The Best Way to Use a Credit Card? Treat It Like Cash from New York Times February 12, 2020Fewer people than ever carry cash these days, it seems. Life can seem ultraconvenient when you don’t have to worry about a wad of bills in your pocket (or even a wallet in your pocket, for that matter).But it can hurt people with low incomes when businesses go cashless, it can hurt workers who rely on cash tips and — even if you’re not in either of these groups — it can hurt you because it’s easy to get into financial trouble with credit cards.Studies prove that people spend more when using credit vs. cash, and late payments are on the rise.“You have an out-of-sight, out-of-mind phenomenon with credit cards,” said Amy Bucher, the director of behavior change design at Mad*Pow, a design consultancy group. “Unless they’re checking their credit card balance on a daily basis, most people don’t have an awareness of how much debt they’re in.”But if used responsibly, credit cards are a fast way to build credit without paying a dime of interest. Good credit scores can save you money down the road, typically qualifying you for lower mortgage or auto loan interest rates. Credit card rewards can make things you buy a little cheaper.The good news: Mental tricks, apps and tools can make spending with credit cards similar to cash, giving you the best of both worlds.Editorial note: The assessments of financial products in this article are independently determined by Wirecutter, a New York Times company that reviews and recommends products, and have not been reviewed, approved or otherwise endorsed by any third party.Make credit card purchases feel tactileCash requires you to shop at a physical store, grab your physical wallet and hand over physical money. Giving a cashier a $20 bill in exchange for an $18 item is a tangible transaction. In exchange for a $20, you now have $2 left and a physical bauble.But a credit card looks the same before and after the transaction, obfuscating what was actually given up for that bauble. Add online shopping to the mix, and you might not even think about your credit card or where the money is coming from.Grab a receipt. Beverly Harzog, a credit card expert and consumer finance analyst for U.S. News & World Report, always takes a receipt. “It’s just one more thing to help you keep a grip on reality,” she said. “When they ask if you want a receipt, just say yes so you have that feeling of payment in your hand.”Editors’ PicksWho Needs a Caribbean Yacht When You Can Take the Ferry?52 Places to Go in 2020The Scenic Isle Where the World’s Chaos Comes Home to RoostRemove payment information from your computer. Consumer psychologists refer to creating friction — meaning barriers to doing something — as an effective way to stop an impulse buy. “If you’re sitting on your couch, you’ve had two glasses of wine, you see rain boots on sale, and your credit card information auto-populates, you’re probably going to buy it, because you really only needed to hit two buttons to make that purchase,” Ms. Bucher said. “If you had to get off your couch, pull out your credit card and type in the numbers, that’s friction. You have to commit a little more to make the purchase.” In contrast, digital payments like Apple Pay offer convenience when you’re at the cash register, but they take cash and physical cards out of the equation. If you’re nervous that holding your phone next to the scanner to complete a transaction could turn you into a spendthrift, don’t partake.[Like what you’re reading? Sign up here for the Smarter Living newsletter to get stories like this (and much more!) delivered straight to your inbox every Monday morning.]Set spending limitsYou can’t buy $300 headphones if your wallet contains only $100. But you can if you’ve got a card with a credit limit over $300 (even if $300 exceeds your budget).Let robots count your money. Budgeting apps like You Need a Budget ($84 a year) or Mint (no fee) track balances across all your accounts, giving you a clearer picture of your actual balance even if you have multiple cards and accounts from different banks. Some banks, such as Bank of America, also let you sync other accounts, even if those accounts are with competing banks. Check your balance in the app to ensure your next purchase fits your budget.Try “action planning.” Determine your budget, then implement measures that prevent you from exceeding it. The Uber Credit Card has a feature that lets you create a self-imposed spending limit for certain categories or merchants, which could remove the temptation to stop at Starbucks on the way to work. Other companies, like Discover, allow you to set up alerts if your credit card balance exceeds a certain amount or you near your credit limit.

