Tuesday, April 17, 2018

Financial Planning for Beginners

Earlier this year, household debt balances in America rose to $12.73 trillion, the highest in our history. In fact, 73% of us die in debt. With this much debt, it’s hard for many people to reach long-term goals such as retirement savings, or shorter-term goals such as paying for a wedding. Many of us just wing it when it comes to our finances, thereby decreasing our opportunities and our joys in life. But with a bit of planning, we can take control of our finances, which gives us much more control over our lives and our futures.

Financial Planning for Beginners

You will find that the following guidelines make a big difference.

Set Your Financial Goals

We all know it’s impossible to get anywhere without knowing where we want to go. Many of us have more than one financial goal, which means we need to set priorities. That doesn’t mean you can’t work toward more than one goal at once. Think about what is the most important thing to you now:

  • Paying off debt;
  • Contributing to an emergency fund;
  • Saving for short- or medium-term goals, such as paying for a wedding or a vacation; or
  • Saving for long-term goals, such as retiring comfortably.

In order to reduce both your risk and your anxiety, it’s best for most people to prioritize paying down their debt and building an emergency fund but without ignoring their retirement. Of course, your goal setting will depend to a large extent on your priorities in life. Recognize what those are and plan your spending accordingly. For some people, buying a large, comfortable house is paramount. For others, travel and new experiences are more important. Neither is right nor wrong. The point is to plan and act to make your personal goals become a reality.

Pay off Debt

Many people wonder how they got into so much debt and they don’t see a way out of it. But you can climb out of debt with good planning. If you are part of an average American household, you may have $15,654 in credit card debt, $27,669 in auto loans, and $46,597 in student loans. And almost half of credit card holders have revolving debt, meaning rather than paying off their debts every month, they carry it forward. If you have these kinds of debts, you are probably paying thousands of dollars per year just in interest.

Also, if you are in debt, you may occasionally overdraw your bank account trying to cover payments. That’s usually a minimum $34 bank fee and more if you don’t repay the money almost immediately. Banks are thrilled when you overdraw. They make more than $30 billion every year in overdraft fees.

Contribute to an Emergency Fund

If anything is constant it’s that nothing is constant. Life happens, and you need to be have a little cash put away for an emergency. Try to have at least enough money to get you by for three months. Six months is better. Shockingly, about 70% of Americans have less than $1,000 in the bank. If you have sudden medical bills, an accident, or lose your job, you need some cushion. If you don’t have an emergency fund, this should be a top priority.

Save for Short- and Medium-Term Goals

Once you have your debts under control and have a comfortable emergency fund, you may want to turn your attention to some short- or medium-term goals. This could be anything from buying a car, going on vacation, or buying a house. Life is to be enjoyed. Just don’t pursue these goals while going deep into debt or ignoring putting money aside for an emergency.

Save for Long-Term Goals

Of course, a long-term goal everyone should have is saving for retirement. Here are a few ways to do so:

  • Start putting money aside as soon as you can, even if it’s only $50 per week.
  • Don’t put your retirement behind everything else. It is far too easy to push it off. Don’t steal money from your retirement to renovate the kitchen or fly to the Bahamas for a few days.
  • If your employer will match retirement funds, put in the maximum amount they will match.
  • If you are over age 50, you can make a larger retirement contribution. Do this.

Know Where Your Money is Going

The first step to reaching your goals is understanding what you have to work with. You need to know where your money is going before you can redirect it to be more in line with your goals.

  • Go through your bank statements and receipts and list what you are spending on.
  • Separate your costs into two groups. The first group is fixed costs, such as rent or mortgage payment and insurance. The second group is flexible costs such as going to the movies and other entertainment, eating out, and gasoline.
  • Make a note of your assets and net worth.
  • Check your credit scores.
  • Add up your debt.

You don’t need to go back years. Just take a look at your spending and financial information from the last few months.

