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March 2013 Archives

Updated: Payday Lender Threats

 Update:  It has been a little over a year since I wrote a blog on payday lenders claiming to be with the McLennan County DA's office.  In my Waco Bankruptcy office, I am having more and more clients tell me that they received calls from individuals claiming to be officers of the court or government agents.  They say they must be paid or the debtor will be picked up by the sheriff or the police and placed in jail. Last February I was able to hear McLennan County DA Abel Reyna speak regarding payday loans and other matters. He specifically addressed the question of whether the McLennan County DA's office is calling and investigating people who are not making their payday loan payments. He denies any involvement from his office and claims that, as a general rule, he has no intention of arresting individuals who fail to repay payday loans. He claims that collection agencies are using his name in vain and he is researching this issue as an attempt to resolve it. However, these recent threats are not the first time collection agencies have used lies and threats to scare people into paying their debts. I once had a client who called crying because her elderly mother had been called and told her daughter would go to jail the next day if the mother didn't pay. I have had other clients who are called and harassed due to deceased family member's debts. The reality is that payday loans are not the answer. The interest rate tends to be in the triple digits and tend to make problems worse.  They are next to impossible to pay off. Furthermore, payday lenders collection tactics are some of the most abusive in the industry. They threaten, lie, and abuse debtors who are struggling to pay off the debt due to the outrageous interest rate. Individuals will pay the payday loans out of fear and end up homeless because they can't make the mortgage payments. If you are struggling with payday lenders, please call 254-633-2876 today for a free, no-obligation consultation to see how we can help! Let my family help yours!

Behind on your mortgage payments? What are your best options

Central Texas Families may fall behind on their mortgage payments for many reasons from job loss to medical bills, from retirement to paying payday lenders and credit cards instead of the house payment. But the end result is the same--if you are behind on your mortgage payments, you are at risk of losing your home to foreclosure. A recent study looked at Chapter 13 bankruptcy as a means to save homes for families at risk of foreclosure. (See http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1223262) The study focused primarily on families who filed for Chapter 13 bankruptcy to avoid foreclosure in Delaware for the majority of the last decade and compared them to families who did not file bankruptcy to avoid foreclosure. The study found a number of important points. First, it is important to act quickly if you are behind on your house payments. A Chapter 13 bankruptcy will stop a foreclosure and force a mortgage company into a repayment plan over the course of 3 to 5 years. Unfortunately, some families were unable to make their repayments plans and still loss their homes in spite of the bankruptcy. While I believe that new programs that have developed since this study ended are helping families be more likely to be successful in Chapter 13 bankruptcies, sometimes families will still lose their homes if job loss continues or they cannot afford their regular monthly house payment plus the bankruptcy payment. (See http://thekehllawfirm.com/hope-for-homeowners-who-struggling-make-their-house-payments/). However, families who were less than 12 months behind on their house payments when they filed bankruptcy were more likely to succeed in keeping their homes in a successful bankruptcy. The take home message, don't delay. If you are behind on your house payments, talk to an experienced bankruptcy attorney today about your options. The sooner you start fixing your problems the more likely you will be successful in saving your home in the long run. Second, this study also confirmed something that I strongly believe--Chapter 13 bankruptcy is not for everyone. There may be other options to save your home where you can be successful like attempting to modify your home loan as a party of a Chapter 7 bankruptcy.  Finally, one option is simply to let the home go back. I know that is not an appealing option to many of my clients, but if you are unable to afford your home, it might be the best option for your family. (See http://thekehllawfirm.com/cant-afford-your-home-foreclosure-right-for-your-family/). If you are behind on your mortgage payments, don't delay! Seek out help today from experienced staff who can work with you to make a plan. Call 254-633-2876 or email me at info@TheKehlLawFirm.com for a FREE, no-obligation consultation before you lose your home.

Should I sign a reaffirmation agreement?