Section 108 of the Internal Revenue Code Relief of Indebtedness Income and WorkoutsOne of the most overlooked areas of the law when doing a workout is Section 108 of the Internal Revenue Code (“IRC”). Section 108 is a trap for the unwary and unless the attorney or lawyer is aware of this tax code section, it can upend a workout or result in a taxpayer having to recognize, report, or pickup unknowingly a significant amount of taxable income. This could ruin the attorney-client relationship or worse yet a malpractice lawsuit by the client against the attorney.Let's begin this post with an explanation of Section 108 of the IRC.IRC § 108 provides that if an individual or an entity that owes money (the “Debtor”) is relieved of indebtedness, then that indebtedness is deemed to be ordinary income to the Debtor. The Debtor  must report that income on their tax return and the Creditor is required to file a 1099 with the IRS. There are two exceptions to this rule: first, if the Debtor files for bankruptcy protection, then the relief of indebtedness income is not picked up; and second, on a balance sheet basis, if the individual’s liabilities exceed their assets and they are insolvent, then they do not have to pick up the income.The goal of a workout from the perspective of the Debtor (the person who owes money) is to pay less than the balance due to the Creditor (person or company owed money).An example of the application of IRC § 108 will help to explain the above. Let’s assume that an individual owes a financial institution $1,000,000.  The individual is unable to pay the $1,000,000, so the parties enter into a workout (an out of court settlement) in which the individual repays the financial institution $600,000. According to IRC § 108, the taxpayer must pick up the $400,000 differential between what he or she owed and paid as ordinary income.Unless the client is made aware of this fact in advance of or during a workout, the client may walk away from the workout. If not told at all, when the client receives the 1099 from the Creditor or worse gets audited by the IRS, they will point a finger at the attorney or sue the attorney for malpractice.Many clients and some lawyers assume that the $400,000 of income is capital gains, but it is ordinary income.Another question raised by clients is how does the IRS find out about this relief of indebtedness income? The answer is that the Creditor  is required to file a Form 1099-C with the IRS reporting the relief of indebtedness income for more than $600 of forgiven debt.Yet another question asked by clients is whether the Creditor will file the 1099 with the IRS? The answer is that the Creditor is legally required to do so and most institutional investors will do the 1099 filing.Section 108 of the IRC comes up in almost every workout, but is currently most prevalent in taxi medallion and restaurant workouts. Both of these industries are struggling and are areas we are doing a lot of workouts.Clients should review all workouts with their CPA’s or accountants.At Shenwick & Associates, we are not tax lawyers, but we are familiar with the IRC and James Shenwick has an LLM in Taxation from the NYU School of Law.Clients who are doing or contemplate doing a workout, are encouraged to consult with James Shenwick to discuss their strategy. Jim Shenwick 212 541 6224  jshenwick@gmail.com

