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Rule #1 of credit counseling is when you are trying to get out of debt you must forgo some expenses while paying off debt. The advice is universal. Decrease expenses. Increase income with a part-time job. Sell some stuff to raise cash. Get the debt snowball rolling. Suck it up and double down on the smallest debt and then the next smallest until all the debt is gone. Live like a crazy person until you can scream out loud I’M DEBT FREE!
And if your debt problem is that you spend money like a moron and you just need to grow up and cut expenses and work a pizza delivery job at night until you pay off the debt, that may be good advice. Dave Ramsey has built a 55 million dollar financial empire by giving out such advice.
But what if you already work as much as you can and your budget is already frugal? What if you have kids at home and you cannot afford to pay a babysitter so you can go out and deliver pizza at night? And what if you are physically and emotionally drained at the end of the day and the thought of working a second job is likely to push you over a cliff?
And what about all that time lost during a debt repayment plan? How long will it take to repay all the debt? And what about all the new debt incurred while you live through a get-out-of-debt program? Time to start a new repayment plan? Amend the plan to add the new debts?
The message of the get-out-of-debt group is that life will begin to be wonderful again once all the debt is repaid. When the debt is paid, THEN you can begin to really save money and establish retirement and college savings plans. AFTER their debt is repaid you can start to achieve YOUR financial goals.
But what if time and time again new problems pop up that prevent the debt repayment plans from completing? You know, like when you get sick and the insurance company says the claim was filed too late even though the doctor’s office said they would file a claim, or when the car gets hit by an uninsured driver, or when your employer says that your job has been outsourced to China. And so you start over and scrounge for a new job and cancel the debt program until you can find a new car but now you have a car loan and the debt payment plan must be changed, again. It just keeps happening, over and over again. For years. For decades. Meanwhile, your financial goals are not being accomplished because you never got to that magical point of being debt free so you could START on achieving your goals. Sound familiar?
What if you could start focusing on your financial goals today, even though you are still in debt? What if you put your long-term financial goals first, and the demand of the bill collectors second? If you sense that the tail is waging the dog in your life and that you can never get ahead because just one damn thing after another keeps blowing up, maybe it is time to confess that life sucks but your finances don’t have to suck as well. Welcome to the Life Sucks Budget.
Under traditional get-out-of-debt budgeting we put creditors payments first since we view financial problems as being a short-term problem, but under the Life Sucks Budget we put your needs first because we view such problems as a never ending, long-term reality.
Under the Life Sucks Budget we surrender to the reality that debts will never go away, and that’s okay. We no longer worry about being perfect and becoming debt free. Rather, we focus on survival and quality of life. We realize that the system was not built for us and that big banks and insurance companies and big employers will keep finding ways to pull the carpet from under us. The Life Sucks Budget is a confession that the American Dream has gone wrong and that we will no longer be suckered into believing that tomorrow will be a better day. We no longer play the game. We accept that we can longer serve two masters, and so we make the decision to fund our long-term needs first and the demands of creditors second.
Pay yourself first. That is the guiding principal of the Life Sucks Budget. So with that in mind, those who adopt the Life Sucks Budget will take the following actions.
- Emergency Savings Account. Every financial adviser worth their salt will advise that clients save 3 to 6 months of their monthly expenses in cash. That’s good advice. Life sucks and so it is necessary to be prepared for periods of unemployment due to frequent job changes and layoffs. So, the first dollars you earn should be tucked away into a separate bank account, preferably at a bank you don’t presently use and ideally at a bank located in a different state. Why a bank located outside of Nebraska? Because creditor judgments may only be levied on bank accounts located in Nebraska. To garnish an account located outside Nebraska the creditor must register their judgment in the foreign state. So, a wise person sets up their emergency savings account in a far away bank. With the ability to open accounts online these days, this is really easy to do. Heck, if you can get an account in Canada that is easy to access, go for it.
- Pay Nondischargeable Debts Before Other Debts. The Life Sucks Budget anticipates that filing bankruptcy from time to time is probably necessary. But not all debts can be discharged in bankruptcy, such as student loans, child support, alimony and recent income tax debts. So, when deciding what debts to pay, it is smarter to pay debts that bankruptcy cannot discharge before paying other debts, like credit cards and medical bills, that can be discharged.
- Tax Debts & Bankruptcy. Generally speaking, most income tax debts can be discharged in bankruptcy IF the tax return was filed and IF three years have gone by since the return was filed. (This is a simplified version of the general rule and there are many additional rules that apply.) The take away here is that if you owe a lot of income tax debt, make sure your returns are filed and perhaps you should not pay any of the debt voluntarily and just wait until the debt becomes dischargeable in bankruptcy. Conversely, if you do not owe a lot of tax debt then you should pay off that debt before paying credit cards or medical debts since the tax debt cannot be discharged.
- Contribute to Retirement Accounts. The great majority of retirement accounts, including 401(k) plans and tax qualified retirement pensions, are protected in bankruptcy. So, if life sucks and you view filing bankruptcy as something that is inevitable, then maximize your contributions to your retirement accounts and NEVER withdraw funds from your retirement to pay off debts that could be discharged in bankruptcy.
- Pay Extra on the Mortgage. Nebraska law protects up to $60,000 of equity in your home, even if you file bankruptcy. Paying a lousy $100 extra on the mortgage can be the difference between paying off a mortgage in 15 years instead of 30 years, so if you have less than $60,000 of equity in the home you should consider paying extra on the loan every month.
