Jen Lee – Page 6

February 21, 2019 By Jen Lee

5 Reasons to Know Your Rights and Options Before Saying, “I Do!”

When you hear prenuptial agreement, you probably think about the rich and famous protecting their assets from a future spouse that the family may not approve of (either silently or very loudly). However, there are many reasons that everyday people should understand how their future spouse’s debt and credit can impact their lives, especially in a community property state like California.

Avoid fights about finances in the future.
The number one cause of break-ups and divorce is financial or money issues. So, talking about finances, expectations, and the future is very helpful in avoiding problems down the road. Talk about how bank accounts will work in the relationship, how major purchases will be decided on, what you want to save for, what things are important to you on a regular basis.
Know what you are getting in to when it comes to major milestone purchases.
Understand how your spouse’s credit score may impact buying a house, a car, or qualifying for other major purchases. Contrary to what a lot of people believe, your credit scores are not merged together when you get married. You each have an individual credit score, but some lenders will use both of your scores to determine your interest rate and terms, especially mortgage lenders.
Know what you are liable for (even if the debt is before the marriage).
Paying for your spouse’s debts. Do you think that debts from prior to the marriage aren’t your problem? Not only does it add stress to the relationship, but technically, your wages (community property) can be garnished for your spouse’s premarital debts, including student loans. See #4.
Avoid pitfalls with student loans, repayment, and collection.
Student loans are a huge problem for many couples. If you are on income-based repayment for your student loans, have you figured out what getting married does to that calculation when your spouse’s income is included? This is often a very big issue for our clients and one to think about how to deal with before it becomes a problem.
Good planning for things that may (or may not) go wrong.
Finally, joint debts acquired during the marriage are not just split 50/50. Both of you are liable for the full amount and this often creates problems during a divorce case because the creditors do not have to abide by the family court division of debt. So, we often see one spouse assigned to pay a debt who doesn’t pay it, which then causes problems for the other spouse when the creditor sues him or her.

Remember, the elephant in every room is that people do not like talking about debt and credit problems. When you are joining your life with someone else’s, it is very important to understand your rights and options for the future. Jen Lee Law, Inc. offers a Premarital Debt Strategy Session to help couples figure out potential issues and get the marriage off on the right foot. Click here to schedule your Premarital Debt Strategy Session.

This is just a basic overview and is not legal advice specific to your situation. If you have questions about your rights when it comes to debt and credit, you should speak with an attorney in your area for legal advice. If you live in California or North Dakota and would like to speak with Jen Lee Law regarding your situation, please schedule an appointment.

February 15, 2019 By Jen Lee

My Loan is Secured by What??

We often talk to clients with business loans. Or, clients who bought their business from someone else and are making monthly payments to the seller. The problem with many of the loans or purchase agreements is that no one seems to know exactly what secures the debt.

For example, a recent business loan stated that the loan was secured by all of the assets of the business. Well, at the time the loan was taken out, there actually were no assets of the business. It was brand new. The agreement was vague and there were also none of the required filings done to actually secure the debt.

In another case, the buyer and seller agreed to a purchase price and that the debt would be paid over four years. A couple of years in, the buyer figures out that new business is really losing money and she cannot afford to keep up with those payments. The problem is that the purchase agreement has no details on what the assets of the business were at the time of sale, just that the debt is “secured by the assets of the business.”

There are a couple of main points to take away when you are thinking about buying, selling, or financing based on assets:

Make sure you follow the law on how to actually secure a debt.

This likely involves talking to a business attorney to follow the right formalities. Yes, it will likely cost you some in attorney fees up front, but far less than when the deal goes south and you are now paying an attorney at an hourly rate to try to squeeze money out of the other side…and it’s quite possible the other side doesn’t have any money anyway.

Avoid vague agreements.

If the agreement is secured by all assets of the business, then you should know and have a list of what those assets are. Both sides want to point to the other side when a vague agreement ends up in trouble, like in bankruptcy court. The seller saying things like, “well, the buyer should know what assets were there when she bought it” and the buyer saying, “I don’t know exactly what was here and what I bought later…” often just costs both sides a lot of time and money that they don’t have.

Find out how things should be done correctly before there is a problem. You’ll be glad that you took the time and paid the small fee up front instead of big litigation costs later. If you need a referral to a local business attorney in California, please contact us and we’ll be happy to recommend several.

February 8, 2019 By Jen Lee

So Misunderstood…Chapter 7 and Chapter 13 Options

This past week, I had a number of different people ask me questions about Chapter 7 and Chapter 13 that revealed just how misunderstood these two options are. Here are a few of those misunderstandings:

A senior who owns a house with no mortgage can file Chapter 7 and get rid of credit card debt.

This came about in a conversation where we were discussing seniors and financial stress. We are seeing an increasing number of seniors who have overwhelming debt and do not have the monthly income to support the debt payments. However, if there is a house with equity, a Chapter 7 becomes much more complicated and less likely. In a Chapter 7, a trustee is appointed to review assets and sell any that are not exempt.

