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There comes a time when you start looking at picking up extra jobs to improve your financial situation.
For example, Megan Fox used to dress up as a banana. Whoopi Goldberg did time as a phone sex operator before her career took off. Brad Pitt donned a chauffeur’s cap to be a limo driver for strippers.
It’s called a side hustle, and lots of people do it. When I opened my practice I had a side hustle working nights as a word processor at Morgan Stanley in midtown Manhattan. It helped me pay the bills as I started building up a client base, and offered a free ride home in a black Lincoln Towncar each night.
These days there are lots of ways to make extra cash on the side. But none are as strange as what UFC star, Ronda Rousey did for money in middle school.
She beat the hell out of random guys in Los Angeles for Frappuccino money.
According to an interview with Sports Illustrated:

“Me and my friend Jackie, after school, we would walk over to the Promenade, and Jackie was like my Paul Heyman. She would be like, ‘I bet my girl right here could beat you up for $10.’ And then some guy would be like, ‘Ehhh, whatever. I’ll take that bet,'” she told the magazine.
“I would throw him to the ground, either give him a choke or an arm bar. We would get him to say he gave up, then take his money and go buy Frappuccinos.”

This is three years before Rousey qualified for the 2004 Olympic Games in Athens and won a gold medal at the World Junior Judo Championships in Budapest.
Here’s the Rousey interview (warning – explicit language):

Necessity is the mother of invention. But if Ronda Rousey offers to fight you, walk the other way.
Starbucks image courtesy of Basheer Tome/Flickr (modified)
The post Would You Fight Ronda Rousey for a Frappuccino? appeared first on Bankruptcy and Student Loan Lawyers - 866.787.8078.

Talk to people with federal student loans and it’s unlikely that you’ll hear praise for companies responsible for overseeing their loans. Now a report issued by the Consumer Financial Protection Bureau confirms what many borrowers have known all along – the system is broken.
The bureau found, “a wide range of sloppy, patchwork practices that can create obstacles to repayment, raise costs, cause distress and contribute to driving struggling borrowers to default.” With public outcry at an all-time high, borrowers as well as servicers are urging new rules to be implemented.
More than 41 million Americans owe student loan debt, with the total doubling from $516 billion to more than $1.2 trillion in the last eight years. The average student loan debt has grown by nearly 60 percent during the same period, rising from about $18,000 in 2007 to nearly $30,000 in the third quarter of 2015.
At the same time, delinquencies have skyrocketed to the point where nearly 1-in-4 student loan borrowers in repayment are delinquent or in default. Given the fact that only 89.5 percent of federal student loans are in repayment – the rest are in some form of deferment or forbearance – a full 3-in-10 outstanding student loans are really past due.
Student loan servicers act as the intermediary between borrowers and lenders. Servicers manage borrowers’ accounts, process monthly payments, manage enrollment in alternative repayment plans, and communicate directly with borrowers, including borrowers in distress. With such explosive growth in the number of borrowers as well as the the total amount of debt they’re called on to manage, it’s easy to see how even the best system can break down.
None of this would be a problem if there were industry standards in place to help borrowers and servicers understand policies and guidelines. Unfortunately, no consistent, market-wide federal standards for student loan servicing exist.
In fact, servicers generally have discretion to determine policies related to many aspects of servicing operations in spite of the fact that they are all under contract with the U.S. Department of Education. The report, based on over 30,000 comments the federal watchdog group received from borrowers, revealed the widespread problems that resulted from these operational problems.
Payments were routinely lost, resulting in late fees and negative credit notations. Military borrowers had a hard time getting the Servicemembers Civil Relief Act interest rate cap of six percent. Older borrowers as well faced an uphill battle in repaying their student loans.
In addition, reports indicate that only 13 percent of borrowers have elected one of the income dependent repayment plans designed to keep them out of default by reducing payments to a portion of income.
Now, at last, the government is attempting to improve the system for all.
The Departments of Education and Treasury, in conjunction with the CFPB, issued a Joint Statement of Principles on Student Loan Servicing to begin to address the problems uncovered. The statement provides as follows:

The Departments and the Bureau intend to work closely with one another, consistent with their respective authorities, to strengthen servicing protections for student loan borrowers, and will seek to ensure that student loan servicing is, where appropriate:

• Consistent. Student loan borrowers and servicers alike would benefit from a clear set of expectations for what constitutes minimum requirements for services provided by student loan servicers and servicer communications with borrowers, including adequate and timely customer service. Student loan borrowers should expect effective student loan servicing, including, but not limited to, conduct related to payment processing, servicing transfers, customer requests for information, error resolution, and disclosure of borrower repayment options and benefits. Such conduct should account for and recognize variations in loan features, terms, and borrower protections.
• Accurate and Actionable. Student loan borrowers often depend on servicers to provide basic information about account features, borrower protections, and loan terms. It is critical that information provided to borrowers by student loan servicers be accurate and actionable. Information, including explanation and instructions regarding borrowers’ loans and repayment options, should be presented in a manner that best informs borrowers, helps them achieve positive outcomes, and mitigates the risk and costs of default.
• Accountable. Student loan servicers, whether for-profit, not-for-profit or government agencies, should be accountable for serving borrowers fairly, efficiently and effectively. If servicers fall short and violate federal or state consumer financial laws, the HEA, contractual requirements, or federal regulations, borrowers, federal and state agencies and regulators, and law enforcement officials should have access to appropriate channels for recourse, as authorized under law.
• Transparent. The public, including student loan borrowers, may benefit from information about the performance of private and federal student loans and the practices of individual student loan lenders and servicers, including information related to loan origination, loan terms and conditions, borrower characteristics, portfolio composition, delinquency and default, payment plan enrollment, utilization of forbearance and deferment, the administration of borrower benefits and protections, and the handling of borrower complaints. The federal government already makes much of this information available for federal student loans, and private-sector lenders and servicers should follow suit. Portfolio performance data, including data at the individual servicer level, should be available for all types of student loans.

The CFPB report as well as the Joint Statement of Principles on Student Loan Servicing are all part of President Obama’s Student Aid Bill of Rights, which directed federal agencies to improve student loan servicing and help make paying for higher education an easier and fairer experience.
For millions of borrowers, this is a step in the right direction. With consistent standards, not only will those paying for college be better protected but they will also be assured of a more accurate and fair means of having their loans serviced.
The post Government Report Reveals Widespread Student Loan Servicing Problems 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.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.

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.