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You know the best way to avoid debt is to have money in your savings account. But it feels impossible to fund a savings account when you’re barely making ends meet.
I know how it feels because I’ve been there, and because my clients roll their eyes at me whenever I talk about the importance of saving money for the proverbial rainy day. I can almost hear them thinking, there is no way I’m going to be able to put away any money on my salary!
That’s why I was excited when I first heard about Digit, a free service that helps you save money by looking at your income and spending, finding small amounts of money it can safely set aside for you in a separate savings account.
To use Digit, all you do is sign up and connect your checking account. From there, it’s supposed to analyze your spending patterns and start automatically saving you money.
Too Good to Be True?
As good as Digit sounds, I was skeptical.
It seemed too easy to let the application worry about my savings and make decisions based on an algorithm. What if someone was barely scraping by financially – would Digit be able to accomplish anything?
I was also nervous that it would overdraft someone’s checking account and leave them saddled with fees and bounced checks. Most of the people I work with don’t have a lot of wiggle room in their budgets, and an overdraft fee could cause a domino effect of financial ruin.
Digit has a no-overdraft guarantee, which means it shouldn’t ever overdraft your account. If it does, Digit will reimburse you for the overdraft fees.
But if Digit was the real deal, I owed it to myself and my clients to learn about it. With that in mind, I signed up to check it out.
Dipping a Toe Into the Digit Pool
I didn’t want to risk much on my experiment so I connected Digit to a checking account I rarely use. Making random deposits and withdrawals each week, I was looking to trick the system into making a mistake.
If the account was overdrawn, it wouldn’t cause any problems with my finances. And given the fact that my test account was reflective of someone with a tight financial situation, Digit would need to have a robust algorithm in place to find savings.
It Won Me Over, Big Time
After two months it was clear that Digit was doing something right.
My test account never went into negative balance range, and my Digit savings account slowly began to grow. $5 here, $7 there – the numbers were small enough that I didn’t miss the money, but it added up.
Even better was the fact that I hadn’t done a thing. Digit did it all for me, automatically and without any involvement on my part.
Satisfied, I connected my main checking account to Digit and sat back to watch the results.
The results have been impressive. I’ve seen my savings grow without any involvement on my part, and never once have I missed the money deducted from my checking account.
Each morning I receive a text message with my checking account balance, which helps keep me up to date on how much I’ve got available in my account.
Whenever Digit makes a transfer, it sends me a text message with the amount of the transfer as well as how much I’ve got in my Digit account. If I want to view my Digit savings balance at any time, all I do is text SAVINGS to Digit and it lets me know.
In fact, there’s a whole list of text commands to help me manually transfer money to savings, view upcoming bills, review recent checking transactions, pause my savings, and even make a withdrawal from my Digit savings account.
When you want your money, just text WITHDRAW to Digit. There are no fees or limits to your ability to withdraw money, and it will show up back in your checking account the next business day.
I Love Saving Money By Mistake
My Digit account won’t fund your retirement, and it won’t help you save for a trip around the world.
What Digit will do is jump start your savings efforts even if you’re not making a lot of money. By taking small amounts from your checking account, Digit makes sure that you don’t realize you’re putting away money month after month.
Before you know it, you’ll have enough for a vacation with your family or a few extra payments towards those nasty student loans.
In the end, you’ll be more financially secure and start feeling the satisfaction of knowing you finally have that elusive cushion of money to help you get through life’s unexpected twists and turns.
My opinion? A total no-brainer. Give it a try and let me know what you think.
One thing – when you click the links in this article to go to Digit, I’ll get a $5 bonus if you sign up. It doesn’t cost you anything, but it’s the company’s way of thanking their customers for letting other people know about it. If you don’t want to use the links in this article, just click here to sign up on your own. Either way, you should try it out and see if it works for you.
The post How Digit Can Help You Effortlessly Grow Your Savings Account appeared first on Bankruptcy and Student Loan Lawyers - 866.787.8078.
If you’ve got federal student loan debt, making the monthly payments can feel like an exercise in futility. With low post-graduate incomes relative to the amount of debt they carry, it’s no wonder.