A reaffirmation agreement is an agreement between you and a creditor where you agree that you personally will pay all or a portion of a debt owed, regardless of the bankruptcy. They only apply in a Chapter 7 bankruptcies and are voluntary. They typically come into play with car creditors in your bankruptcy. Before the bankruptcy, if you did not make your car payment, the car creditor could repossess the car and sell it at an auction. You are liable for any balance owed, or deficiency, after the auction. For example, if you owe $10,000.00 on a car note and the car creditor repossesses the car due to lack of payments, the car creditor may sell it at auction for $2,000.00. In that example, you are still personally liable for the remaining $8,000.00. The car creditor may sue you for the deficiency and must report that deficiency to the IRS on a 1099-C which could cause you to receive a small refund or owe the IRS money when you file your yearly income taxes. When you file bankruptcy, you must include that car creditor in your bankruptcy. However, the Chapter 7 bankruptcy eliminates your personal liability on the car note. The car itself remains liable on the note but you are not. That means that if you make your car payments, you will keep the car. However, if you are unable to make your car payments, the car creditor will repossess the car, BUT the car creditor may never attempt to collect any deficiency from you. So, in my example above, the car creditor may not pursue you personally for the $8,000.00. Signing a reaffirmation agreement causes you to remain personally liable for the car. You become liable for the $8,000.00 deficiency in my example above again. It is basically saying I really want this car. I want it so badly that if I don't make the payments, the car creditor may come after me personally for the balance of the loan. There are advantages and disadvantages to signing a reaffirmation agreement. One advantage is that if you sign, then the car creditor may report your payments to your credit report which can help you reestablish credit after the bankruptcy. Another advantage is that some car creditors may lower the interest rate or balance of the loan as an incentive for you to sign the reaffirmation agreement. However, signing a reaffirmation agreement is serious and has one major disadvantage--you remain liable to the entire car note. If you owe more than the car is worth or have an extremely high interest rate, it may not be in your best interest to sign a reaffirmation agreement. Your bankruptcy attorney should discuss any reaffirmation agreements with you during your Chapter 7 bankruptcy. Reaffirmation agreements require your bankruptcy attorney's signature in addition to your signature. I have handled numerous bankruptcy cases for my clients from Waco, Temple, Killeen, and the surrounding areas. I can inform you of your rights and obligations with regard to reaffirmation agreements so you can make sound decisions about your financial future. Every case is different, so it is important to discuss your situation with an experienced bankruptcy attorney who can work with you to help you make your decision. Call 254-633-2876 or email us at info@thekehllawfirm.com today to discuss your options.

In Tough Economic Times You Have to Shop Smart

As a Waco Bankruptcy Attorney, I have noticed more and more of my clients are shopping at discount and dollar stores. They are trying to cut their food budgets and the budget for household items such as laundry supplies. The truth is they may not be getting the bargain they are looking for. I also shop at discount and dollar stores, here are some of the things I have learned. Discount and dollar stores tend to round up to the nearest dollar or half dollar. For example, I was shopping at a local dollar store and notice a box of 5 microwave popcorn bags for $1.00. That may not seem expensive, but I had seen the exact same box of 5 microwave popcorn bags for $0.78 at Walmart. That is a 12 cent difference. When you purchase several items, the difference adds up. When shopping you should look at the cost per individual item or cost per ounce. Another thing to watch for is store brands. I was shopping at a local HEB. I was looking a tuna fish in pouch. The store brand was a few cents less than StarKist. I looked a little closer and noticed that the store brand had an ounce less tuna. Doing the math, that made the store brand actually cost more per ounce than the name brand. This is a favorite trick of manufacturers to make more profit. Just look at the coffee isle. Very few packages of coffee are a pound anymore. They are instead 12 oz. or 14 oz., but they are selling for the same price. I have heard it referred to as being "hit by the grocery shrink ray". Again you need to look at the cost per ounce when comparing brands so you are comparing apples to apples. Another trick stores use is selling smaller count packages and discontinuing the larger count packages. You have to buy more of the smaller count packages which have a higher cost per item. You are getting less of the item and the store is making more profit. I have seen this first hand, I had been purchasing a 100 count bottle of an allergy tablet at a local store. The store stopped carrying the 100 count bottle. The largest they carried now was a 30 count box. Two of the 30 count boxes (60 tablets) was selling for what the 100 count bottle sold for. It is very important to keep an eye on the cost per item. If the price goes up look somewhere else. I now get the 100 count bottle at Sam's club for half of the price I was initially paying. Sam's club is a great way to save money, but you have to pay $40.00 a year to be a member. You have to ask yourself will you save more than $40.00 a year to pay for the membership? Purchases from Sam's club tend to be in larger quantities than in the grocery store. The cost per ounce or per item is usually a lot lower, but you still need to keep your eye on them. I have found some things cheaper at Walmart. Another thing to consider is you will need to be able to store what ever you buy. If it is perishable you need to be able to use it or freeze it before it goes bad. It helps to have an extra freezer. To effectively save money at Sam's club you must stick to your shopping list. They have so many neat things for sell it is easy to spend any money you would have saved. Finally as a closing bit of advise, I have seen it recommended that you don't grocery shop at just one store. Every store seems to have items that they sell for less than the competition and items that are more expensive. It is best to buy the items where they are the cheapest. This may take shopping at 2 or 3 stores. I have even noticed that the Walmarts in town don't sell the same items at the same price.

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