- College Savings Plans. Contributions to a 529 College Savings Plan made more than one year prior to bankruptcy are exempt and protected. If you have minor children that plan on attending college one day, contributions made to 529 savings plans more than one year ago are protected even if you are forced to file bankruptcy.
- Pay off Car Loans. Nebraska law protects up to $10,000 of equity in a vehicle, so it makes sense to pay off car loans ahead of other debts so you reach a point of economic freedom from the threat of repossession.
Of course, by paying yourself first you will be short on money to maintain minimum payments on all your debts. And that’s okay, because we acknowledge that life sucks and we deal with that problem later by filing bankruptcy or by debt settlement or by letting the debt expire over time. We pay creditors what we can, but we don’t worry if the account goes into default because what is more important is that we fund our long-term needs first so that we don’t wind up old and poor.
The Life Sucks Budget is not a call to financial irresponsibility. Rather, it is a call to wake up and to smell the coffee of today’s economic system where lower wage Americans never seem to improve their condition because they pay creditors first. The Life Sucks Budget is actually a call to work hard so that your financial needs are met and it is a reminder that, even with low income, you can achieve financial success if you put your family’s legitimate needs first and force creditors to accept what is left over.
Image courtesy of Flickr and NOAA Photo Library.
In a system where the majority of people have to sell their labor for wages to survive, people’s ability to support themselves financially almost always decreases as they age. Without public assistance, therefore, old age is comfortable only for those with savings, and uncomfortable if not downright miserable for those without.
This is why the United States passed the Social Security Act in 1935, which guaranteed a source of income to replace wages for all people 65 and older, along with the Social Security Act Amendments in 1965, which created Medicare, a public health insurance program for the same population. These programs are financed socially, by adjusting the tax rate schedule to accommodate them — that is, by requiring everyone in society to contribute, based on their ability to pay, for benefits that they will be entitled to after a certain age.
These and other mid-century programs made it a little bit easier to grow old in America, for a while. But they have come under strain as wages have stagnated and the cost of housing and education skyrocketed, placing a greater burden on social welfare programs to achieve adequate income for people. Meanwhile, programs themselves have been systematically starved of resources or outright eliminated.
Older Americans haven’t fared well. In fact, they’re filing for bankruptcy in record numbers. A new report from the Consumer Bankruptcy Project called “Graying of US Bankruptcy: Fallout from Life in a Risk Society” contends that, while it took a few decades to fully set in, older Americans are now experiencing the consequences of the assault on the social safety net that began under Reagan and has persisted, with leadership from both parties, ever since.
Running the Risk“Government is not the solution to our problem,” Reagan was fond of saying. “Government is the problem.” His election inaugurated the reign of the free-market neoliberals, who advocated supposedly leaner and more efficient market-based alternatives to socially-funded government programs. Not coincidentally, these alternatives were friendly to capitalists — lower taxes, new lucrative private markets.
In 1982, Reagan established a commission made up of corporate executives whose task was to “root out inefficiency” in government spending. The Grace Commission issued “2,478 cost-cutting, revenue enhancing recommendations” that took aim at federal wages, retirement systems, healthcare programs, and a variety of federal subsidies which were deemed wasteful. The chairman of the commission, successful businessman J. Peter Grace, wrote to Reagan, “If the American people realized how rapidly Federal Government spending is likely to grow under existing legislated programs, I am convinced they would compel their elected representatives to ‘get the Government off their backs.’”
One man’s “getting the Government off their backs” is another’s evaporation of opportunity. As social programs have withered, wages have stagnated, and inequality has skyrocketed, many ordinary working people have lost their financial footing and their retirement prospects have dimmed. Today, just one hundred CEOs have the same amount of money stored away for retirement as the bottom 41 percent of the American population.
Meanwhile the age at which a person is eligible for full Social Security benefits has risen from 65 to 70, and the penalty for early retirement has increased up to 30 percent. Medicare recipients’ out-of-pocket costs are ballooning. Defined benefit pensions have been replaced with unpredictable and risky employee-owned 401(k)s. The list goes on.
And now the chickens are coming home to roost. The Consumer Bankruptcy Project found that since 1991, the rate of Americans age sixty-five to seventy-four filing for bankruptcy has doubled. The rate for those age seventy-five and over has tripled.
“The changes are so great,” they found, “that the broader trend of an aging US population can explain only a small proportion of what is happening in the bankruptcy courts. Older Americans’ reported reasons for filing strongly suggest that they are experiencing the fallout from our current individualized risk society and the corresponding shrinkage of their social safety net.”
The researchers’ data backs this up, suggesting that “that financial crises associated with living in America’s high-risk society are highly correlated with older Americans’ increasing use of the bankruptcy system.” As risk and responsibility have shifted from society as a whole onto individuals to pay their own way — even when they can’t work at all — older Americans are increasingly vulnerable to financial ruin.
The Means of LifeThe responses to the questionnaires collected by the Consumer Bankruptcy Project illuminate the predicament that working-class older Americans are in. When asked the reason for bankruptcy, one respondent said:
All things went up in price. Retirement never went up. Had a part time job that was helping to meet monthly payments. House payment kept going up. Was fired from my part time job that I had for over 10 years without any warning. Being 67 and having back problems, not many people will hire you even as part time worker.
Here we can see the complex of problems that give rise to financial difficulty in old age. Income in retirement isn’t sufficient to cover the rising cost of living, including healthcare costs and payments on debt. After a lifetime of depressed wages, many people don’t have the savings to meet their financial responsibilities, yielding need employment to supplement their income.