The average class of 2015 graduate with student-loan debt will have to pay back about $35,000, according to an analysis of government data by Edvisors. And according to CNBC, average starting salaries for college graduates range from $80,600 for petroleum engineering majors to $43,852 for liberal arts/ general studies grads. Reports indicate that a number of early career salaries come in at $35,000 or less, including athletic training ($35,000), human services ($33,800) and child development ($32,200).
That’s to say nothing of the millions of graduates who leave college only to find a minimum wage job or, even worse, no employment at all.
By now the federal government has done a fair job of getting the word out about the various income dependent federal student loan repayment options – income-based repayment, income-contingent repayment, and Pay-As-You-Earn. These programs allow you to bring your monthly payments in line with your income, and lead up to a discharge of the unpaid balance after 20 or 25 years depending on the repayment plan you choose.
These plans are often called Obama Student Loan Forgiveness by the various companies that charge borrowers upwards of $1,000 or more for the privilege of completing the simple (and free) forms that are freely available from the U.S. Department of Education. It’s one of those bait-and-switch terms that ignores the fact that sometimes forgiveness isn’t quite forgiveness.
It’s the tax implication at the end of the income dependent repayment options that strikes some people as the major problem. You get a tax form at the end of the repayment term for any unpaid balance, and you may have to pay income taxes on that amount.
Financial commentators such as Suze Orman have come out against the income dependent repayment options for that reason. By lowering your payments, Orman says, you’re allowing the balance to balloon over the repayment period and possibly obligating yourself to a tax burden later on.
But Orman misses a few critical points.
- You’ve Got To Have a Financial Hardship to Qualify. A borrower qualifies for one of these programs only if their income qualifies them for a hardship under federal guidelines. Those who can afford to make their federal student loan payments aren’t permitted to opt for one of the income dependent programs. That removes the possibility of someone getting into an alternative payment arrangement as a matter of convenience, and limits participants to those who would otherwise not be able to make their federal student loan payments.
- Payments Rise When Your Income Goes Up. Payments under the program adjust annually based on your income, and rise when you make more money. The payment is capped at the 10-year repayment amount. If your income rises significantly, your participation in the program isn’t saving you any money.
- There are Benefits to Interest Accrual. Though it’s true that interest continues to accrue on your loans, it probably won’t end up making things worse for you. If your reduced payment doesn’t cover the interest, the government will pay that interest on your Subsidized Stafford Loans during your first three years in an income dependent program. Interest that does accrue after that time won’t compound (which is the opposite of what happens when you’re in a hardship forbearance). Compounding interest make the loan balance rise more quickly and allows the government to effectively charge interest on interest.
- You’re Allowed to Pay Your Loans In Full. There’s no reason you can’t decide to pay off your federal student loans when your income rises. Rather than continuing to make payments for 20 (or 25) years, you can write a check to the government and make the balance disappear without paying anymore interest or risking the tax consequences of discharge of the unpaid balance.
- Remember True Forgiveness Plans. Finally, there are a number of federal student loan forgiveness programs that allow you to wipe out the unpaid balance without tax consequences. The best known of these program is Public Service Loan Forgiveness, but there are a number of others. If you’re working towards one of those tax-free forgiveness programs it makes sense to elect an income dependent repayment program early on.
Don’t dismiss income dependent repayment plans for your federal student loans. Not only will they reduce your payments but they allow you more freedom to pay your loans in the way that’s most effective and efficient for your personal financial situation.
The post 5 Reasons To Embrace Income Based Student Loan Repayment Options appeared first on Bankruptcy and Student Loan Lawyers - 866.787.8078.
Julie, Over the past few years I have been working with Cindy Millns for my case. She has been so easy to work with and helpful, that I cannot express enough gratitude for her professionalism and courtesy during my troubling times. She took the time to answer phone calls and emails when I needed answers […]
The post Peter from Royal Oak, MI appeared first on Acclaim Legal Services, PLLC.
I still remember being in the bankruptcy meeting room waiting for my client’s turn to see the Chapter 7 Trustee. What I saw was a classic mistake made by young and inexperienced bankruptcy attorneys.