Build a Budget

Just as you can’t get anywhere without deciding where you want to go (your goal), you also can’t get there without a plan. Once you have a firm grasp on the money you have coming in, your debts, your expenses, and how you spend your extra money, you need to make a budget.

“Budget” is a word that can strike terror into the hearts of many people to the point that they become paralyzed with fear. The word can conjure images of failure, similar to the word “diet.” There is no need to put yourself through this. Your budget doesn’t have to look like anyone else’s. Recognize your personal priorities and be realistic.

If you are saving for a short- or medium-term goal that is extremely important to you such as a big wedding or a vacation, you might be willing to tighten your belt in some areas for a bit. But if you live and die for weekend golf or morning lattes, those may not be the first place to look at cutting your spending.

Just realize you may not be able to have it all, at least not all the time.

Get Help if You Need It

Some people become almost paralyzed with fear when it comes to dealing with their finances. If sifting through your financial records and creating a budget is too much for you, get help. There are various levels of help according to your needs. Help can come in the form of budgeting software, budgeting services, financial advisors, accountants, and bankruptcy attorneys.

The most important thing is that you get started immediately, because your future won’t wait.

Free Initial Consultation with a Utah Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
Posted by at No comments:
Labels:

Monday, April 16, 2018

An Employee is Hurt During a Workplace Emergency – Can the Employer be Held Liable?

Whenever a crisis arises in the workplace, there is often concern regarding who is liable — whether it’s the government, a healthcare provider or the company itself. Liability during emergency situations is a tricky matter, and many businesses could be held accountable for employee injuries if they respond in the wrong way or fail to respond at all.

An Employee is Hurt During a Workplace Emergency - Can the Employer be Held Liable

Emergency situation liabilities can stem from a wrongful death case to a slip and fall case that may involve a lawyer. This can put a lot of pressure on both employers and government officials from West Jordan, Utah to the rest of the state.

Potential Areas of Liability

Emergency first responders can potentially be held liable under matters of civil and criminal liability. They may be protected by different liabilities and waivers, but there’s still room for egregious conduct when responding to an emergency situation. For instance, an unfortunate slip and fall could arise during an emergency — and first responders could potentially be held liable on grounds of negligence.

Civil Liability

Civil liability is most likely where liability issues are going to arise. Civil liabilities include negligence, intentional harm, privacy violations, discrimination or misrepresentation. Even though one particular employee may have been responsible for an injury, the employee’s company would be held liable, as an employee acts as a representative of his or her company. However, an intentional tort can place blame upon an individual, if intent to harm can be successfully proven.

So if an employee were to intentionally trip someone, resulting in a slip and fall injury, then the employee could be held liable. If an accident were unintentional, then a company would have to hire a good lawyer out of West Jordan in order to ensure a smooth court case.

Defense in Intentional Torts

If you and your lawyer find yourself involved in an intentional tort case, there are two general arguments that you can make: you can either argue consent or necessity. In the argument of consent, such as in the case of a drug injury, one can argue that the patient was informed beforehand of what drug was going to be administered. This argument can also be used if medicine was administered while the person was unconscious.

Another argument that can be used is necessity. This could be used in a case in which someone intentionally causes a person to slip and fall in order to protect the person from further harm. These are a couple of routes that your West Jordan-area lawyer may take if you are involved in an intentional tort lawsuit.

Negligence

In an emergency situation, employers should do everything within their power to assist employees in danger — if not, they could be held liable for an injury due to their negligence. This could be a tough case for your lawyer to argue, especially if you had to opportunity to provide assistance but failed to take action. Your West Jordan-based company could be found liable for an injury due to negligence if you weren’t properly prepared, or breached some kind of employee confidentially.

If you find yourself in court in West Jordan Utah due to a slip and fall case during an emergency situation, use this knowledge and be prepared.

