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Let me show you how to start a great annual tradition that can save you money and your reputation, and it’s free!

Even after you have filed your bankruptcy case and started to build a solid financial future, erroneous and outdated information can creep into your credit report, driving down your credit score without any justification.

Now is a good time to check your credit report at www.annualcreditreport.com. This is the free credit report source. I think you should check your credit report every single year. Tax Time is a great memory trigger to take a few minutes to make use of your free annual credit report review. It is easy and smart to check this all important rating to protect your reputation against errors and inaccuracies.

Couple listing their creditors for their bankruptcy filing

How to Dispute Errors on Your Credit Report

If you find mistakes on your credit report, you should dispute the errors by writing each of the credit bureaus. The Federal Trade Commission provides a helpful article on writing credit report dispute notices at http://www.consumer.ftc.gov/articles/0151-disputing-errors-credit-reports. The FTC provides a sample form letter that you can change and use at http://www.consumer.ftc.gov/articles/0384-sample-letter-disputing-errors-your-credit-report.

Errors on Your Credit Report Can Do More Harm Than You Think

Your credit score can raise or lower the interest rates you pay on vehicle loans, mortgages and consumer accounts, and can affect the rates you pay for automobile and other insurance policies. Some employers “cull” job applicants based upon their credit scores.
The good news is that following a bankruptcy filing, your credit score can often increase in comparison to the level before you filed.

How to Spot Harmful Credit Report Errors

There are many credit score errors that you should look for on your annual credit report, including these:
1) Credit lines/cards that your report shows as open that you know to have been closed, paid off and canceled long ago.
2) Credit card reports that show high balances when the cards actually have much lower balances.
3) Debts that were discharged in bankruptcy that your credit report lists as open and unsatisfied obligations.
4) Debts that were discharged in bankruptcy that have been reposted on your credit report by a collection agency that is unaware of your bankruptcy filing.
5) Inaccurate information about delinquencies or late payments.

If You Live In the State Of Washington, We Can Help

Our law firm offers premier bankruptcy and debt representation in the Puget Sound and southwestern Washington areas and beyond. We have helped clients from the San Juan Islands and Bellingham to Vancouver, and eastward to Aberdeen and North Bend.
If you or someone you know is struggling with their debt load, we are here to help.

Spring Cleaning!

It happens. You had an appointment with us or scheduled an appointment that you could not make. We want to help you through financial difficulties that won’t go away. Now is the time to contact us to move forward on a bankruptcy case.

To serve you better, we now offer expanded spring hours during our busy tax season to help you get your case filed quickly, and to get those creditors off of your back right now!

Your Debts Won’t Go Away By Themselves

After filing for bankruptcy, many people can get a loan to replace their aging automobile not long after the case concludes successfully. You may soon be able to apply for a credit card to handle unexpected expenses.
But doing nothing will bring the wrong kinds of certainty. By doing nothing,

  • Your credit score will stay down indefinitely,
  • You will not get a car loan except at ridiculously high interest rates
  • You will not get a modest limit credit card, and worst of all,
  • Your creditors will continue to sue, harass and garnish you.

Those are the realities of doing nothing. Nothing will change for the better unless and until you take control of your future, and get your bankruptcy case filed.

Life After Bankruptcy Is Always Better Than Living in Fear and Dread of Debt

Call us at (253) 383-1001 during our expanded spring hours:
Monday 8 AM—7 PM
Tuesday 8 AM—7 PM
Wednesday 8 AM—5:30 PM
Thursday 8 AM—7 PM
Friday 8 AM—5 PM
Saturday 9 AM—3 PM
You can reach us by email at staff1@washingtonbankruptcy.com with any questions you might have or to arrange your free, no obligation 30 minute consultation with the attorney. We care about your future, and we are here to help.

If All This Seems Confusing or Too Complicated,
Please Call Us for Help

Tax problems or long neglected debts can be complex and overwhelming. I may be able to help you understand your situation; I can certainly help you by discussing certain trade-offs and options concerning your situation with your debts, the IRS, and bankruptcy. Contact my office for a free, no obligation consultation right away!

The Law Offices of James H MaGee Washington Bankruptcy Attorney
1108 N 6th Street TacomaWashington98403-1615 USA 
 • (253) 383-1001

The Most Read Articles on My Web Site In 2014

We thought it would be interesting and useful for our valued readers to have a handy resource that lists the most read articles on my web site this year. They cover a breadth of topics, and as always, represent the kind of valuable free advice we strive to provide to you through email, our site, and other digital media.
Thanksgiving Blessing

My Staff and I Wish You and Yours All the Joys and Blessings of the Holiday Season, and for the New Year to Come

Each post title listed below contains the link to each article so that you can easily click them. The direct link follows the title of each post so that you can copy and paste them to share with friends and family individually if you like, or simply send a link to this page so that they can see the breadth of infomation we cover throughout the year. The articles are listed in descending order of popularity.


