Category Archives: Consumer Finance

How well do you know reverse mortgages?

By now, anyone who watches TV has likely seen advertisements for reverse mortgages. Targeted towards senior citizens who own their homes free and clear. Ads highlight that the Federal Housing Authority (FHA) insures over 98 percent of all the reverse mortgages in United States. A reverse mortgage loan allows a home owner, at least 62 years of age, to convert the equity in their home into cash. Some people take monthly payments, lines of credit as well as lump sums of cash as needed. The loan against the equity in the home is secured by the home itself.

When the owner passes away the loan becomes due in full and is often taken from the proceeds of the sale of the home. In other cases, a life insurance policy may be used to repay the loan if home and other property is given to others in a will. The lenders offering reverse mortgages charge fees and surcharges along the way. These fees and the terms of the loan are a function of the life expectancy of the home owner, the value of the home and other factors.

Doing your research is important. The more you can learn about the pros and cons of reverse mortgages, the better decisions you and your family can make.

As the reverse mortgage ads suggest, the children of aging parents can be involved in the process of researching reverse mortgage loans and the lenders. Even if your parents are well-able to manage their financial affairs, it is always helpful to get another opinion, especially when there are so many new financial opportunities for seniors budgeting for and funding their retirement years. While researching, pay attention to credible alerts and warnings published online. Be careful because in the sea of information there is plenty of what looks like news but is really advertising telling you that reverse mortgages are risk free and there is never a need to look any further.

The loans are only as good as the lenders. Homeowners considering reverse mortgages should be notified by their lender that while the reverse mortgage is in place, the homeowner must still pay taxes and insurance on the property and that is not something covered by the lender. Lenders may also charge high fees on loans and get away with it when working with seniors who may have less bargaining power in negotiating the terms of the loan. It is important to know what financial terms are reasonable in the current time and market. Knowing what the competition is offering makes it easier to negotiate a fair reverse mortgage loan.

Beware of what you are risking with reverse mortgage loans and be vigilant. If you must, hire a professional to help you negotiate a better deal and avoid the awful stories told by several loan victims.

Read these stories at Center for American Progress: Treasury Secretary Nominee Steve Mnuchin’s Bet Against Seniors:

  • Only press coverage stopped the eviction of a 103-year-old grandmother on a technicality
  • 92-year-old widow evicted for 27-cent shortfall
  • Foreclosure actions that defy common sense

At Joseph Wrobel, Ltd., we help get our clients a fresh start at financial success. We feel strongly that everyone should be financially successful when they have the right tools and knowledge to make the best deals that protect their savings and help grow for the future.

About us: Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with questions and concerns about the collectors and their rights to pursue you.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

Credit repair tips: Secured credit cards, limited balances and OptOutPrescreen.com

There are many misconceptions out there about which path is the right one to financial freedom and success. One thing to always ask yourself is, “Who has something to gain by the decision I make?” If you are researching whether bankruptcy or a debt repayment plan is going to work, you will likely hear a variety of things from people with a wide range of opinions regarding the best route to a good credit score. If you have bad credit because you fell on hard times, it can be fixed. People who file bankruptcies typically qualify for conventional home loans with competitive rates within four years of filing bankruptcy. In a bankruptcy, you can discharge some or all debt you cannot repay. After the bankruptcy, when you are not suffering from all that debt, it is easy to get a secured credit card or two and follow a few credit building rules if you want to qualify for a good mortgage.

How does credit scoring work, generally?

Your credit scores all vary slightly among the three major credit reporting bureaus, TransUnion, Innovis, Equifax and Experian. While it may seem like a mystery calculation behind the magic curtain, there are a few basic rules that make logical sense. Your credit scores reflect the amount of risk a lender is taking by giving you a loan, mortgage or credit card. The better the score, the more likely you are to pay your bills and loan payments on time. If you owe less debt and don’t have a dozen minimum monthly credit card payments, you likely have the money to pay your bills – this is your DTI – debt to income ratio. You want your income to be enough that after you pay your bills you have extra spending money to save for a rainy day. If that is you, you are less likely to default on your bills and loans.

