Debt Consolidation

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.

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.

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.

January 10, 2019 By Jen Lee

The Most Important Part of Your New Year’s Resolution

Every year, we all vow to lose weight and pay off debt. We are very predictable creatures. Those are the top two resolutions for people who actually make resolutions. While it’s great to have a goal, many forget the most important part of reaching a goal:

Create a plan!

When it comes to debt, it’s very hard to pay off all of your debt if you don’t know how much you owe, what your options are, what you can do, and when you should do it. I often see people give up on their goals because the goal is so big that it becomes this overwhelming thing that you can’t even imagine.

So, what does a plan look like? Where should you start?

List out everything you owe, including balances and monthly payment amounts. This is the scariest step, but it really helps to figure out where to go next.
If the list looks overwhelming, commit to getting yourself some professional advice on your rights and options (schedule with Jen Lee Law).
Create a budget so you know how much you have to pay towards debt every month.
Decide on the order you want to tackle the accounts.
Develop a few milestone points where you celebrate what you’ve accomplished.

Finally, remember that your plan has to be based on what works for you. There is no one-size-fits-all approach to accomplishing any goal (see last week’s post about more than one way to skin a cat). If you know that you need someone to keep you accountable, find that person. If you know that you have a weakness for online shopping, delete your saved credit card information out of the shopping cart (Amazon, I’m looking at you). If you know that numbers are not your friend, ask for help. You can always schedule an appointment on our website to review your budget and your rights and options.

January 3, 2019 By Jen Lee

Lies You Find on The Internet

Nothing makes me more frustrated than finding out someone read something on the internet that was wrong and then it influenced that person’s decision.

Last week, I had a colleague reach out to me regarding a company that his client hired to help him with some debt issues. The client thought he had done debt consolidation, but the company’s information on their website says that they only do debt settlement or debt negotiation. So, the first issue was the client likely did not fully understand what he had signed up for in the first place.

Then, I started looking at the company’s website. It gave wrong information about the benefits of their program and also very wrong information about the difference between debt settlement and bankruptcy. Here is the paragraph from their site that I am going to pick apart:

“Bankruptcy is an option that is generally treated as a last resort and if you need to protect appreciating assets. It will remain on your credit report for as long as 10 years & you can be denied employment, state licenses, insurance, as well as tenancy of an apartment. Most importantly, you can be denied virtually any type of credit with a bankruptcy on your report for several years. In addition, since the bankruptcy laws have changed recently, it is even more difficult to qualify for Chapter 7, the method of liquidating assets to eliminate your debt. You will not be allowed to discharge alimony, child support, taxes, student loans, judgments, or any loan on the bankruptcy petition. Under Chapter 13 bankruptcy, your debt payments are simply restructured meaning you will still have to pay a percentage of your debts while you suffer the consequences of bankruptcy. Debt negotiation is an alternative to bankruptcy.”

How is this wrong? Let me count the ways.

There are very specific situations where a bankruptcy can be used against you in employment and they are very few. I did an interview on this topic with Kira Feick of Ignite HR because it’s such a misconception.
For insurance, your credit score cannot be used to raise your rate or deny you insurance in California. If you consent to using your credit score, the only thing the insurance company can do with it is lower your rate.
You can be denied credit for anything at any time, whether you have a bankruptcy or not. However, you qualify for a mortgage a year after bankruptcy and a car loan immediately after bankruptcy. You will receive credit card offers BEFORE your bankruptcy is completed. If you are in a debt settlement program, you will not get credit because all of your accounts are in collections.
The bankruptcy laws have not recently changed. The last time there was a significant change in qualifying for bankruptcy was 2005 (14 years ago…). There are also a number of ways to qualify for Chapter 7 (and sometimes Chapter 13 is a better route – see last week’s post).
The list of things they say you cannot discharge is pretty much wrong. You can discharge taxes in many circumstances, judgments, and all personal loans.
Finally, they try to scare you by saying that in Chapter 13, you still have to pay your debts back. Shocking. You have to pay more back with “debt negotiation” than with Chapter 13 in most cases. Again, see my recent post on what’s so great about Chapter 13, because people generally recover much more quickly from filing Chapter 13 than trying a multi-year debt settlement program.

Researching online can be a good thing, but make sure that you make your final decision based on knowing all of your rights and options, not just the one they are trying to sell you.

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.

Got Debt? Your Employer Should Care

Meet Bernadebt – the Elephant in the Room!

The Most Important Part of Your New Year’s Resolution

Lies You Find on The Internet

What’s So Special About Chapter 13?

Disclaimer and Additional Information

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