What Happens if My Chapter 13 Bankruptcy Plan is Dismissed Because I Can’t Afford the Payments?

http://washingtonbankruptcy.com/what-happens-if-my-chapter-13-bankruptcy-plan-is-dismissed-because-i-cant-afford-the-payments/

You Can Add Points to Your Credit Score by beating the “Charge off Date” Scam

http://washingtonbankruptcy.com/you-can-add-points-to-your-credit-score-by-beating-the-charge-off-date-scam/

I Didn’t List All Of My Creditors In My Chapter 7 Bankruptcy Filing. What Will Happen to My Case?

http://washingtonbankruptcy.com/i-didnt-list-all-of-my-creditors-in-my-chapter-7-bankruptcy-filing-what-will-happen-to-my-case/

Rebuild Your Credit Score after Bankruptcy

http://washingtonbankruptcy.com/rebuild-your-credit-score-after-bankruptcy/

What Property Is Exempt, And What Property Can Be Taken, In Bankruptcy?

http://washingtonbankruptcy.com/property-exempt-property-can-taken-bankruptcy/

Do You Know These Eight Used Car Buying Scams?

http://washingtonbankruptcy.com/do-you-know-these-eight-used-car-buying-scams/

How to Avoid the Loss of Inherited 401k and IRA Funds to Creditors in Your Bankruptcy Case

http://washingtonbankruptcy.com/avoid-the-loss-of-inherited-401k-and-ira-funds-to-creditors-in-your-bankruptcy-case/

How Do Bankruptcy Exemptions Function To Protect Some Of My Property From Sale By A Bankruptcy Trustee?

http://washingtonbankruptcy.com/how-do-bankruptcy-exemptions-function-to-protect-some-of-my-property-from-sale/

Do I Have to Include Credit Cards With a Zero Balance on My Bankruptcy Petition?

http://washingtonbankruptcy.com/do-i-have-to-include-credit-cards-with-a-zero-balance-on-my-bankruptcy-petition/

HAMP Modifications Part 1 Of 7: NPV, The “Secret Formula” That Determines Your Eligibility

http://washingtonbankruptcy.com/hamp-modifications-npv-the-secret-formula-that-determines-your-eligibility/

I Didn’t List All Of My Creditors In My Chapter 7 Bankruptcy Filing. What Will Happen to My Case?

http://washingtonbankruptcy.com/i-didnt-list-all-of-my-creditors-in-my-chapter-7-bankruptcy-filing-what-will-happen-to-my-case/

How to Stop Debt Collectors from Ruining Your Credit

http://washingtonbankruptcy.com/how-to-stop-debt-collectors-from-ruining-your-credit/

A Family’s Bankruptcy Story
http://life-after-bankruptcy.info/A-Family-Story.html

Is Now the Time to Challenge Defaulted Federal Student Loan Debt?

http://washingtonbankruptcy.com/now-time-challenge-defaulted-federal-student-loan-debt/

How to Vet Charities for “Ineffectiveness” and “Phishers” This Holiday Season

After nearly 20 years in the bankruptcy business, I am often pleasantly surprised at how truly generous my clients are. Rarely do I have a bankruptcy client who does not have some history of charitable giving. They may strain to meet family obligations, overcome job layoffs, and deal with unexpected expenses like car problems, yet many continue to give. Every time I see this, it renews my faith in the essential goodness of people. It is important to me that the hard-earned money people give so generously be correctly used, and not be stolen by charlatans cruelly masquerading as charities.

Up to half of charitable giving in the U.S. occurs in November and December of any given year. Scammers know this and intensify their efforts to trick you out of your well-intentioned donation. If you are considering a donation to an unfamiliar charity, consider checking that charity’s grade on a charity vetting service like charitynavigator.org. Charitynavigator.org is a well-respected watchdog that identifies some, but not all, ”ineffective” charities and can occasionally identify a “phishing” criminal organization posing as a charitable organization.

Where Money is Freely Given, There You Will Also Find Those Who Prey on Your Good Intentions

We can classify charities into three groups. The “good” charities are those in which at least 75% of the money collected is actually used for the underlying charitable purpose or cause.

The “ugly” classification are not always all bad, but can be termed “ineffective” charities. “Ineffective” charities are those which consume a major proportion of donations in administrative fees, marketing costs, and salaries, leaving little money to distribute to the underlying charitable cause. Consuming more than 25% of donations in administrative, marketing, and salary expenses is considered “ugly”.