But the aging body leads to a (real or perceived) inability to do the work needed to secure a wage. As a result, older Americans are increasingly left without much financial recourse besides personal bankruptcy — which is not a panacea, just a last-ditch effort to eliminate personal debt and stop the multiplication of costs.
One path to solving this problem is to make a concerted effort to drive up wages, control living costs, and repair the social safety net, so that people enter old age with savings instead of debt, and so that older people who can’t work still have a way to sustain themselves in their final decades. The Left should pursue this approach without reservation.
And there is a deeper issue, too, which requires a more radical solution in the long-term. The problem is that people are required to sell their labor to capitalists in order to have access to the means of life to begin with. What if, instead, we had a society where everyone was guaranteed a decent living just because they’re alive, not on condition of employment, and we pooled our resources and our productive capacities to make good on that guarantee? Then perhaps all people, young and old, could live with dignity.
Copyright 2018 Jacobin. All rights reserved.
What is the Tacoma bankruptcy process
In Tacoma, bankruptcy attorneys are frequently asked about the bankruptcy process and bankruptcy forms. What steps are involved in filing bankruptcy? How much does it cost to file bankruptcy? How long will the bankruptcy take? The answer is, it depends on your situation. The fastest way to get answers to these and other questions is to contact one of our experienced Tacoma bankruptcy attorneys. We’ll take the time to answer all of your questions and to help you decide if bankruptcy is the right thing for you.
This article is by no means comprehensive, there are many aspects to filing for bankruptcy in Tacoma and there is no way to compress thousands of pages of bankruptcy laws and local rules into one article. Again, that is why you need a Tacoma bankruptcy attorney to assist you. The following, however, is a brief overview of the general Tacoma bankruptcy process.
Tacoma credit counseling
Since 2005, every person filing bankruptcy in Tacoma has been required to take a pre-filing credit counseling course and a post-filing financial management course. When you meet with your Tacoma bankruptcy attorney, he will give you details about these courses and explain what you will need to do to complete them successfully. Bear in mind, these courses are not optional, you must take them and file a certificate of completion with the bankruptcy court or risk having your bankruptcy dismissed.
Tacoma Bankruptcy Means Test
When you meet with your Tacoma bankruptcy attorney, they will help you complete what is known as the means test. Essentially the means test determines if you qualify for a Chapter 7 bankruptcy or if you will need to file a Chapter 13 bankruptcy instead. While income is a big factor in determining your eligibility to file Chapter 7 bankruptcy in Tacoma, it is not the only factor. Your current debts and obligations are taken into consideration as well as what it takes to maintain your household. Things like food, transportation, childcare, and other expenses are also factored in. In most cases, anyone who needs to file a Chapter 7 bankruptcy will qualify for Chapter 7 bankruptcy in Tacoma. It all comes down to whether you have enough disposable income after your expenses to pay back some of your creditors.
You can find additional information about the means test and even use our means test estimator to find out if you qualify for Chapter 7 bankruptcy in Tacoma, Washington.
Collecting Information
You will need to collect certain documents and information for your Tacoma bankruptcy attorney in order for them to prepare your bankruptcy forms. Much of your information your bankruptcy attorney will be able to extract from your credit profile. However, there are things that do not appear on your credit reports such as your income, recent gifts, monthly living expenses, certain assets, and other similar items that you will need to file for bankruptcy in Tacoma. One of our experienced bankruptcy attorneys will provide you with a list of things that you need to file for bankruptcy.
Filing Bankruptcy Forms in Tacoma
After you have provided all of the required information to your bankruptcy attorney, our team of bankruptcy professionals will get to work preparing your bankruptcy forms, documents, and petitions. Depending on your case, the total number of pages of bankruptcy forms needed to file can range from as few as 50 or 60 pages to several hundred. Every bankruptcy form must be meticulously created with accurate information and reviewed by your Tacoma bankruptcy attorney before you review the documents. Upon completion of your bankruptcy forms and documents, you will need to review each page carefully for any inaccuracies or mistakes. Your bankruptcy attorney is only as good as the information they are provided, so it is your responsibility to make sure the information on the bankruptcy forms is accurate. Any mistake on the bankruptcy forms must be corrected before they are filed with the bankruptcy court. Again, the need for accuracy is so important that you shouldn’t risk trying to complete the bankruptcy forms yourself or pay a non-attorney bankruptcy preparer to complete your bankruptcy forms.
Once all of your bankruptcy forms and documents are prepared and assembled properly, you will need to pay the filing fee and your Tacoma bankruptcy attorney will electronically file your bankruptcy forms for you.
You can find more information about bankruptcy forms and the filing process for bankruptcy in Tacoma on our website.
Automatic Stay
Upon filing your bankruptcy forms, what is known as the automatic stay will go into effect. The automatic stay is an order of the court intended to stop creditors from taking any further collection actions against you without the permission of the court. This means, upon having been notified of your bankruptcy filing, your creditors are no longer to contact you directly. The automatic stay will at least temporarily stop most foreclosure actions, repossessions, wage garnishments, and bank levies.
You can find more information about the automatic stay on our website.
Tacoma Bankruptcy Trustee
After filing for bankruptcy in Tacoma, the bankruptcy court will appoint a bankruptcy trustee for your case. The job of the trustee is to see that your creditors are paid as much as possible. This person will thoroughly review your paperwork, particularly the assets you have in your possession and the exemptions you wish to claim and can challenge any element of your case. Bankruptcy trustees are paid a percentage of the value of your bankruptcy estate. This gives them the incentive to make sure that they squeeze the most out of your bankruptcy case to pay your creditors. A mistake in your bankruptcy exemptions or inaccurate information on your bankruptcy forms could potentially result in you unnecessarily losing property in bankruptcy. An experienced Tacoma bankruptcy attorney will help you avoid the pitfalls of failing to properly complete your bankruptcy forms.
