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OVLG Blog

5
July
2010
So now you’ve said “I do” and your fiancée is now your spouse. There’s only one storm cloud in your relationship, debt.
Debt and marriage
Either you or your spouse may have come into the marriage with a lot of unpaid student loans or credit card bills. Then there are the bills from the wedding and honeymoon that you and your spouse paid for. Who is responsible for paying the bills is always an issue during a marriage, regardless of whether you’re newly married or have been married for years. There are as many ways to handle who pays the bills as there are couples, but if both know their rights under the law it can sometimes defuse a tense situation and save you from divorce. Post nuptial agreements are becoming more and more common, and not just among the rich. A post nuptial agreement (commonly shortened to a post-nup) is exactly like a pre-nuptial agreement except it’s made after the couple has already been married. Every state allows married or engaged couples to define who pays for what debts in a pre or post nuptial agreement. This can be a handy tool for any couple that wants to avoid problems when it comes time to pay the bills. If you and your spouse think a post nuptial agreement would be a bad idea, there is still a way to avoid arguments about who should pay what bills. Each state has its own laws concerning who owns what debt, but in general state laws can be divided into community property states and common law or equitable distribution states. Community Property States Living in a community property state can have its pros and cons where debt is concerned. Some states in the US, mostly the states that were French or Spanish possessions before they joined the US, are community property states. Those states that are community property states are Arizona, California, Louisiana, Nevada, Idaho, Texas, Washington, and Michigan. Alaska is a hybrid state, allowing couples to choose whether they want to follow community property laws or not In a community property state, any debts incurred before the marriage remain the obligations of the individual unless the now-married couple decides otherwise. Any debts incurred during marriage are the property of the couple as a whole regardless of whether both spouses signed the agreement, unless the couple decides otherwise. The sole exception to this rule occurs in Texas, which if there is a disagreement as to who owes on the debt rules on a case by case basis. If one spouse gets into debt and the creditor begins collection actions or one spouse files for bankruptcy under Chapter 7, the creditor/trustee can seize both spouse’s marital property and income in order to pay off the debts. However, the advantages to this are that the debts get paid off faster, and in the case of Chapter 7 both spouses’ eligible community debts will be released. The only way to get around a community property state’s joint property laws is to sign a pre-or-post-nuptial agreement. Each state has slightly different rules concerning what a pre/post nuptial agreement can and cannot cover, and to be sure that any agreement will stand up in court each party should consult their own lawyer. Any couple can visit a lawyer together to draft an agreement, but due to the rules governing lawyers in every state regarding conflict of interest, it is always best if each spouse/soon-to-be spouses consults their own lawyer. Common Law States Every state not mentioned above, is a common law state. In a common law state, unless the debt is for any purchase that benefits the family as a whole, such as food, housing, and other essential household items or both spouses agree to be responsible for the debt, only one spouse is liable for it. For example, if a wife takes out a payday loan then unless her husband co-signed the agreement, only the wife is liable for it. This means that if the husband and wife keep separate bank accounts and keep their paychecks in separate accounts, a creditor can only reach the assets of the debtor spouse. However, if the couple keeps a joint account, a creditor can only reach ½ of the money in the account. In addition, a creditor can only reach joint property if the property is not held in “tenancy by the entirety”, which means two people hold property as one legal entity and is exclusively for married couples. It also means that one spouse can file for bankruptcy without affecting the obligations and assets of the other. If joint debts are included in a bankruptcy estate, then part or all of the debt may be canceled and joint assets may be used to pay them off. In order to be sure which debts will be canceled and which assets may be affected, the couple should both consult a bankruptcy lawyer.