Charitable Giving Has a Familiar Sound During the Holidays
The “bad” charity is not a charity at all. It is a criminal organization operated by a “phisher” who is seeking to siphon off some of your generosity to no benefit to those who you tried to help. What’s worse, the “bad” charity may target your personal information for identify theft and criminal purposes.

When considering a donation to a new, unfamiliar charity, you should assure yourself that your money is not at risk by taking some time to research the charity. That way, you can avoid “bad” phishing fraudsters who would steal from you, and also bypass “ugly”, ineffective charities that waste your money. In order to help you protect your best intentions during this holiday season from being dashed to pieces, I’ve listed some of the favorite charitable areas that holiday season scammers target below. At the end of this article, I’ve provided a list of five investigatory tools, including charitynavigator.org, that will help you vet a new charity. Special thanks to the excellent website scambusters.org for significant contributions to this article.

Police and Firefighter Charities: Approach With Caution

Not all police and firefighter charities misappropriate donations. Sadly, some do, sullying the good names of brave first responders who selflessly answer calls for help every day. Charitynavigator.org identifies a number of such police and firefighter charities as “ineffective” charities that pay large salaries to operators and spend lavishly on marketing operations, leaving little to go towards the intended cause.

If you aren’t completely sure that the first responder charity that interests you is in the “good” classification, then it may be worth asking for written “effectiveness” materials before donating. Also consider that if a particular police or fire department is identified as the beneficiary, then contact that organization’s outreach coordinator or public relations office to make sure that the charity in question is one that the organization is familiar with.

If You Plan to Donate a Car, Carefully Research the Charity

Charities that offer a “donate a car” option often uses a middleman who collects, reconditions, and then sells the donated cars, usually at an auction. The middleman takes first cut at the proceeds in order to recoup the costs to get the car ready to sell, and turns over the net sale proceeds to the charity. The problem is that these middlemen may not be honest. The middleman may intentionally disable a car to claim that it needed their towing services and repairs, fees and overhead that are deducted from the sale proceeds, leaving less money for the charitable cause.

How can you donate a car and ensure your donation is not abused? Look for a charity that will actually use the car instead of just selling it. You might donate it to a vocational school program as a “laboratory car” for kids learning the automotive trade. Some organizations like the Goodwill or Salvation Army might actually use the car to deliver items or meals. Another alternative is to find a suitable family in need that really could use the car in their daily lives. To avoid a messy transfer process for yourself and the worthy family, you may be able to arrange to donate the car through a charity. The charity may be able act as a legal conduit to ensure that you receive a fair tax deduction for the value of the car if you itemize deductions.

Also consider just selling the car outright, then donating the proceeds to a well vetted charitable cause. If you are too busy to market the car, some car lots will accept cars for consignment sale, a more transparent method than donating the car to a charity since the consignment fee for the car lot sale is known up front.

Unsolicited Charity E-Mails That Tug at Your Heartstrings May Pull Everything Out of Your Wallet

Most “real” charities do not use unsolicited e-mail campaigns to generate new donations. If you receive unsolicited email from the “American Red Cross” that asks you to click on a link to make a donation, be wary. The website you click through to could be an official looking but phony lookalike website that asks for credit card data, social security number, and other personal information. Dead giveaways include misspellings in the text of the email, links that seem too long or don’t contain the name of the charity before the “top level domain” portion—the portion before the “.org”—or web addresses that don’t end in familiar “.org” domains, but instead end in “.ru” or other foreign domains.

Well known legitimate organizations like the American Red Cross are so well known that criminals have created clone sites that exist only to capture your data and steal as much money as possible, and your identity, too. If you do receive an unsolicited “American Red Cross” or other charitable sounding email asking for donations, and you are moved to donate to the cause, there is a way to donate while avoiding the phony phisher: visit the official “American Red Cross” website at https://www.redcross.org, and donate there. The American Red Cross has a long history of providing aid domestically and internationally. If you know the link you’re clicking on is the correct one for the charitable organization you mean to visit, then it is OK to make a donation there. Protect yourself from being hoodwinked by spam email by clicking through to a spoofed website pretending to be the real charity.

Unsolicited Charity Phone Calls May be the Wrong Number for You

Some legitimate charities do use cold-call telemarketing phone banks to raise money. Charitable organizations—and politicians, you may have noticed—are not restricted by the “do not call registry” as are for-profit businesses. However effective telemarketing may be, some of the telemarketing businesses employed by otherwise legitimate charities extract large percentages of the donations received, charge high fees to charities, or both.

Should receive a charitable telemarketing phone call that interests you, you can do one of two things before handing over your credit card number. First, you could request detailed written information be sent to you to confirm the percentage of your donation that goes to the charity versus the portion that will go to the telemarketing firm. Second, and even better, you could politely end the call, and then visit the underlying charity’s web site. Find the donation link, or the physical address where the charity can receive a good old fashioned check. You’ll cut out the middleman and add in more effective dollars to the cause proper through your donation.

