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Recent Blog Posts
How Payment Methods Influence Consumer Spending Habits
Americans say that they are spending less money on extras like restaurants, bar tabs and the like compared to 2012. That is according to a survey conducted by the consumer research team Mintel. They surveyed Americans about consumer spending habits for thirteen different categories. The only two categories that consumers admitted to spending more on were groceries and household care items.
This might not be the case according to consumer spending data. That research has shown that spending has increased for several of the categories surveyed by Mintel by as much as five percent. This discrepancy could be caused by a small percentage of consumers who have spent more money on luxury and big ticket items.
Small Business Bankruptcy Threatens San Antonio’s Future
With the economy firmly in recovery, it may seem for residents of San Antonio that it’s all clear ahead. Indeed, CNN Money Magazine lists San Antonio as one of the top ten booming cities in the country. According to CNN, “those who move here from other parts of the country often find their income stretches much further in San Antonio… it’s 57 percent less expensive to live there than in Manhattan, 29 percent less than in Los Angeles, and 18 percent cheaper than in Chicago.” This translates to some big savings—especially when it comes to housing. Now that the Great Recession has done its worst to the housing market, houses in San Antonio are some of the cheapest in the nation. According to CNN, the median price for a single-family home in San Antonio was $167,000 in 2013, “well below the $184,000 national median.” This means that the city is prime stomping grounds for new entrepreneurs and start-ups. Even CNN reports “San Antonio is a blue collar town that is attracting a lot of cutting edge companies.”
Bankruptcy and Your Credit Score
Bankruptcy is a personal choice that may or may not be the best solution for everyone. However for many Texas residents, filing bankruptcy offers a way to overcome insurmountable debt. Nonetheless, it's no secret that your credit score will be affected if you file bankruptcy. According to Dailyfinance.com, there are at least five steps that one can take to rebuild credit after bankruptcy.
Erase the Guilt
This isn't to say that your credit score will be low forever. Rebuilding your credit is a process and bankruptcy is viewed by many as a fresh start. The first step to rebuilding your credit is giving up guilt or shame. According to the Wall Street Journal people who filed for bankruptcy protection rose 9% in 2010. That number has increased since then. So avoid the negative self chatter and replace it with thoughts that you are doing what's best for you.
Filing for Chapter 7 Bankruptcy
When someone files for personal bankruptcy, they typically file for either Chapter 13 bankruptcy or Chapter 7 bankruptcy. Under Chapter 13, a payment plan is set up for the debtor to pay back all of the debts, whereas, under Chapter 7, the debts are forgiven.
When a person files for Chapter 7 bankruptcy, these are some important steps to take early on:
The person in debt (debtor) must file a bankruptcy petition with the court, along with a list of assets and liabilities, a list of income and expenditures, a financial affair statement and a list of all current leases
- Once the petition has been filed, debtors must also have tax documents available to hand over to the case trustee
- If the majority of the debts are consumer debts, the debtor must also file a certificate of credit, a copy of a debt repayment plan from credit counseling if there is one, evidence of payment from employers and any interest in qualified education or tuition accounts
How Bankruptcy Affects Retirement Planning
When it comes to retirement planning, people face many questions and choices. Some wonder what types of investments are best for them. A popular retirement planning tool is an IRA, which stands for Individual Retirement Account. As the name suggests, it is an investment vehicle designed to ensure income during retirement. They were first introduced in 1974, with the passage of the Employee Retirement Income Security Act (“ERISA”). 26 U.S.C. § 7701(a)(37). Since their creation, Congress has acted to increase the contribution allowed and the protections against creditors.
Congress recognized that people work hard during to build enough savings in their 401(k)s and retirement funds to provide for retirement. As such, they thought it necessary to protect retirement money from creditors in a case of bankruptcy. Yes, persons who file for Chapter 7 or Chapter 13 bankruptcy get to keep their retirement funds.
Card debt being paid off at slower rates?
According to a recent article, an Ohio State University study found that young Americans borrow a lot of money with credit cards, and they repay the debt much more slowly than generations before them.
Lucia Dunn, an economics professor at Ohio State University, has suggested that these new findings mean that the typical young credit card holder will probably die in debt to credit card companies. Dunn was a co-author of the study, along with Sarah Jiang, who is the manager of credit and business strategy at Capital One Financial in McLean, Va.
According to Professor Dunn, if this pattern continues, the United States may end up with a serious financial crisis among the elderly people who cannot pay off their card debts.
Texas Deceptive Trade Practices Act saves bankruptcy case
While proving whether the defendant broke the law is all that must be done in most court cases, it is not always that simple. Sometimes, judges must rely on past cases to determine the outcome of a current court case, and that is exactly what had to be done in Texas not long ago in bankruptcy court.
The United States District Court for the Northern District of Texas heard Carroll v. Faroogi in February and agreed with a U.S. Bankruptcy Court’s decision that an individual has standing to pursue an action against a franchise or under the Texas Deceptive Trade Practices Act (DTPA).
The case was about an unsuccessful sale of a Salad Bowl franchise. The CEO (who is also president, chairman and CFO) of the franchise company contacted a potential buyer of his franchise and the buyer, then signed a thirty-day option contract and paid $25,000 to the CEO for the franchise fee. The buyer, unfortunately, was unable to line up suitable financing to complete the purchase and demanded that the CEO refund him his initial $25,000 fee.
