Higher Credit Scores For Some

Stricter matching requirements of public records to consumer credit files could mean higher credit score for some consumers. These new requirements will likely help consumers by preventing erroneous data from appearing on credit files from public records. Additionally, it could help with higher credit scores of some by omitting some civil judgments or tax liens from their credit score.

Tax Liens, Civil Judgments, and my credit score

Enhanced Standards For Credit Reporting Of Public Records

These enhanced standards for fair credit reporting were scheduled to be enacted July 1, 2017. The enhanced PII (Personal Identifying Information) standards require name, address, and Social Security Number or Date of Birth for the public record data utilized in credit reporting databases.

What does this mean to your credit score?

This means that if you have a judgement or lien and the required personal identifying information is not recorded in the damaging public record, the judgement or lien may no longer be counted against you on your credit score. Thus, your credit score will increase. Additionally, if your credit score is being lowered by erroneous information taken from public records, that information may no longer impact you if your proper PII is not recorded with it in the public records.

Will this impact everyone with a judgement or lien?

This will not impact the credit reporting of judgments or liens which are recorded in public record with PII that meets the new requirements.

While this may provide relief in the form of higher credit scores for some, it is still important to monitor and protect your credit score. This includes taking any necessary steps to deal with debt issues, including judgments and tax liens.

 

 

 

Sources:

NCLC (National Consumer Law Center) – Big Changes for Credit Reports, Improving Accuracy for Millions of Consumers

CDIA (Consumer Data Industry Association) – March 13, 2017
Statement Consumer Data Industry Association

Keep Retirement Accounts by Filing Bankruptcy in Columbus, Ohio

Will I Be Able To Keep Retirement Account By Filing Bankruptcy in Columbus, Ohio?

The topic of retirement accounts is often very important when determining how to handle financial problems. Bankruptcy clients often ask “will I be able to keep retirements accounts by filing bankruptcy in Columbus, Ohio?”

Retirement Accounts are Protected in Bankruptcy

The decision to drain retirement accounts before talking to a Columbus, Ohio bankruptcy attorney can be an unfortunate one, because many people don’t realize that under Ohio bankruptcy code most retirement accounts are protected through a bankruptcy filing. Therefore, proper planning could have left their retirement acc

Retirement  savings 401k, IRA, Roth,
keep retirement by filing bankruptcy in Columbus, Ohio

ounts in tact through a bankruptcy, while resolving their debt problems.

Most pension plans, retirement accounts, and cash value in life insurance policies are protected from creditors and are not lost in an Ohio bankruptcy filing. What this means is that you can keep your retirement accounts, while dismissing your other debts by filing for chapter 7 or chapter 13 bankruptcy. It is all too common for individuals and families to consider bankruptcy as an absolute last resort, rather than for its true nature, which is consumer protection. Unfortunately, this means that many people don’t have a free consultation with a bankruptcy attorney in Columbus, Ohio until it is too late. This can prove to be a costly mistake as 401(k), 403(b), Roth IRA, SEP, SIMPLE IRA, Keoghs, profit-sharing plans, money purchase plans, and, defined-benefit plans are NOT taken in a bankruptcy to pay creditors. In most cases these ERISA qualified plans are fully exempted from a bankruptcy filing.

Keep Retirement Accounts by Filing Bankruptcy

If it isn’t bad enough that hard earned retirement accounts are no longer available when it is time to retire, additional financial hardships can be created through early utilization of retirement accounts in the form of tax implications and penalties.

For instance: If you take a withdrawal from your qualified retirement account prior to the age of 59 ½, you will be subject to a 10% early withdrawal penalty, so you automatically lose part of your hard earned retirement funding right from the word go. Additionally, you will owe income tax on the money that you take as a withdrawal from the retirement account. Now if this only temporarily patches your financial situation, and you still end up filing bankruptcy eventually, you will have lost your retirement while paying more of your money to the government.

As a bankruptcy attorney office in Columbus, Ohio, we understand that every situation is different, therefore it is in your best interest to schedule a free consultation with The Columbus Bankruptcy Lawyer prior to taking any withdrawal from your retirement plan to manage your debts. The Columbus Bankruptcy Lawyer – Scott Needleman will work directly with you to determine what the best options for your situation are, and if you choose, he can help you to put a plan in place to secure your financial future and help you to keep your retirement.

 

 

 

 

 

Not Talking to a Bankruptcy Attorney Could Be a Costly Mistake

Going deeper into debt before filing bankruptcy

The Columbus Bankruptcy Attorney help those who are drowning in credit card debtAs a Columbus, Ohio Bankruptcy Attorney, I consistently see people who are facing debt problems putting themselves into a worse situation by not considering all options. This includes getting deeper into debt before considering filing for bankruptcy protection. This can lead to added stress, maxing out credit cards, borrowing from friends, skipping mortgage payments, missing student loan payments, taking loans against or selling your real property, and many other activities that are part of the viscous debt cycle.