Free Consultation with a Utah Business Lawyer

If you are here, you probably have a business law issue you need help with, call Ascent Law for your free business law consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
Posted by at No comments:
Labels:

Sunday, April 15, 2018

Claims in a Business Divorce

When conflict within a privately owned company cannot be resolved through negotiation and the parties stand at the brink of filing litigation to resolve their disputes, the parties must analyze whether their claims are direct or derivative in nature. The distinction between direct and derivative claims and claim procedures may trap the unwary.

Claims in a Business Divorce

Direct Claims in a Business Divorce Case

Direct claims are those claims brought by an owner for losses suffered directly to that owner and are unique to the owner. In the personal injury context, the plaintiff is entitled to bring claims based upon their bodily injuries caused by the wrongful conduct of the defendant(s).Similarly, claims by a business owner must only be for the economic harm or equitable relief necessary to correct the wrong by the defendant(s).

Derivative claims are claims brought by an owner on behalf of or in the right of a corporation or LLC. The shareholder steps into the shoes of the company to enforce the rights of the company against the defendant(s).The owners’ claims arise because of their ownership in the company.

Stemming from these basic definitions are issues related to whether damages being sought are truly direct or damages suffered by all shareholders. If the damages claimed are suffered by all shareholders then the claim is not direct.

Derivative Claims in a Business Divorce

In Utah, the code discusses the necessary steps for a derivative claim. An LLC derivative proceeding is governed similarly under the Utah Code Annotated as well. First, a shareholder may not commence or maintain a derivative proceeding until it is established that the shareholder was an owner in the corporation at the time of the act or omission or became a shareholder through transfer by operation of law from someone who was an owner at the time of the wrongdoing. In addition, the shareholder must fairly and adequately represent the interest of the company in enforcing the rights of the company.

A shareholder may not start a derivative lawsuit until a written demand has been made upon the corporation to take suitable action to correct the wrongdoings and recover losses for the company. In addition, once a written demand is received, ninety days must expire from the date of the demand before a lawsuit may be commenced. Exceptions to this rule exist when the demand has already been rejected, the statute of limitations will expire within the ninety days, or irreparable injury to the company would result by waiting for the expiration of the ninety days. The purpose of the written demand is to give the company an opportunity to investigate the claims and take action prior to being embroiled in litigation. If the corporation does commence an inquiry even after the demand and a Complaint has been filed the court may take action to stay the derivative proceedings for a period necessary to complete such investigation.

If the parties are now prepared to file their litigation, they must also comply with the Utah Rules of Civil Procedure. The Complaint should be verified and allege that the plaintiff was a shareholder or member of the company at the time of the transaction or obtained their ownership interest by operation of law from someone who was such an owner. The Complaint must further allege with particularity the efforts made to obtain the action desired from the directors or other management authority of the company and the reasons for the plaintiff’s failure to obtain the action sought or for not making such an effort. In addition, the plaintiff must demonstrate that they fairly and adequately represent the interest of all shareholders or members similarly situated in enforcing the rights of the company.

Termination of Derivative Proceedings

A derivative proceeding may not be dismissed or compromised without approval of the court after notice. On the termination of the derivative proceedings, the court may make orders with respect to expenses incurred including attorney fees. If the court finds that the plaintiff’s derivative action has resulted in a substantial benefit to the corporation it may order the corporation to pay the plaintiff’s expenses and fees. However, if the court finds that the derivative proceeding was commenced or maintained without reasonable cause or for an improper purpose, the court may order the plaintiff to pay all defendant’s reasonable expenses and fees.