Can I Keep My House if I File for Bankruptcy? One of the biggest things that holds people back from filing bankruptcy and getting the debt relief they need is the fear that they will lose their house. They want to get rid of their debt, but they don’t want to lose the things they have built so far. Plus, no one wants to lose their family home, whether they’ve only been in it a few years or they’ve lived there for decades. Fortunately, filing for bankruptcy in Mesa doesn’t have to mean losing your house and ending up on the streets. However, there are more things to consider, so the answer to whether you will be able to keep your house or not if you file for bankruptcy is not a simple “yes” or “no.” You’ll need to talk to an experienced bankruptcy lawyer to review your finances and to know exactly how bankruptcy will impact you. But here are some general guidelines to give you a basic understanding of how bankruptcy works: Chapter 7 Bankruptcy Chapter 7 bankruptcy is known as a “liquidation.” It is designed to discharge your unsecured debts, such as credit cards, personal loans, and medical bills. It offers maximum debt relief. However, in order to qualify to file for Chapter 7 bankruptcy in Mesa, you have to meet the “means test,” which looks at your income compared to the average in your area, as well as your other sources of financial support and your assets. Your home is a huge asset, and as such, it can be subject to liquidation (or sale) to pay off your creditors. That might make you think that you would definitely lose your home under Chapter 7 bankruptcy. However, you are allowed to exempt your home from such liquidation if the equity does not surpass a certain threshold. The amount varies depending on your marital status and other factors, but it is a generous limit. Most people will not exceed the limit unless they have been paying on their house for a very long time. Therefore, you will likely be able to keep your home if you file for Chapter 7 bankruptcy. Chapter 13 Bankruptcy Chapter 13 bankruptcy around Mesa is what is known as a debt repayment plan, which is similar to a debt consolidation. The bankruptcy trustee looks at your finances and your debts and determines what you can pay over a three- to five-year repayment period. At the end of that time, you may be able to discharge some debt. If your house is in foreclosure, or if you have become very late on your payments, filing for Chapter 7 bankruptcy won’t help you, but filing for Chapter 13 might. Those late payments and fees can be included in your repayment plan, helping you to get current on your home. You may be able to put a stop to current foreclosure proceedings, or you may be able to avoid the risk of foreclosure. The solution will depend on what you owe, your income, and other circumstances. It’s important that you go through your finances with an experienced bankruptcy attorney to fully understand the impact that bankruptcy can have. Your bankruptcy lawyer will explain not only how each chapter of bankruptcy can give you debt relief, but also how it would impact each of your asses, including your home. Your bankruptcy attorney can work with you to devise the best plan to get maximum debt relief while also saving your home and other important assets. If you are thinking of filing Chapter 7 bankruptcy or Chapter 13 bankruptcy, My AZ Lawyers can help. We’ll start by helping you understand the ins and outs of bankruptcy and how it can help your situation. Then we’ll analyze your financial circumstances to help you understand what you qualify for and how bankruptcy might impact your assets or other things. We’ll make recommendations that will maximize the debt relief you can receive with the least negative impact. Our attorneys are committed to helping you get your finances back under control. Call us today to schedule a consultation with an experienced bankruptcy attorney. We represent clients in the Mesa, Glendale, Tucson, and Phoenix areas, and we have a bankruptcy law office near you. My AZ Lawyers Mesa Location: 1731 West Baseline Rd., Suite #100 Mesa, AZ 85202 Office: (480) 448-9800 Glendale Location: 20325 N 51st Avenue Suite #134, Building 5 Glendale, AZ 85308 Office: (602) 509-0955 Tucson Location: 2 East Congress St., Suite #900-6A Tucson, AZ 85701 Office: (520) 441-1450 Avondale Location: 12725 W. Indian School Rd., Ste E, #101 Avondale, AZ 8539 The post Can I Keep My House if I File for Bankruptcy? appeared first on My AZ Lawyers.

Your house is usually one of the most important places for you. You may have fought long and hard to get it, and you may not want to give up the everlasting memories you forged there. However, all of these great things may be in jeopardy when your creditors try to take it away from […] The post Can I Keep My House if I File for Bankruptcy in Pennsylvania? appeared first on .

By: Christy BieberFrom: The Motley Foolhttps://www.fool.com/student-loans/paid-off-student-loans-early/

Two weeks after filing bankruptcy, Rod got his security clearance. Rod contacted me from a military base in the Midwest. The military wanted to give him a new assignment, in the DC area, with more responsibility. His wife and children had already rented a place and moved, while he was awaiting orders. At the last […] The post Bankruptcy Solves Rod’s Security Clearance Problem by Robert Weed appeared first on Robert Weed - AE.

Driving NYC taxis out of business: How Uber and Lyft doomed the once-solid yellow cab industryBy: Clayton GuseFrom: nydailynews.comhttps://www.nydailynews.com/new-york/ny-medallion-foreclosures-taxi-bailout-plan-uber-lyft-20200130-s2mjkhjubzgptdxasoxddwdote-story.html 

Right After Bankruptcy, Carla Signed on a Car Loan and She’s Probably Gonna Lose Her House I tell people please please please, do not get a car loan until at least two years after your Chapter 7 bankruptcy.   Two years after bankruptcy, I’m seeing people get car loans in the 6%-8% range. Three years […] The post Right After Bankruptcy, Carla Signed on a Car Loan by Robert Weed appeared first on Robert Weed - AE.