Just can’t get ahead of credit card debt

Frequently we will see clients who have been juggling debts just to keep their heads above water. Pay one credit card and borrow or heavily use another. This pattern often leads to over-the-limit penalties, late penalties, and default credit card interest rates that can be in the twenty to thirty percent range. By adding interest and penalties to the already large amount owed to the credit card companies, debt can increase every month, even when spending is decreased.

Don’t Cash in Insurance or Retirement Accounts

In an attempt to stay financially afloat it may seem like taking loans from or cash withdrawals from Life Insurance policies and retirement plans could be a way out of debt. Although, there are several important considerations that should be taken into account before utilizing retirement accounts. Some considerations include the possible tax consequences and penalties of early withdrawals. One of the most significant factors is whether or not early utilization of retirement accounts will actually end the debt problems or just delay filing bankruptcy. It is important to note that most life insurance and retirements accounts are protected in a bankruptcy. Therefore, you can usually keep the cash value of your life insurance and keep your retirement accounts when filing bankruptcy. All too often we see individuals and families come in to file bankruptcy after depleting accounts that they would have been able to keep through the Ohio bankruptcy filing.

Keeping your assets through a bankruptcy

Consumer bankruptcy protection laws allow for retention of certain assets. Additionally, there are multiple Federal and Ohio bankruptcy exemptions which can be utilized to help you keep cash, keep your car, and keep other personal property. The decision to file chapter 7 bankruptcy or chapter 13 bankruptcy in Ohio is often impacted by items that clients wish to keep. In addition to Federal bankruptcy exemptions, a few of the Ohio bankruptcy exemptions include:

  • Ohio Cash Exemption
  • Ohio Wildcard Exemption
  • Ohio Exemption for the Earned Income Tax Credit
  • Ohio Exemption for the Additional Child Tax Credit
  • Ohio Motor Vehicle Exemption

Note: this is just a sample of some of the bankruptcy exemptions available in Ohio. It is important to discuss your situation with an Ohio bankruptcy lawyer to determine what exemptions will apply your specific financial situation.

The Viscous Debt Cycle and your Bankruptcy Attorney

Every day we meet clients who have taken second mortgages or sold off properties, borrowed from friends and family, sold their vehicle, taken payday loans, and numerous other methods that turn out to only delay filing bankruptcy for a few months longer. This may work if there is a pending change to your income or other anticipated windfall, thus impacting your financial situation for the better. However, all too often we see Ohio bankruptcy clients who have exhausted assets that they could have otherwise kept. We recommend taking advantage of the Columbus, Ohio Bankruptcy Attorney FREE Consultation, even if you are not ready to file bankruptcy today.

It’s important to understand that consumer bankruptcy protection is just that, protection. Therefore, you don’t need to be down to your last dollar when you file for bankruptcy in Columbus, Ohio.  Talk with an Ohio bankruptcy attorney today about your specific situation, even if you are not yet ready to file. The bankruptcy lawyer can help plan to leave you in the best financial situation. Whether you end up filing bankruptcy or if bankruptcy is not the best solution for you, your bankruptcy attorney can help you to understand the best path to get out of debt.

 

Benefits of Chapter 13 Bankruptcy Over Chapter 7 in Ohio

Chapter 13 bankruptcy is a Debt Reorganization Plan. It is like throwing all of your debt into a box, and then it’s paid out to one person, known as a Chapter 13 Trustee, who disburses your payments.

A common question is why would I need to file a chapter 13 bankruptcy instead of chapter 7?

Attorney for high student loan debts in Columbus, OhioThe first reason is to stop the Student Loan collectors from garnishing your wages. Student loans are paid through a plan that can last up to five years.  They are forced to accept the amount we calculate is their share per the plan.  It holds them at arm’s length for 5 years and paying them something.  Also penalties and late fees stop, however, interest still accrues.  A Chapter 13 Bankruptcy can free your life for 5 years as you try to determine a permanent settlement.

The second and most common reason consider filing for chapter 13 bankruptcy instead of chapter 7 bankruptcy is having too high of an income to qualify under the means test, which is required to qualify to file for Chapter 7 bankruptcy. While you may feel that you need or at least want to file Chapter 7, making a little too much money can disqualify you from filing this type of bankruptcy. The other way you can be forced to file Chapter 13 debt reorganization is if your income exceeds your expenditures.  It would take an analysis from a bankruptcy lawyer to learn if this is a factor.

The Means Test is a government calculation, which is allegedly supposed to be a bright line test. The government calculation is based on your income and IRS created living expenditures depending on family size, then create a determination of Chapter 7 and Chapter 13. The Means Test is a calculation using the financial information and expenditures, it’s designed to determine based on your income or means, whether you should be able to qualify for Chapter 7 bankruptcy. However, just because you may have a little too much income to qualify to file for chapter 7 bankruptcy, that does not mean that you are not eligible to file bankruptcy altogether. This is one of the cases where chapter 13 bankruptcy may be the best option for you.

