Category Archives: Finance

Businessman showing his empty pockets

Filing for Bankruptcy? Avoid These Mistakes

Businessman showing his empty pocketsBankruptcy may be a negative thing, but it can also be a positive experience, especially if you’re looking for some debt relief. This only makes it important to approach the process the right way, which also means knowing what you shouldn’t do before filing.

Law Office of Davis & Jones, P.C. and other bankruptcy attorneys in Salt Lake City share the mistakes to avoid when filing for bankruptcy:

Doing it on your own

Bankruptcy has legal and financial outcomes, so it is only recommended to find the right legal representation. The laws regarding bankruptcy are also complicated to understand and if things don’t go as expected, you can’t change it or ask for a do-over. It is best to hire a bankruptcy lawyer who can explain you the law the process, decide which chapter is right for you, and guide you all throughout.

Not disclosing all assets and income

In Chapter 7 bankruptcy, keep in mind that there is a “means test” that will determine your eligibility for debt relief and ability to pay off your debts. If you intentionally lie about your assets and income, it is likely that the court will dismiss your cases. You cannot simply get away with your deception, so just tell the truth.

Giving assets to friends or family

Giving away valuable assets or asking friends and relatives to keep some of your stuff with the intention of getting them back is another way of lying or cheating. You are also likely to lose a valuable possession if you give that to a loved one before filing for bankruptcy. The main takeaway: List all your assets and always tell the truth.

Taking on new debts or using your credit card

If you make credit card purchases before filing, the creditors can challenge the debt discharge. You should also know that purchases made within 90 days of filing would not be listed as bankruptcy debt. You will need to pay for those debts in full. You may also be accused of fraud.

Not doing your homework

While bankruptcy can offer some debt relief, not all debts will be wiped out at the end of the case. Some debts that are never discharged include alimony, child support, certain tax debts, and fines for breaking the law. It is best to do your homework and get the help of a lawyer to help you learn more about bankruptcy.

Desperation or intentions to help your case may only backfire. The best thing you can do is to seek the assistance of a legal professional to guide you throughout the process.

Early Mortgage Payoff: 3 Smart Ways to Cut Back On Costs

mortgage documentPaying off your debt early comes with various benefits. Your interest accruals are minimized, you rid yourself of debt burdens, and you get to focus your energy and finances on other investments. However, early mortgage repayment also comes with a fair share of its pitfalls.

Opportunity Costs

When you allocate budget to your FHA 203k loan payment, you miss an opportunity to allocate funds to other essential investments. However, if such funds are spared and set aside for other profitable projects, they can yield unimaginable returns as time progresses. It is wise to first weigh your options to make an informed decision on whether to use the extra cash to invest or pay off debts.

Emergency Savings

A disaster or disease may strike you or your loved ones, and you might have to take out cash to attend to these emergencies. Your cash reserves are the best source of quick cash when trouble comes your way. This is one reason why your cash reserves should not be used to pay debts.

Other Debts

Some individuals have a number of debts in their name. The interest rates chargeable on these loans vary from one type of loan to another, and many factors are responsible for the difference in interest rates – from credit scores to the state of the economy at large. But ideally, the best way to pay your loans is starting with the ones that carry high-interest rates so that you cut back on costs in the long run.

Using a mortgage to build or buy a new home comes in handy especially if you cannot fund the whole project alone. However, the need to pay off the debt early should not deny you a chance to explore and take investment opportunities that will lead you to your financial goals.

Top 3 Ways to Pay Off Your Loan Faster

debt settlementAbout 80 percent of borrowers find it hard to pay their debt. Some end up defaulting on loan repayments, not because they want, but because they take comfort in paying the little installments stated in the contract.

This, in turn, racks up interest rates and sometimes unwarranted fines that becomes unbearable at the end of it all. This article provides some of the secrets to paying your debts early. Enjoy reading.

Make one sizeable extra payment per year

For many individuals, especially business people, there is always a particular time of the year when good profits are realized in their businesses. For the few intelligent ones, they will put a huge chunk of such cash in savings.

Making it a habit of channeling such funds towards your debts at least once a year can be a prudent idea. When you use such funds to top up on installments made, you will find a significant number of months covered which may cut the entire repayment period by a half or so.

Never skip payments

Some cash loan lenders either in Salt Lake City or elsewhere will charge you hefty penalties if you skip a month or two to pay installments. Others will freely allow you to skip without any fees. By all means, avoid the temptations of skipping on payments.