What to Do With Your Donation Dollars in This World of Good, Bad, and Ugly Charities?

While some if not most smaller charities are perfectly legitimate and are not “bad” phishers or “ugly” ineffective charities, there is legitimate concern that the good little guys are hard to vet successfully. The sad fact is that scammers and “phishers” may also lurk among obscure, smaller charities where charity names may sound legit, but the truth is harder to prove. It may be safer to stick with larger, more famous charities that you know, and those that you can vet successfully, versus one that may be legit, but hasn’t been around long enough to earn the trust of the charity rating agencies.

Even some “big” charities can fall from grace in the eyes of the charity vetting organizations. It always pays to check one of the watchdog vetting services. For example, charitynavigator.org dropped the Susan G. Komen for the Cure cancer charity from four stars down to two stars in 2013 for a number of reasons, including a frowned upon practice called “Pinkwashing”. Pinkwashing is a practice in which the charity’s endorsement is given to corporate sponsors in exchange for contributions. In some cases, the contributing corporations sold products that may even have had a carcinogenic link. In addition, some staff salaries may be inordinately large. As recently as 2010, the Harris Interactive Equitrend brand equity poll ranked Susan G. Komen as one of the most trusted charitable brands in America. Susan G. Komen may have a battle ahead to regain its place at the top of the charities ranked by the charity vetting organizations.

If you don’t have the time and investigatory interest to carefully research and evaluate charities, then consider these options:

  • Act locally. Food banks, local homeless shelters, animal shelters, and family crisis centers always need funds.
  • Consider a multi-charity clearing house like the United Way, which investigates and vets local and national causes, and then allocate funds from shared donation sources.
  • Consider well-known organizations in which you have strong personal belief and trust, including World Vision, Médecins Sans Frontières (known as Doctors Without Borders in the U.S.), Amnesty International, the Muscular Dystrophy Association, and the Red Cross.
  • Finally, always consider your faith group if you are involved in religious practice, or the school or college you attended. Your faith group many have an outreach “Deacon’s Fund”, “Bishop’s Storehouse”, or other fund that provides aid to families in need in the congregation or community. Many colleges have students with needs programs, or opportunities to fund new acquisitions or other worthy activities.

Best of luck navigating safely to the many good charities in our world, while avoiding the bad and ugly charities. Here are a few sites to visit when researching potential charities:

How to stop debt collectors from ruining your credit

Think your credit history is good enough that you can thumb your nose at a $150 disputed medical collection without much consequence? Think again.

Even if debt collectors have stopped calling and mailing demand letters to you over a $150 debt that you owe, a bill collector might have the last laugh by posting that small debt on your Experian, TransUnion, and Equifax credit reports.

Young woman thinking about her credit problems

Even a small debt in collection can hurt your credit score.

Of the 35.1% of American consumers with collection bureau delinquencies, a full 10% of these debtors owe less than $175. Those old cell phone contracts, forgotten medical lab bills, and cancelled gym membership charges can cost you thousands in increased interest expenses. What’s more, you may also find that you pay much more in car insurance premiums and borrowing costs as a result.

Even a small amount of debt placed for collection can cut your credit rating by 20–100 points. As a matter of fact, those with better credit scores will experience larger reductions in their credit scores, according to an article on the credit.com blog. The author’s research indicates that the report of your first late payment on your credit report might drop you from excellent credit (740 points) to mediocre (640 points). Collections agencies sometimes single out debtors with better credit ratings to focus their collection efforts on because those debtors are more likely to pay overdue bills faster than debtors with poor credit, according to the credit.com blog.

Get a Free Annual Credit Checkup

It’s a good practice to check your credit reports for free once a year at Annualcreditreport.com to determine whether your credit report has any forgotten debts listed on one or more of the three credit bureaus.

What should you do when you find a small negative item on a credit bureau history?

Make a choice. Pay it or dispute it.

First, take a look at your financial picture. Are you carrying high credit card balances on revolving accounts? Are other bills overwhelming you?

If you feel as though you cannot escape financial pressures that seem overwhelming, then a bankruptcy filing could be the right solution for you and your family to help you get a fresh start on a brighter financial future.

  • If you are a higher earner, filing a Chapter 13 case might allow you to retire debts with 36 easy payments.
  • If you are a lower earner, or if you have a large household size, then you might be able to wipe away all the debts at once by filing Chapter 7 bankruptcy.

With the amendments to the bankruptcy code that took effect in 2005, many high earners can breeze through a Chapter 7 case even though the stated purpose of those amendments was to make qualification to file Chapter 7 bankruptcy “tougher”.