Columbus Ohio foreclosure defense chapter 13 bankruptcy attorneyIn addition to having too high of an income to qualify to file for chapter 7 bankruptcy, a common situation where filing Chapter 13 is considered is if you are behind on your house payment, want to keep your home, and are unable to catch it up to date by the time you will file bankruptcy.

 

Filing for Chapter 13 bankruptcy allows you to throw the arrearage, or the amount that you’re behind on the house, into the chapter 13 repayment plan, and the mortgage company will be paid the same way as your other debtors by the Chapter 13 trustee. At the end of the plan, your mortgage will be current and since the remainder of your other unsecured debts get discharged, you should be able to afford to make the monthly payments.

For example: if your house payment is $1000, and you’re behind $3000. The $3000 would go into the chapter 13 debt repayment plan, the $1000, which is your regular payment, would also go into the chapter 13 plan, so the trustee would essentially be distributing the $1000 of your regular house payment, plus a very small minimum payment, probably $50 a month or so, on the $3000, if this plan should run for 60 months (Chapter 13 repayment plans are set up to last from 3-5 years).

 

 

 

 

It is very important to understand that, even if you do not qualify to file for chapter 7 bankruptcy due to your income, or you are behind on your mortgage payment and want to save your house, filing chapter 13 bankruptcy can help you save your house, your car, and your dignity.

 

 

Student Loan Bubble

 

While credit card debt is trending down, student loan debt has been on the rise since 2004 and in 2012 had almost tripled1. Many have referred to the impending financial crisis as the student loan bubble. However unlike the housing bubble the Federal Government is still making money on these student loans.  They are becoming more aggressive in their collection efforts often filing lawsuits.  They are aggressively pursuing co-signers of student loan debt.  They are also gearing up collection efforts on Parent Plus Loans.

Student Loan Debt Help in Columbus, OhioSimilar to the housing bubble the student loan bubble has been predicted to explode.  Financial crisis for the borrowers will be the result of defaulted student loans.  The crisis will be that people saddled with high student loans may find it very difficult to obtain credit. The debt to income variable for a bank to make a loan would be very hard hurdle to overcome.

College graduates struggle to find jobs with a bachelor’s degree, while the rest of the country wonders why the recent grads are not helping the already slow recovery of the housing market.  Unemployed graduates work to pay back loans that may already 90 days or more past due, so the idea of buying a house to start their futures seems out of reach.  This also can be viewed as an explanation for the rise in multi-family housing nationwide.  With tuition rates rising and student aid decreasing, colleges are losing enrollment numbers each year.  This is one reason schools like Sweet Briar College in Lynchburg, VA have had to make the difficult decision to to close its doors. Sweet Briar did so in the spring of 20152. Sweet Briar is not the only college with a financial crisis, Corinthian College in California filed for bankruptcy in May 2015 and announced it would close its doors3.  Entrepreneur and billionaire Mark Cuban has been very public about his opinion regarding debt forgiveness, as predicted the “inevitable college implosion” has begun.  Cuban also registered the domain collegedebt.com which shows the ongoing increase of student loans compared to credit card and auto loans. As the dollars tick up anyone could feel the impending bubble burst on the horizon.

The majority of the $1.3 trillion in student loans are backed by the federal government so that leaves the public with the burden.  Public burden tends to resort to federal legislation talks and words like bail-out, market crash and crisis.  Bail-out is a familiar word we have heard before and with that comes years of recovery, but the options for to prevent the bubble from popping are running out.  There new amendments being introduced, such as H.R. 449, this bill would amend the bankruptcy restrictions allowing the discharge of private student loans in a personal bankruptcy. Bills such as this come into play with the debate on how to fix the student loan crisis. In some cases student loans can be discharged, dependent upon major restrictions and proving financial hardship. Even with those restrictions, a high number of bankruptcies are coming from those millennials forced to live on credit cards while they pay those past due student loans.  The student loan bubble has caught a lot of national attention, more so after the housing market crash.  With a new generation starting college this fall, new solutions are bound to become available for those still struggling with loan payments. In fact, as a bankruptcy attorney office, we have dedicated a portion of our practice to working with those who are struggling with student loan debt in order to help to find a solution to overwhelming student loan debts.

 

 

 

 

  1. http://moneymorning.com/2013/03/05/the-scary-reality-of-the-student-loan-bubble-in-5-charts/
  2. http://www.businessinsider.com/mark-cuban-sweet-briar-college-college-debt-bubble-crisis-2015-3
  3. http://reason.com/archives/2015/05/22/is-the-student-loan-bubble-starting-to-p
  4. https://www.congress.gov/bill/114th-congress/house-bill/449/text