Debt Settlement

Middle-Aged Mortgages: Getting a Mortgage in Your 50s

March 29, 2015 by illinois

Times have changed. Decades ago, it was a common assumption that every working American (with a few exceptions) would be retired by age 65. However, now about three quarters of working Americans say that they plan to work well into the age formerly associated with retirement. Many 50 year olds have many working years ahead of them, which means there’s plenty of time to put income towards a home. That’s right! Your fifties are not too late to consider buying a home, and we’ll weigh in on some of the more complex points of getting a mortgage in your 50s.

There’s still no reason to totally neglect your age as a consideration. Just because you’re far from retirement doesn’t mean you’re still a 20-something. At this age, financial decisions have some more fine points that need attention but other decisions are very streamlined compared to earlier in your life. If you think getting a mortgage in your 50s is smart for you, read on and make these considerations.

Realistic Size

If you’re in your fifties and looking at home-buying options, make careful consideration of whether the trade is an improvement. While we all dream of our perfect house, even if you can afford it you need to consider the sensibility of this investment. A considerable aspect of this is the size of your home. At this age, your kids are likely gone (or leaving very soon) so getting a mortgage in your 50s for an enormous amount for an enormous house will most likely be a regrettable decision financially. Also think about the expenses associated with a larger house:

Heating
Cleaning
Decorating
Cooling
Maintenance
Property tax

All of these will cost more with a larger house, and will make getting a mortgage in your 50s harder. This still varies—if you had kids late or expect grandkids to move in with you, a larger house might be the right move. Still, you won’t work forever, and you need to be positive that you retirement funds will be more than enough to fund the tail end of your mortgage.

Mortgage Types

For most new homeowners looking for a mortgage, their age makes a 30-year mortgage the most sensible option. For these demographics, the consideration of anything else is limited (if not eliminated) because of the payment amount as well as future financial resources. However, getting a mortgage in your 50s is much different. No one wants to be making house payments late into retirement (can you imagining receiving monthly bills into your 80s?) so a shorter, higher-payment option may be better for you. For this, 15-year mortgages are popular, to try to pay off the entirety of the mortgage before retirement, avoiding dipping into 401(k) s, IRAs, and other retirement funds. This is especially important if you plan to live in this home for a good deal of time after retirement.

Mortgage vs. Retirement Funds

This next consideration will require a fair amount of number-crunching and most likely aid from a financial adviser, accountant or other proficient help. Making the best possible contributions into your 401(k) or IRA have the potential to save you more money in the long run than paying off your mortgage as soon as you can. Investment markets are unpredictable so you should act conservative as possible, but never forget that you retirement contributions will be your chief living income after you end your employment. Social Security should not be relied on like one of these accounts! If getting a mortgage in your 50s, consider how it will weigh against the finances of your retirement accounts.

Location, Location, Location

It’s a core tenet of real estate that location is the biggest factor in land prices. However, most people underestimate the difference this will make. Consider Austin and San Francisco—both mid-size cities in warm areas, but San Francisco homes will run as much as 70% more expensive. Most choices won’t be as drastic, but large differences are seen even in single cities. Is that neighborhood really worth the increased payments? Convenience is also just as important as cost. Isolated areas are expectedly much less expensive, but the hassle of excessive travel for typical activities will become more and more considerable as you age.

Other Considerations

When considering getting a mortgage in your 50s, you need to think about how it will integrate with your future retired life. Declining health can cause enormous expense, and a mortgage can compromise your care. An oft-visiting extended family will mandate more bedrooms in your house, and that will add a good deal to your payments. As an alternative, look at the payments for their hotel rooms and see which is more expensive. And of course, just because you can doesn’t mean now is the time. There are plenty of totally reasonable situations where buying a house is not the right move.

As always, run any decision by a trusted financial adviser, and do your research. A mortgage in your 50s is much more feasible now than ever before, so considering buying a home is no longer an impossible dream for older people.

Properly Negotiating Debts with a Debt Collector

March 10, 2015 by illinois

Step 1: Determine Your Financial Situation

To start properly negotiating debts with a debt collector, the type of debt and your personal history with debt must be determined. In other words, find out what you owe and how much you owe. Thereafter, it’s imperative to understand your history with debt management. These two factors will help you create a solid negotiation plan that is logical and affordable.

