Fort Myers bankruptcy attorneys
Should I File For Bankruptcy?
November 30, 2017
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How to Get Yourself Out of the Cycle of Debt
January 30, 2018
man upset over bills - Naples bankruptcy

Americans are drowning in debt.  According to Pew Charitable Trusts, 8 in 10 Americans have some kind of debt such as mortgages, student loans, car loans, credit cards, etc.  Changing attitudes in saving and borrowing, unscrupulous lending practices, teaser rates, being uneducated in financial responsibility, and the massive increases in college tuitions and health care costs can make it seem impossible to make ends meet.

However, the biggest contributor to the perpetual increase in debt is that the cost of living has outpaced income growth for many years.  Income growth has been at 20% over the last decade, where medical expenses have grown at 34%, “other” expenses at 30%, food and beverages 22% and housing 20%.  While recent numbers have been promising, the fact remains that the vast majority of Americans are in debt.

How do you break the cycle?  The first step is to educate yourself on personal financing and how to make and stay on a budget.  This will help you make good financial decisions going forward, and by staying within your budget, you can keep from adding more debt.  For some, this will be enough to get back on track, but for those in deep financial debt, more help is necessary.

Many turn to debt settlement companies for help, but is it really in your best interest to do this?  Debt settlement companies contact your creditors for you to try to settle your debts for less than you owe.  While this sounds helpful and convenient, some of these companies charge high fees, and if your creditors refuse to work with them, as many do, it could just end up adding to your already high debt.

In 2017, a complaint was filed by the Consumer Financial Protection Bureau (CFPB) against Freedom Debt Relief for misleading consumers.  The program requires consumers who have enrolled in it to stop making any payments to creditors and instead make deposits into a dedicated bank account until there is enough money to settle with creditors, which can take up to 3 years.  Upon settlement, Freedom charges the consumer between 18% and 25% of the total amount of the debt.  The complaint alleges that Freedom misled consumers into believing all creditors will settle debts, but in fact, many do not, Chase, American Express, Discover and being among them.  Even if they didn’t settle, allegedly in some cases, consumers were charged fees anyway.  The complaint also claims that Freedom instructed consumers on how to settle with these clients directly, allegedly telling them what to say and even lie to them to get a settlement and would still charge their fees.

Although these are not how all debt relief companies act, they do generally follow the same procedure of having the consumer cease all payments and communications with their creditors while putting money away for a settlement.  There are many flaws with this tactic.  First, while you’re not making these payments, interest still accrues and your creditors are still trying to collect.  When they fail, they’ll send your account to a collection agency, which adds fees, and if that is unsuccessful, they’ll charge off your account, which you may pay income tax on.  All of which means your credit report will have late payments, collections, and charge-offs, all which will detrimentally affect your credit score.

Often, if you cannot pay your bills, you can’t make the required monthly deposits either and drop out of the program.  By then, your debt has increased with late fees and interest from your creditors, fees from the debt relief agency, you may have judgments on your accounts, and your creditor(s) may be able to garnish your wages to collect the debt.

Bankruptcy is another option for relief from your debts, and it has some advantages over debt relief programs.  When you file for bankruptcy, by law, your creditors must stop contacting you to collect their debt immediately, subject to the provisions of the Automatic Stay.  Although the debt relief program will tell you to give their contact information to your creditors, there is no Automatic Stay saying they have to stop trying to collect the debt from you like in a Bankruptcy.  It also prevents creditors from any further action against you such as late payments, collections, and charge-offs, and may even be able to discharge old judgments.

In many cases, the bankruptcy process can be completed in a few months. Depending on the type of bankruptcy you qualify for, Chapter 7 or Chapter 13, it may not require further payments to your creditors.  While bankruptcy does greatly lower your credit score, it only stays on your record for 10 or 7 years, respectively, and that time starts ticking down once the bankruptcy is completed.  Credit can and should start to be established as early as possible after filing for Bankruptcy.  Not all lenders will give you credit or a credit card, but there are plenty that will. You should take your credit seriously and avoid overspending on any credit account over what you can pay off each month to avoid interest.


Bankruptcy is not a decision to be made on a whim.  It can affect your ability to obtain housing, a vehicle, and even employment in some financial sectors.  The attorneys at Miller, Hollander, and Jeda of Naples, Florida can help determine if bankruptcy is the right choice for your specific financial situation.  Call today at today at (239)775-2000 for a free consultation and get your financial independence back.