341 Meeting of Creditors
Shortly after filing for bankruptcy, you will receive a notice of a 341 meeting of creditors from the bankruptcy court. This is not a court proceeding with a judge in attendance, your bankruptcy trustee will oversee the meeting of creditors. This meeting gives creditors the opportunity to appear in your case and object to what you have filed that relates to them. However, creditors rarely appear at these meetings. You, on the other hand, must appear at the meeting of creditors or risk your case being dismissed. Your Tacoma bankruptcy attorney will appear with you at the meeting of creditors. In most Tacoma Chapter 7 bankruptcy cases, this will be the only time you will need to appear in your bankruptcy case. Should the trustee or a creditor object to anything in your bankruptcy forms, your Tacoma bankruptcy attorney will negotiate a resolution with the trustee. If, however, a resolution cannot be reached, it will be necessary for a bankruptcy judge to hear the objection. In most Tacoma Chapter 7 bankruptcy cases, your meeting of creditors will last only a few minutes and, while it can be nerve-racking there is really nothing to worry about providing your bankruptcy forms have been prepared properly.
Discharging your debts in Tacoma
After your meeting of creditors, there is usually not much more for you to do except. Your bankruptcy attorney will provide you with instructions on what your responsibilities are for the remainder of your case. It is important that you follow the instructions of your Tacoma bankruptcy attorney. Your creditors are given a little time to object to your bankruptcy forms and petition but in most cases, they will not. If everything goes as planned, and it showed if you are using a bankruptcy attorney, you will receive a notice of discharge from the bankruptcy court. What this means, is that all debt that is remaining after your bankruptcy, that was included in your bankruptcy, and not a special class of debt like taxes and student loans, has been wiped out. Your creditors can no longer attempt to collect on debt that was discharged. Once you have received your discharge, you will be well on your way to a fresh start financially. Ultimately, what you do with the fresh start is up to you. However, with our debt recovery through bankruptcy system and free credit repair service, you could be on your way to a top-tier credit score in as little as 18 months.
You can find more information about our debt recovery through the bankruptcy system and free credit repair service on our website.
Contact us
With thousands of pages of bankruptcy law and local rules that you must follow, it doesn’t make sense for you to try to file a bankruptcy yourself. We make it easy to file bankruptcy with affordable monthly payments for your attorney’s fees. With our credit repair service that is included with every bankruptcy we file in Tacoma, we give you the best chance possible at a real fresh start financially. Give our Tacoma bankruptcy law office a call today for a free debt evaluation and bankruptcy consultation.
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How to choose a Tacoma bankruptcy attorney
Filing for bankruptcy in Tacoma is always a difficult decision. A lot of fear and anxiety comes along with deciding to file for bankruptcy. In some cases, bankruptcy is not the right choice. The problem is, how does someone without any experience in bankruptcy no if bankruptcy is the right choice for them? Well, that is what Tacoma bankruptcy attorneys are for. We offer a free debt analysis and consultation prior to filing for bankruptcy in Tacoma. This gives our clients the opportunity to ask questions and get the answers they need to decide if bankruptcy is right for them. So, start by contacting one of our Tacoma bankruptcy attorneys for a free consultation.
Hiring a Tacoma bankruptcy attorney
Let’s face it, you can’t throw a rock without hitting a Tacoma bankruptcy attorney. You have lots of choices but there is a big difference between us and other Tacoma bankruptcy attorneys.
First, we do more than just say we care about you. We really want to see you get back on your feet financially and make a fresh start. We know that you are already struggling with debt, so we have made it easy for you to file bankruptcy in Tacoma. We start out with easy, affordable payments for your attorney’s fees instead of demanding a big onetime payment.
Second, we know that financial stress is no fun delivered with and is no way to live. So, we have one of the most experienced teams of bankruptcy attorneys and professionals in Tacoma. Our Tacoma bankruptcy attorney will guide you through the process of collecting the information necessary to file bankruptcy. After you have retained our bankruptcy team, you can let go of the stress. We will take it all on for you and deal with those hostile collection agencies and debt collectors. We can help you put an end to the foreclosure process, stop repossessions, stop garnishments, and give you peace of mind. We will prepare and file your Chapter 7 bankruptcy or Chapter 13 bankruptcy in Tacoma quickly and accurately. We will be there for you from the time that your bankruptcy is filed in Tacoma, to the time you receive a discharge, wiping out your debt and giving you a fresh start.
Third, we don’t just stop after your bankruptcy into, has been discharged. Our promise is that we will do all we can to get you back on your feet financially. That is why every Tacoma bankruptcy we file includes our credit repair service free of charge. With this service, most people can reestablish their credit in less than 18 months. Many people end up with the highest credit score they have ever had upon completion of our credit repair program. This means you won’t spend the next 10 years struggling to obtain credit. If you live in Tacoma, Washington and you are struggling with debt, our debt recovery through bankruptcy system may be the fresh start you’ve been looking for.