OVLG Blog

5
July
2010
As the Baby-Boomer generation starts to reach retirement age, more and more retirees have to face their long awaited freedom from the daily grind with mountains of debt.
Debt during retirement
While traditional means of settling one’s debt, consolidation, negotiation, and bankruptcy are available, these may not be the best solution for an individual on a fixed income. Debt consolidation is the process of taking out a loan to pay off your high interest loans and debts and paying back the loan at a lower interest rate. However, even with the increasing life expectancy of the average American, few lenders are willing to make loans that the borrowers on a fixed income with lots of medical bills can repay. Debt negotiation can also be a risk for creditors, and for the same reasons. In debt negotiation, the debtor (or a company on their behalf) negotiates with the creditor to reduce the amount they owe. But because a lot of the money retirees owe are for medical bills and hospitals are notorious for over-charging and their reluctance to accept less than what they’re owed, negotiation can be tricky. However, a retiree has two advantages based on their age, creditors know that they’re on fixed incomes and that ill health could mean the creditor might not get all of their money if the debtor dies. Therefore, this means that creditors have an incentive to agree to what they can get as soon as possible. The best thing a retiree can do while living on a pension or social security is to budget wisely. Try and minimize your debts to what you can afford, and save as much as possible. And just like with younger debtors, it’s better for retirees to stay away from credit cards as much as possible. If you use credit cards, then making more than the minimum payments is always advisable. The last alternative for any debtor is bankruptcy. Most consumer debtors file for Chapter 7 or Chapter 13 under Title 11 of the Federal Code. Chapter 13 is designed to help individuals with income pay off their debt over five years, which is not an option for most retirees given that most retired debtors have to live on social security and/or government pensions. Chapter 7 gets rid of most of your debt by liquidating certain assets and using the money from the sale to pay off your debts according to your state’s priority laws. In order to file for Chapter 7, the Federal government requires that the debtor make less than the median income for their state, which is not a problem for those retirees living on social security and/or government pensions. If you are facing Chapter 7 bankruptcy and are afraid you’ll be left without a means of support, do not worry. Most states in the US have purposefully enacted exemption laws designed to protect most retirement assets from being touched by a creditor or the bankruptcy estate. These exemptions also cover judgments for collection suits, rendering most retirees judgment proof. The problem, however, is if a debtor is judgment proof the chances of their bankruptcy being approved, whether Chapter 7 or 13, is lessened. Finally, there is one option available to retiree that is not available to regular debtors, the reverse mortgage. Reverse mortgages are a lot like second mortgages in that you are borrowing against the equity in your home in order to get money. These loans are safer than the average second mortgage, because they are non-recourse loans, meaning you will never owe more than what your home is worth, even if you borrow more than what your home is worth. And since you can never be forced out of your home with a reverse mortgage, you are safe from foreclosure. Unlike a regular mortgage, a reverse mortgage does not require monthly payments; in fact a reverse mortgage does not have to be paid at all until the home is no longer used as the primary residence. In addition, unlike traditional mortgages, a reverse mortgage does not need a credit check. A reverse mortgage does not have any income restrictions at all, and is tax-free. However, there are several restrictions. A person applying for a reverse mortgage must be 62 years of age, own their home outright or have a low mortgage balance, and receive credit counseling before you qualify. Also, if you are planning to leave your home to your potential heirs after you die, you must pay back the reverse mortgage before you die otherwise the home will be sold to pay off your loan and the difference paid to your estate. Therefore, if you are retired and have a lot of debt there are always ways out. The important thing is to manage your money wisely, and keep away from dangerous debts like payday loans. Know your rights, and if you have any problems consult a lawyer who can help you fight for your hard earned leisure!

