Credit Card Alternatives

Posted on June 25, 2009 by Redd Law, PLC

When some of my

bankruptcy
clients learn that they have to disclose all of their creditors on their petition, they become concerned about the one or two credit cards they want to keep. I usually recommend that they get rid of all

credit cards
so they can get a complete fresh start. Without credit cards, how can one order plane tickets or reserve hotel rooms? There are some non-credit card options available for people who need to make travel reservations and online purchases.



Bill Me Later:

There are a lot of stores and travel providers that offer the option to order a product or service and pay for it later through Bill Me Later. Instead of issuing a credit line, the company extends credit for each transaction. Typically, full payment must be made within 90 days in order to avoid finance charges. This is a safe way to shop online and is a good option when you don’t want use a credit card.



Visa Check Card:

Most banks offer Visa check cards with their checking accounts. You can use it like a regular credit card. The only difference is that the money is deducted from your checking account. Like regular credit cards, you are protected from unauthorized charges. The merchant doesn’t need to know that it’s attached to your checking account. When making reservations or purchases, you just provide your account number and tell them your paying with a Visa card.



Paypal:

Paypal offers a secure way to shop without exposing your financial information. Money can be deducted from your bank account or credit card without providing account information to the merchant. You can even use Paypal to transfer money to a friend or family member’s bank account. You are protected from unauthorized payments transferred from your account.


Prepaid Credit Card:

This is used like a Visa check card, but is an option if you don’t have checking account. You deposit money on the card and can use it until the money runs out. Unlike the Visa check card, there are typically fees for making deposits.

Posted in Creditors, Personal Finance

Bankruptcy Myths

Posted on June 17, 2009 by Redd Law, PLC

Here is an informative video about common bankruptcy myths:

 

 

Posted in Personal Finance

Scamming Lawyers

Posted on June 14, 2009 by Redd Law, PLC

There are so many variations of the same scam. Someone sends someone a check to deposit into a bank account and a portion of the funds is sent to the scam artist. Several weeks ago, I was surprised to receive an email from someone stating that he was looking for an attorney to collect on some delinquent accounts for his company. I immediately searched the internet for the name of the company and discovered that some lawyers have fallen victim to a scam by agreeing to represent the company and accepting a retainer.

Apparently, the retainer was large and required the attorney to refund a portion of the money. Another variation was when the attorney received a check after supposedly collecting on the bad debt. The attorney was to deduct his fees out of the check and send the remaining money to the client. In either case, the check was ultimately discovered to be no good.

Although some attorneys discovered the scam before it was too late, I was surprised to learn that at least one did actually lose money as a result of it. As attorneys, we often try to be careful about who we represent and we inform our clients to read everything they sign. So, I was surprised that an attorney would agree to represent a foreign client without verifying everything. The scam artists are becoming craftier; they have even started using the names of legitimate businesses. However, a huge red flag needs to go up anytime someone asks you to deposit money into an account and send some of the money back to him or her. This is especially true when dealing with large sums of money.

Many people don’t realize that a bad check can clear temporarily. If it takes a bank a month to discover that a check was forged, then you will have to return any of the funds that you spent. There are also fake money orders and cashier’s checks so you still have to be careful with those also. It’s better to just avoid that seems like a scam whether it’s someone trying to transfer a relatives money, a Western Union secret shopping job, or an foreign client with a large retainer.

Posted in Lawyers and Law Firms

Qualifying for a Chapter 7

Posted on June 14, 2009 by Redd Law, PLC

Most of my clients want to file a Chapter 7 bankruptcy. After all, the complete debt relief that a Chapter 7 can provide seems more desirable than the payment plan that a Chapter 13 provides. However, the new bankruptcy law enacted in 2005 requires a means test which involves an analysis of a debtor’s income for 6 months. This income is compared to the median income for the state. A debtor’s income is analyzed based on the number of people in the household. If the income is lower than the median income, then it is presumed that the debtor qualifies for a Chapter 7 although the court will still look at whether it appears that there is extra income available to pay creditors.

Even with income higher than the median, debtors may still be able to file a Chapter 7 bankruptcy. If a debtor no longer earns the higher income due to a job loss or reduced income, then an affidavit can be filed with the court showing that the means test shouldn’t apply. Also, the means test provides additional calculations for higher income debtors to see if they can qualify for a Chapter 7. That’s why it’s important to see an attorney about qualifying for a Chapter 7. There may be ways for a debtor to qualify for a Chapter 7 bankruptcy now or in the future with accurate analysis and planning.

Posted in Chapter 7 Bankruptcy

To Surrender or Not?

Posted on June 13, 2009 by Redd Law, PLC

The decreased home values in the Detroit metropolitan area have prompted many people to seek a way to walk away from their homes and mortgages. However, the decreased home value shouldn’t be the only reason to surrender a home. I do believe that home values will eventually increase, so there should be other reasons for surrendering a home.


Can you afford your mortgage payments?

If you are unable to afford your mortgage payments, there may still be some options available for keeping your home. If you can easily afford your first mortgage payments, but your second mortgage or equity loan are giving you problems, then you may be able to remove the second mortgage’s lien in a Chapter 13 bankruptcy. This option is available if your home is worth less than what you owe on the first mortgage.

Another option for reducing your mortgage payment is a loan modification. In order to obtain a loan modification, you must contact your mortgage company and submit an application. There are different types of loan modifications. Some will reduce your mortgage payment while others will simply put the past due amount at the end of the loan. A loan modification is never guaranteed and mortgage companies have different criteria for approving them. There are new government programs that encourage lenders to modify mortgages, but lenders are not absolutely required to do so.

Michigan has enacted a law designed to reduce foreclosures by encouraging mortgage lenders to modify loans. The law becomes effective on July 5, 2009. Most Michigan foreclosures occur by advertisement. Now, homeowners can request a meeting with a housing counselor to discuss mortgage modification. The request must be made within 14 days after the borrower receives written notice about the pending foreclosure and will delay the foreclosure for 90 days.


Do you really want to keep your home?

If you are in a position to purchase a different home, it may be worth surrendering your current home. There’s a good chance that you can purchase a bigger and better home for less money resulting in a lower mortgage payment and the opportunity to benefit when home values increase in the future. It may also be worth surrendering your home if you need to move to be closer to a job or if the quality of your neighborhood has declined significantly.

Posted in Foreclosure Law