Type of debt

There are various types of debt you might have, and the type of debt will determine the proper methods of negotiating debts with a collector. For instance, debt incurred from credit cards is vastly different from defaulted loans. Credit card debt owed to a large, national bank will have different protocols for negotiation than if debt is owed to a local bank or credit union.

Likewise, negotiating debts from an unpaid medical bill will depend on the insurance. If you have medical insurance, your unpaid bill may be partially or fully covered by your insurance. But, if the insurance company did not cover a portion of the claim, negotiating with a collector could prove difficult. Often, collection agencies are tied to contracts with insurance companies or the medical service provider which dictate whether or not a lower payoff is available.

History with debt

It is always a good idea to pay off incurred debt as quickly as possible. Typically, if you pay off debts in full and in a timely manner, a collector will be more likely to offer you the best settlement deal. If you have a consistent track record of paying off debts and your accounts are in otherwise good standing, your account is less likely to be flagged for reduction options. But, life happens. Falling behind in payments can negatively affect the final settlement. However, if you can prove that this particular bill is a “one time only” offense, collectors may be able to offer a good deal. Whereas, if you continue to incur debt and the collector sees that you have many offenses of similar debt over time, the collector is more likely to deny settlement and instead seek a full payoff.

The easiest way to assess your history with debt is by reviewing your credit report. There are many free credit reports from major credit reporting agencies which you can use to track how much debt you have.

Step 2: Assess Your Collector

When negotiating debts, more often than not, the collector will either offer or refuse a settlement deal. There are several types of collectors that you find yourself negotiating with. Contingency debt collection agencies, for example, focus on collecting debt immediately. Contingency debt collectors tend to receive a lot of unpaid accounts at one time and work diligently to collect full payoff amounts. These types of collectors are much more difficult to negotiate with because they work directly for creditors. If the collection agency is a contingency collector, chances of agreeing on a lower payoff settlement are rather unlikely.

Yet, working with a contingency collection agency may prove worthwhile if the first round of negotiations were not in your favor. Once the contingency debt collection agency receives your account and does not immediately receive payment from you, they may wait for several months for your full payment. If full payment is not received, there is a small timeframe wherein negotiations take place and result in a lower settlement. This is because the creditor can retract the account from the initial agency and send the account to another agency. Shortly before they lose your account, the initial agency may be more willing to negotiate a settlement deal with you.

Step 3: Know Your Options

As previously mentioned in Step 2, creditors have the option to work with many different agencies. If one agency is unsuccessful in obtaining payment, the creditor may transfer your account to another agency. Additionally, a creditor may sell your account, thereby changing the legal ownership of the debt. As such, negotiating debts will change as a new debt owner can offer different settlement options.

While account turnover is good in theory, the process can happen rather quickly. One agency may be in charge of your account today, but can sell the account to another agency tomorrow. Because you may be dealing with different agencies, always try to resolve a collection debt with a lump-sum payoff and get any agreement in writing.

Negotiating debts not only takes time, but also requires a logical approach to the three steps outlined above. When negotiating debts, it’s necessary to know the type of debt, amount of debt, your history with debt, the collection agency, and payoff options. Identifying, assessing, and evaluating these criteria will help you negotiate the best settlement.

Watch this video to further understand the types of debt collection agencies:

Unfair Debt Collection Practices: When Debt Collectors Go Too Far!

March 1, 2015 by illinois

As American debt in general has risen, so has the practice of unfair debt collection practices. This led to the Fair Debt Collection Practices Act, which was a breakthrough in giving aid to unfair creditors. However, the problem is far from solved, with over 300,000 complaints to the Federal Trade Commission between 2006 and 2011. Despite this huge influx of complaints, a mere 32 formal actions were taken against the agencies practicing unfair debt collection practices—in 10 years! To make up for this, consumers should learn now how to protect their rights and deal with unfair debt collection practices on their own.