Act Now to Make Your Financial Future a Bright One

Contact us to make an appointment at one of our convenient locations. We can help; our customer reviews show how hard we have worked for clients in many difficult circumstances. It’s never too late to take charge of your life and to make the right decision for you and your family.

Learn the Secret to Saving Your Home Without Sacrificing Your Retirement Plan

Few Americans will enjoy a traditional old-school defined benefit pension during their retirement years. A defined benefit pension plan is a type of pension plan in which an employer or sponsor promises a specified monthly benefit on retirement that is predetermined by a formula based on the employee’s earnings history, tenure of service, and age, rather than depending directly on individual investment returns. Traditionally, many governmental and public entities, as well as a large number of corporations, provided defined benefit plans. Today, most employers have shifted the responsibility of retirement savings to the employee. IRAs, Roth IRAs, profit sharing plans, and 401(k) plans, among other sorts of less common accounts considered “defined contribution” accounts, make up retirement planning today. Continue Reading →

The Most Important Plan You Can Make To Protect Your Loved Ones Today

Protect your loved ones and ensure that your wishes are followed. Make sure that your estate plan contains your current will, establishes your Power of Attorney, and contains your current Health Care Directive today.

Why is this so important? An estate plan? A will? The recession was painful for many people. The recovery is still lukewarm. Millions filed bankruptcy or at least thought about it. I understand the situation all too well. While eking out a living, hoping to achieve financial recovery, who has time to worry about a will?

Aren’t Wills Just For Wealthy People?

Modern wills are important for people in all walks of life, especially with advances in modern medicine. Without proper estate planning, you could be kept alive in a state you don’t want to endure; kept in that state because you are unable to speak up and say, “I’ve had enough! Let me go!” Your assets could be distributed according to the decisions of total strangers, or be subject to taxation that leaves less than you hoped for your loved ones. Your burial wishes might not be known. The list of unintended consequences goes on.

While these issues are not the most pleasant to consider, they are very important, especially as we get older, if we have complicated estates to distribute, or if we have explicit wishes for property distribution to family members, charities, and other recipients. You can address these concerns with my expert help by either updating or creating your will. The average tax refund is more than enough to settle these questions and gain peace of mind.
Continue Reading →

Can “Thinking Young” Help You Get Ahead Financially in 2014?

Stick with me here. I want to share some ideas and a great website with you. I am going to give you three great reasons why you should start “thinking young”—or better said, “think like you were young’, during the Holidays, even if you are not under 30.
Couple Working on Finances

Couple Working on Finances

Reason #1: Broke as a 20 year old? Then strategize like a 20 year old—think young.

Many of us were battered and bruised financially by the Great Recession of the past decade. Some of us went back to school with the assistance of student loans when employers cut back or vanished. Others drained 401ks and relied upon credit cards just to get by. Many homeowners became renters once again as they lost homes to foreclosure.

Now the Holiday season begins with messages across virtually all media encouraging conspicuous consumption while some of us try to cope with reduced hours at work, smaller or non-existent year-end bonuses, and 5-10 years of flat wages.

The Holidays might not offer much more than stress with everyone under so much pressure to spend, spend, spend and put on a brave face for family and friends. If you can’t keep up the “doing just fine” image, you might feel really alone and disconnected this Holiday season.

2004-2013 may have been a “lost decade” in financial terms for many of us. Really, are you much better off this Holiday season than in Christmas 2003? How much progress towards financial security have you made since January 1, 2004? Do you feel much better off than you did during Christmases past when you were 20? Or when you were 30?

The “lost decade” may have led to a bankruptcy filing. Sometimes the choice was bleak: (1) file bankruptcy or (2) lose your sanity and ruin your health over financial stress.

So as the financial “lost decade” draws to a close, what to do?

There’s an alternative to the financial rat race. If you are 40 or 50 years old but not much financially better off than when age 29, doesn’t it make simple good sense to visit the financial advice columns and blogs read by financially savvy and well-informed 29 year olds?

I suggest survive the the Holiday season with a goal and a purpose to begin the new year with a new point of view, and with the support and shared wisdom of a group of forward thinking individuals just like you. How? Where? Read on.

Reason #2: Pass on the wisdom

If you are in your 30s, 40s or whatever, some younger person is going to look up to you for direction and help. Over the spiked punch bowl this Holiday season, your nephew may just spill the beans that he is struggling financially and is very unhappy. What better way to help lead someone else to greater financial literacy and better decisions than to introduce your nephew to the supportive and interesting on-line community found at moneyunder30.com.

