A blog about debt, credit and bankruptcy

December 20, 2018 By Jen Lee

What’s So Special About Chapter 13?

Whenever I mention Chapter 13, I get looks of horror from clients and people listening to talks I give about financial stress. Chapter 13 is a repayment plan of 3-5 years and many seem to think that it is the end of the world, so I decided to do a blog post about how powerful Chapter 13 really can be in the right situation.

Why declare bankruptcy if I have to pay it back??

The first thing that is totally misunderstood or misrepresented about Chapter 13 is that you have to pay back everything you owe. While that may be true if you have a lot of equity in your house or other assets, Chapter 13 often results in a very low payment to unsecured debts like credit cards. In fact, many cases pay back 0% to credit cards. However, Chapter 13’s power comes in being able to pay back other debts (like taxes or mortgage arrears), relieving the pressure of minimum payments, and restructuring what you have so that you come out of the payment plan with a fresh start.

Isn’t debt settlement a better option?

Yes, debt settlement is a better option…for debt settlement companies. I always explain to clients that Chapter 13 IS debt settlement, but with a court order. There is little to no negotiation and the court reviews everything to make sure that creditors are getting what they are legally entitled to under the bankruptcy law. Again, that often means that your credit card companies get a small percentage of what they would under a debt settlement agreement.

But, my credit is ruined for 10 years and I can’t buy a house for 10 years!

Wrong. You can actually buy a house while in Chapter 13. If someone offered you a deal that you could be out of debt in 5 years, buy a new house, and have a 700 credit score (or higher) if you agree to make a monthly payment on time each month, would you say no or that it is a horrible idea? Not that Chapter 13 is all fun and games, but it’s a viable tool for getting a fresh start, clearing debt, and restructuring.

Aren’t the only people filing for Chapter 13 bad with finances?

Nope. One of the analogies I often use is that business owners and successful individuals do not have a problem using the laws as needed to get the best deal, whether it is tax planning, estate planning, or yes, even bankruptcy. There seems to be this idea in more middle-class populations that using laws to our advantage is somehow taboo and even unethical. Whether you are bad at finances or not, understanding the rights and options available to you is a smart move. Please note that I’m not encouraging people to run out and file bankruptcy for the fun of it. My point is that sometimes the smartest move is to get back on track and avoid the possibility of being homeless before the financial stress of the situation causes bigger problems.

So, this post was written a little tongue-in-cheek. I find that there is so much misinformation about what Chapter 13 is, what it can do, and why it’s often a good thing, that I tend to get a bit sarcastic. However, while Chapter 13 isn’t always a fun idea, it can often be life-saving, marriage-saving, and the fresh start that people need to move forward.

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 on our scheduling site.

December 12, 2018 By jenleelaw

Holiday Blues: Top 5 Signs a Senior in Your Life is Struggling with Debt

The Golden Years May Have a New Name: The Bankrupt Years

In the past month or so, a number of articles in the news have come out showing that seniors are declaring bankruptcy at an increasing and alarming rate. The debt burden on seniors is going up due to student loans,credit cards, and lack of retirement savings.

Around the holidays, we often see senior family members who we may not have a lot of contact with at other times of the year. Or, we get to go to their houses and can notice that something may be a bit off, including debt and credit problems.

Often, the difficult part for seniors is talking to someone to figure out what to do with debt. They are vulnerable to scams and slick sales pitches because of this fear of others finding out that their finances are not in great shape. There also tends to be a feeling of pride and really wanting to solve the problems themselves because that is how they have always done things.

The problem then becomes getting help for someone who may not be willing to admit to others, especially close family members, that there may be a problem. So, how can you identify potential problems before a senior in your life has to resort to bankruptcy, especially during the holidays when things often get lost in the shuffle?

Unopened mail. This is not necessarily a generational or senior issue. Someone who is afraid and avoiding a debt problem will avoid opening the mail. From a senior standpoint, caregivers or family members may notice piles of unopened mail on the counter or in a drawer. That doesn’t necessarily mean snooping around grandma’s house during a holiday celebration, but a stack of mail could be hiding in plain sight.
Never ending phone calls. Someone who is in debt will usually receive a lot of phone calls from creditors or even collection agencies. The phone ringing off the hook can be unnerving to the senior, but also a noticeable red flag that something may need to be addressed.
Avoiding home repairs. Home repairs can be expensive and can be one of the first things that get neglected when money is tight. Paying attention to the condition of the home when visiting a loved one during the holidays can clue you in to problems before the situation becomes dire.
Skipping meals or not going out with friends and family. I once met with a lady who was worried about her mother. Every time she would ask her mother to go out for a bite to eat, the mother would come up with an excuse. We later found out that the mother was embarrassed that she could not afford to eat and did not want her family members knowing how bad it was.
Missing mortgage payments. There have been interesting studies done that show that consumers are more likely to pay credit cards than mortgages when money is tight. Why? Because if you are one day late on your credit card payment, they are calling you multiple times a day (see #2 above). Mortgage companies very rarely call because they know if you do not pay, they can foreclose. There have been times where we found out that the mortgage was not being paid when a notice of sale was posted to the door and a family member saw it.

If you notice any of these red flags, it can definitely be a difficult conversation to have with a loved one. However, the sooner the problem is recognized, the easier it is to develop options and strategies.

September 1, 2018 By jenleelaw

Rule #1 – You are the Driver of Your Bus!

