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4 days 4 hours ago

The Best Way to Use a Credit Card? Treat It Like Cash from New York Times February 12, 2020
Fewer people than ever carry cash these days, it seems. Life can seem ultraconvenient when you don’t have to worry about a wad of bills in your pocket (or even a wallet in your pocket, for that matter).

But it can hurt people with low incomes when businesses go cashless, it can hurt workers who rely on cash tips and — even if you’re not in either of these groups — it can hurt you because it’s easy to get into financial trouble with credit cards.

Studies prove that people spend more when using credit vs. cash, and late payments are on the rise.

“You have an out-of-sight, out-of-mind phenomenon with credit cards,” said Amy Bucher, the director of behavior change design at Mad*Pow, a design consultancy group. “Unless they’re checking their credit card balance on a daily basis, most people don’t have an awareness of how much debt they’re in.”

But if used responsibly, credit cards are a fast way to build credit without paying a dime of interest. Good credit scores can save you money down the road, typically qualifying you for lower mortgage or auto loan interest rates. Credit card rewards can make things you buy a little cheaper.

The good news: Mental tricks, apps and tools can make spending with credit cards similar to cash, giving you the best of both worlds.

Editorial note: The assessments of financial products in this article are independently determined by Wirecutter, a New York Times company that reviews and recommends products, and have not been reviewed, approved or otherwise endorsed by any third party.

Make credit card purchases feel tactile
Cash requires you to shop at a physical store, grab your physical wallet and hand over physical money. Giving a cashier a $20 bill in exchange for an $18 item is a tangible transaction. In exchange for a $20, you now have $2 left and a physical bauble.

But a credit card looks the same before and after the transaction, obfuscating what was actually given up for that bauble. Add online shopping to the mix, and you might not even think about your credit card or where the money is coming from.

Grab a receipt. Beverly Harzog, a credit card expert and consumer finance analyst for U.S. News & World Report, always takes a receipt. “It’s just one more thing to help you keep a grip on reality,” she said. “When they ask if you want a receipt, just say yes so you have that feeling of payment in your hand.”

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Remove payment information from your computer. Consumer psychologists refer to creating friction — meaning barriers to doing something — as an effective way to stop an impulse buy. “If you’re sitting on your couch, you’ve had two glasses of wine, you see rain boots on sale, and your credit card information auto-populates, you’re probably going to buy it, because you really only needed to hit two buttons to make that purchase,” Ms. Bucher said. “If you had to get off your couch, pull out your credit card and type in the numbers, that’s friction. You have to commit a little more to make the purchase.” In contrast, digital payments like Apple Pay offer convenience when you’re at the cash register, but they take cash and physical cards out of the equation. If you’re nervous that holding your phone next to the scanner to complete a transaction could turn you into a spendthrift, don’t partake.

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Set spending limits
You can’t buy $300 headphones if your wallet contains only $100. But you can if you’ve got a card with a credit limit over $300 (even if $300 exceeds your budget).

Let robots count your money. Budgeting apps like You Need a Budget ($84 a year) or Mint (no fee) track balances across all your accounts, giving you a clearer picture of your actual balance even if you have multiple cards and accounts from different banks. Some banks, such as Bank of America, also let you sync other accounts, even if those accounts are with competing banks. Check your balance in the app to ensure your next purchase fits your budget.

Try “action planning.” Determine your budget, then implement measures that prevent you from exceeding it. The Uber Credit Card has a feature that lets you create a self-imposed spending limit for certain categories or merchants, which could remove the temptation to stop at Starbucks on the way to work. Other companies, like Discover, allow you to set up alerts if your credit card balance exceeds a certain amount or you near your credit limit.


4 days 19 hours ago

Section 108 of the Internal Revenue Code Relief of Indebtedness Income and WorkoutsOne of the most overlooked areas of the law when doing a workout is Section 108 of the Internal Revenue Code (“IRC”). Section 108 is a trap for the unwary and unless the attorney or lawyer is aware of this tax code section, it can upend a workout or result in a taxpayer having to recognize, report, or pickup unknowingly a significant amount of taxable income. This could ruin the attorney-client relationship or worse yet a malpractice lawsuit by the client against the attorney.

Let's begin this post with an explanation of Section 108 of the IRC.