Trustee: So how long have you owned the painting supply business?
Debtor: About 8 years.
Trustee: I see that you rent the store space and that you value the business equipment at $5,000, is that right?
Debtor: Yes, that’s correct.
Trustee: Are you owed accounts receivables? Do customers owe you money today?
Debtor: Yes.
Trustee: How much do they owe? What is the total?
Debtor: About $15,000.
Trustee: And your inventory of paint, how much is that worth?
Debtor: About $10,000 to $15,000.
Trustee: Okay, and my understanding is that you are a sole proprietor. You are not incorporated. Is that correct?
Debtor: Yes, that is correct.
Trustee: Okay, well I’m going to claim your inventory and accounts. I want you to stop operating the store now and deliver the keys to my office.
And just like that, the business was over.
The tragic thing is, neither the bankruptcy attorney nor the client thought this would happen. They thought the business was safe because the business owed way more in debts than it had in assets. In truth, the business did owe a lot of debt for rent, supplies, utilities, taxes, etc, but none of that mattered.
When you are a sole proprietor there is no such thing as a business being separate from you. You are the business. The business assets are your assets. In your mind you think of the business as a separate creature, but it is not. The “business” is nothing more than a collection of assets and debts that is combined with your personal property and debts. There is no distinction.
Now consider how this case would have turned out had the business owner incorporated the business prior to bankruptcy. Instead of owing a painting supply business the debtor would have owned stock in a company that operated a painting supply business. The corporation would have owned the business property and the corporation would have owed the various debts. Since the debts of the company would have exceeded the value of the business assets, the stock of the company would have been worthless. The business would have been safe from the Chapter 7 Trustee since the company’s stock would have had a negative net worth. The trustee could not “cherry pick” the business assets.
There is a key difference between owning a business individually and owning stock of a company that operates a business.
SHOULD YOU INCORPORATE YOUR BUSINESS PRIOR TO FILING BANKRUPTCY?
Some businesses are so simple that there is no need to incorporate. A home daycare may not have very many assets to protect (but watch out for receivables). Some businesses are simple personal service businesses, so incorporation may not be necessary. But if the business owns significant assets or if substantial inventories or receivables exist, it is probably best to incorporate the business prior to bankruptcy.
Transferring assets to a new company on the eve of bankruptcy can be a dangerous activity. Chapter 7 trustees have special powers to undue property transfers, so incorporating a business is not a simple solution. It is best to hire a very seasoned corporate attorney to set up the new business. You may want to delay the bankruptcy filing until the current inventory and receivables are gone and new inventory and receivables are built up in the new corporation. You need to be counseled by an attorney who is familiar with the bankruptcy law of Fraudulent Conveyances and Insider Preferences.
If you own a business that supports your family and need to file bankruptcy, slow down. Make sure you don’t lose your business in the bankruptcy process. Consider the safer Chapter 13 alternative if you sense too much risk in the quick but dangerous Chapter 7 case.
Image courtesy of Flickr and Marius Watz.
Here at Shenwick & Associates, we specialize in bankruptcy and the unusual questions that arise in the course of bankruptcy cases. One of the great aspects of working in such a specialized area of the law is trying to figure out how courts will hold on an issue that isn't clear under current statutes and case law.
Sometimes, even the District Courts and Courts of Appeals disagree on a point of law. When Courts of Appeals disagree, there becomes a "circuit split" on an issue that only the Supreme Court can resolve.
A "circuit split" occurred regarding the question of what happens when a debtor (in good faith) converts a case to Chapter 7 after the confirmation of a Chapter 13 plan. Do the undistributed funds get distributed to creditors, or are they returned to the debtor?
The question turns upon how the courts interpret Section 348 of the Bankruptcy Code, which addresses the effect of conversion on cases. Subsection (f) provides that if the case is converted in good faith, "property of the estate in the converted case shall consist of property of the estate, as of the date of filing of the petition, that remains in the possession of or is under the control of the debtor on the date of conversion."