The Utah statutes have a procedure which effectively terminates the plaintiff’s derivative claim and the right to be heard before a jury or a judge if certain conditions are met. First, if the corporation investigates the matter and resolves internally the issues raised in the derivative demand the basis for the lawsuit is eliminated. The second method available to obtain early termination of the litigation is for the corporation to move the court to appoint a panel of one or more independent persons to determine whether the maintenance of the derivative proceeding is in the best interest of the corporation. The court appointed panel, like the company appointed panel, must conduct a reasonable inquiry in good faith and if it concludes that the maintenance of the derivative proceeding is not in the best interest of the corporation, the corporation may ask the court to dismiss the claim. In sum then, the plaintiff’s claim falls to the hands of either a court appointed or company appointed independent panel to determine whether or not the claim should effectively be maintained in litigation. If in fact it is determined by this panel that the maintenance of the derivative proceeding is not in the best interest of the corporation, the plaintiff then has the burden to prove by clear and convincing evidence that the panel has not acted in good faith, may not have conducted a reasonable inquiry and has drawn a conclusion that is not in the best interest of the company.

In a business divorce context, plaintiffs pushing for separation who file direct or derivative claims, effectively have two fronts to attack the wrongdoers or those from whom they would like to separate. Derivative proceedings present a procedure that may reduce the cost of litigation by use of the independent panel. The pressures of litigation may force the parties to separate hopefully by settlement rather than litigation because of the direct or derivative claims.

Free Consultation with a Utah Business Lawyer

If you are here, you probably have a business law issue you need help with, call Ascent Law for your free business law consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
Posted by at No comments:
Labels:

Payday loans and Bankruptcy

Even though the holidays are over, people of every income range have been buying gifts for others and now the lenders want to collect. For many, this is just an added year-end expense. Others who feel the pressure to give to family and friends but don’t have the money may look for other ways to fund this seasonal expense. The ads for “payday” loans tend to prey upon that need, offering quick cash now with a short-term temporary loan. But before giving into temptation, be aware of the pitfalls that could affect your financial future into next year…and beyond.

Payday loans and Bankruptcy

What is a payday loan?

Also known as a cash advance or a check loan, a payday loan was originally given that name because repayment of the loan was typically due on the borrower’s next payday.

Some common features of payday loans include:

  • the loan is for a small amount, generally $500 or less;
  • repayment is usually due on the borrower’s next payday;
  • the date of your next payday is disclosed to the lender to allow the lender to draft a payment from your checking account when the payment is due; and
  • the loan has unusually high interest rates.

Generally, the loan can be used for whatever purpose it is needed: the necessary, such as an emergency medical bill or an overdue electricity payment, or the frivolous, such as a quick weekend trip. But the key to using the loan in the most advantageous way depends on when and how the loan is repaid.

The Trouble With Payday Loans

Regardless of when the loan is repaid, the interest rates charged by the lenders are exorbitant compared to other credit sources. Interest on credit cards typically ranges from 12 percent to 30 percent on an annualized basis. A payday loan, on the other hand, generally carries a finance of charge of $10 to $30 of every $100 loaned. The annual percentage rate (APR) on a charge of $15 per $100 rate would be about 400 percent.

The interest rate alone is bad, but the real problems begin when the loan is not repaid within the two-week period. Obviously, most people who turn to a payday loan for a critical expense one week are unlikely to be in a greatly improved financial position in two weeks. In many cases, the borrower has to rollover the loan to the next payday (or the next, or the next…) and the high interest rates continue to accrue.

Payday Lending Online

That’s an ugly picture, but it can get worse. Payday lending is illegal in many states, but lenders will often operate online in order to get at consumers across state lines. Beware the online payday lender – many of them are just scams. They’ll collect an upfront fee and leave you with nothing. The website (and your fee) will disappear into the night and you’ll be left with less cash than before.

Who uses payday loans?

When considering the “typical” payday loan borrower, the obvious answer is someone in at least short-term financial trouble. But a study done by Pew Research in 2012 provides more specific information: most payday loan borrowers are white women between the ages of 25-44. In addition, the study identified five groups that are more likely to take out a payday loan:

  • those without a four-year degree;
  • those who rent, rather than own, a home;
  • African-Americans;
  • those who earn less than $40,000 per year; and
  • those who are separated or divorced.