Regarding credit cards, there is a similar calculation of how much credit you have and how much you use. The information on your credit report indicates how high your balance may be and the amount of your credit limit you use. A significant portion of your credit score is an equation of how much credit you have available and how much you use. People looking to get into a new mortgage are often told to never use more than 20 percent of the available balance on a credit card. So, if you get a credit card with a $300 limit, don’t charge more than $60 a month. Always make the payment on time but do carry a small balance instead of paying it off in full – because if the credit card company is reporting zero balances it looks like you have credit cards you are not using and that can hurt your score.

You can always get a secured credit card even if you don’t qualify for a regular credit card yet.

Secured credit cards are easy to obtain. Most local banks offer them. You pay a $200 deposit, for example and your secured card will have a $200 limit. You can use it to pay a small monthly bill or two, like Netflix, every month, and you are now boosting your credit score. If you fail to pay the credit card bill, the company cancels the card and you forfeit the deposit. If there are more charges you can be on the hook for them as well and a collector will hurt your credit score and call and harass you until you pay up. If you are working on credit to apply for a mortgage, use the same rules that apply to conventional credit cards, and always keep your balance due somewhere between 10 and 20 percent of the available balance on the card. Again, avoid maxing out the card, even if you pay it off every month in full or always make the minimum payments on time. Just like the debt to income ratio, your available to used credit is important to monitor.

The easiest thing to boost your credit may take only five minutes on OptOutPrescreen.com.

The credit bureaus encourage consumers to be educated about credit offers and opportunities with good interest rates. As your credit score starts rising you will start receiving pre-approval letters in the mail. The credit reporting companies share your improving credit information with these companies. The Fair Credit Reporting Act (FCRA) is the federal law that imposes rules and restrictions on credit companies. The law gives you the right to “Opt Out” of receiving credit offers. Did you know that taking advantage of your opportunity to opt out can raise your credit score, by 25 points in many cases?

Why does Joseph Wrobel Ltd. care about your credit score?

Our Chicago bankruptcy law firm has been around for decades and we have a solid reputation. We don’t put people into bankruptcies simply to earn a fee and move clients through a big law factory like some of the big bankruptcy firms. Instead, we focus on teaching potential clients about the options they have and how they can best fix their finances. We know that the bankruptcy will show up on your credit score and it may take a little while to be approved. What matters is not the bankruptcy or what lead to it, what matters is what you do after the bankruptcy. Following simple credit use tips and maintaining control over your finances can help you get back to a very good credit score much quicker than you realize. While we are not a credit score repair business, we do know a few things and have credit repair professionals who can help.

About us: Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with questions and concerns about the collectors and their rights to pursue you.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

Taking the sting out of bankruptcy: You may be surprised how liberating it can be

There are many people who consider filing for bankruptcy for a while before they finally decide it is time to go ahead. Some of the common fears people have is that everyone will find out about the bankruptcy and shun them or talk behind their back. In all likelihood, the people you think may be doing so well may also be considering a Chapter 7 or Chapter 13. It is important to remember that a bankruptcy does not mean failure – a bankruptcy means you are smart enough to take advantage of the law to protect you and give you a fresh start. People may be hesitant to file for bankruptcy because a friend told them incorrect information about the trustee coming to take and sell everything they own; this is a false myth. Credit scores are another concern many have, and they fear they will never get credit again, when in reality many lenders may look more favorably on you after you no longer are buried under a mountain of debt. While it is not the most common topic of conversation, many will tell you the relief they experienced after they filed for bankruptcy and got the mountain of debt and creditors off their back.

People are not likely to find out about your bankruptcy unless you tell them.