From: wamc.orgBy: Chris Arnoldhttps://www.wamc.org/post/myth-busted-turns-out-bankruptcy-can-wipe-out-student-loan-debt-after-all Originally published on January 22, 2020 9:31 am A few years ago, Lauren had a big problem. The Queens, N.Y., resident had graduated from college with an art degree as the Great Recession had hit. She had private student loans with high interest rates. For work, all she could find were retail jobs. And by 2016, her loans had ballooned to about $200,000. " 'I can't afford to actually pay my bills and eat and pay my rent,' " she remembers thinking. "I was financially handicapped. I mean, my student loan payments were higher than my rent was." So Lauren started to look into bankruptcy. She doesn't want her last name used because she thinks all this might hurt her job prospects. Over the years, a myth has taken hold that you can't get student debt reduced or wiped out through bankruptcy. But many bankruptcy judges and legal scholars say that's wrong. And bankruptcy can be a way to get help. Bankruptcy is not fun. Your credit gets destroyed for years, and you have to be in pretty dire financial straits for it to make sense. But if you reach that point, you can get your debts reduced or erased through bankruptcy so you can get back on your feet. But the lawyers Lauren called said that with student loans it's different because there are special rules for student debt. "They had told me things like you have to have a disability where you're not able to even work," she says. "And I was like, 'Well, but that doesn't make any sense.' " Jason Iuliano, a Villanova University law professor, says that over the past 30 years, Congress has made it harder to discharge student debt. You need to meet what's called an "undue hardship" standard. That also means more work for your lawyer. But Iuliano says that this has created the misconception that it's nearly impossible to get help for student debt through bankruptcy. That's not true. Iuliano did some research and says a quarter-million student loan debtors file for bankruptcy each year. They do that because they have credit card debt or other debts and they can get those reduced or erased. But when it comes to trying to get their student debt forgiven, "more than 99% of the student loan debtors in bankruptcy just give up without even trying," Iuliano says. "It struck me as a really surprising statistic when I first uncovered it." For those who do try, though, Iuliano's research finds that about half the time the person gets some or all of the student loan debt erased. One study he did found that they got help through bankruptcy about 40% of the time. And he says more recent data from this past year show that figure rising to more than 50% of the time. "So I think that's really important for bankruptcy attorneys to see that there are judges out there who are willing to grant undue-hardship discharges and that people are much more likely to obtain relief in bankruptcy for their student loan debt," Iuliano says. Just this month, a federal judge in New York discharged more than $220,000 in student loans for a borrower. In her ruling, Chief Bankruptcy Judge Cecelia Morris criticized the fact that even many lawyers "believe it impossible to discharge student loans." She added, "This Court will not participate in perpetuating these myths." Robert Lawless, a law professor at the University of Illinois, says, "I think we're reaching a tipping point with what the bankruptcy courts are doing." He says he hopes more people are able to get help through bankruptcy. But he says the rules are still too restrictive. Lawless researched the issue with a group of attorneys and former judges for the American Bankruptcy Institute, a professional organization. They're recommending that Congress rewrite the rules on student loans in bankruptcy. Under the proposal, Lawless says, "after seven years from when the loans became due, they would be treated pretty much like any other debt in a bankruptcy case." There is at least some support for that in Congress. Part of the obstacle now is that the current rules often require paying your lawyer more money to attempt to get student debt forgiven. Lawless says it costs on average about $1,200 to file a typical Chapter 7 bankruptcy case. Bankruptcy attorneys say it can cost thousands of dollars more to pay your lawyer to jump through the extra hoops related to student loan debt, unless you find one who will do that for a reduced rate. Iuliano says the outcome and how much student debt is forgiven, if any, can have a lot to do with what particular judge you end up with and what the rules are in that bankruptcy district. Some of that is because of the language of the original statute stating that student loan borrowers have to meet a threshold of "undue hardship," he says. Iuliano says Congress has never defined what that means, so a lot of discretion is left up to the courts and the particular judge you get. Harrison Wadsworth, a consultant for the Consumer Bankers Association, notes that most student loans are issued by the government. But for loans from private lenders, he says relaxing the bankruptcy rules to make it easier to reduce or eliminate student debt could push up interest rates. "Lenders would have to be careful about making loans and probably have to charge more for them," Wadsworth says. Lauren eventually found a lawyer who took her case and charged her about $3,000, doing some of the work pro bono. And going through bankruptcy, she got her debt reduced from about $200,000 to around $100,000, with the bulk of that reduced to a 1% interest rate. "It's still a lot of money," she says. But she says, "I was extremely