Payday Lending Under Pressure

Many states have outlawed payday loans, having found them to be predatory and taking advantage of the people who use them. On the other hand, the lenders may choose to not do business in states that do allow them because those states have tightened their regulations on payday lenders to the extent that the lenders no longer make enough of a profit in those states due to the restrictions on interest rates and fees.

In 2013, the Consumer Finance Protection Bureau launched an aggressive investigation into payday lenders and their effect on American finances, soliciting complaints from consumers about their experiences with the loans. A year later, the Bureau has investigated almost 1600 of these complaints. Of those investigations that have been closed, only about 11 percent have resulted in a favorable outcome for the borrower.

During its investigation, the CFPB found that about 12 million Americans use some form of these loans. But the most disturbing part of the investigation was the discovery that almost 4 out of every 5 of the loans are not repaid within 14 days, causing the continuing high-interest renewal or rollover. And over 60 percent of those borrowers roll the loan over so many times that the interest and other fees end up being more than the original loan amount.

One consumer group, the Consumer Federation of America, states that the fault with the system is that the lender focuses on the ability to collect, not necessarily the borrower’s ability to repay. With access to the borrower’s checking account or employer information, the lender is in a position to collect the money owed if necessary.  But why do that when more money can be accrued by just continuing to rollover the debt and increase the interest owed over and above what was originally loaned.

Another consumer group, Consumers Union, is looking for changes to be made and enforced in the industry. Among its recommendations are:

  • limit the fees and interest that can be charged on the loans;
  • make repayment schedules longer, e.g., a few months rather than a couple of weeks; and
  • put a cap on the number of payday loans one person can borrow in one year.

Payday Loans in Bankruptcy

For those whose financial picture doesn’t improve enough to stop the continual rollovers and renewals, bankruptcy may eventually be an option to consider. If taking out payday loans is all that keeps a budget afloat, it may be time to look at putting a stop to the revolving door.

While payday loans in general may be discharged in bankruptcy, there are situations where the lender may have a valid objection. First, some debts incurred within 70 to 90 days of filing bankruptcy cannot be discharged because the creditor may claim that the debt was incurred while planning to file bankruptcy and discharge the loan with no intention of ever paying it back.

Free Consultation with a South Jordan Bankruptcy Lawyer

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in or call in for your free initial consultation.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
Posted by at No comments:
Labels:

Saturday, April 14, 2018

Trust Is Crucial in Attorney-Client Relationships

There is no substitute for building trust with clients. It establishes open lines of communication, increases cooperation and ultimately drives the profitability of a law practice. Clients who trust their lawyer are eager to meet their lawyer’s needs, making the working relationship enjoyable for the lawyer and supporting staff. Yet, increasingly, I hear lawyers voice their frustration with the practice of law and specifically with clients who demand too much of their time, or clients who are not eager enough to support the lawyer in meeting the client’s objectives. A lack of trust or a breach of trust is often at the root of these problems.

Trust Is Crucial in Attorney-Client Relationships

Trust is Determined by the Client

Trustworthiness of the lawyer is a subjective determination made by the client. If this feels like a burden to lawyers, well, welcome to the practice of law. Another way to look at the subjectivity of this determination is that it’s an opportunity. A lawyer who believes that every interaction with a client will result in either building or diminishing trust looks for—and creates—opportunities to strengthen the relationship at every turn. Bankruptcy lawyers are no exception.

Bankruptcy clients are admittedly anxious and fearful. They don’t know who to trust. They’ve often been lied to and they’ve been told numerous stories. They feel like they are failing, which leads to embarrassment and often anger. To boot, they typically enter the lawyer-client relationship with a perception of lawyers that has the potential to be an ongoing barrier for both the lawyer and the client.

What’s a lawyer to do?