In years past, there may have been a more negative stigma to bankruptcy and small town newspapers published names and cases, possibly for the benefit of any creditors and providing them notice. In reality today, there are so many bankruptcy filings, especially in major cities like Chicago, that the newspaper would be massive if bankruptcy filings were posted. Unless you decide to tell people, your friends and neighbors will never know you filed for bankruptcy protection. There is a federal bankruptcy website where you can look up your own bankruptcy information and it will appear on your credit report and on background checks. Do now worry however, as more people have bankruptcies than you may realize and they still find new jobs, buy homes and cars.

It is not an immoral or unethical decision to take advantage of financial laws like bankruptcy.

Say you are sued by a creditor and they obtain a court judgement against you for $50,000. Yes, you can list that money judgment in your bankruptcy and wave goodbye to paying that off. For many people, the threat of a judgment being collected by wage garnishments and asset seizures is enough for people to decide to file for bankruptcy. Some people worry that the judge or court may be mad at you, but that is of no concern. A money judgment is just a court order to pay someone. The obligation to pay a debt can be discharged in bankruptcy – the whole point is to eliminate debts you cannot afford to pay so you can have a fresh financial start.

You can keep your car, house and belongings despite filing for bankruptcy.

There is a qualifying financial test called the Means Test and a bankruptcy lawyer can review your financials and advise you whether you qualify for a Chapter 7 discharge, the traditional bankruptcy most of us think about, or a Chapter 13 reorganization, in which you can make payments to catch up on your debts over a three to five-year period. If your vehicle is financed, you can sign a reaffirmation agreement and keep making payments despite the bankruptcy. You are allowed to keep a certain amount of equity in your home and personal belongings and assets up to a certain exemption value, despite filing for bankruptcy.

One of the best things about a bankruptcy filing is that by law, the automatic stay provision of the bankruptcy laws kicks in when you file your petition for bankruptcy – creditors and collectors must stop all collection activity and they can no longer call you while you are in bankruptcy. The stress relief of the automatic stay provision alone may bring you to a major sigh of relief.

Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with best credit repair options.      

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

 

 

Gas tank getaways and overnights from Chicago: Get out and enjoy yourself!

The 4th of July weekend is here! Are you bummed because you don’t have a fancy lake house to go and spend the long weekend on your boat, grilling steaks and lobster? Do not worry, you too, can and should get out of the house and do something fun this weekend, and this summer generally. Life is short and we never know when some turn of events makes it more difficult to take weekend trips and gas tank getaways. The average price of gas in Illinois is $2.40 which is lower than recent weekends, and pretty good for the summertime generally. Here are some tips on fun weekend destinations and activities that will not break the bank. Remember, it is not how much money you have that matters, it is how smart you are at getting more for your hard earned buck.

5 great gas tank getaways and weekend trips from Chicago – click on the titles to visit the links:

  1. Starved Rock State Park

100 miles west on I 80 just before I 39 you will find one of Illinois’ best state parks, full of hiking, fishing and boating with canyons, trails and log cabins. Someone who visited last week and must have camped, had this to say in a Google review, “Awesome. Trials are outstanding, delivering the most beautiful views, and being very well maintained ! Campground was good as well. Hot and reasonably clean showers, very nice sites.”

Travel tip: bring good hiking shoes, the trails are fun, but not in flip flops.

  1. Chicago Museums and Navy Pier in Chicago

Don’t want to drive or don’t have a car? Hop on the Metra or a CTA train to the Loop and museum campus just to the south of Grant Park. You can visit museums that are “donation only” or have affordable deals on tickets, especially during the summertime and holiday weekends when tourists are in town. The Art Institute of Chicago, the Field Museum, Shedd Aquarium, and the Museum of Science and Industry should be on the top of your list. Maybe do one per adventure because there is so much to see. When you’re done at the museum, walk or take a cab to nearby Navy Pier to grab something to eat and enjoy all the entertainment and people watching you desire. If you’re daring, look for one of those Jet Ski rentals at Navy Pier or ask someone there where you can get your hands on one.