If you are keen enough, you will realize that there is an extra cost that you will have to incur in both cases. Besides, skipping a month or so translates to an extended payoff period.

Use paperless payment means

Most lenders prefer paperless payment methods since it saves them money and time of having to follow up and sign thousands of papers manually. Some of them offer some good discounts to clients who subscribe to auto-payment systems.

Furthermore, you also keep extra fees that come as a result of late payments at bay, since the payment is set at time intervals and you don’t have to be there in person.

However, besides the many benefits that result from early debt pay off, it also has its share of setbacks. One of them is that some lenders don’t allow early loan repayment. Doing so would land the borrower in hefty penalties.

Consequently, it’s advisable to read and elaborately understand the terms of your loan before signing any papers.

Declaring Bankruptcy and a Fresh Start

Businessman BankruptEven with overpowering debts, some people don’t want to entertain the idea of declaring bankruptcy. While filing for one has some repercussions, it can also give you a fresh start. If your debts are out of control and you can no longer pay your creditors, bankruptcy may liquidate your assets to repay the debts or help you create a repayment plan.

Bankruptcy attorneys from Barski Law Firm PLC note that under the protection of bankruptcy law, you can discharge or pay off your debts, depending on the type of bankruptcy you file for. Here’s how bankruptcy can give you a fresh start:

Creditors Can’t Harass You

When you file for bankruptcy, all debt collection activities stop. This means that creditors can’t call, pester, or harass you to pay back their money. Bankruptcy can allow you to live a normal life again by stopping all creditor contacts such as calls, texts, emails, letters, and subtle threats.

Stop Wage Garnishment

With wage garnishment, the court will require an employer to withhold a certain amount of an employee’s salary to make debt payments. The automatic stay in bankruptcy stops garnishment, which is also a form of collection action. While the case is proceeding, creditors cannot seek new garnishments.

You’ll Sleep Better

As bankruptcy stops credit collection and helps you start a new life, you can sleep better. There’s also less stress and reduced mental burden. Just be sure to work with an experienced bankruptcy attorney when going through a bankruptcy case. The right lawyer can answer all your questions and explain how the law applies to your situation.

You’ll Get Some Credit Education

According to the Federal Trade Commission, filing for bankruptcy protection requires to you complete a debtor education course and credit counseling from a government-approved organization. This can give you an opportunity to look back and learn how you got into trouble, as well as provide helpful tips on managing your finances better.

If you find yourself with spiraling debt and in need of a fresh start, talk to an experienced bankruptcy attorney. This is to learn more about the law and find out if bankruptcy is right for your situation.

Couple signing divorce paper

What’s Making Your Divorce More Expensive?

Couple signing divorce paperDivorce, in general, is expensive, but what you don’t know is that you may also be the culprit for the high expenses of your case. When you and your spouse can’t settle things on your own, the divorce cost is likely to be higher. This is because fighting makes the process longer and more difficult, with the likelihood of your case ending up to be settled in court.

A family law attorney in Albuquerque shares the other possible reasons your divorce costs so much:

Representing Yourself

You may think that not hiring a lawyer and doing it on your own can help you save money on legal fees. The sad part is representing yourself can cost you more in the long run, especially if you unknowingly enter into a bad agreement. Keep in mind that every divorce case is unique, so you can’t just rely on DIY guides on the Internet. If you really want to save, hire an experienced lawyer.

Treating Your Lawyer as a Therapist

Divorce attorneys charge in different ways: hourly, flat-fee, or combination. If you constantly call your lawyer to share your grievances or simply to talk, expect your fees to be higher. This is because doing so means taking their time away from working or dealing with other clients. If you want someone to talk to, it’s best to turn to your close friends, find a support group, or seek the help of a therapist.

Getting Revenge on Your Spouse

If your spouse has done something unforgivable, it’s easy to entertain the idea of getting even. This, however, can invite more expenses and hate. There’s also no winning with the goal of revenge in your divorce. It’s best to set hurt and anger side so that you can get through the process as quickly as possible.

Forgetting to Plan for the Future

Those going through a divorce usually experience a drop in their standard of living. This only makes it important to think carefully about how a new life will be like as a single person or as a single parent.  Work with your attorney and make sure that financial negotiations with your soon-to-be ex-spouse are included in the divorce process.

Prevent your divorce cost from rising. Consult an experienced family lawyer and find out how you can manage the cost of your case.