David Weliver started moneyunder30.com  after he found himself $80,000 in debt at age 25 with nothing much to show for it. David writes, “I started moneyunder30.com in 2006 for [a] singular reason: to provide simple, honest and relatable financial advice for starting out. By the way, it is fine if you are over 30, too. It is never too late to get right with your money! Whatever your goal, I want to help you get there.”

The articles on the site are great. Staying informed is easy. You can either sign up to receive a free email newsletter on the site, or can follow David’s Twitter account there so that you’ll automatically be notified of new posts and comments on the site.

What sets this site apart from the rest is that by participating, you’ll join an active community of likeminded people. You can leave comments on articles to share your experiences or expand on the content, too. The article comments are surprisingly numerous. By participating on topics on the site relevant to your situation, you may soon learn that you are not alone in your stress over finances. But this is not just a community of complainers. It is a group working to proactively change their current financial status and share ideas and comments to that end.

The site does look at bankruptcy as an option, but not as a panacea or an end without epilogue. I think that participation in the moneyunder30.com community will help you to realize when it is too late for anything but bankruptcy, it makes perfect sense as a positive alternative to years unnecessarily and hopelessly wasted, toiling with debt to no avail. The site is balanced and mature in that sense. Sometimes no amount of smart shopping or expenditure trimming can avert the need to consider bankruptcy.

There are millions of people just starting out or just starting over at the end of this ”lost decade”, or perhaps recovering after a bankruptcy or other financial shock. Stress over finances can feel isolating and embarrassing, but as a countermeasure, moneyunder30.com offers a welcoming online community you can join to fight back. This community welcomes you to make contributions by commenting on nearly every article.

David’s website features the contributions of a number of knowledgeable guest posts about consumer, home, auto, educational, and investment finance as well as timely and entertaining feature articles on topics like saving during the Holiday season.

Many of the moneyunder30.com articles seemed to echo what clients ask me every day, such as: “How to build credit (for the first time)”, “Should you save or pay off your student loans”, “Top Financial iPhone Apps” and ”Why it is ok to rent”.

The deeper financial advice articles are balanced with shorter, action oriented one, including: ”Cut back on spending: 10 painless money-saving tips for the upcoming holidays”, ”Free budget spreadsheet”, and “10 best cities for the young, broke and single—where to live if you are 18-44 years of age”.

I also note that the moneyunder30.com site appears to vet some credit offers, saying in effect that “if you need credit, we took a look at this credit product/offering and as far as we can till, it seems to be the least of all possible evils”.

Reason #3: Excellent Holiday savings!

The moneyunder30.com website has some great gift ideas that are economical. Speaking of which: want to save a truckload on last minute Christmas shopping? Who doesn’t! In next week’s post, we will review some low-cost gift ideas suggested by a recent moneyunder30.com article.

What Can Eike Batista’s Story Teach Everyday Washingtonians About Financial Planning?

Brazil is a really big country generally recognized for its spectacular economic growth over the past 10 years.

In this steamy and exotic country, things happen in a big way. It is now the home of Latin America’s largest ever bankruptcy—the consequences of a huge gamble that didn’t quite pay off. The man at the center of this whirlwind is the flashy and self-assured promoter, Eike Batista.

What is interesting is that nearly everyone—even the Brazilian government—had astounding confidence in the charismatic and handsome Brazilian. There is no doubt that Mr. Batista also believed in himself and his plan. Not long ago, Forbes magazine ranked him as one of the world’s wealthiest people with an estimated $30 billion net worth.

The Choices Get Tough Once the Frying Pan Gets Hot

The Choices Get Tough Once the Frying Pan Gets Hot

 

Brazil is known as one of the BRICs, the term that economists use for Brazil, Russia, India, and China. For much of the past 5 years or so, Brazil has been a darling of global investors. Investment flowed into Brazil at a floodwater’s pace, and Mr. Batista had little trouble finding investors to provide credit, which he used abundantly to help build his empire.

Much of Brazil’s economy is based upon its natural resources such as timber, foodstuffs, oil, and gas. As demand and prices for these commodities increased around the world, Brazil’s abundance in most of those categories attracted large amounts of new investment. Consequently, as prices and demand for these commodities increased around the world, Brazil prospered even further as money from the sale of Brazilian commodities fueled a domestic consumption boom for consumer goods as more of Brazil’s once poorer citizens were able to afford cars, televisions, appliances, better housing, and nicer furniture.

Many global investors wanted a piece of the Brazilian investment action, and Mr. Batista’s companies provided ready opportunities for them. Mr. Batista started an oil company, OGX, followed by OSX1, a ship building company, followed by LLX, a logistics/shipping company, and by MMX, a mining company.

The idea was that LLX would buy oil transport ships and offshore oil drilling platforms from OSX1. OGX would then pay LLX to transport the oil in the ships that OSX1 built and sold to LLX. LLX would in turn lease offshore oil drilling platforms to OGX. LLX would also operate the ports where OGX oil and ore mined by MMX would be transported and exported.