In the case the Supreme Court decided to review, Harris v. Viegelahn, the petitioner was indebted to multiple creditors and $3,700 behind on his monthly payments to Chase, who held the mortgage on his home. He filed for Chapter 13 bankruptcy, and his plan provided that he would resume making monthly mortgage payments to Chase and $530 per month would be withheld from his post-petition wages and remitted to Viegelahn, the Chapter 13 trustee. Viegelahn would make monthly payments to Chase to pay down Harris' mortgage arrears, and distribute remaining funds to Harris' other creditors.
However, Harris again feel behind on his monthly mortgage payments, and Chase foreclosed on his home. After the foreclosure, Viegelahn stopped making the payments earmarked for Chase and funds began to accumulate in his possession. About a year after the foreclosure, Harris converted his case to Chapter 7. Ten days after the conversion, Viegelahn distributed $5,519.22 in Harris' withheld wages to creditors.
Arguing that Viegelahn lacked authority to disburse his post-petition wages to creditors after conversion, Harris sought an order from the Bankruptcy Court directing refund of the accumulated wages Viegelahn paid to his creditors. The Bankruptcy Court granted Harris' motion, and the District Court affirmed. However, the Fifth Circuit reversed, concluding that a former Chapter 13 trustee must distribute a debtor's accumulated post-petition wages to his creditors. The Supreme Court disagreed, concurring with the Third Circuit in In re Michael that a debtor who converts to Chapter 7 is entitled to the return of any post-petition wages not yet distributed by the Chapter 13 trustee
For these and other questions that require our bankruptcy expertise, please contact Jim Shenwick
I’ve had this nagging though rattling around in my head for the past few years – the thought that you’re not getting the right conversation when we talk about your personal financial situation.
Yes, you’re in debt. You’ve got student loans to pay, credit cards that are through the roof, and other bills that are piling up faster than snowflakes on the windshield in the middle of a Northeastern winter morning.
You’ve got debt collectors hounding you, and they’re not willing to cut you a break in spite of your best efforts. You’re worried about judgments and what they’ll mean for your paycheck if a garnishment hits just as the rent comes due.
We’ll talk about defending the collection lawsuits or filing for bankruptcy to give you the chance to start rebuilding your finances. During the course of my representation we’ll go through your budget, and if the numbers are completely unrealistic then we’ll go over them until it all makes sense.
And yet.
We’re Treating The Symptom, Not The Cause
You got into your financial situation as a result of an unforeseen problem. The problem wasn’t the unexpected medical bill or the fact that you lost your job and couldn’t find work for longer than you expected.
Your problem was the fact that your income didn’t exceed your expenses by enough to give you a cushion to ride out the tough times.
When we first meet, you’re going under for the final time. Your financial problems are so bad that you can’t swim to safety without a helping hand.
But once you’re out of debt, there’s no safety net in place to keep you from falling down again.
Your income still barely covers your expenses. And the next financial calamity is right around the corner.
The average American puts less than 5% of his or her disposable income toward savings, according to the Bureau of Economic Analysis. Not only that, but 43.9 percent of American households have less than three months worth of living expenses in their savings accounts.
We Need to Change the Conversation
When you’re in financial difficulties, the conversation needs to include a deep dive into how you’re spending your money. We need to focus on making improvements in your personal rate of savings, and talk about ways to cut your expenses while maximizing your income.
We need to start looking at ways to make sure you’re never going to need my help again in the future.
Getting out of debt is the start of a journey to financial security.Click To Tweet
Anything less is like a heart surgeon sending you on your way after a triple bypass without setting you up with a plan to lose weight, quit smoking, and start exercising. It’s a recipe for disaster, and a surefire way to all but guarantee that you’ll be back again with the same problem someday.
A Marathon, Not a Sprint
Budgeting, saving money and planning for retirement is a long-term commitment. It doesn’t happen overnight, and it’s not a “set it and forget it” sort of thing.
Life changes, and so do the ways in which you spend and save your money. You’ve got to adapt over time, making small changes to help keep you on track.