Pregnant woman seating at the park

U.S Has Worst Maternal Death Rate: High Medical Costs May Be Why

Pregnant woman seating at the parkThe United States has the one of the worst maternal and neonatal death rate worldwide. In fact, up to 900 women die because of childbirth-related complications. Personal finances and high medical costs may be the reason behind it.

Confirming a pregnancy should be one of the most exciting times in life. But, for many women, it comes with anxiety about how they will pay their medical bills. Not all pregnancies are planned so there may not be money set aside for maternity care.

The Unaffordable Price of Maternity Care

Pregnancy and childbirth are heavy on personal finances. A single visit to an obstetrician could cost 150 dollars. An ultrasound scan could be 250 dollars, while a full battery of blood tests may set you back another 300 dollars — that’s not including the delivery which sets expectant moms back by thousands of dollars. The average natural birth costs 30,000 dollars. Meanwhile, the bill soars up to 50,000 dollars for a cesarean session, an important factor since 31 percent of U.S births are surgical.

Low paid workers and the unemployed are the least likely to be able to afford such costs. They may not be able to afford large insurance co-pays either. Consequently, low-income women may have fewer antenatal visits or avoid the doctor altogether.

Open Access for All

The Affordable Care Act marketplace can help expectant mothers find cheaper insurance so they can see an obstetrician. The act offers a range of plans that have smaller premiums or co-pays and many of them have maternity coverage.

In addition, since 2014, it is illegal for insurance companies to charge women more than men. Previously, a 25-year-old woman without maternity coverage on her plan could be charged 81 percent more than a man of the same age, a situation that marginalized women. The Affordable Care Act (ACA) aims to bring equality in medical care to all.

No woman should die in childbirth in the 21st century. Sadly, America has one of the worst maternal death rates in the developed world. High costs are one reason for this. The ACA can help lower wage women access the maternity care they need.

bottle full of coins with greenery

Investing in Real Estate: How Does a 1031 Exchange Work?

bottle full of coins with greeneryWith a Section 1031 Exchange, also commonly known as a like-kind exchange, you have the chance to defer your property sale taxes by exchanging your investment property for someone else’s property that’s similar to yours.

According to IRS rules, the property you got in exchange would be considered as a continuation of the investment property you exchanged. This results in the IRS postponing your gains taxes, which means that you defer paying taxes on the profit you obtained from the exchange, but get to own new property.

Basic Example of a 1031 Exchange

Let’s say you traded a rental home that has an adjusted basis of $300,000 for another investment property. So both properties’ fair market value is $600,000. And since the basis of your new property, which is $300,000, is equal to your old property, there’s no recognized gain for the transaction.

To benefit from a 1031 exchange, the IRS states that you might only trade property for another property similar to yours, called “like-kind” properties. Investment expert 1031 Exchange Place says that 1031 exchange properties have a similar character or nature, even if they have varying qualities or grades.

Generally speaking, all investment properties in the U.S. are deemed like-kind with other properties in the U.S., regardless of location or type. For instance, an office building in Utah is like-kind to a rental building in San Francisco.

What’s Not Covered

If you continue trading an investment property for another with the same value, you won’t ever recognize gains that you would need to pay taxes on. However, if you sell your exchanged property to obtain cash, your original deferred gains, along with any extra gains would be deemed taxable by the IRS, because the succeeding transaction, involving cash, won’t be covered under the IRS’ 1031 exchange rules.

By entering into a 1031 exchange, you could trade properties to raise or reduce your exposure to specific property sectors, while also deferring capitals gains taxes until such time that you sell your properties for cash.

Understanding the game of property investment and the rules set forth by the IRS, 1031 exchanges are an excellent way to rebalance your property investment portfolio.

woman using calculator on top of documents

Considerations for Computing the Stamp Duty Land Tax

woman using calculator on top of documentsWhen buying a house or any property, there are closing costs associated with the transaction. Typically, contracting a conveyance solicitor would help in filing the papers, and making sure that all the procedures, processes and paperwork were adhered to. This includes payment of any stamp duties.
Before hiring a conveyance solicitor, due diligence has to be done, as well as an estimate of the duties to be paid. A stamp duty calculator for the UK is highly recommended to get an idea of the stamp duty due on the sale of a property.

What is the stamp duty?