Fourth, our debt recovery through the bankruptcy system can help you learn to manage your credit, rebuild your credit, and protect your credit for the rest of your life. You may join what we call the 720 club. 720 is the credit score you need to break into the top tiers of credit. Having a 720 credit score or higher will give you access to the credit you need at a much lower interest rate and more favorable terms. This improves your buying power and reduces the amount of time and money it takes to repay a debt. It means the difference between paying 25% for a credit card or paying 6%. On a home loan, it can save you thousands of dollars over the term of your mortgage. That is why we have included our credit repair service with every bankruptcy filed in Tacoma. We want you to look back in 18 to 24 months from now and be able to say, “I did it!, I have top-tier credit.”
Contact us
If you are struggling with debt in Tacoma, Washington, you owe it to yourself to check out our debt recovery through bankruptcy system and free credit repair service. Isn’t it time for you to stop stressing over debt collectors, foreclosure and repossession? Call us today for a free debt evaluation and bankruptcy consultation.
The post Tacoma Bankruptcy Attorney appeared first on Portland Bankruptcy Attorney | Northwest Debt Relief.
Life After Bankruptcy
We know that filing for bankruptcy can be a stressful ordeal. And while you may feel relief after your case closes, the decisions you make in your life after bankruptcy are just as (if not more) important.
To learn more about how to regain control of your finances in life after bankruptcy, contact a skilled bankruptcy attorney at Allmand Law Firm, PLLC today.
Tips to Follow When Rebuilding Your Credit After Bankruptcy
After you file bankruptcy, you still have a few items to check off your to do list. Your main goal should be to clear your financial record and begin anew. You can do that by taking the following steps:
Check Your Credit Reports
You should monitor your credit reports with all three of the major credit report bureaus closely. Equifax, TransUnion, and Experian will all record your bankruptcy activity. This means that your bankruptcy will be reflected on your credit reports; however, your debts should be listed as discharged. Creditors should update the status of your debts within three to six months. Dispute anything that looks inaccurate on your credit report.
Reaffirm Debt You Wish to Continue Paying
You may have kept your home, car, and other property that you wish to continue paying after your bankruptcy. Those creditors will want you to reaffirm, or validate, that debt. This can be done with a formal letter or form that the creditor may mail to you. This will allow you to keep your property in life after bankruptcy.
Avoid Incurring More Debt
In life after bankruptcy, you will be sought out by new creditors and offered new credit cards, loans, and other debt. Avoid that debt unless it will improve your financial situation and you can afford it. You should have worked with a financial advisor who can help you stay on a straight path to avoiding unnecessary debt in life after bankruptcy.
Rebuild Your Credit
Your credit score will likely take a dip when you file bankruptcy; however, you can begin rebuilding it right away. Once you eliminate the majority of your debt, you can work with a budget to establish good credit habits. This may include a secured credit card or a car loan in life after bankruptcy. These can help your overall credit score and improve your situation in life as well.
Pay Your Bills on Time
In life after bankruptcy, you must maintain a responsible relationship with your credit. This includes paying bills on time. A financial advisor can help you build a budget and understand when and how to pay bills. It may seem obvious, but paying bills on time can be a difficult endeavor. You must ensure that you have enough money at the right time each month. Work with a professional to make a better financial life after bankruptcy.
Stick to a Budget Every Month
When you filed for bankruptcy, you were required to take credit counseling courses that helped you learned about bankruptcy and finances. You can also take budgeting courses that will help you learn about monthly expenses and how to use your income wisely. It’s important to stick to a budget in life after bankruptcy so you don’t end up in debt again.
How Long Does the Bankruptcy Process Take?
Life after bankruptcy will begin when your bankruptcy is finalized and the court discharges the remainder of your debt. For a Chapter 7 bankruptcy, that may be four to six months, depending on how long it takes you to complete paperwork and have necessary hearings. For a Chapter 13 bankruptcy, that may be three to five years, or whenever your payment plan concludes.
Although the bankruptcy will be on your credit report, you can begin rebuilding your credit right away. You may use some of the strategies mentioned in the list above to make sure you keep a clean financial slate and rebuild your credit.
Contact Us to Learn More About Life After Bankruptcy
If you have questions about filing bankruptcy or how a bankruptcy will impact your life, contact us today. We have worked with countless clients and helped them through life after bankruptcy. Call Allmand Law Firm, PLLC today to find out how we can help you.
The post Life After Bankruptcy: How to Regain Control of Your Finances appeared first on Allmand Law.
In performing financial autopsies for my bankruptcy clients over the past 25 years I have noticed one common mistake people make. They fail to prioritize their money.
Priorities matter. Successful people have a common trait–they prioritize their day and do he most important tasks first. They write lists. They have WRITTEN goals for their day. They plan their day in advance, and then they go out an kick butt.
But when it comes to money, especially money in marriage, even organized people get messed up about how to set priorities with their money. Why is that?
I think part of the answer lies in those sappy marriage courses we take before our weddings. You know, the ones that say how a man and women become one and cease to have separate identities. No secrets in marriage. Everything is shared. Mutual submission. Love is generous and we support one another give all that we have to each other. Sound familiar? And somehow out of this marriage class people conclude that in marriage you should have a single joint bank account that is shared and all money earned goes into it and all expenses are paid out of it. No secrets. Complete transparency. Mutual submission. Yeah, what could go wrong with this plan?
When all of your money sits in a single bank account you effectively have no money priorities.
It is moronic for a married couple to handle all of their finances out of a single bank account. This is pretend land. It’s crazytown. When all of your money sits in a single bank account you effectively have no money priorities. Buying pizza has the same priority as paying the mortgage or insurance or saving for emergencies because when money is not divided into separate accounts there is no priority to the spending, and that is just not true.