But there was one problem, and it turned out to be a big one.

There wasn’t much extractable oil in the oilfields controlled by OGX. OGX had raised $4.1 billion in a 2008 public offering to acquire money to tap offshore oil field reserves then estimated at 10.8 billion barrels. In the ensuing years, OSX burned through much of its cash in a failed effort to develop those fields. In July 2013, OSX finally disclosed that it was incapable of extracting oil from most of the oil fields, triggering a fire sale on its shares.

The Brazilian government loaned Mr. Batista’s companies about $4.5 billion, making the Brazilian people likely losers to some extent in this disaster.

Things can happen explosively in Brazil, and Mr. Big can suddenly find himself as Mr. Nobody. While Eike Batista is a long way from a nobody, he could be on his way if his fortunes don’t improve.

Is Mr. Batista gone and forgotten? Not quite yet. Under Brazilian bankruptcy law, the debtor is granted quite a bit of leeway to propose and attempt to complete a reorganization plan. So Mr. Batista may have quite a long leash, but with new oil discoveries elsewhere, including in the U.S.A. thanks to new technologies like hydraulic fracking and applying data mining techniques to locating promising drilling sites, and with other Brazil’s other commodity prices stagnating, it may be very difficult for Mr. Batista to assemble a feasible reorganization plan.

Had the oil fields turned out better, perhaps Mr. Batista’s story would have turned out differently.

What Can We Learn From The Eike Batista Story About Financial Planning?

At first glance, the story reminds us to not borrow and spend future revenues that are not assured, particularly if the business venture involves high risk and is subject to intense competition like drilling for oil in unproven fields offshore.

Playwright William Shakespeare reminded us of irrational exuberance when he wrote of the unfortunate farmer in Macbeth, Act 2, Scene 3, “Here’s a farmer that hanged himself on the expectation of plenty.”

Another lesson is that just because we can borrow more money to get more stuff, it doesn’t always mean that we should. Mr. Batista borrowed from everyone to buy more stuff, including borrowing from his own country, the government of Brazil.

If you or someone you know bought too much stuff and now confronts a struggle with excessive debt due to poor financial planning, give us a call. A bankruptcy filing may help you out, as it may Mr. Batista. If you bought a reasonable amount of stuff, but an illness, or job loss, or some other life event has left you struggling with debt, please give us a call for a compassionate, non-judgmental and understanding consultation about your bankruptcy options.

Serve Others While Bettering Yourself and Your Family: A Thought During The Thanksgiving Holiday Week

During Thanksgiving, we think about how we have been blessed, and perhaps also how we could provide a blessing and serve others who are more in need than ourselves.

We all may remember the telephone pole placards “Work from home and make $5,000 a month: call 555-1212”. Most were frauds or multi-level marketing come-ons designed to feed on our innate nature and lower instinct to get something for not much of nothing.

But can you really make a living—and maybe even a fortune—helping the poor? There are 3 billion desperately poor people in the world. Is it really possible to bless the desperately poor while still providing for yourself? Can you help the billions of poor while still working from home?

Paul Polak and Mal Warwick say “yes” in their new book entitled, “The Business Solution to Poverty: Designing Products and Services for Three Billion New Customers.” Berrett-Koehler, publisher; 264 pages; $27.95. The book is available in various formats on Amazon.com.

Thanksgiving Blessing

Can Your Idea Bring Thanksgiving Blessings To The World?



In the early 1980s, Paul Polak invented a donkey cart for Somalian refugees and started a project jokingly called “Ass Haul International”. But it ended up being no joke. Aid agencies bought the carts for about $450 each and provided them to refugees. The refugees turned the carts into small businesses, and some earned up to $200 monthly—a tidy sum in areas like Somalia. The carts were unique. They could be flexibly configured, and were much more comfortable for the donkeys that pulled them.

In the 1980s, Mr. Polak’s “new” idea was nearly heretical to the charitable aid community. His idea that business could play a role in undeveloped/developing nations to help lift people out of poverty met with plenty of cold shoulders. The view in the 1980s was that people needed charity in the form of food, sanitation, electricity, and medicine rather than simpler innovations that might lead to skills, jobs, and work. The old idea was that once the desperately poor of the world were provided adequate nutrition, health, and safety that the poor would eventually figure out how to support themselves and lift themselves out of poverty. The old view: it would be unseemly for anyone to make a profit while helping the world’s poorest citizens.