IRC § 108 provides that if an individual or an entity that owes money (the “Debtor”) is relieved of indebtedness, then that indebtedness is deemed to be ordinary income to the Debtor. The Debtor  must report that income on their tax return and the Creditor is required to file a 1099 with the IRS. There are two exceptions to this rule: first, if the Debtor files for bankruptcy protection, then the relief of indebtedness income is not picked up; and second, on a balance sheet basis, if the individual’s liabilities exceed their assets and they are insolvent, then they do not have to pick up the income.

The goal of a workout from the perspective of the Debtor (the person who owes money) is to pay less than the balance due to the Creditor (person or company owed money).

An example of the application of IRC § 108 will help to explain the above. Let’s assume that an individual owes a financial institution $1,000,000.  The individual is unable to pay the $1,000,000, so the parties enter into a workout (an out of court settlement) in which the individual repays the financial institution $600,000. According to IRC § 108, the taxpayer must pick up the $400,000 differential between what he or she owed and paid as ordinary income.
Unless the client is made aware of this fact in advance of or during a workout, the client may walk away from the workout. If not told at all, when the client receives the 1099 from the Creditor or worse gets audited by the IRS, they will point a finger at the attorney or sue the attorney for malpractice.

Many clients and some lawyers assume that the $400,000 of income is capital gains, but it is ordinary income.

Another question raised by clients is how does the IRS find out about this relief of indebtedness income? The answer is that the Creditor  is required to file a Form 1099-C with the IRS reporting the relief of indebtedness income for more than $600 of forgiven debt.
Yet another question asked by clients is whether the Creditor will file the 1099 with the IRS? The answer is that the Creditor is legally required to do so and most institutional investors will do the 1099 filing.

Section 108 of the IRC comes up in almost every workout, but is currently most prevalent in taxi medallion and restaurant workouts. Both of these industries are struggling and are areas we are doing a lot of workouts.

Clients should review all workouts with their CPA’s or accountants.

At Shenwick & Associates, we are not tax lawyers, but we are familiar with the IRC and James Shenwick has an LLM in Taxation from the NYU School of Law.

Clients who are doing or contemplate doing a workout, are encouraged to consult with James Shenwick to discuss their strategy. Jim Shenwick 212 541 6224  jshenwick@gmail.com


1 week 19 hours ago

Chapter 13 bankruptcy can be used to save your home or investment property  from a mortgage or association foreclosure. The filing of a chapter 13 case generally stops the foreclosure case and gives you the opportunity to propose a plan to reorganize your mortgage or association payments. The chapter 13 case though must be filed before the foreclosure sale.

Cure Mortgage Arrearages

One typical Chapter 13 Plan provides for the catching up-to-date of your past due mortgage or association payments. The Chapter 13 Plan usually involves paying off the mortgage or association arrearages over a 3 to 5 year period in addition to making your regular ongoing monthly mortgage or association payments.

The Bankruptcy Court's Mortgage Modification Mediation Program

The Bankruptcy Court in Miami started a new mortgage mediation program on April 1, 2013. Under this program a mediator is appointed by the Bankruptcy Court to assist in the process and documents and communications are exchanged over a special internet portal.

Avoid Second Mortgage 

If your home has decreased in value, sometimes you are able to wipe out or "avoid" your second mortgage.  For example, if you owe $300,000 on your first mortgage and $100,000 on your second mortgage and your home has gone down in value to $250,000, there is no equity or value to "secure" the second mortgage. Under these circumstances, the Chapter 13 Plan may provide to wipe out or avoid the second mortgage lien. The $100,000 debt owed on the second mortgage will be wholly unsecured and usually only receive a small dividend together with other general unsecured creditors.

Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com


1 week 22 hours ago

Chapter 13 bankruptcy can be used to save your home or investment property  from a mortgage or association foreclosure. The filing of a chapter 13 case generally stops the foreclosure case and gives you the opportunity to propose a plan to reorganize your mortgage or association payments. The chapter 13 case though must be filed before the foreclosure sale.

Cure Mortgage Arrearages

One typical Chapter 13 Plan provides for the catching up-to-date of your past due mortgage or association payments. The Chapter 13 Plan usually involves paying off the mortgage or association arrearages over a 3 to 5 year period in addition to making your regular ongoing monthly mortgage or association payments.

The Bankruptcy Court's Mortgage Modification Mediation Program

The Bankruptcy Court in Miami started a new mortgage mediation program on April 1, 2013. Under this program a mediator is appointed by the Bankruptcy Court to assist in the process and documents and communications are exchanged over a special internet portal.