Some expenses are more important than others. We all know that. Paying the mortgage or the insurance premium or saving for emergencies is vastly more important than paying for temporary needs, like a slice of pizza. And even if we verbally agree with this statement, if we just nod our head and do nothing more, then nothing has changed. Establishing priorities means taking action. It means dividing money into separate accounts based on their priority level.
The absolute key to money management is to divide money on payday. Not one day later. Not one minute later. Automatically divide money on payday. Put that on a tattoo.
The phrase “pay yourself first” is really just saying that you need to set money priorities. And when it comes to setting money priorities, it means dividing money into separate accounts. Here is how you do that.
- STEP ONE: Write your Top Ten list. Write down the ten most important monthly expenses. You already know what these are. Mortgage/Rent. Car Insurance. Utilities. Cell Phones. Netfix (really, I’m fine with this being in the top 10). Child Support. Income Taxes. Daycare. Then, add up the list. This monthly total must be paid. This is your priority. It must happen. Leave out food, gasoline, pizza, and other day to day living expenses.
- STEP TWO: Go back to Step One and add missing items. I bet a lot of you forgot to put Emergency Savings in your top ten list. (And I’ll bet those of you who didn’t ironically have no emergency savings!) And retirement savings? Was that in your top ten list? No? Why not? Do you plan on not retiring or is your plan to become a religious monk with a poverty vow? No? Well put that in the list. It’s important to have money when you retire, and if you are self-employed or are not eligible for a 401(k) plan, then put retirement savings in your list. Christmas? Did you put Christmas and holiday gifts in your list? No? Are you planning on being a Grinch this year? Or was you plan to put that stuff on a credit card, again? Really, it’s time to stop delaying the funding of expenses you know you have to pay.
- STEP THREE: Align paychecks to monthly expenses. After correcting your Top Ten list in Step 2 above, add up the new monthly total. How much is the monthly priority spending total? Now, figure out how much of each paycheck you must set aside in a new bank account so that at the end of the money you have enough to pay this priority total. If possible, have that amount directly deposited from your paycheck into this new account on payday. If you don’t have direct deposit, then manually deposit the money ON PAYDAY. It is supper important to divide money on payday! This must be automatic. The absolute key to money management is to divide money on payday. Not one day later. Not one minute later. Automatically divide money on payday. Put that on a tattoo.
- STEP FOUR: Utilize your bank’s Bill Pay service. Now that you have funded a separate bank account to pay the Top Ten list of most important monthly expenses, the next step is to have the bank automatically pay these priority expenses. Most banks and credit unions offer free Bill Pay services. Learn how to use this system. If you hate computers then go into the bank and have them set up the automatic payment. This is easy and necessary. To prioritize money there must be automatic deposits into priority spending accounts and automatic payments from the account.
If you have completed these four steps above, congratulations on achieving priority-based money management. If you set up your system correctly, you are now saving money each month automatically. Your retirement is being funded and when holidays roll around the money is already saved to buy presents. With each and every payday your emergency savings account should be growing, and it needs to continue growing until you have 3 to 6 months of your living expenses saved in cash. When bad things happen, when the car transmission needs replacement and your son breaks his leg trying to dunk like Kobe Bryant, you will be ready. Your mortgage will be paid of in 15 years instead of 30 since you now pay an extra $100/month on that expense because you decided to make that a priority.
Pay yourself first. Prioritize your needs first, your retirement first, your kid’s college savings first, your second honeymoon first, your family vacation first, your retirement first, and then worry about everyone else second. The money struggle does not go away, but you are no longer following the Thelma & Louise retirement plan. You still have to figure out how to pay back all those credit card and medical debts, and you will find a solution. But what you are no longer doing is sacrificing your future security for the temporary problems of today. You are back on the road of progress because you are paying yourself fist.
To budget money means to divide money. To budget means to prioritize. And to prioritize money means to divide money on payday into multiple bank accounts. Emergency savings account. Christmas/holiday/birthday savings account. Retirement account. Vacation fund. Top 10 monthly expense account. Day-to-Day spending account.
Don’t be afraid to pay yourself first. You are worth it. You work hard for your money. You made a promise to your kids and to yourself. Honor that promise. Pay yourself first.
Image courtesy of Flickr and Bradley Weber.
There is one simple habit that all financially successful people do–they pay themselves first.
That phrase has always annoyed me. Pay myself first? What exactly does that mean? I heard financial gurus say that phrase over and over, and it just came off as cocky and glib.
“Want to become rich boy? Well, it’s simple. Just pay yourself first!” What? You can’t just pay yourself into wealth. You have to create the wealth. Build the business. Land the great job. Earn the money, and THEN you save money and become rich. Right?
Wrong. Want to get rich? Pay yourself first. Want to pay off the mortgage in retire with money in the bank? Then pay yourself first. Have financial problems? Pay yourself first.
In fact, the less money you earn the more important it is to pay yourself first.
We feel frustrated because we sense time blowing past us and it’s becoming apparent that our financial goals are not being met. The mortgage balance is not going down. In fact, we may even owe more than when the home was purchased because we borrowed against the home to consolidate bills. The retirement nest egg is almost to zero because we keep raiding it to cover all those unexpected jams we got ourselves into and at midlife there is nothing in the pot. An eerie sense of doom pervades and now panic is starting to set in.
Pay yourself first. The anxiety bells fade away when you pay yourself first. Problems will still exist–problems will always exist–but instead of living with a sense of running out of time to accomplish your financial goals in life you will sense that goals are being accomplished despite the nipping bites at your heels from the unavoidable day to day hazards of being alive. Pay yourself first.