Rather than resent a client who is reluctant to give information or calls too often, try a different approach. Imagine what their experience must be like. Put yourself in their shoes. Actually connect with the anxiety that comes from a phone that won’t stop ringing; every caller a constant reminder of your failure to meet your obligations. You may not have gone through a bankruptcy, but surely you’ve been anxious, angry.

The next time you interact with a client, listen for cues to their emotional state. Does their tone of voice change when discussing a particular creditor or an upcoming financial hurdle? If so, use that as an opportunity to openly reflect that you have been thinking about them and their situation. Ask them how they are feeling. Guess at how they might feel. And then let them talk. You’ll be surprised by the results.

Trust can be built in the moment. These small pieces of a conversation take a minute, sometimes two minutes. As a result, the lawyer-client relationship is strengthened, and both parties benefit from it for the duration of the representation. A human connection is made. That connection inspires you to understand the client’s full range of needs, and inspires the client to do whatever it takes to assist you in getting the job done. It also happens to be an enjoyable way to practice law.

What Property Can I keep In A Bankruptcy?

People considering bankruptcy often have the misperception that they will lose all of their property if they decide to file. Fact is, only non-exempt property will be eligible for sale in a chapter 7 bankruptcy.

Filing bankruptcy doesn’t have to mean losing all of your property

As a matter of public policy legislatures at both the state and federal levels have enacted exemption laws to ensure that those who seek bankruptcy protection are able to retain property through the process. Exemption laws vary by state and designate certain property that is exempt or protected from creditors.

An example using real estate

For example, let’s say a state’s homestead exemption allows a married couple filing a joint bankruptcy case to protect $37,500 of equity in their home. Therefore, assuming they could afford the mortgage payments after bankruptcy, this theoretical couple could keep a $500,000 home through the bankruptcy process as long as home equity does not exceed $37,500 (as long as the mortgages encumbering the home added up to about $460,000). Equity is calculated by subtracting debt on the property from its value. The entire value of property is not the determining factor for exemption purposes.

The same principle applies for cars

The same principle applies for cars. If you currently owe $10,000 on a car that is worth $12,000, most exemption statutes will allow the $2,000 of equity in the car to be protected from your creditors. You will be able to file bankruptcy to shed burdensome debt while retaining your car.

When you think about it, the application of the laws make sense. We no longer have debtor’s prisons. People in financial peril need relief, and often the Bankruptcy Code is the means to receiving this relief. Could a consumer truly obtain a fresh start financially if they were left with no home and car? Of course not. Therein lies the policy justification for exemption laws. Consumers who find themselves in financial trouble must be left with some property so they can get back on their feet.

Even is stuff is sold, you’ll receive a check for the amount of the exemption

It should be noted that even if you have non-exempt equity in property, you may have the option of paying the value of the non-exempt portion of the property to the bankruptcy trustee in order to keep it. If the property is sold by the trustee, you will still be entitled to a check for the value of the exemption. To harken back to our homestead example, if you had $60,000 of equity and the trustee sold your real estate, you’d get a check for $37,500 after the sale. A sale does not defeat the exemption.

Then there’s always chapter 13 bankruptcy

Alternatively, chapter 13 bankruptcy can provide a nice solution for consumers who want to get their debt under control but have significant non-exempt assets. Chapter 13 bankruptcy allows debtors the option of paying out the value of non-exempt property to their creditors over time while slashing credit card debt and other unsecured debt. It is important to consult with a knowledgeable bankruptcy attorney in order to determine the effect that your state’s exemption laws will have on you and your property.

Free Initial Consultation with a Utah Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
Posted by at No comments:
Labels:

Exercise, Eat Healthy and File Bankruptcy

If you find yourself deep in debt and are desperately trying to avoid bankruptcy, it might be time for a paradigm shift.

Not only does bankruptcy provide relief from debt, it provides relief from chronic stress that can lead to poor health. Constantly worrying about bills and your financial future is far more toxic than a negative line on your credit report.

