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As many readers over blog posts are aware, at Shenwick & Associates we practice personal and business bankruptcy law and workouts. With respect to our personal bankruptcy practice, we do not have a volume practice and we are generally referred more complex personal bankruptcy filings, rather than the run-of-the-mill filings, which we also do.Recently, a client contacted us and wanted a second opinion regarding his personal bankruptcy filing. Briefly, the facts were as follows, the individual was a relatively high income earner with a lot of personal debt and a significant amount of student loans, including graduate student loans. He had consulted with a number of personal bankruptcy attorneys, who indicated that based on his income, he did not qualify for Chapter 7 bankruptcy but rather Chapter 13, which would entail a 3 to 5-year payment plan.We met with the client and got detailed background financial information. Many of the clients' student loans were graduate student loans, were related to his profession or his ability to earn an income and accordingly case law held that they may be classified as business income and not personal income. In the way of background, if an individual's income is greater than the state's “Median Income” and they fail the “Means Test”, they cannot file for chapter 7 bankruptcy.We asked the client for documentation regarding his graduate school attendance and did exhaustive research regarding treating graduate student loans as business income, rather than personal income. We put together a research memorandum, containing documents, case law and articles and based on our reviews of his file and our research, we believed that he would qualify for a Chapter 7 bankruptcy. We did not over-promise and indicated that we thought his chances of success were approximately 60% and that the Chapter 7 bankruptcy trustee and the United States Trustee would question the treatment of the graduate loans, review the filing and possibly challenge the bankruptcy filing.The client was happy about the news, but concerned about his chances of success and spoke with his father who advised him to move ahead with our law firm and file for Chapter 7 bankruptcy.
We spent a lot of time preparing the client for his 341 hearing had we forward our research memo to the chapter 7 trustee, who sent it to the United States Trustee and we were thrilled to find out this week that the client received his Chapter 7 bankruptcy discharge
The client wrote us a letter of recommendation which is provided below. Bankruptcy, particularly personal bankruptcy is a specialized area of the law and clients having questions about which type of bankruptcy to file, if any and what chapter to file should contact Jim Shenwick for a consultation or a second opinion. Jim Shenwick, Esq. [email protected] 212 541 6224Client Recomendation“I needed to file bankruptcy which was a very difficult and stressful decision. I never wanted to get to the point of having to file chapter 7, but I knew in order to have a fresh start it was the only way out. I spoke with several attorneys, most said I could only file chapter 13. I was single, no kids, and employed; my career and lifestyle were getting better but the debt was still substantial and I couldn't save any money. I felt overwhelmed thinking I had to figure out how to pay off the debt. James was the only attorney that firmly said you need to file for chapter 7. He didn't promise it would happen, in fact he was honest saying I had a 60/40 chance but he believed I had a good chance. I'm so glad I followed my instincts and went with him. He was aggressive and direct and got the job done. He prepared me for the court day and it went in my favor. I'm not gonna lie, I'm not proud of the situation, but I'm happy to be debt free with a new promising start. Thanks James!”
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What You May Not Know About These ServicesServices like “buy now pay later” now account for $100 million in annual transactions and are a popular financial resource for millions of Americans. These methods make purchasing simpler, but there are hazards involved as well.
Consumers enjoy the convenience of “buy now pay later,” but they are unaware of how it affects their wallets.
“People love the convenience, but there is still a lot of misunderstanding regarding BNPL services and their influence on people’s financial lives.”, says Amy Maliga, a financial educator with Take Charge America. It’s simple to overlook the future threats because there is such confusion. Because of this, it’s essential to look more closely at any new services or products, especially those that make it simpler for you to spend your hard-earned money. Prior to utilizing BNPL services, Maliga advises you keep the following in mind:
Don’t be misled, these “loans” function as credit
BNPL payments are a form of credit, despite the fact that BNPL providers may advertise themselves as a more convenient way to pay for regular purchases without using credit or debt. Additionally, some services impose late fees or interest if you miss a payment. Use caution when utilizing these services as it is simple to slip into debt.