Travel tip: bring a backpack with essentials, maybe snacks and waters.

  1. Lake Geneva, Wisconsin

75 miles north off I 94 you will be able to Escape to Wisconsin without driving all the way up to Door County and worry about all those fine members of Wisconsin law enforcement. If you want to go camping or stay at a nice bed and breakfast, you can find just about whatever you are looking for in the Lake Geneva area. Many people recommend the Lake Geneva Canopy Tours – zip lining, starting at $30 for an unbelievable ride and views. After you recover from thrill-seeking, fishing, boating or simply laying around, there are great places to eat. From Annie’s Burgertown ($) to BJ Wentkers ($$$) Triangle Bar & Grill, Lake Geneva has options for every taste and budget.

Travel tip: clean off your camera lens and start snapping for Facebook, Twitter or Instagram!

  1. Six Flags Great America in Waukegan

You are never too old to go to Six Flags! It shouldn’t take more than an hour to get there from just about anywhere in Chicagoland. Take your kids or take yourself and spend a day getting back to your childhood and take in the Americana that is a big roller coaster theme park. Of course there are all sorts of things to do there if the big coasters are not your thing. You certainly won’t have a hard time finding treats to eat and souvenirs to bring home. If you are sticking to a budget, but still want to go on the best rides and get your money worth, get the FLASH Pass and walk right up to your short VIP line instead of waiting in the sometimes very long lines for the popular and newer rides.

Travel tip: sunscreen will be your best friend because you can get burned easily when having fun.

  1. Summerfest in Milwaukee, Wisconsin

If you really need to take a break from work, daily life and chores, consider indulging in one of the concert events of the season – Summerfest, in Milwaukee. Also 100 miles and just short of two hours depending on traffic, Milwaukee is much closer than most of us realize. And if there was ever a place to walk around listening to great music and enjoying a few beers, Milwaukee should be at the top of the list. Some people take the Amtrak train from Union Station and save money on gas, parking and worry about driving after drinking those beers. The music lineup at Summerfest is always impressive and you can catch major acts as well as some more local bands.

Travel tip: study the map of the grounds before you go and use the buddy system; it’s easy to get lost or mixed up with a crowd of fun people.

We hope everyone has a fun and safe 4th of July weekend. If any of these day or weekend trips are fun, let us know. And even if you stay home, you can close your eyes and go on imaginary trips wherever you want!

Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with best credit repair options.      

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

How many ways can credit scores cost me money? What can I do about it?

The Consumer Federation of America “(CFA) is an association of non-profit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization’s Board of Directors.[i]” The CFA studies consumer behavior and uses focus groups to follow economic trends and how public policy can affect consumers. The use of credit and the cost to consumers when they have low credit scores is a particular area of inquiry for the CFA. Creating pro-consumer policies and increasing communication and awareness about credit issues is a focus of this service organization.

The recent survey and release of findings on credit scores and the costs to consumers

The CFAs sixth annual survey of credit scores today, was released June 13, 2016. The survey findings indicate that over 80 percent of consumers do not understand some basic facts about their credit scores. The following are highlights of the survey as reported in the CFA press release:

  • Credit scores are used by mortgage lenders (88%) and credit card issuers (87%).
  • Key factors used to calculate credit scores are missed payments (91%), personal bankruptcy (86%), and high credit card balances (85%).
  • Ethnic origin is not used to calculate these scores (believed by only 12%).
  • 700 is a good credit score (81%).[ii]

The findings show that the Millennial generation have less an understanding of the credit scoring system when compared to Generation X.

What consumers do not know, can cost them money

A low credit score can affect many aspects of a consumer’s day to day life. Not only is your credit score used to determine the percentage rate you would pay on a car or home loan. The insurance rates you pay can be significantly higher than your neighbor with the higher credit score. When the insurance companies consider a consumer with a low credit score (something under 620) they figure that individual is more likely to file multiple insurance claims, and the statistics back it up.