It is rarely, if ever, discussed, but filing for bankruptcy could actually improve your health and prolong your life

How did I reach this conclusion?

Exercise, Eat Healthy and File Bankruptcy

For starters, I’ve represented clients in numerous bankruptcy cases and have seen firsthand the relief that starting over financially can provide. People generally don’t regret filing bankruptcy, they welcome the opportunity to begin anew, and many are able to successfully turn their lives around. Unfortunately, the reason for personal bankruptcy success stories is often lost in more technical discussions of the amount of debt that was discharged, what chapter the debtor filed under or whether tax debts were eliminated.

The real value of bankruptcy is stress relief.

Arnold Palmer famously said that golf is 90% mental. Well, the same is true of debt.

It’s never the actual red in the ledger that causes debtors to suffer, it’s the worry about supporting a family, collection phone calls, lawsuits, foreclosure and the myriad of other mental beatings the seriously indebted are forced to endure. Whether it’s fear of having a credit card rejected at the grocery store or concern over a pending wage garnishment, consumers who find themselves in debt are constantly reminded of their predicament. They can’t escape mentally. The debt follows them wherever they go, becoming their constant companion, causing incredible stress that breaks up marriages and ruins friendships.

Make no mistake, this debt stress can make you sick.

According to the Clinic, the following conditions are caused in whole or in part by stress:

  • Heart disease
  • Sleep problems
  • Digestive problems, such as irritable bowel syndrome
  • Depression
  • Obesity
  • Memory impairment
  • Worsening of skin conditions, such as eczema

Heart disease is still the number one cause of death in America today. Over time, digestive disorders, such as irritable bowel syndrome, can lead to cancer and other more serious conditions. Depression robs its victims of their desire to use their God given talents, taking the very meaning out of one’s life. You get the idea, the implications of stress caused by debt reach well beyond your checking account.

It’s not just about debt, it’s about your health.

Consider your daily thought patterns. If you’re deep in debt, they will be consumed by plans to pay back creditors, stave off lawsuits, keep your children from finding out how bad things have gotten, keeping up appearances with neighbors, and on and on the nightmare goes. Although the mental aspect of health doesn’t get as much play as more “scientific and provable” diagnoses, the toxicity created by debt stress is very real.

How can you properly focus on a child’s sporting event, or a project at work when you are consumed by stressful thoughts about debt?

How can you and your spouse enjoy and support each other when your interactions are constantly blighted by fear and uncertainty?

Bankruptcy is not anyone’s first choice, and it is certainly not a process to be entered into lightly, however, it does provide an opportunity to start over spiritually as well as financially.

For some, the benefits of that opportunity do far more than merely eliminating debt.

Free Consultation with a Utah Bankruptcy Attorney

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in or call in for your free initial consultation.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
Posted by at No comments:
Labels:

Friday, April 13, 2018

Why Draining Your Retirement To Save a Doomed House from Foreclosure Before Filing Bankruptcy is a Mistake

Should I use retirement to pay a mortgage?

Twice in the last two days I have had the same discussion with two prospective clients. Each client owned a house that at the height of the market was worth over two million dollars. In each case, the client had encumbered the house with a loan for about a million dollars a few years back. Each client had suffered significant financial set backs related to the current economic recession. Both clients had been paying mortgage payments close to $10,000.00 per month from their retirement accounts for the past year, and both clients were now at the end of their rope, with their retirement accounts dwindled to a mere pittance.

Why Draining Your Retirement To Save a Doomed House from Foreclosure Before Filing Bankruptcy is a Mistake

Monday morning quarter backing on the eve of filing bankruptcy does not bring back a depleted 401K or IRA. But there is a lesson for others in these two cases. Before tapping out your 401K or IRA to continue paying a mortgage on a house that is doomed to end up in foreclosure, know your bankruptcy options.