relieved." Lauren says it is significantly less than she owed before. And she says the payments are manageable. "And because they lowered the interest, I'm actually paying off the loan," she says. So she says she can recover financially, which Lawless says is what bankruptcy is there for.Copyright 2020 NPR. To see more, visit https://www.npr.org.DAVID GREENE, HOST: Many Americans who get overwhelmed by student loan debt are told bankruptcy is not an option for them because you can't get student debt reduced or wiped out through bankruptcy. Well, now more judges and legal scholars are saying that's a myth, and bankruptcy can be a way to help. Some advocates want Congress to act to change the laws so student debt is treated the same as any other kind of debt. Here's more from NPR's Chris Arnold. CHRIS ARNOLD, BYLINE: A few years ago, Lauren (ph), who lives in Queens, N.Y., had a big problem. She graduated college with an art degree just as the Great Recession hit. She had private student loans with very high interest rates. For work, all she could find were retail jobs. And by 2016, her loans had ballooned to about $200,000. She remembers thinking... LAUREN: I can't afford to actually pay my bills and eat and pay my rent. Basically, I was financially handicapped. I mean, my student loan payments were higher than my rent was. ARNOLD: So Lauren started to look into bankruptcy. She doesn't want to use her last name because she thinks all this might hurt her job prospects. Now, bankruptcy is not fun. Your credit gets destroyed for years, and you have to be in pretty dire financial straits for it to even make sense, but you can get your debts reduced or erased so that you can survive and get back on your feet. But the lawyers that Lauren called said, look; basically, with student loans, it's different. LAUREN: They had told me things like you have to have a disability where you're not able to even work. And I was like, well, but that doesn't make any sense. ARNOLD: Many bankruptcy judges and legal scholars agree. Jason Iuliano is a law professor at Villanova University. He says over the past 30 years, Congress has made it harder to discharge student debt. You need to meet what's called an undue hardship standard. That also means more work for your lawyer. But he says that's created this misperception that it's nearly impossible to get help for student loan debt through bankruptcy. Iuliano did some research, and... JASON IULIANO: What struck me as a really surprising statistic when I first uncovered it - there is a quarter of a million student loan debtors who file bankruptcy each year. ARNOLD: They do that because they have credit card debt or other debts, and they can get those reduced or erased. But trying to get their student debt forgiven... IULIANO: More than 99% of the student loan debtors in bankruptcy just give up without even trying. ARNOLD: But he's also found that when people do try and they pay a lawyer to jump through the extra hoops, about half the time, the person gets some or all of their student loan debt erased. IULIANO: So I think that's really important for bankruptcy attorneys to see that there are judges out there who are willing to grant undue hardship discharges and that people are much more likely to obtain relief in bankruptcy for their student loan debt. ARNOLD: Just this month, a judge in New York discharged $220,000 in student loan debt for a borrower. And in her ruling, she criticized the fact that even many lawyers, quote, "believe it impossible to discharge student loans." She added, quote, "this court will not participate in perpetuating these myths." ROBERT LAWLESS: Well, I think we're reaching a tipping point with what the bankruptcy courts are doing. ARNOLD: That's Robert Lawless, a law professor at the University of Illinois. He hopes that more people are able to get help through bankruptcy, but he says the rules are still too restrictive. He took part in research on the issue for the professional organization the American Bankruptcy Institute, which recommends... LAWLESS: That Congress rewrite the rules on student loans and bankruptcy and make it so after seven years from when the loans became due, they would be treated pretty much like any other debt in a bankruptcy case. ARNOLD: There is at least some support for that in Congress. Harrison Wadsworth is a consultant for the Consumer Bankers Association. He says most student loans are issued by the government these days, but for loans from private lenders, loosening the rules could push up interest rates. HARRISON WADSWORTH: Lenders have to be more careful about making loans and probably have to charge more for them. ARNOLD: In Lauren's case, she eventually found a lawyer and, going through bankruptcy, she got her debt reduced from around $200,000 down to around $100,000, and the bulk of that at a 1% interest rate. LAUREN: It's still a lot of money (laughter). ARNOLD: Yeah. LAUREN: Yeah. So for me, like, I was extremely relieved. It is significantly less, and I'm actually able to, like, make the payment. And because they lowered the interest, I'm actually paying off the loan. ARNOLD: So Lauren says she can recover financially, which, Lawless says, is what bankruptcy is there for. Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.

How Chapter 7 Real Estate Sales Benefit Insiders Randa filed Chapter 13 bankruptcy in March 2019. She was hoping to be able to save the family home, by catching up the mortgage over five years. Her husband was recovering from a long illness and was able to work full time again, making the catch up […] The post How Chapter 7 Real Estate Sales Benefit Insiders by Robert Weed appeared first on Robert Weed - AE.