Many people with low credit scores have more difficulty financing a home and renting is their only option. More bad news for renters with low credit scores – expect to pay a higher security deposit when renting a home or apartment. The assumption is that people with low credit scores have a hard time paying their bills, so the rental owner wants more money on deposit in case the renter with the low credit score cannot pay their rent.

Today is the day you can start learning more about credit and how to maximize yours

By reading this article and the CFA press release, you will know more about credit than many others out there. Here’s something else to be aware of, advocates for reform want more protection for consumers so their lives are not determined by credit scores. If you do some research on the Internet, you can learn how to write your local legislative representatives and tell them you want them to take better care of consumers with protection laws that prevent big companies from charging you more money due to your credit score.

Next steps in repairing, boosting and making your credit score bulletproof

Well, we can’t really make your credit rating bulletproof, but there are several ways you can improve your score and keep it there. If you are underwater on all your payments and your scores suffer every month with negative reports, a Chapter 7 or 13 bankruptcy can help you wipe out the debts you cannot pay and give you a fresh start. Rebuilding your credit is much easier when you are not behind the eight ball. We can connect you with credit repair companies who use advanced systems to wipe out negative debt and “zombie” debts that may be hurting your score. When you also consider secured credit cards, credit unions and more, you can really take control of your credit, save money and live the way you deserve!

 Joseph Wrobel, Ltd., works with clients on consumer issues including bankruptcy and they can offer additional information to find out if you qualify for Chapter 7 or 13 bankruptcy, and your options and rights under the law. The firm will also advise and assist clients with best credit repair options.   

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

 

 

[i] Consumer Federation of America, website, About CFA

[ii] Consumer Federation of America, 6th Annual Credit Score Survey Reveals Large Majority Know Credit Score Basics But Don’t Understand Important Details, Jun. 13, 2016 press release.

Beware of IRS scams in several forms, report the “bad guys!”

Most people born and raised in this country know how the IRS works, and that an IRS agent calling themselves “officer” does not call you on the phone one day and extort a payment under threat of an arrest warrant. Sounds too amazing to be real? Guess again. Just one of the scams the “bad guys” are using involves demand of full or partial payment of an overdue balance to the IRS, with the promise (or threat) that law enforcement may be speeding to your door at any minute to arrest you and toss you in IRS jail until you cough up the money they’re demanding. The story sounds like something out of a bad movie about tourists being scammed abroad in countries where the police cannot help.

In the real world, police actually are here to help you, when it comes to your reporting IRS scammers.

Tax time is a perfect time for scammers who know you may have recently filed your IRS tax return and either expect a refund or to make your tax payment(s). Many of these “bad guys” conducting the scams are calling non-native Americans and commonly targeted minority groups, hoping they find someone who does not know how the IRS really works, or worse, is fearful of being deported in the event they are not in the country legally.

One day, however, the “bad guys” called a realtor, very aware of these types of scams, and the realtor fired back at them, calling the local ABC television station to help them warn viewers about IRS refund scams. The realtor said the man who called him had a noticeably foreign accent and very quickly determined the person he was talking to did not work for the IRS.

The IRS issued responses and advisory statements to the public in light of these and other scams.

In a recent announcement the IRS stated that, “Aggressive and threatening phone calls by criminals impersonating IRS agents remain a major threat to taxpayers, but now the IRS is receiving new reports of scammers calling under the guise of verifying tax return information over the phone.[i]

The IRS will never call and ask you to verify personal information over the phone. Everything that happens with the IRS is done with paperwork and they will send field agents to your home before calling you. If you ever receive a call from someone who says they are an IRS agent, call the IRS directly or your local police department if you suspect a scammer. The realtor who received a phony phone call from one of the “bad guys” notified his local police department, who told him they were receiving several calls from people telling similar stories about scammer phone calls.