Officially, it is called the Stamp Duty Land Tax (SDLT), and it is the amount of money that buyers pay upfront as taxes when they purchase real property. It is a requirement if you buy land or property worth above a certain price in the England, Wales and Northern Ireland. In Scotland, there is no longer any STLD. Instead, property buyers pay a Land and Buildings Transaction Tax.

Considerations

The SDLT is paid when the residential property is worth more than £125,000. For non-residential land, buildings and properties, the SDLT is paid when the transaction is for more than £150,000. The SDLT is paid when the buyer buys a freehold property, a new or existing leasehold, a property bought through a shared ownership scheme; or a transferred land or property in exchange for payment.

For first time buyers, there is a discount or relief if the price is less than £500,000. Another consideration is given if the property is non-residential or mixed-use.
The stamp duty is usually paid as soon as possible before the settlement of the sale. It should be settled within 30 days of completing the purchase of the property, home or land. If it cannot be paid within 30 days, the late payment will entail penalties and interest.

an fha loan form

Interested In An FHA Loan? Here’s All You Need To Know

an fha loan formFHA loans are one of the most popular loan products today. They are very attractive to home loan borrowers, especially those who will be buying a house for the first time because the requirements are much lower compared to private lenders.

In case the borrower defaults, the FHA loan lender like Primary Residential Mortgage, Inc. can get back the money from the Federal Housing Administration. Before rushing to get an FHA loan, keep these facts in mind when applying for one.

Low Credit Score and Down Payment Requirement

A typical private lender will first check your credit rating. It’s also the same with FHA loans, but you only need a minimum credit score of 580 to qualify. Also, you need to make 3.5 percent down payment. Those with credit scores below 580 but not lower than 500 can still be eligible, but this time, the down payment requirement is 10 percent. There are cases, however, where an applicant with a credit score of below 500 can get an FHA loan.

FHA is the Insurer, Not the Lender

Some people have the misconception that the FHA itself is the lender. The government agency only guarantees that it will pay the loan in case of default. This is why you need to make sure that the lender you are dealing with is FHA approved. The rates offered by these FHA-approved lenders are also not the same.

Pay Two Mortgage Insurance

On all FHA loans you pay, not one, but two mortgage insurance premiums. The first premium is equivalent to 1.75 percent of the loan. Pay this premium once you get the loan. If it’s possible, you can include this premium to the FHA loan.

The other one is the annual premium, but you pay for it monthly. The rate will depend on the size of the loan, the length of the loan, and the initial loan-to-value ratio.

FHA Loan For Home Repairs

Homeowners in need of cash for repairs can apply for a special loan known as 203(k). The loan amount you can get is not based on your home’s current appraised value. Instead, it’s based on the expected value after you have made the repairs.

Financial Relief Option

FHA loan borrowers who are undergoing financial hardships can apply for relief. If approved, lenders then can offer to lower the interest rate or extending the payback period. They may even allow deferring part of the loan without interest.

Possible Coverage of Closing Costs

Borrowers can include the closing costs in their loan application. The lender charges typically a higher interest rate if you choose this option. There are instances though that a home seller or builder will shoulder the closing costs to finalize the deal.

What Amount of Reverse Mortgage Can You Get?

reverse mortgageThere are advantages of owning a home than just saving the rent you were paying. You can take a loan against your home to undertake your projects. Reverse mortgage in Missouri is a loan that uses your home equity to give you money.

Although it is not the cheapest method to borrow, it’s worth comparing other options before getting one. The duration of the loan depends on certain calculations, and the amount of money that you can get depends on various factors.

Four of these determinant factors include:

Equity

The more the home equity, the higher amount of loan money you can get. It works best for some borrowers who have been paying down their loan for many years, and their current mortgage is almost paid.

Age

Older borrowers are likely to get a higher loan amount compared to the young. A younger spouse will be required to vacate should the older borrower die, and the younger one is not in the loan processing documents. Your choice to acquire the loan is as vital too. You can select on various payouts.

Time-To Time Payments

You can prefer to get regular payments, say monthly. Such payments would last for good or for a specified time like ten years. If you are required to pay the loan because all borrowers have left, the payments are fully paid.

About lifetime payments, you can end up getting even more than expected if you live longer.

Line of Credit

You can decide on taking a line of credit that will allow you to get funds when you need them. The benefit is that you only pay interest on money you have indeed borrowed, as it increases your credit line with time.

You now know of an alternative way of getting money as a homeowner. Consult a reverse mortgage lender in Missouri with information concerning the above factors and increase your chances of securing a loan.