Where Requests Become Harassment

An entire industry revolves around debt collection, and illegal or unfair debt collection practices are shockingly prevalent within it. The agents working for this industry are paid based off of the number of debts they collect, and many have quotas to meet. To meet these, they’ll resort to a number of threats that they are not allowed to make:

Seizing property or cutting pay: Agencies are almost never permitted to do these things, so collectors have no valid permission to make this threat.
Notifying people of your debt: Without your express permission, agencies have no right to tell employers, banks, or other institutions about the amount, nature, or even existence of your debt.
Initiation of criminal complaint: Fraud claims made by the collection agencies are false, and they are unable to initiate criminal complaints against you.
Self-misrepresentation: This particularly frequent method is to claim to be someone they are not, like an investigator for fraud cases or a lawyer. This is a trick to try to add legal fees to debt, or more often simply intimidate you. This is one of the most criminal unfair debt collection practices unfortunately seen today.
Police threats: Some collectors like to tell the debtor that a police officer is en route to their house at the moment to make an arrest, which is totally false. Debt cases are never handled via arrests—do not believe this!
Other harassment, oppression, and abuse: Searches through credit card bills and other financial records to find embarrassing purchases is a tactic used by some very dedicated debt collectors. Any controversial or arguable purchase will result in a threat to notify your employer or even your family. Other abuse can be excessively often calls or profane language, all of which are unfair debt collection practices.

Misrepresentations

Some debt collectors may claim to be someone that they are not to try to get you to pay. If you receive a call from any of these people, know that it’s fake.

Law Enforcement: Any claimed connections to government are fake, unless the collection involves unpaid child support or district attorney check diversion. Any government debt communication is made by mail first.
Amount Owed: Collectors may attempt to collect more debt than you actually owe, which is punishable under fraud charges.
Attorneys: Any claims to be from a law office are false, legal action will always be handled through a judge.
Action Warnings: Claims that you will be arrested or your possessions will be taken are false, unless the original creditor has found an extremely rare case that allows them to take this action—this is almost never the case, and more often an attempt at unfair debt collection practices.
Illegal Threats: Unintended or forbidden actions will not happen, regardless of how severely they are threatened. “Final Notices” demanding payment are not allowed. Threats to sell debt to a third party so you lose claims are also impossible measures to take in reality.
False Claims: They may accuse you of criminal charges or tell the state you are not disputing the debt, or even claim that they are employed by a credit bureau or bank rather than collection agency.
Falsifying court and legal documents, or using fake business names are also not uncommon.

Unfair Measures

Some actions are regarded by the government as unfair and even outrageous, and cannot happen, like these:

Add extra debt from interest or other charges that was not originally agreed upon or legal
Deposit postdated checks early, or solicit postdated checks with threats of prosecution
Cause unjust communications fees like collect calls or postage by obscuring or falsifying the true intent of the communication
Threaten to take over your ownings, when they have no right, reason, or intention
Communicate via postcards
Make any markings on an envelope that indicate it has anything to do with debt collection

Fred Williams is a journalist who did extensive study into collection agencies, and even took a leave of absence to work for one to get an inside look. Many of the examples above have been exposed by him, and happen to real people

Know your rights about debt collection, and be able to realize which accusations are baseless and which threats are empty. If harassment continues, talk to an attorney to see if you may have grounds for criminal charges against the agency. As always, do your research to avoid making a critical mistake.

Get Your Money Back: Collect a Bad Debt

February 19, 2015 by illinois

There’s nothing worse than loaning money to someone that doesn’t want to pay you back. When you do something out of the kindness of your own heart to help another one, it can be very upsetting when you see them throwing it all back in your face. Not only does it weigh on your finances, but you’ve also got to deal with the emotional consequences. Depending on the amount of money you’re owed, you might never want to help anyone out in the future. If you’re serious about trying to collect a bad debt, there are certainly things you can do to get the process underway. The world isn’t over once you try to collect a bad debt, but you might experience some difficulties along the way. Even still, you deserve compensation and you should get it back however you can manage it!

Try To Separate Your Personal Feelings

Whenever you get into a situation that involves money you’re owed, the person that owes you will do whatever they can to get out of paying it back. Whether they complain about losing a job or just not having it, they’ll try to do anything to make you feel guilty for asking for the money. They might even get bold enough to blame you! Whatever the case, don’t let it stop you from trying to collect a bad debt. In this case, it will be most important for you to keep any contact with them on a business level. Don’t engage in personal conversation that will make you upset. If you’re able to keep your feelings out of the equation, you’ll see how much more successful you can be. To let the borrower know how serious you are, you should be prepared to take any measures to get your money back: no matter if you have to tarnish their credit report or take them to a court of law.