Most likely, you’ll spend more.
Retailers aggressively market BNPL since customers tend to spend more money when using these services. Two-thirds of buyers who used BNPL plans spent more than they otherwise would have, according to a LendingTree poll. Be sure to examine your finances and bank account before making that expensive purchase. Make sure you can actually afford it. Otherwise, you run the danger of racking up debt you cannot pay for.
Inconsistent impact on credit scores.
You don’t benefit from the advantages of responsible repayment because the majority of BNPL suppliers don’t report on-time payment information to the major credit agencies. Negative incidents, such as late payments or collection activities, are more likely to be recorded. Due of this, it is even more important that you make all of your BNPL payments on time and without missing any.
No consumer safeguards.
These services are not covered by the Truth in Lending Act because of BNPL’s typical four-installment payment schedules. This mean that with BNPL providers, consumers are not protected from any potential predatory or misleading lending practices. What is the difference? Federal law requires five installments before any regulations are imposed.
Source: inbusinessPHX.com (intended for educational purposes only)
Feeling buried with debt? Check out National Foundation of Consumer Credit Counselors, but beware of the scams offering “debt relief” services.
From their website: “Beyond our credentials and our decades of service as a nonprofit financial counseling organization, what we offer is hope. The kind of hope that allows you to envision a bright financial future that is achievable and sustainable.
Our grounded expertise, inclusive solutions, and commitment to the common good are what turn that hope into a plan that fulfills your dreams. Years of independent, academic research have proven our efforts effective. Ultimately, we believe in better futures for all, and we are committed to seeing that through.”
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What may appear to be “FREE” does not mean free. Nor, is “low cost” really low cost. It means that you will pay later. It may mean your free trip to the mountains comes with obligations to attend two days of intense sales pressure to buy a timeshare that no one wants. It may mean you get a free puppy who hates your children (or it could mean life is perfect and everyone gets along). The lenders or retailers are in the business to make as much money as possible. How much profit received by the owners of the business (usually shareholders) dictates whether they will keep the folks in charge of the business. Take time to investigate why someone is offering something for free, or what appears to be easy terms, and investigate what are you obligated to do or what the cost will be in the long run.
Diane L. Drain
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The post The Secret Costs of Using Buy Now Pay Later Services appeared first on Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer.
This article from TDPel Media will be helpful to many clients (and some attorneys) titled 10 Tips On How To Avoid Legal IssuesThe article can be found at https://tdpelmedia.com/10-tips-on-how-to-avoid-legal-issues
Jim Shenwick, Esq. [email protected] [email protected]
" I needed to file bankruptcy which was a very difficult and stressful decision. I never wanted to get to the point of having to file chapter 7, but I knew in order to have a fresh start it was the only way out. I spoke with several attorneys, most said I could only file chapter 13. I was single, no kids, and employed; my career and lifestyle were getting better but the debt was still substantial and I couldn't save any money. I felt overwhelmed thinking I had to figure out how to pay off the debt. James was the only attorney that firmly said you need to file for chapter 7. He didn't promise it would happen, in fact he was honest saying I had a 60/40 chance but he believed I had a good chance. I'm so glad I followed my instincts and went with him. He was aggressive and direct and got the job done. He prepared me for the court day and it went in my favor. I'm not gonna lie, I'm not proud of the situation, but I'm happy to be debt free with a new promising start. Thanks James!
We knock out Dyck-O’Neal, Save Lonnie’s Clearance and his Family Home Place Lonnie was about to lose his federal job. His clearance review showed he owed Dyck-O’Neal $127,153 from a foreclosure deficiency. He needed to take care of that. Or he’ll lose his clearance and his job. Obviously he didn’t have $127,153. And when we […]
The post We knock out Dyck-O’Neal, Save Lonnie’s Clearance and his Family Home Place by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.