Avoid Second Mortgage 

If your home has decreased in value, sometimes you are able to wipe out or "avoid" your second mortgage.  For example, if you owe $300,000 on your first mortgage and $100,000 on your second mortgage and your home has gone down in value to $250,000, there is no equity or value to "secure" the second mortgage. Under these circumstances, the Chapter 13 Plan may provide to wipe out or avoid the second mortgage lien. The $100,000 debt owed on the second mortgage will be wholly unsecured and usually only receive a small dividend together with other general unsecured creditors.

Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com


1 week 6 days ago

Few conversations load in more emotion than those about finances. Wynn at Law, LLC, knows that the tensions and fears only escalate when the topic is bankruptcy. Knotted in the dialogue are important things like transportation, child support, student loans, and medical care.
A beater with a heater
In our section of Wisconsin, a car is less of a luxury and more of a necessity since only the larger metros have public transportation. Finding/Keeping a job is contingent (usually) on have reliable wheels.
Discharging some debt in bankruptcy might free up enough income so you can pay cash for something more substantial than a ‘beater with a heater.’ Most people will need a loan. Because there is a waiting period before you can file for bankruptcy again (see previous article) and you should have a better debt to income ratio to help raise your credit score, you can likely find a lender willing to lend you money for a car after a bankruptcy. Set your expectations accordingly: It’s probably going to be at a much higher interest rate.
Take care of the kids
Child Support is off the table in both Chapter 7 and Chapter 13. The obligation will not be discharged.
However, freeing up some income may make it easier to make on-time child support payments. This is critical since your on-time payments will avoid arrears and costly interest. The arrears and interest can build and lead into the same financial situation that contributed to bankruptcy to begin with.
Student loans are nearly untouchable
Just like child support, student loans are off the table in a bankruptcy filing. Well, usually that’s the case. To get a student loan all or partially discharged, you have to prove undue hardship.
The standard for undue hardship is tough. The American Bankruptcy Law Journal notes that less than 0.1 percent of student loan borrowers declaring bankruptcy try to get student loan debt discharged. Of that fraction, only 2 in 5 succeed. Just 4 in 10,000 people who filed for bankruptcy and sought to have their loans discharged received even a partial discharge.
Will my doctor dump me after I discharge his bill?
Unexpected medical bills are right up there with job loss when it comes to the reasons for filing bankruptcy. Yet at the same time, we spend years building a relationship with our primary healthcare providers. They might be annoyed by having most if not all their outstanding bills discharged.
There is an odd dichotomy here.  On one hand, yes, they can drop you unless you’re seeing the provider for emergency care. (The Emergency Medical Treatment and Labor Act is federal law. It requires anyone coming to an ER to be stabilized and treated, regardless of their insurance status or how much money they have… or have discharged.) On the other hand, a doctor or nurse practitioner likely has no idea of your billing account and large healthcare facilities are very accustom to bankruptcy filings. They understand that any new services will be paid for and no changes are made when it comes to your care. For smaller offices, like a local dentist, he/she may actually understand your situation – and it’s not that uncommon – because you have built that relationship. Most of Wynn at Law LLC clients are able to continue seeing their regular providers without issue.
 
Image by Gaj  Rudolf, used with permission.
The post From Cars to ERs, Bankruptcy Questions Answered appeared first on Wynn at Law, LLC.



2 weeks 2 days ago

Two weeks after filing bankruptcy, Rod got his security clearance. Rod contacted me from a military base in the Midwest. The military wanted to give him a new assignment, in the DC area, with more responsibility. His wife and children had already rented a place and moved, while he was awaiting orders. At the last […]
The post Bankruptcy Solves Rod’s Security Clearance Problem by Robert Weed appeared first on Robert Weed - AE.


2 weeks 2 days ago

Driving NYC taxis out of business: How Uber and Lyft doomed the once-solid yellow cab industryBy: Clayton GuseFrom: nydailynews.comhttps://www.nydailynews.com/new-york/ny-medallion-foreclosures-taxi-bailout-plan-uber-lyft-20200130-s2mjkhjubzgptdxasoxddwdote-story.html 


2 weeks 2 days ago

Right After Bankruptcy, Carla Signed on a Car Loan and She’s Probably Gonna Lose Her House I tell people please please please, do not get a car loan until at least two years after your Chapter 7 bankruptcy.   Two years after bankruptcy, I’m seeing people get car loans in the 6%-8% range. Three years […]
The post Right After Bankruptcy, Carla Signed on a Car Loan by Robert Weed appeared first on Robert Weed - AE.