Have Your Evidence Ready to Go

It’s important to get any kind of serious agreements down in writing but so long as you and the borrower had a thorough understanding that you would loan the money and they would pay back as soon as possible, you have a binding contract. If you don’t have an agreement that’s been cemented in writing, you can gather all of the information that was shared between you and the borrower regarding the money they owe you. Having all of the emails and letters you shared is a great idea and it will be all the better for proving your case. As long as these pieces of documentation detail when and at least how the borrower planned to pay you back, it should be easier to collect a bad debt.

Give the Borrower a Serious Warning

No matter if you’ve got the correct documentation or not, you should send the borrower a letter that’s been registered and demand that they pay you back. Your letter should touch upon the terms that you all agreed on. Remind them of the date you all came to this agreement, how much they should pay you back and when you expect the first payment to be made out to you. If they consented to paying interest charges, you should be sure to remind them of this information. It’s your responsibility to upfront and clear about what you want and when you expect to have it. By this point, the borrower had enough time to make good on their loan and they haven’t: you don’t owe them any further kindness.

Get Some Professional Help

If you don’t get a favorable response or payment within two weeks or less, it’s up to you to take further action. Don’t let your borrower get off easy without paying the price! Get a lawyer to have your back through the process. If your lawyer were to send a letter over to your borrower, you can bet that they would take it a lot seriously very quick. Hiring a lawyer will not be cheap in most instances but if you’re owed a lot of money, it definitely wouldn’t hurt to have the assistance of a talented lawyer on your side. The letter from your lawyer to your borrower is certain to send shock waves into their head. Your lawyer will most certainly be flowery and exact in their language and they’ll most likely remind your borrower of the trouble coming their way if they don’t cooperate. If you’re not totally confident in your ability to collect a bad debt on your own, your lawyer will be there to get you through the tough times with ease.

Do Whatever It Takes To Get It

If your borrower still seems unwilling to settle after all this, you’re more than ready to take your issues up with district, small claims or superior court. Small claims court is probably the best option since it’s the most inexpensive and a lawyer or attorney isn’t required.

Bad Financial Decisions You’ll Come to Regret

November 8, 2014 by illinois

It’s very easy to worry about the financial struggles that we face each day, but it’s much harder to think about our financial futures and how our current situations will impact the days to come. Bad financial decisions are a part of life. Our financial situations can change in the blink of an eye, and thinking about both the short term and long term will help you be most prepared for anything that comes your way. If you want to be more prepared for what’s to come, avoid making these bad financial decisions and you’ll be better apt to deal with what life throws your way.

Forgetting to Save for Retirement

Neglecting to put anything aside to live off of in retirement is one of those very bad financial decisions that happens all too often. Most people don’t even let the thought of saving for retirement cross their mind. They either think that retirement is too far away to plan for, or they don’t have the money to put into their 401k or IRA. Both of these ways of thinking will put you in a tight spot and you’ve got to change your perspective. No matter how small the amount is, you should always make it a point to add money to your retirement account and if you don’t have one yet, you should get one! Retirement age will be here before you know it and nothing is worse than having to scrounge together enough money for you to live off of when you can’t work anymore.

Not Putting Anything Away for Emergencies

If you’re not setting your extra money aside in an emergency fund, you’re making one of those bad financial decisions that you’ll regret in the future. All people will experience some kind of big emergency in their lifetime: whether it’s the loss of a job or a necessary car repair that needs to be done right away. When you have money set aside that you can use in dire situations, you’ll be able to get yourself out of a tight spot without having to borrow from someone and that will feel great.

Ignoring Your Debts

The root of a lot of bad financial decisions begins with allowing your many debts to sit and grow larger. Paying debt off is annoying and hard to do, but sticking with it will do you good in the long run. Your debt will always follow you and incur more interest, so paying it down little by little is much better than just trying to ignore it.

Out of Control Spending

Spending way more than we should is very easy in today’s modern age where things are more expensive than they’ve ever been. Treating yourself every once in a while is acceptable, but you shouldn’t make a habit of spending frivolously. Instead of spending wildly, set those funds aside so they can go towards a bigger, more important financial goal.

Investing Without Research

Most people think that they need to get into investing because of all the positive stories they’ve heard from friends and co-workers. In reality, if you haven’t done your research and you don’t have the first clue about how to make your investments work for you, you’re probably making one of those bad financial decisions. Investments can potentially make you a whole lot of money, but you don’t want to sink your money in something that you don’t rightly understand.