OVLG Blog

5
July
2010
Are you or a loved one a member of the armed forces and facing bankruptcy? If so, then you should know that your (or your loved one’s) bankruptcy procedure will be slightly different than for a civilian. Bankruptcy is a court procedure governed under Title 11 of the United State Code. Most individual bankruptcies are filed under Chapter 7 or Chapter 13. Chapter 7 bankruptcy is also known as liquidation bankruptcy. Under Chapter 7, a court appointed trustee sells your non-exempt property and distributes the profits among your creditors. Chapter 13 is also called “wage-earners bankruptcy” because it is designed to help those people who are employed pay off their debts within 5 years. A member of the military is actually given more options in filing for bankruptcy than a civilian is. In order for a civilian to file for Chapter 7, they must qualify under an income test called The Means Test. In order to qualify for under The Means Test, the person seeking to file under Chapter 7 must make less than the median income for their state according to the IRS and the most recent Census. However, a member of the military does not have to qualify under The Means Test. When changes were made to the bankruptcy code in 2005, members of the military were specifically exempted from having to qualify under The Means Test, making it easier for a member of the military to file Chapter 7. In addition, members of the military can take advantage of a special act called the Servicemember’s Civil Relief Act (SCRA). SCRA protects servicemember’s ability to be assigned to active duty outside the US and still file for bankruptcy relief. Under SCRA, any civil case, including bankruptcy, can be postponed without damaging the servicemember’s interests if they are assigned to a station outside the US. This means that if a member of the military files for either Chapter 7 or Chapter 13 and is assigned to active duty outside the US; the bankruptcy action will essentially be put on pause until the servicemember returns to the US. The purpose behind this act is to make sure members of the military can focus on their duty to their country without distractions even if their economic circumstances require them to file bankruptcy. This is different than an automatic stay. An automatic stay prevents a creditor from suing a debtor who has filed for bankruptcy for the money they are owed while the bankruptcy proceeding is going on unless the creditor can show the court that their interest would be severely impaired by the automatic stay. Servicemembers still get an automatic stay when they file for bankruptcy in addition to the protections of SCRA. Therefore, a servicemember’s bankruptcy case could be extended for months or even years beyond what a civilian’s bankruptcy case would take, because unlike with automatic stays, a creditor has no recourse if a servicemember is called on active duty. The provisions of SCRA protect active servicemembers during their time of active duty and for 90 days after they are discharged from active duty, the military, or die. Portions of SCRA also protect reservists and inductees who have received orders to report for duty but have not reported or been inducted.

OVLG Blog

2
July
2010
So the person you thought was your soul mate turned out to be someone you wish you’d never met. You’ve started the divorce proceedings,
Debt and Divorce
but don’t know what to do about all the debt you and your soon to-be-ex-spouse have accumulated. Here are some things you should consider. The Pre/Post Nuptial Agreement The first thing to look at when deciding who has responsibility for the marital debts during a divorce, is whether there is a pre/post nuptial agreement (commonly called a pre-nup). While many people think that if their fiancée or spouse asks them to sign a pre/post-nup they aren’t trusted, a growing number of couples are making them in order to protect their individual interests. If there is a pre or post nup, then unless the agreement is invalid, the agreement controls what happens to the couple’s assets and liabilities during a divorce. If there isn’t an agreement or the agreement is invalid, then the laws of the state concerning property division control. When dealing with debt in any state, there are times when one ex-spouse does not (either because they’re angry or simply don’t have the money) pay some or all of the debt the divorce decree says they are responsible for. In this case, the other ex-spouse has two choices. The non-defaulting spouse can go to court and have the debtor spouse explain why they’re not paying the debt (which in some circumstances can lead to fines and jail time for the defaulter) or they can pay on the debt and go to court to get reimbursed. It all depends on how messy the divorce was. State Laws In the US states can be divided into two different categories depending on how they deal with the distribution of property between married couples. A small minority of states, mostly in the portions of the country the US acquired from France or Spain, are community property states. The majority of states in the US are “common law” or “equitable distribution” states. Community property states In most community property states, debt acquired during the marriage is considered as belonging to the couple, just like any assets acquired during the marriage. Community property states split marital property and debt right down the middle. Each person gets half the assets (or their fair market value) and each spouse becomes responsible for half of the marital debt. In order to determine which ex-spouse is responsible for which debt, the courts usually look to see who initially agreed to be obligated for the debt and whether the debt was for the family as a whole or just one spouse. Common law states Common law states split debt in one of two ways. They can split marital debts between the two divorcees, just like a community property state or they can divide them according to what seems fair to the judge. Usually, when dividing debts, the ex-spouse who gets most of the assets will get most of the debts as well. The judge can also look at each debt, see what it was for and who agreed to be liable for it and divide it that way. Some Tips Going through a divorce is stressful for you and your family. Going through a divorce and dealing with debt can be even worse. Here are some tips you can follow to make your life easier when dealing with both: •Find yourself a divorce lawyer. An experienced divorce lawyer will know how to get you an equitable settlement and save you the hassle and emotional stress of fighting with your ex. •Don’t hide any assets or debts from your ex. It is always better to be honest and open with your lawyer and with your ex than to lie and risk getting caught. One thing that divorcees always have problems with is what to do if your ex doesn’t pay a debt the divorce decree says he or she has to pay and the creditor comes after you. If this happens, you have two options. The first option is to send the creditor a copy of the divorce decree that shows them that your ex is responsible for the debt and you aren’t. This may or may not work, depending on the creditor. You may end up being sued by the creditor, again, depending on the creditor. Your second option is to pay the debt, making sure that you get proof that you paid it. Then go to court and get an order from the divorce judge saying that your ex has to pay you what you paid to the creditor. In this case you are essentially stepping into the creditor’s shoes. No matter what you do, know your legal rights and debt won’t bother you either during or after divorce!