Joseph Wrobel, Ltd., works with clients on consumer issues including bankruptcy and they can offer additional information to find out if you qualify for Chapter 7 or 13 bankruptcy, and your options and rights under the law. The firm will also publish notices and warnings about consumer fraud scams to keep you aware of the “bad guys.”  

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

[i] IRS, Consumer Alert: Scammers Change Tactics, Once Again

Memorial Day 2016 Chicago Bankruptcy Question and Answer Podcast with Joseph Wrobel

Chicago bankruptcy and consumer credit attorney Joseph Wrobel shares news and updates in bankruptcy law as well as business and consumer financial matters. It has been documented that financial troubles can cause all sorts of ailments, the most common of which is sleeplessness. Joseph Wrobel helps clients alleviate their anxiety created by the inability to pay bills and the embarrassment of financial distress.

Click/tap here to listen to the podcast

Sample questions answered in this 30-minute show:

  • Can I convert from a Chapter 7 to a Chapter 13 bankruptcy if I made the wrong filing?
  • Is there a way to stop a garnishment and get a payment plan without filing bankruptcy?
  • Will the bankruptcy trustee sell my house in order to pay off any of my debts?
  • How can I file for Chapter 7 with damaged credit and little or no student income?

Joseph Wrobel has been a practicing attorney since 1973 and has experience in a wide variety of law relating to legal matters for individuals and families. Wrobel helps clients get out of debt and get a fresh start. He is an active member in several bar associations and the Bankruptcy Panel of Pro Bono Program of the Chicago Volunteer Legal Services. After serving the U.S. Army Reserve 363rd Civil Affairs Unit, Wrobel earned a B.A. in Psychology from Northwestern University and in 1973, he earned a JD from DePaul University Law School.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

Visit our Chicago Bankruptcy website online for more about the firm or call for more information at (312) 781-0996 or e-mail at JosephWrobel@ChicagoBankruptcy.com.

Want to get rid of overdraft fees forever? Five steps to success!

The majority of people who pay the lion share of bank overdraft fees are the people who can least afford those fees! Have you ever needed to buy gas and knew you were low on your checking account balance, but knew the debit card would still work? I hope you filled the tank because a $35 fee on top of a $20 gas purchase makes no sense. Some people tell stories about banks choosing to approve and post your larger purchases first, to help you, of course, and then they post the small stuff last. If your smaller purchases for the day post when your account is in the red, each little purchase might trigger an overdraft fee. That can make for some expensive coffee, even if it was from a gas station.

Think of overdraft fees as a bad habit you can kick if you follow five steps to success!

  1. Ditch the overdraft protection so your card declines and you avoid the fees.

Consumer protection laws designed to protect you, require you to opt-in to the bank’s overdraft protection programs. If you do not opt-in to overdraft protection, your debit card will be declined when you go to make a purchase and there is not enough money in the account to cover it. The upshot is not being able to overdraw your checking account by over swiping your debit card. These days, payment system technologies hold the money on your debit card, and even though it might not post for a day or two, you should not be able to overdraw your account with debit transactions if you do not opt-in to overdraft. Make sure you have some emergency cash or a credit card on hand in case you need it.

 

  1. Connect a savings account to your debit checking to cover any “oops” charges.

Most banks and credit unions offer the ability to connect your checking account to an emergency or back-up account that will transfer some money into your checking account when it becomes overdrawn. The idea is to use your own money to cover it instead of using the bank’s money to cover your overdrawn purchases and sock you with fees. This is a good way to cover yourself in the event you completely forgot the tollway was going to debit that extra $40 from your account when your tollway balance fell short.