What does it mean to pay yourself first?
It starts with identifying your goals. Where do you want to wind up? For most of us, that question is not difficult to answer. At the end of our working day we want a decent home paid in full and some money in our retirement accounts so we can slow down and enjoy grandchildren and retirement and maybe take a trip to the beach when Nebraska’s winter kick us in the butt.
Once you define your goals, the next step is simple. What do you have to do every payday to achieve your goals and stay out of financial trouble? How much do you have to set aside every payday to pay off the mortgage in 10 years instead of 20? Find out and start paying that now–before you pay other debts. How much money do you want in your retirement account at age 65? Start funding your retirement account NOW to make that happen before you worry about paying off your debts. Pay yourself first. Put your priorities first. Put your family’s needs first before paying VISA and MasterCard.
Most people who wind up in a shitty retirement earned plenty of money in their life to retire a millionaire. But they didn’t put their needs first. Instead, they cashed in their retirements to pay off debt. They put a 2nd mortgage on the house to consolidate bills only to run up the credit card accounts again. And all of it was for a good reason. Johnny needed a better bed so you used the credit card. Susie showed talent at piano so of course we have to borrow from the 401(k) to pay for lessons. And the list goes on. All good reasons to spend money. Just helping the family out. Just being a good spouse or parent and supporting others in their needs. Just doing what is right. And, little by little, day by day, putting other people’s needs before your own. Paying yourself LAST. That’s how you wind up old and poor.
Paying yourself first is not being selfish. It’s necessary. It’s the responsible thing to do. I’m not saying to be a complete jerk and to avoid paying rightful debts. Rather, I’m advocating that you balance your legitimate needs with the claims of your creditors. And when balancing your needs and their claims, pay yourself first. Pay creditors AFTER you have paid extra on the mortgage, saved for retirement, paid into the emergency savings account, paid your taxes, funded your vacation fund, and contributed to your church. What’s left over belongs to them.
So what do you do when you pay yourself first and there is not enough money to pay the creditors? You deal with it. You take on a second job. You cut unnecessary expenses. You call a family meeting and lay the problem out honestly and completely to every human in the house. You get professional advice. You seek out people you respect and get their input. Maybe you chat with a bankruptcy attorney or credit counselor. But what you don’t do is to stop paying yourself first. You keep paying extra on the mortgage. You keep paying into the retirement and keep your damn fingers off the funds already saved. You keep paying into the vacation account. And you figure out the problem somehow. It doesn’t matter how. What does matter is that you rightfully keep your family’s priorities and dreams in first place and let everything else come second.
Life is just one problem after another. They keep coming and as we age they sometimes get worse. That’s just a fact of life. And over time, what seemed like a big problem at the time just looks a lot smaller in the rear view mirror of life. Don’t sweat the problems. Focus on the goals. Pay yourself first and reach your financial dreams. You owe it to yourself. You owe it to your spouse and children. That’s not being selfish. That’s being responsible. Just do it.
The August 2018 New York City Taxi & Limousine Commission (TLC) sales results have been released to the public. And as is our practice, provided below are Jim Shenwick’s comments about those sales results.
1. The volume of transfers rose from July. In August, there were 52 taxi medallion sales.
2. 37 of the 52 sales were foreclosure sales, which means that the medallion owner defaulted on the bank loan and the banks were foreclosing to obtain possession of the medallion. We disregard these transfers in our analysis of the data, because we believe that they are outliers and not indicative of the true value of the medallion, which is a sale between a buyer and a seller under no pressure to sell (fair market value). Three transfers were estate sales for no consideration and another transfer was from an individual to an LLC for no consideration, which also do not reflect fair market value and which we have also excluded from our analysis.
3. However the large volume of foreclosure sales (approximately 71%) is in our opinion evidence of the continued weakness in the taxi medallion market.
4. The 11 regular sales for consideration ranged from a low of $150,000 (one medallion), $160,000 (one medallion), $170,000 (one medallion), $172,500 (two medallions), $175,000 (two medallions), $180,000 (one medallion), $182,300 (one medallion), $185,000 (one medallion) and a high of $200,000 (one medallion).
5. Accordingly, the median value of a medallion in August was $175,000, the same as in July.
In Jim Shenwick’s opinion, the new NYC law restricting the number of Uber, Via and Lyft licenses does not seem to have yet increased the value of taxi medallions.
Please continue to read our blog to see what happens to medallion pricing in the future. Any individuals or businesses with questions about taxi medallion valuations or workouts should contact Jim Shenwick at (212) 541-6224 or via email at j[email protected].
By James Barron
Mohammed Uddin was having a bad day, and it was only lunchtime. He was fourth in line at a green-taxi stand in Astoria, Queens, and not happy about it.
But he was not waiting for a green cab to pull up. He was in a line of green cabs waiting for passengers to pick up in the shadow of the Astoria Boulevard subway station.
“I started at 9 o’clock,” said Mr. Uddin, a green-taxi driver since he left a hotel job on Long Island in 2014. “I made $47 so far. That’s very bad. If Uber hadn’t come in, it wouldn’t be like this.”
Uber and Lyft, the ride-share services that have transformed the way many New Yorkers get around, have plunged the yellow cab industry into an existential crisis. But green-cab drivers are no less angry about app-connected rides, saying that Uber and Lyft have torpedoed their fledgling segment of the taxi industry before it even had a chance to establish itself.