OVLG Blog

2
July
2010
The booming debt relief industry has put us face to face with a very important question – how much credible the consumer debt relief programs actually are?
Consumer relief program
The doubt has been further triggered by the fact that thousands of consumer complaints regarding debt relief scams are lodged with the FBI, the Better Business Bureau and the Consumer Debt Council every single day.And that makes it extremely crucial for you to ensure the credibility of the consumer debt relief program you want to opt for. Now the million dollar question is, “how to judge whether debt relief programs are trustworthy or not?” Distressed debt stricken consumers are the ideal preys for companies conducting scam debt relief services. Such consumers in their desperate attempt to rid off debts often overlook small things that would have otherwise helped them evaluate the true nature of the debt relief service. Therefore you have to be absolutely conscious, while signing up for any debt relief program. Your choice should be careful and logical. All that glitters is not gold! So, in the very first place, do not make the mistake of fathoming authenticity by the glitzy appearance of the debt relief company. You must thoroughly get yourself informed about the company’s reputation and its debt relief programs before you decide to hire its services. You can gather references on the company's history and debt relief services or you can ask for your friends’ and acquaintances’ opinion about the company. You can also check out the company’s services and testimonials on the Internet. Also you must check the following things: •Is the company providing complete information? If the company hesitates to provide complete and accurate information on the debt relief programs they offer, then it is better you step back immediately. •How much is the upfront fee? Many companies demand a lump-sum as upfront fees for services like debt settlement and debt consolidation. It is advisable that you avoid services offered by such companies. •Is the company demanding very low monthly payment? If the company demands exceptionally low monthly payment for the program, then its debt relief services are likely to be fraudulent. It may be possible that the company will raise the amount after you have enrolled for the program. This can push you into further debt and worsen your situation. Hence, do not get lured by a meager monthly payment. It will be wiser if you check the whether there is any potential for hidden charges that you might incur later. •Is the company asking for redundant personal details of yours? A debt relief company should only seek your creditor’s names and contact details, your debts and the interest on it. But if you find the company to be over inquisitive about some redundant information (such as your account numbers, social security number, or other personal details) before providing the quote, it is better you reconsider their services. •Is the company affiliated to the BBB? Debt relief programs offered by companies affiliated to BBB or any other pro consumer group can surely be trusted. You must carefully judge these aspects before you take your first step towards debt relief. These are important. A little mistake on your part can put into a never ending maze of debts and liabilities. So, be well informed about everything you intend to do about your debts. After all a good debt relief service is the remaining lifeline, that can pull distressed debtors out of their liabilities and lead them to a happy debt free life!
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Oak View Law Group is one of the best law firms in the country. Registered with CalBar and Cal Chamber, this law firm has been protecting rights and alleviating financial stress of consumers since 2007. The firm has more than 363 live reviews to it’s credit and 5 star rating from the TrustLink. Continue reading


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