 

  1. Pay with a credit card or actually use cash, and when it’s gone, you’re done spending.

Credit cards are great when you use them like debit cards. How much do you have in the account? That’s how much you can afford to swipe on the credit card. Now, if you blow a tire and need to buy a new pair of tires, the several hundred dollars might have to ride on the credit card for a paycheck or two, but when you get caught back up, any interest you might pay for carrying a balance is tiny in comparison to overdraft fees. Stashing emergency cash in the car and at home is a good idea. Some people call it “wall money” and more often keep it in a coffee can out of reach in the kitchen or somewhere only you know where it is. If you have to, run to the bank and make a deposit before the end of the business day so there is enough money in the checking account before the bank posts the transactions that could put you under and tack on all the overdraft fees.

  1. Make your mother proud, sit down, and make a budget you can manage.

Go ahead and skip to number five if you want, but consider making a budget, if only for a minute or two. Figure your fixed monthly expenses and determine how much you can really afford for discretionary expenses and fun stuff. Imagine when you get paid, you take a pile of cash and stack it up in the different budget piles – when the money’s gone, you’re done spending it. You might get mad the first few times you learn how it feels to want to go out to dinner and you regret spending your extra budgeted money on baseball tickets. It really takes discipline. If you try and fail, try and try again. You might just end up making some positive spending and saving habits despite your spending habits.

  1. Save money for rainy days or those days you otherwise would have overdrawn your account.

A savings account can be addictive. When people start saving money they are proud of the stash they set aside and want nothing to ever happen to it. As you keep adding a little bit here and there, you feel more pride in your savings. If in the meantime you overdraw your account or run out of money and need that new set of tires, pull some from savings – it’s okay, that’s what it’s there for. Financial success is a function of your wins and losses with money. Think of it like a game you can play. Test yourself and see how strong you may need to be to win the battle. When you win more battles than you lose, you win the war against overdraft fees!

Joseph Wrobel, Ltd., is here to help individuals take advantage of bankruptcy laws to help get a fresh start. However, if we can share smart financial advice to help you avoid a bankruptcy, or keep a clean financial record after a bankruptcy, it’s a good thing for everyone.

Joseph Wrobel, Ltd., works with clients on consumer issues including bankruptcy and they can offer additional information to find out if you qualify for Chapter 7 or 13 bankruptcy, and your options and rights under the law.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

Debt settlement pitfalls and issues, get it in writing

When deals look too good to be true, they probably are. Credit card companies and bill collectors may reach out and offer settlement “deals” to customers who owe them money. Unfortunately, many dishonest bill collectors out there make deals with customers and then completely fail to honor those agreements once the money is paid. With some collection agencies, the customer must be late in their payments to qualify for a partial settlement. If you qualify for a settlement with a partial payment, and you make an agreement over the phone, enforcing that agreement can be difficult. There may also be income tax consequences and liabilities for settling debts for less than you owe, and in many instances, the creditors do not tell people about tax consequences.

Creditors may offer partial settlements when they are otherwise ready to file a lawsuit against you.

The companies who own the consumer debt you owe, on a credit card, for example, have a limitation of five years to file a lawsuit in court to seek a judgment against you. Having said that, they can continue with debt collection forever if they do not obtain a court judgment. If the debt has been unpaid for years, and it is getting close to the time when the collector has the option to file a lawsuit against you, they may reach out and offer a settlement of the debt you owe, sometimes taking 50 to 70 percent off the entire balance, if you pay in full. At the time, if the creditor is threatening a lawsuit they are doing so because they think you will pay the settlement amount to avoid a trip to court and a judgment entered against you.

Make sure to get the deal in writing.

The deals many creditors offer requires the partial payment to satisfy the debt be paid in one lump sum. Others may accept payments over a short time, but the overall deal will not be as good. It is very important, if you make a deal with the creditor, to pay a partial amount in settlement of the entire debt, that you get an agreement in writing. Too often, the deals are made over the phone and once the creditor receives your partial payment, they sue you anyways or continue trying to collect from you, even when you thought you had an agreement.

There are credit score and potential tax consequences of settling a debt.