Mayor Bill de Blasio recently signed a bill into law that capped ride-share vehicles at their current level, around 100,000, making it the first major American city to impose a limit on the booming industry. But drivers like Mr. Uddin said the cap was unlikely to create a new window of opportunity for green cabs, in part because ride-hail cars outnumber green cabs 30 to 1. City officials estimate the number of green cabs on city streets to be around 3,500.
The city wanted green taxis to be an antidote to a longstanding problem: Yellow cabs rarely pick up people outside Manhattan, except at the airports. But their arrival more or less coincided with the rise of Uber, which, after establishing itself in Manhattan, expanded across the city.
“Uber and Lyft really decimated the green cab sector,” said Bhairavi Desai, the executive director of the New York Taxi Workers Alliance, which represents taxi and ride-hail drivers. “There was high expectation among drivers that this would be an opportunity to earn without the same level of pressure that you face in the yellow-cab industry.”
Uber counters that it helps green cabs, because many green-taxi operators also drive for Uber. An Uber spokesman said the ride-hail service dispatches more than 50,000 trips to green taxis every month — of course, for passengers, it can be confusing to order an Uber car and have a green taxi pull up to the curb. The Uber spokesman, Jason Post, said Uber provided “an enormous earning opportunity by connecting drivers with more rides,” especially in far-flung neighborhoods where fewer green cabs circulate looking for passengers.
Uber riders say it is often much easier and faster to get an Uber car with a couple of taps on a cellphone than to it is to look for a green cab to hail on the street.
Figures from the city’s Taxi and Limousine Commission underscore how much business for green cabs has declined since ride-share cars arrived. In May, green taxis made 25,693 trips a day across the city, a 55 percent decrease from May 2015, the busiest month on record, which had 57,637 trips. By contrast, Uber says it handled more than 84,000 trips to or from a single neighborhood, East New York, Brooklyn, between July 18 and Aug. 15.
For green cabs, revenue has declined proportionally as trips have dwindled, to $386,965 a day citywide in May 2018, from $862,099 in May 2015. Green-cab drivers are working less than they were, 5.7 hours in May 2018, compared with 6.5 hours in May 2015.
Brooklyn accounted for a third of green-cab pickups from January through May of this year, according to the taxi commission. Almost another third, 31 percent, were in northern Manhattan, and 29.5 percent were in Queens. By contrast, only 5.3 percent were in the Bronx, and only one one-hundredth of one percent on Staten Island.
And, while the number of ride-hail vehicles has soared, the number of green cabs has shrunk. A total of 8,345 permits have been issued since 2013, but the taxi commission considers only 3,514 active.
As for whether Uber had hurt the green cabs, Mr. Post, the Uber spokesman, said, “I would say Uber has built a better mousetrap.”
Green taxis were supposed to be that mousetrap — a new category for the entrenched taxi industry, created when Michael R. Bloomberg was mayor. “The right to hail a legal taxi in all five boroughs,” he said in 2013, was “something that New Yorkers have deserved and never had.” A survey by the taxi commission found that 95 percent of yellow taxis picked up passengers below 96th Street in Manhattan and at the airports.
The solution — taxis that could only operate away from the areas dominated by yellow cabs — now seems so 2011, which is when the Bloomberg administration first proposed it. The new category of taxis that was created, the green cabs, could not pick up passengers in Manhattan south of East 96th Street or West 110th Street. They can stop if someone hails them anywhere in the other boroughs, except at the airports.
By coincidence, 2011 is also when Uber began operating in New York.
Now, some passengers say green cabs tried, but never fulfilled their promise.
“They filled a crucial void in areas like Harlem where yellow cab service was spotty at best” when they first hit the streets, said Derek Q. Johnson, who lives in Harlem. “But I think it’s hard to dispute that the ride is better with Uber and Lyft and the reliability is more assured.”
Different rules apply to green cabs at airports, where they can drop off passengers but cannot pick them up, except by prearrangement — for example, if they are sent there by a dispatcher. Many drivers complain that those rules force them to go to the airports empty if they are dispatched for a pickup or return empty if they take someone there. Unlike yellow cabs, they cannot wait in the taxi lines. Uber and the other ride-hailing apps are not bound by airport rules.
The yellow-cab industry responded to the plan for green cabs by going to court. Yellow cab owners worried that the value of their million-dollar medallions would plummet.
The city won the court challenge and the value plummeted, but not because of competition from the green cabs that went on the streets in 2013.
“Unfortunately, they came along at the same time as Uber and Lyft,” said Mitchell L. Moss, a professor at New York University where he is the director of the Rudin Center for Transportation Policy and Management. “The benefit of Uber is it can come pick you up in highly dispersed locations, which the green taxi can’t really do because it’s got to stay near dense transit pickup locations.”
Green cabs, he said, are “basically clustering at transit and retail hubs” — near where subway lines end, for example — because they are more likely to find passengers there than if they cruise the streets they are authorized to cruise where people are not used to seeing cabs. Indeed, Ms. Desai, of the Taxi Workers Alliance, said that “significant street-hail markets” had not developed outside Manhattan.
But that was not the only problem for green cabs. “The city was kind of undercutting them by licensing all those other cars” — the ride-share vehicles, said Graham Hodges, a historian of the taxi industry and a professor at Colgate University, who predicted that a shakeout is coming.
“There are far too many vehicles on the road, and that’s where I think the T.L.C. will tighten up regulation,” he said, referring to the taxi commission. “And when they do, the ones with those permits will be in the best legal situation. They’ll be the ones that survive.”
Copyright 2018 The New York Times Company. All rights reserved.
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