We knock out Dyck-O’Neal, Save Lonnie’s Clearance and his Family Home Place Lonnie was about to lose his federal job. His clearance review showed he owed Dyck-O’Neal $127,153 from a foreclosure deficiency. He needed to take care of that. Or he’ll lose his clearance and his job. Obviously he didn’t have $127,153. And when we […]
The post We knock out Dyck-O’Neal, Save Lonnie’s Clearance and his Family Home Place by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.
Money Magazine has an excellent article on this topic. The article can be found at https://money.com/get-items-removed-from-credit-report/
Jim Shenwick, Esq 212 541 6224 [email protected]
Need Tax Relief? Here’s How To Get Rid Of Your Back Taxes. Excellent article on how to get tax relief at Forbes. The article can be found at https://lnkd.in/ezfF9rQq
Not mentioned in the article, but many incomes taxes can be discharged in a chapter 7 bankruptcy filing. Jim Shenwick, Esq 212 541 6224 [email protected]
We view negatively a person who files bankruptcy after running up credit cards debts to fund an extravagant lifestyle, but we are less judgmental about the unlucky person who incurs medical debt. Apparently the three major credit reporting bureaus agree and have decided to remove these debts from their credit reporting.
Forbes Magazine has a break-down of the new rules:
- Starting July 1, 2022, medical debt that’s been paid will no longer be included on credit reports from Equifax, Experian and TransUnion—even if it’s been on your report for several years.
- In addition, the three credit bureaus are increasing the amount of time before medical debt in collections appears on your credit reports. That cushion is now six months but will be lengthened to one year.
- If you’re in the process of negotiating or paying a medical debt, this can give you extra time to work with providers or collectors to find a mutually-agreeable payment solution.
- Finally, beginning in the first half of 2023, the three consumer credit reporting agencies will no longer include medical debt in collections under $500 on credit reports.
Is this a good thing?
Well, for bankruptcy attorneys this is a bad development since we pull credit reports when preparing a bankruptcy petition. We can’t list creditors we don’t know about, and clients seem overwhelmed when trying to remember all the medical creditors they owe.
There will be more unscheduled debts. That’s a bad consequence of this new practice.
The woke FICO score.
So, medical debts are no longer “debts” for the FICO score. It would be harsh and oppressive to report . . . um . . . debts. I mean, the wrong kind of debts.
Something tells me this is purely public relations. My guess is there is another report bankers are viewing to tell the about the politically incorrect debts, like medical debts. In fact, I know such reports are reviewed when bankers are deciding whether to extend credit.
For years the Credit Counseling industry has said that enrolling in a Debt Management Plan does not affect the FICO score, but I’ve heard bankers tell me that they know that people who enter these programs are several times more likely to default on a loan, so they do consider those programs as a “factor” when extending new loans.
The score ain’t the score anymore.
Debt management plans don’t reduce FICO scores, but it is a “factor.”
Medical debt is not debt.
2+2=5.
If a credit report does not accurately report a person’s debts–if the debt-to-income ratio is not really an accurate ratio–what good is the report?
I smell a rat. Somehow, some way, those bankers still look at medical debts.
A credit score is supposed to inform us of whether you are a good credit risk. The higher the debt level, the higher the risk. More debts equate with more lawsuits and garnishments and potential loan defaults. How you acquired the debt really doesn’t matter, but apparently it does now.
What else shouldn’t be reported?
So what other debts will not be reported based on what is politically correct? Should debts incurred by single moms be reported? Should debts of ethnic minorities be reported? Should debts owed by residents of low-income neighborhoods be reported? Isn’t all reporting of debt repressive?
Image courtesy of Flicker and CafeCredit.com
The article can be found at https://www.yahoo.com/lifestyle/commercial-chapter-11-filings-increase-120000894.htmlProfessionals or clients with questions about chapter 11 bankruptcy can contact Jim Shenwick, Esq 212- 541-- 6224 [email protected]
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