The policy of some credit companies is to offer settlements once debts have become delinquent, either 60 days or longer. If you have a high credit card balance and interest and you have been paying on time, your credit score might have to suffer late payment marks before you may be eligible to participate in a deal to settle your debt for a partial payment. Likewise, with the necessity to get the agreement in writing, make sure the agreement states that the creditor will promptly notify all the credit agencies.

The IRS considers a debt owed, that is written off, to be income. Income from a settlement that exceeds $600 must be reported when you file your taxes. Most creditors in the business of collecting and settling debts will send you an IRS Form 1099-C to file with your taxes, reflecting the write off amount as taxable income. It is important to keep track of tax liability for settled debts, to protect yourself in the event the creditor never sends you a form, or sends a form to the IRS but not to you.

Bankruptcy can be an alternative to court judgments and collection agreements.

While some bill collectors will work with customers and give them written agreements with fair terms, many others take what they can get and run, or sue you anyways. If you do get sued for a debt collection and the company is threatening to take your property, wages, tax returns or more, a Chapter 7 or 13 bankruptcy filing can stop them in their tracks. As soon as bankruptcy petition is received by the bankruptcy court, the automatic stay provision takes effect, making it a federal crime for a collector to continue pursuing collection efforts against you while you are in bankruptcy. You may be eligible for a Chapter 7 full discharge, or a Chapter 13 structured reorganization plan, paying debts back over time, often pennies on the dollar.

Joseph Wrobel, Ltd., works with clients on consumer issues including bankruptcy and they can offer additional information to find out if you qualify for Chapter 7 or 13 bankruptcy, and your options and rights under the law.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

Credit counseling: Required before bankruptcy

The bankruptcy laws and courts give bankruptcy petitioners a fresh start, with a partial or full discharge of certain debts and financial obligations. They also require individuals filing for bankruptcy to attend a credit-counseling course and obtain a certificate of acknowledgement to file with the court before it accepts a petition for Chapter 7 or Chapter 13 bankruptcy. There are many reasons individuals file for bankruptcy protection. The automatic stay provision of the bankruptcy court stops all creditor collection activity, including wage garnishments, when an individual files a bankruptcy petition. In some cases, waivers are available under certain circumstances.

What’s the purpose and what should I expect?

The purpose of the credit-counseling requirement is to educate individuals about their options, and help them consider whether they need to file for bankruptcy or could solve their financial problems with a debt repayment plan or other means. Many credit-counseling agencies help you prepare a budget for your income and expenses, and if it is clear that you lack the income to pay the debts, the agency will confirm you as qualified for bankruptcy. Despite the credit-counseling agency offering you a repayment plan option, you are not obligated to accept anything but will be required file the proposed plan with the bankruptcy court.

Selecting a qualified credit counseling agency

Qualified nonprofit credit counseling agencies are approved by the U.S. Trustee’s office. The credit counseling must take place within 180 days of the filing of the petition for bankruptcy. Once you select a qualified credit-counseling agency and complete the program, you will receive and need to file with the bankruptcy court, a certificate of completion of your credit-counseling course.

Many of the credit-counseling providers offer online courses, some for $25, and they are available in both English and Spanish. The U.S. Department of Justice publishes a list of Illinois Approved Credit Counseling Agencies. It is important to make sure the credit counseling agency you select is approved by the Trustee’s office to ensure the court will accept their certificate of completion.

Do I qualify for an exception to the credit-counseling requirement?

There are a few exceptions to the requirement to attend credit counseling before filing for bankruptcy. Where an individual needs to file for bankruptcy to stop a wage garnishment, the court may accept a certified application to waive the requirement. If you have a mental or physical incapacity, or are in active military duty, you may be able to obtain a waiver of the credit-counseling requirement before filing bankruptcy.

Joseph Wrobel, Ltd., works with clients on consumer issues including bankruptcy and they can offer additional information about credit counseling courses.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!