Retirement accounts are often exempt in bankruptcy

Nearly all retirement accounts that are governed by the Employee Retirement Income Security Act (ERISA, as it is called), including pensions and 401Ks, are not assets of a bankruptcy estate because they almost all universally contain an anti-alienation clause that protects them from the reach of creditors. Due to recent amendments to Section 522(n) of the Bankruptcy Code, Individual Retirement Accounts (IRAs), and other similar retirement savings vehicles, while assets of the estate, enjoy special protection capped at $1 million.

What does all this mean? It means in most cases, all the money drained from retirement accounts to keep a doomed mortgage out of foreclosure for an extra year, could have survived a bankruptcy. Retirement accounts exist to help you survive in your twilight years. It does you no good to waste these assets to delay an otherwise inevitable foreclosure. If you find yourself in this situation, before draining your 401K or IRA, talk with a bankruptcy lawyer with experience in foreclosure defense about your bankruptcy options and foreclosure defense options.

How Can I Repair My Credit?

Whether you filed Bankruptcy or have faced foreclosure, repossession or a delinquency on a loan, it is a fact of life that your credit score can fluctuate. Access to credit is important when applying for a car or home loan or when starting a new business, the lower your credit score, the higher your interest rate will likely be.

Improving credit after bankruptcy or foreclosure

FICO scores range from 300 to 850; the median score is 723. To get the best rates, you’ll usually have to have a score of at least low- to mid-700s, so how can you repair your credit score after it has been damaged?

Credit Repair Steps to take

Unfortunately, it is far easier to bring your credit score down than it is to make improve it. Nevertheless there are steps you can take.

Step #1: visit annualcreditreport.com

Start by visiting www.AnnualCreditReport.com, a website set up under federal law to give consumers access to their credit reports. Be on the lookout for impostors, AnnualCreditReport.com is free, there will be no need to supply your credit card or make any payment. There are three different consumer credit agencies (Experian, Equifax and TransUnion) that compile information that factors into your credit score. Not surprisingly, the three agencies don’t always agree. It is important that you go through each report and identify any errors. Did you recently pay off a debt that is listed as delinquent?

Step #2: Write to the credit agencies

It is important to write to the credit reporting agencies both to correct errors as well as to explain any delinquencies. It is perfectly reasonable to write a letter to the credit reporting agencies explaining why you have been late on a mortgage or were forced to file for bankruptcy. Lenders view your credit score in its proper context. Perhaps you have been a victim of mortgage fraud and were forced to file bankruptcy to protect your assets from an aggressive lender. Maybe the economic downturn has caused a salary decrease that made it hard to stay current on car payments. Whatever the Cause of your credit taking a hit, it is crucial that you weigh in on the problem and voice your perspective. It can help.

Step #3: pay your bills on time

I advise my clients who have filed for bankruptcy to be meticulous in paying every bill on time after filing. The same principle applies to anyone trying to repair their credit as payment history is one of the biggest factors in determining your credit score. It may be a good idea to open a single credit card, use it only for groceries and then pay the balance in full each month.

Step #4: debt to income ratio

Filing bankruptcy can actually improve your credit score. Why? Because another factor lenders use in their underwriting process is how much of a debt load is the potential borrower carrying? Are they swamped in debt? If the answer is yes, they will be less likely to be able to service more. When large chunks of credit card debt are discharged in bankruptcy it can often have a positive impact on credit just a few months after filing.

Step #5: be patient

Your credit history factors into your score as well. The longer you’ve been borrowing and paying on time the better. In some ways this is the lender’s way of developing a friendship with you. When you meet someone for the first time, you might like them but can only develop a friendship or romance over time. If you have been paying your bills for a long time, lenders are more likely to court you.

Be of good cheer, with a little patience and responsible use of credit, your score will improve.

Free Consultation with Bankruptcy Lawyer

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in or call in for your free initial consultation.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
Posted by at No comments:
Labels:
Subscribe to: Posts (Atom)