I can’t tell you it’s going to be easy, but it will be valuable. After all, do you really want to live on the finance precipice of disaster for the rest of your life? Do you relish the thought of being one paycheck away from being broke?
Or would you rather be able to sleep soundly each night, comfortable in the fact that you and your family are financially prepared for whatever life throws at you?
How I Fit In
My role needs to evolve as well, from being merely the guy who fixes the immediate problem to the one who functions more as a long-term guide.
As of this writing, I’m not sure what that means. Whether it’s a newsletter with tips on how to keep your money in line with your plans, a course or something else I’m not sure.
I’ll ask you for your input along the way so I can be sure to deliver what you need, in a way that makes the most sense to you.
One thing’s for sure – we’ll keep talking about this subject right here, as well as elsewhere.
The post We’ve Been Having the Wrong Conversation About Your Money appeared first on Bankruptcy and Student Loan Lawyers - 866.787.8078.
Please be aware that in recent weeks several current bankruptcy clients from multiple law firms in the Chicago area have been victimized or attempted to be victimized by a fraud scheme. This is how the fraudulent effort plays out in essence. There are two specific individuals that play a part in this scheme. The first+ Read More
The post Current Bankruptcy Clients Contacted By Fraudulent Creditor appeared first on David M. Siegel.
Attorney Christopher Jones has one again been selected by Super Lawyers as a Michigan Rising Star for 2015. Super Lawyers recognizes attorneys who have distinguished themselves in their legal practice. Their patented selection process is rigorous, involves peer nominations and results in a third-party validation of their professional accomplishments. Christopher W. Jones Attorney […]
The post Attorney Christopher Jones Recognized by Super Lawyers as 2015 Rising Star appeared first on Acclaim Legal Services, PLLC.
All is not lost when a debtor files Chapter 7 Bankruptcy. On September 22, attorneys Patricia Scott and Scott Chernich presented a webinar titled "Collect Your Money in Bankruptcy: Chapter 7." In addition to teaching the ins and outs of how to collect money and assets in a Chapter 7, they discussed the basics of a Chapter 7, motions for relief from stay, co-debtor stay, non-dischargeable claims, and other topics to efficiently and effectively obtain what is rightfully yours in a bankruptcy.
To watch this webinar view the recording on our YouTube channel here.
Are you interested in learning about collecting your money in a Chapter 11 or Chapter 13 bankruptcy? Sign up to attend these two webinars below.
Tags: Chapter 7
In Florida, generally the transfer of a mortgage note transfers with it the related mortgage. The mortgage note is regarded as the principal item with the mortgage being regarded as a mere accessory. Hence the adage "the mortgage follows the note."
The Restatement (Third) of Property provides in Mortgages section 5.4(a) (1997) that "[a] transfer of an obligation secured by a mortgage also transfers the mortgage unless the parties to the transfer agree otherwise." Florida law is apparently in accordance with the Restatement. The stated objective of the Restatement is to avoid economic waste to the lender and a windfall to the borrower if the note and mortgage are split rendering the mortgage note as a practical matter unsecured. The Restatement cites the United States Supreme Court decision in Carpenter v. Longan, 83 U.S. 271 (1827) which held that "[a]ll the authorities agree that the debt is the principal thing and the mortgage an accessory."
The Restatement's exception provides that a transfer of a mortgage note is possible without the transfer of the mortgage if the parties so agree, but the effect of such a transfer would be to make it impossible to foreclose the mortgage unless the transferor of the mortgage note is made the assignee's agent or trustee with authority to foreclose on the behalf of the assignee of the mortgage note.
Assignment of the Mortgage
The opposite situation is presented if a mortgage is transferred without the transfer of the mortgage note. The apparent rule in Florida is that an assignment of a mortgage without an assignment of the related mortgage note is deemed a nullity and creates no right in the assignee because a mortgage is a mere lien incidental to the obligation it secures. 37 Fla. Jur. 2nd, Mortgages, Section 511. See e.g., Sobel v. Mutual Development, Inc., 313 So.2d 77 (Fla. 1st DCA 1975). Vance v. Fields, 172 So.2d 613 (Fla. 1st DCA 1965).
Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
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