2 weeks 3 days ago

Student Loan Debt “Relief” Companies Sued for Fraud and Violation of Federal Laws
CFPB FILED LAWSUIT AGAINST CHOU TEAM REALTY, LLC, MONSTER LOANS, DOCUPREP CENTER, DOCS DONE RIGHT, AND SEVERAL MORE ENTITIES.  ALSO, BILAI ABDELFATTAH, BILL ABDEL, THOMAS CHOU, SEAN COWELL, ROBERT HOOSE, EDUARDO MARTINEZ, JAWAD NESHEIWAT, FRANK ANTHONY SEBREROS and DAVID SKLAR
student loanAs described in the complaint, the Bureau alleges that between 2015 and 2017, Monster Loans violated the Fair Credit Reporting Act (FCRA) by obtaining consumer-report information for millions of consumers with student loan debt from a major credit bureau on the pretense that the company planned to use the information to offer mortgage loans to consumers when, in fact, Monster Loans provided the reports to the student loan debt-relief companies to use in marketing their services.  The Bureau also alleges that, between 2017 and at least early 2019, Lend Tech Loans similarly violated the FCRA by obtaining consumer report information for millions of consumers for use in marketing student loan debt-relief services. 
The Bureau further alleges that, while offering and providing student loan debt-relief services, certain defendants violated the Consumer Financial Protection Act of 2010 (CFPA) and the Telemarketing Sales Rule (TSR) by making deceptive representations about the companies’ services.  Specifically, the Bureau alleges that certain defendants misrepresented to consumers that they would have their interest rates reduced, have their credit scores improved, and that the U.S. Department of Education would become their servicer.  The Bureau also alleges that certain defendants unlawfully charged and collected at least $15 million in fees before consumers received any adjustment to their student loans and made any payments toward their adjusted loans.
The Bureau filed its complaint in the U.S. District Court for the Central District of California on Jan. 9, 2020.  The Bureau’s complaint seeks an injunction against the defendants, as well as damages, redress to consumers, disgorgement of ill-gotten gains, and the imposition of civil money penalties.  The complaint also names several defendants in order to obtain relief and seeks disgorgement of those relief defendants’ ill-gotten gains.
student loans
Student Loan Debt “Relief” Companies Cannot Charge Upfront Fees
CHARGING ADVANCED FEES FOR DEBT-RELIEF SERVICES IS IN VIOLATION OF THE FEDERAL LAW

Under the TSR (“Telemarkarting Act, 15 U.S.C. Sections 6101-6108), it is an abusive act or practice for a seller or telemarketer to request or receive payment of any fee or consideration for any debt-relief services unless and until (A) the seller or telemarketer has renegotiated, settled, reduced, or otherwise altered the terms of at least one debt pursuant to a settlement agreement, debt-management plan, or other such valid contractual agreement executed by the customer; and (B) the customer has made at least one payment pursuant to that settlement agreement, debt management plan, or other valid contractual agreement between the customer and the creditor or debt collector. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B).
In the course of providing, offering to provide, or arranging for others to provide debt-relief services, the Student Loan Debt Relief Companies, Docs Done Right, Nesheiwat, Sklar, Hoose, Sebreros, and Martinez charged and received fees before consumers’ applications for loan consolidations, loan repayment plans, and loan-forgiveness plans were approved, and before consumers had made the first payments under the altered terms of their student loans, in violation of the TSR. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B).
student loans

MUSINGS FROM DIANE:

student loanstudent loan repair scam
Anyone can be scammed – you, me, governments and the smartest person you ever known.  Cons have no sympathy and consider stealing to be “their right”.  In their world, no one can be trusted, not even a fellow thief.  What a world they live in!!  No, I am not trying to excuse their outrageous behavior.  I am merely saying that they live without knowing the peace and love we have.  What the thieves don’t understand or even care about, is the people they con have to live with those mistakes.  They lose their home, their family, their sanity.  Many end up on the street, staving and sick, fearing to ask anyone for help because they may be scammed again.

What can we do?  If you see something, say something.  Encourage everyone to question offers from others – even friends.

How Can I Help You?
The post Beware Student Loan Debt Relief Scams appeared first on Diane L. Drain - Phoenix Arizona Bankruptcy & Foreclosure Attorney.


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