Can’t Seem to Save

We all have that one friend that forever complains about never being able to save money. It’s true that it has become harder to save in these rough economic times than ever before, but there’s always another way to save: even if it’s not much. You can clip coupons to save on the things you buy the grocery store, you can cut out unnecessary bills like cable and you can save five to ten dollars from each of your paychecks. Watch how quickly those savings start to pile up.

Lavishing in Luxury

To a lot of people out there, appearance is more important than anything else. It’s a given that most people want to look nice, but some of us take it to the extreme. If you’re accustomed to buying luxury and a lot of name brands fill your closet, you’re definitely spending way more than you could be. Cut back on the expensive purchases you buy them on credit and quit making these bad financial decisions!

Think for the Long-Term

Short term goals like paying down a car note or saving for a fun vacation seem to sit at the forefront of our mind, but owning a home and starting a family might be the other kinds of things you want to consider. Time moves so fast, and if you’re not at least considering the long run, you could get caught up in it all.

Process to File Bankruptcy in Illinois

May 26, 2014 by illinois

If you are considering filing bankruptcy and live in the state of Illinois, there are some facts you will need to be aware of before going through this process. Read through the following important information to file bankruptcy in Illinois.

Bankruptcy Acts

There are some financial acts that cover the process to file bankruptcy in Illinois, as well as other states in the US. It is a good idea to become familiar with these to determine if you qualify and what debts are covered.

Credit Counseling Act (2005). All consumers that file bankruptcy must participate in credit counseling in the six months prior to filing for relief. They must also complete financial management courses once they file bankruptcy in Illinois.
Means Test (2005). To determine if you qualify for either Chapter 7 or if Chapter 13 is needed, all income sources, expenses and debts will be considered. The bankruptcy court will analyze your average household income for the preceding 6 month period and then compare it to the median income for the state. This will determine which chapter is applied to file bankruptcy in Illinois.

Paperwork Required to File Bankruptcy in Illinois

When beginning the process you will need meticulous itemization of all your income sources, as well as some other records. Be prepared with all the following information to file bankruptcy in Illinois.

Financial Transactions. All major financial records for the previous two years will be required.
Living Expenses. Proof of living expenses for a one month period.
All Debts. This includes secured as well as unsecured debts owed.
Assets. This covers any property or possessions that could be sold and converted to cash.
Tax Returns. Courts require a two year tax return history.
Deeds and Titles. This applies to real estate holdings that are owned outright and any automobiles that are fully paid off.
Loan Documents. Any outstanding loan documents will be needed to determine level of debt and terms of repayment agreements.

Steps to File Bankruptcy in Illinois

When all the above documents and information are consolidated, the time has come to determine if any of your property falls under the Illinois seizure exemptions. A two page petition is then filed with the Illinois court by either yourself or your lawyer. There are also several more forms that are necessary to complete the process to file bankruptcy in Illinois. All this paperwork and forms are meant to represent your financial status currently. It is imperative that they be accurate and completely honest, or your petition could be rejected.

There are fees involved to file and you need to be aware of these before you file bankruptcy in Illinois.

Chapter 7. The fee for Chapter 7 bankruptcy is $306. You may be able to arrange installment payments, but this fee is not eligible to be waived.
Chapter 13. The fee for Chapter 13 bankruptcy is $281. It is ineligible for waiver as well.

Requirements for Chapter 13

Those that are eligible for Chapter 13 bankruptcy must submit a proposed plan of repayment. Monthly expenses that are reasonable are subtracted from your income, leaving an amount that could be applied to debt that is outstanding. Taxes and child support are considered priority debts that will be paid entirely, while other unsecured debts will be negotiated for settlements at less than the amount owed.

When you file bankruptcy in Illinois, your repayment plan must meet these requirement:

Good Faith delivery.
Unsecured creditors should receive the minimal amount covered under Chapter 7 regulations.
100% of your disposable income is applied to the repayment plan for a minimum of three years. The court usually insists on wage garnishment to ensure this requirement is met.