I recently read a book called “The Energy Bus” and it really reminded me of why I love what I do. I found myself wanting to be the character Joy. Sometimes gently, sometimes not-so-gently guiding people in the right direction. First, I highly recommend reading the book. It’s a quick, easy read, but life-changing.

It also reminded me of the number 1 rule that I strive to impress upon my clients, but I didn’t realize this was a “rule” before I read the book. That’s possibly because I’m not a big fan of rules in general, but that’s another article by itself.

You are the driver of your bus. So many people come to our office to talk about their debt and credit issues feeling dejected, hopeless, and out of options. My goal for every single person that comes in like that is to leave energized, hopeful, and full of options. But, it starts with you being able to see the light at the end of the tunnel. That’s our job. To give you a path to find the light and then energize you to keep working towards it.

Now, I can’t say it just like that. When was the last time your attorney said, “Come on in to our office, we’re going to talk about positive mindset to get everyone on board your energy bus!”? I’d get locked up in a looney bin. But, I can practice what I preach and significantly impact the lives of my clients, just like Joy did.

Being the driver of your bus means taking control and steering your life the way you want it to go. That’s easier said than done, but it also can start with one small change. Don’t be afraid to find out what your options are. We talk to so many people who put off taking control so long that it’s negatively impacted their health, their relationships, their work, etc. What if you knew that taking control and finding out that there are options would result in better health, relationships, work, etc.? Would you be less fearful? You are the driver of your bus!

Here is a list of the rest of the rules. Some I like more than others. I definitely agree with getting rid of energy vampires in your life. Life is too short to hang around people who literally suck the life out of you! If you come into our San Ramon office, this will likely be hanging on the wall.

The full book title is The Energy Bus: 10 Rules to Fuel Your Life, Work, and Team with Positive Energy by Jon Gordon. It’s available on Amazon: https://amzn.to/2CcSfmy

On a final note, there is also a children’s version. Your kids are watching how you react to challenges and difficulties all the time and they will copy you. The best gift you can give your children is to teach them that they are the driver of their own bus. https://amzn.to/2PponFv

June 24, 2018 By jenleelaw

Will I Ever Be Able to Get a Car Loan Again?

One of the most common questions we get when discussing bankruptcy is, “Will I ever be able to get a car loan again?”

The answer is yes. And probably a lot sooner than you may think.

However, there is a lot of misinformation about there. I read an article this evening on a site that works with people in bankruptcy to get a car loan. You would think the information would be correct, since they purportedly work with people in bankruptcy, but there were some major red flags.

What Chapter Did You File?

If you file for Chapter 7, you can get a car loan as soon as 1 day after you file with some of the lending programs out there today. However, this article incorrectly states auto loans are not available during the Chapter 7 because “it’s possible for the car to be included in your bankruptcy, which could leave your lender holding the bag.”

That’s not how Chapter 7 works. Everything you own on the day that your bankruptcy is filed is what is included in your bankruptcy (also known as the bankruptcy estate). A car lender should never be left holding the bag because the loan is secured against the car. Bankruptcy doesn’t wipe out a secured loan and leave the lender “holding the bag.”

If you filed for Chapter 13 (which is a repayment plan over 3-5 years), you generally need trustee approval and there are often limits on the monthly payment and total amount that will be approved. Talk to your Chapter 13 attorney to make sure it’s a smooth process.

This article instructs you to bring your financing information to your bankruptcy trustee and that the trustee will present it to the court in a motion to incur debt.

No.

You should bring your financing information to your attorney. The attorney will coordinate with the trustee’s office to get approval. Depending on your court, a motion is probably not required at all and the trustee is never the one who will file the motion – you or your attorney (if you are represented) needs to do that.

Finally, the article states that there may be a hearing and “if all of your debtors agree,” it will be approved. Again, no. First, you are the debtor and you have creditors. Second, all of your creditors do not have to agree or approve of your car loan.

The bottom line is that financing is available at almost any stage of the bankruptcy process, but it’s important to know your local procedures and work with your attorney to understand the steps that are required.

The article I read is here.

January 17, 2018 By Jen Lee

Identity Theft and Tax Returns

If you are not expecting a nice big refund on your tax return, you still want to file your taxes as soon as possible. This time of year, we start getting a lot of phone calls regarding identity theft, rejected tax returns, and missing refunds. The general story is almost always the same:

Jane files her tax return on April 1st. She gets a response back from the IRS that her tax return has been rejected because it has already been filed. Jane knows that she hasn’t already filed her tax return and starts investigating.

She finds out that someone else has filed using her social security number and likely bogus income/deduction numbers that resulted in a mid-size refund back to the scammer’s bank account. Before the whole thing can be tracked down, the scammers are gone with the refund and Jane is left with a mess to resolve with the IRS.

There’s a second part to these stories. Once we find out that the tax return is rejected, we recommend that the victim get a credit report for all family members. At that point, there is often identity theft involving new lines of credit, new car loans, or other accounts that family members have no idea existed.

Another reason to worry this year: Equifax.

I’ve done some writing on the Equifax data breach over the past few months. One big reason to especially worry this year is because of the Equifax data breach. We have no idea who has access to social security numbers and other identifying information. Filing your tax return as soon as you are able cuts off some of the risk of falling victim to this scam.

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 on our scheduling site.

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What’s So Special About Chapter 13?

Holiday Blues: Top 5 Signs a Senior in Your Life is Struggling with Debt

Rule #1 – You are the Driver of Your Bus!

Will I Ever Be Able to Get a Car Loan Again?

Identity Theft and Tax Returns

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