Texas Congressman Ruben Hinojosa emerges from bankruptcy
When people think of bankruptcy, they often think of foreclosed homes, people with cardboard signs on the sides of highways and old raggedy clothing. That is often not the image of a bankrupt person, however; sometimes the people that file for bankruptcy are those with great jobs and just more debt than income. In Dec. of 2010, Rep. Ruben Hinojosa (D-Texas), had to file for personal bankruptcy. According to a court document, he recently emerged from the Chapter 11 bankruptcy.
The document, which was issued by the U.S. Bankruptcy Court in Southern District of Texas, provided a final decree that closes Hinojosa’s bankruptcy case.
Hinojosa has been serving in Congress since 1997, had a debt of $2.9 million at the time he declared bankruptcy, including $2.6 million claimed by Wells Fargo Bank. Hinojosa stated that his bankruptcy was due to a loan that he had secured to rescue H&H Meat Products, a slaughterhouse that was founded by his father and uncle, after the company declared bankruptcy in 2008.
In a statement at the time of the filing, Hinojosa, who, ironically, is currently sitting on the House Financial Service Committee, said, “I have done everything humanly possible to avoid filing for bankruptcy protection to no avail. The bank debt of H&H was more than I could handle financially.”
Although House members are required to disclose personal financial documents with Congress each year, nothing prevents members that are indebted to banks from serving on the House Financial Services Committee.
Hinojosa’s annual congressional salary is $174,000. His debt stood in large contrast the wealth of about 249 members of Congress, 47 percent, who were reported as millionaires in 2011.
In the five months that followed Hinojosa’s bankruptcy filing, documents revealed that the congressman spent thousands of dollars on unnecessary expenses, such as $1,800 on clothes, $680 on cleaning services and $540 in allowance to his children.
If you are considering filing for bankruptcy, contact a bankruptcy lawyer in San Antonio, Tex. today. Attorney Chance M. McGhee will help you with your bankruptcy filing now.
Photo courtesy of cooldesign/FreeDigitalPhotos.net
Card debt being paid off at slower rates?
According to a recent article, it has come to attention that young Americans borrow a lot of money with credit cards, and they repay the debt much more slowly than generations before them, says a recent study by Ohio State University. Although with the help of a Texas bankruptcy attorney, bankruptcy can be a solution to financial problems, it is smart to responsibly manage your finances. Lucia Dunn, an econ professor at OSU, has suggested that these new findings mean that the typical young credit card holder will probably die in debt to credit card companies. Dunn was a co-author of the study, along with Sarah Jiang, who is the manager of credit and business strategy at Capital One Financial in McLean, Va.
According to Professor Dunn, if this pattern continues, the United States may end up with a serious financial crisis among the elderly people who cannot pay off their credit card debt.
The study was originally published in an issue of Economic Inquiry. It was based on two long-term surveys, one of which included not only borrowing data but payoff data as well. This information has not been previously available to many researchers. It has allowed more accurate predictions in regards to when Americans will be financially able to pay off their card debts.
There are several reasons as to why these younger generations are struggling with debt more than those before them. Credit is now much more readily available, and general attitudes toward debt have changed dramatically. According to Dunn, “It’s a lot more socially acceptable to have debt and go into bankruptcy.”
The results have also found that younger people are paying off their massive credit card debts at slower rates. The current payoff rate is approximately 24 percentage points lower than their parents’ and a dramatic 77 percentage points lower than their grandparents’ rate.
There are other factors that play into this, such as the skyrocketing levels of student debt, which leads to trouble paying off credit card debt.
There was a bright side to the study though. Researchers found that if the minimum required monthly payment on cards were to be raised, borrowers would be forced to pay off more debt and possibly eliminate debt much earlier in their lives.
Credit card debt has become an increasingly serious problem for all Americans. If you or somebody you know is struggling with debt and/or bankruptcy, do not hesitate to contact an experienced Texas bankruptcy attorney to answer your questions and get you back on the right track.
Image courtesy of stockimages/ Freedigitalphotos
All about Your Credit Score
Your credit score is a three digit number that is used by businesses to determine if you are worthy of risk. Do not take this these three little numbers lightly. Although small, they have a lot a power and can affect your life negatively or positively. If you don’t think so, consider this; When you apply for credit, it is those three numbers that will determine if you get approved or denied. The same holds true when you apply for an apartment, insurance and a job.
Your credit score is determined by a mathematical formula and although there are tons of these formula models around, most companies use the FICO scoring model, which gauge between 300-850. The higher your score is the better risk you are--likewise the lower the score the higher the risk. Until 2009, each person had three FICO scores because there were three major credit reporting agencies using the FICO model, EquiFax, TransUnion and Experian. Experian is no longer under agreement with FICO. Although there are five categories that make up a credit score, each person’s score is determined based on their circumstances individually. That means that a new person with no credit history is not weighted the same as someone with an established credit history. Instead, the newbie is grouped and weighed against those in that same circumstance—tens of millions to be exact.
There are five categories used to make up a credit score. Payment history and debt owed are two categories that weighed most heavily.
- How you make your payments and any delinquent accounts goes into the Payment history category and is 35% of the pie.
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