In California, a senior can exempt up to a maximum of $175,000 (and this varies some, depending on age and circumstances, but this is the maximum). If there is more than $175,000 in equity, the first thing a Chapter 7 trustee is going to do is list the house for sale. While Chapter 7 may not be the best option in this particular situation, there are often other options such as downsizing, reverse mortgage, settlement, or possibly Chapter 13.

Chapter 13 requires all debts to be repaid.

The next misunderstanding of the week happened when I was talking with a client about options for reorganizing a lot of debt that included business debt, unsecured debt like credit cards, car loans, a mortgage in the early stages of foreclosure, and a decent amount of tax debt. When I brought up Chapter 13 to deal with all of these things at once, she was confused because she thought it meant that she had to pay back all debts over five years and there was no way the business could support that kind of monthly payment.

On the contrary, Chapter 13 is very powerful because it allows you to pay back debts secured by items you want to keep (like a house, car, etc.), along with priority debt, like income taxes over five years. However, the unsecured debt often does not have to be repaid in full and sometimes none of the unsecured debt has to be repaid and it is discharged at the end of the five years.

You can’t have any assets and file for Chapter 7 (or you’ll lose everything).

This is a variation of the misunderstanding above about the house and Chapter 7. Yes, you can have assets and file for Chapter 7, but it’s important to correctly value and exempt your assets. In California, there are two different ways to exempt assets, depending on if you own a home or not. Most people who file for Chapter 7 keep all of their assets and nothing is sold. That is why it is very important to make sure you know what your rights are and how to protect the assets you do have.

All of these misunderstandings go to show that people really need to find out what their rights and options are before making life-changing decisions. Also, it’s very important to understand the different options and what your future looks like after each one.

February 1, 2019 By Jen Lee

Got Debt? Your Employer Should Care

Every night, I get Google Alerts with various key words about bankruptcy, debt, credit scores, etc. I know, sounds exciting, right?

Well, last night, I got an alert about a CNBC article titled, “Got Debt? Your boss wants to help with that.” I got excited because I talk about financial stress in the workplace ALL the time and the fact that it costs employers $7,000 per year per employee in productivity (I even wrote a white paper about it).  I read the article with great hope but ended up feeling that like so many previous articles, that this one too missed the boat.  

The article misses the basic point that many of the employees face current stresses and need quicker solutions to the day-do-day problems they are facing.  Talking about budgeting or 401k options is great but won’t help someone deal with a child’s student loans or the stresses caused by buying a house they can’t afford.   Financial stress is not about budgeting or picking the right 401k options! Financial stress is not about inviting financial advisors into the workplace for a free lunch and learn so that they can get your information and sell you insurance products! Financial stress is figuring out how to deal with a wage garnishment  on your new spouse  or a collections lawsuit or what to do with an IRS tax lien because you are behind on taxes or all three at once. Then, there’s the student loan situation. No amount of budgeting will pay off $200,000 in student loans on a $40,000 salary.

No one talks about options. No one explains the various legal scenarios that may help an employee  find a path  to resolve a difficult situation. No one goes through why taking multiple 401k loans may be a bad idea. It’s all focused on budgeting and basic financial education.  Basic financial education is not helpful when someone is in crisis mode. Basic financial education is helpful BEFORE someone gets in that situation. Statistics show that more than 50% of Americans are  beyond  the point where basic financial education is even helpful to their situation. More importantly, it’s isolating and dismissive of their actual problems. Employees are not going to  be motivated to hear about things they know they should be doing but can’t do until they resolve THEIR BIG ISSUE.   On top of that, since no one else is talking about their  REAL  debt and credit problems, they think they are the only ones with this type of problem. They couldn’t be more wrong.

Instead of addressing the problem, employers are doing everything they can to ignore the elephant in the room. Buzz words like “Financial Wellness” and “Financial Literacy” and “Financial Well-Being” are used instead of talking about the actual problems employees face.

Wake up, Employers.  If you really want to help your employees become more productive, help them find the right tools so they can solve their problems and get back to work.  

Here is the link to the actual article. If your company is looking for a great way to improve the bottom line and help employees, Jen Lee Law, Inc.’s Employees Are Assets™ program gets down to the root of the problem so employees are happy and the company can thrive.

January 25, 2019 By Jen Lee

Meet Bernadebt – the Elephant in the Room!

Hi, my name is Bernadebt.

I am the elephant in every room.

Lots of people have debt and credit problems, but no one wants to talk about it.

When you walk in a room, imagine that half of those people have a debt or credit problem.

What??!!

Other people have debt or credit problems? Yes, over 50% of Americans have some sort of debt or credit problem they are struggling with.

But, that’s not what you see on Facebook? You mean people are not talking about their debt and credit problems on Facebook?? It makes you feel very isolated and that you are alone in dealing with this problem.

My name is Bernadebt and I was created to help you understand that you are not alone.

I am the elephant in every room.

5 Reasons to Know Your Rights and Options Before Saying, “I Do!”

My Loan is Secured by What??

So Misunderstood…Chapter 7 and Chapter 13 Options

Got Debt? Your Employer Should Care

Meet Bernadebt – the Elephant in the Room!

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