit score up to 100 points meaning you will pay higher rates on everything else you can purchase.  On top of that defaulted student loans are subject to harsh penalty fees and increased interest rates on the loans that can make a $20,000 student loan double and become a $40,000 student loan.

And the loan companies aren’t going to be the only ones chasing student loan borrowers anymore.  Recently, three major universities, Yale, Penn, & George Washington University, sued their students that defaulted on student loans!

So there is a problem and I know what you are thinking… the bankruptcy lawyer just told me there is nothing I can do and that nobody can help me.  That is not the case.  There are options out there and Congress appears to be finally taking notice and attempting to propose solutions.

This is just the first in a series of blogs I am going to be doing on student loans.  Next week we will review the bills floating around Congress, including a possible change to the bankruptcy code, that could help student loan borrowers with private debt.

Stay tuned!


Interested in how bankruptcy can help you with your finances?  Give our office a call at 732-302-9600 or fill out our online consultation form and we will call you!

A good friend of my associate forwarded this to her today knowing that we would absolutely love this story.

A West Virginia woman was told she owed a debt that she did not owe and not only did she not pay the debt, she fought back against the harassment and sued the collector. 

Now she is in the process of collecting her judgment against the collectors that attempted to extort her.

For most of our clients they do owe the debt but that does not mean that a debt collector has a right to harass or intimidate you.  If a debt collector contacts you and threatens your life, threatens to jail you, or suggests any other malicious activity they are acting illegally and whether you owe the debt or not you may be able to sue the collector.

If you are having trouble with your creditors calling and threatening you, give us a call at 732-302-9600 or fill our our online consultation and we will talk about what we can do to help you with your troubling financial circumstances be it with an FDCPA action or a personal bankruptcy.