Final Steps to File Bankruptcy in Illinois

Automatic Stay. Once you have been completed the process to file bankruptcy in Illinois, you are protected immediately from further contact by creditors or any foreclosure actions against you.
Bankruptcy Trustee. When you file bankruptcy in Illinois, the court immediately assumes legal management of all outstanding debts and the property and possessions not covered under the state exemption list. A court appointed trustee then fastidiously analyzes and reviews all documents and paperwork that you have filed with your petition. They are also able to challenge any portion of your petition.
341 Meeting. Section 341 of the Bankruptcy act require that a meeting between the court appointed trustee, creditors and petitioner be arranged. Generally, this occurs about 30 days after you file bankruptcy in Illinois. Occasionally, in Chapter 7 cases, creditors may choose not to attend. If objections to any aspect of the plan or exemptions are raised, the trustee can negotiate. When conflicts cannot be resolved the bankruptcy judge will rule.
Discharge of Property. All non – exempt possessions and properties are sold by the trustee and the money is then applied toward your debt. Occasionally, low value property is returned to you.

Make Sure You Understand What Debt Settlement Companies Are Offering

October 11, 2013 by illinois

There has been a lot of media attention on some debt settlement companies over the last few years. They have left a string of people that perhaps didn’t need their services in a much worse financial position. The advertising that they have conducted gave the perception that they could help people reduce their debt. Debt settlement is not a realistic way of reducing a debt that you have been paying and have the ability to continue to pay.

There have been a number of companies that have cycled through starting up, advertising and gaining customers and then closing down. This happens over about a 24 month period and can have very negative effects on the people that it attracts. The debt settlement does not end up happening and all payments made are expended on fees and charges. This leaves the customers out of pocket and with a larger debt than they began with owed to their creditors.

What Debt Settlement Companies Are Selling?

The concept that debt settlement companies operate under is that your creditors will when offered an amount to settle your debt take that amount because they have little or no expectation of recovering the debt. This is usually explained in a debt management plan that is drawn up by the consultant that is dealing with your case. The advantage for you is that they offer to try and settle a debt for a percentage of the discount that they arrange for you.

The problem is that you are paying the company money before they have made any arrangements with any of your creditors. The debt management plan is only an estimate that is based on what they believe may happen it is not an agreement with your creditors.

You are provided with an estimate of what the company may be able to negotiate for you.
The estimate is not guaranteed and has not been discussed with your creditors.
Your payments are accumulated by the company until they deem a sufficient amount is available to approach a creditor with a settlement amount.

Fee Escalation

One of the problems that you can face is when your debt continues to grow during the period that you sign up for the services and the time a settlement is made. If for example you had a $10,000 debt that the company believed that they could settle for $5,000 and their fees is 20% of the saved amount. The fee would be if successful $1,000. If the accrued interest, late fees and penalties increased the debt during the period before it was settled to $15,000 and the creditor agreed to settle for $5,000 then the fee payable would jump to $2,000.

The problem is during this period you have been making monthly payments and these payments first must satisfy the fees before they are credited against the amount owing. With multiple debts this can mean you are paying fees for years before the debts are settled.

Fees are paid before any money is sent to your creditor to pay off debt.
Increases in the amount owed can mean increased fees for the management company.
If the company goes out of business then all your payments may be lost.

Debt Settlement or Debt Reduction

One of the areas that unscrupulous debt settlement companies have targeted is people that have a high debt burden but have been making their payments and continue to be in a situation where they are able to make payments. The typical scenario is as follows:

Advertising in print, radio or television that offers a safe and effective way to reduce the debts that you have.
Sales teams that sell the idea that paying the payments for the debt that they have is silly and by ceasing to pay and using their service that they can reduce the amount of debt they have by a sizeable amount.
That they only get paid for the amount that they save you so they are on your side and will fight to get you the best deal.
The paperwork and contract that a person signs does not reflect what they were told by the salesperson.

Debt settlement companies were started as an alternative to people going into bankruptcy. They could negotiate a lower settlement amount with the creditors that their client could pay and bankruptcy was avoided.

It is difficult to understand how this sort of structure could be marketed at people that are current with their obligations and are able to meet their payments. The only possible explanation is a cynical drive to gain the most fees. The clients cannot in anyway be said to be better off even if the claimed reduction in debts is delivered. The risks to their credit rating and the possibility that they could lose assets or be forced into bankruptcy far out ways the possibility of lower debt levels.