The new view is that so-called charitable food and medicine hand-out schemes are subject to criticism because the organizers of the charities see the needy as victims who are unable to ever support themselves, and who need perpetual care. Critics say that the emphasis on free aid in the developing world results in victims who are “made”, and the self-images that the free aid recipients develop breeds feelings of dependency and inability to help themselves. In contrast, the newer view is that business will treat poor people as workers and customers, empowering them to stand on their own two feet and provide for themselves.

Mr. Polak and Mr. Warwick’s book focuses on the particular challenge of trying to reduce poverty by building businesses that have products or innovations that might serve the 3 billion poorest people in the world—products and services which those people might buy with their own incomes. Polak and Warwick join other thinkers in this idea including a well-known work entitled “The Fortune at the Bottom of the Pyramid” by C.K. Prahalad. Mr. Prahalad’s book also examined the idea of larger businesses making money while helping the poorest people of the world.

Mr. Polak’s innovations include concepts he calls “zero-based design” and “radical affordability” to appeal to people earning only a couple of dollars a day. The product or service sold need to be deliverable locally, as potential purchasers are unlikely to be on a postal route, let alone in an area with FedEx service. Polak also emphasizes that not only multinational corporations can play a role, but even individual entrepreneurs may have a place in helping the neediest people in the world.

Are You Called To Serve? Will You Act On Your Calling?

So what have you dreamed up that might be useful for the third world? An innovative and portable water filtration/purification method? A “super shoe” that is durable, comfortable, and long lasting? A smartphone application that teaches English? A solar food dehydrator? An affordable drip irrigation system for the small home-garden plot? An efficient, affordable, and durable light fencing material to keep marauding animals out of the subsistence farmer’s family food growing plot upon which the farmer’s family depends upon for much needed income?

If you believe that your idea is more than just an idle thought, and you want to try realize your dream as a real product or service, then one approach that you could take is to present your idea on “kickstarter.com“ in hopes of attracting sufficient “crowdfunding” from people interested in helping bring innovations to aid the world’s poor. I wrote a blog post about kickstarter.com not long ago that may interest you. Simply type “kickstarter” into this website’s search box to find it.

I remember from childhood Sunday School that in Mark 14:7 Jesus said “For ye have the poor with you always, and whensoever ye will ye may do them good: but me ye have not always.”

There are 3 billion really poor people on the planet. Do you have an idea or innovation that might improve their lives? Today might be your day to “do good” for some of the world’s poorest citizens.

The Thanksgiving Holiday week is a special week to remember how we have been blessed. And also to think about how we might share our blessings with others.

Is It Too Late To Invest In Pierce County Real Estate?

Blackstone Homes’ subsidiary Invitation Homes, American Homes for Rent, and FREO Washington are three large institutional investors scooping up a significant share of the vacant foreclosed homes in Pierce County, Washington. The purchases that these companies are making might artificially inflate local home prices, say some. Others believe that the area is poised for a housing price comeback.

Blackstone Homes and the other corporate investors that are purchasing large numbers of homes claim that they are in the business to serve as a long-term landlords, but local experts are skeptical. They think that the institutional investors are really planning to wait for prices to rise a bit before dumping the houses for a tidy net profit, according to Kathleen Cooper’s article in the real estate section of the Tacoma News Tribune on October 27, 2013 “This is no different from institutional investors being bullish in other commodities,” says Jody McNamer, a Gig Harbor-based real estate investor who has focused on the South Puget Sound region for 20 years. “They run those commodities up and dump their holdings after they make their profits. And little guys are all, um, what happened?”

Business Meeting depicted by The Law Offices of James H. MaGee, Washington Bankruptcy Attorney

Are big investors bidding Pierce County real estate prices up?



 

What does this mean for the rest of us?

It could signal that these well-informed corporate investors are confident that the Pierce County housing market is likely at its price low point now, and that they expect prices and rents to rise soon. If the big corporate investors are correct, then it means that those pondering whether to buy a home can trust that some well-informed corporate investors also believe that now is a good time to buy.

How many houses are these big investment companies purchasing? Between September 2012 and October 2013, almost 1,000 homes were purchased by Invitation Homes, American Homes for Rent, and FREO Washington. There are also additional regional and local companies making investment purchases, so at least 1 in 12 homes purchased in Pierce County over the past year was purchased by a big investor.

Some people think that these institutional big investors have miscalculated and are skewing the market upwards, and that the temporary upswing in housing prices will decline again once the big investors quit pumping money into local purchases. The skeptics could point out that the median home price in Pierce County peaked at $285,000 in August 2007, then plummeted to about $160,000 in February 2012. Since big firms moved into the area as early as October 2012 to buy homes, the median price has risen to $220,000 as of September 2013. These naysayers could claim that housing prices are moving up too fast, given the otherwise generally flat or low-growth local and national economies.

Substantial numbers of purchases by large real estate investment firms are being made all over the country. In Washington, investors are concentrating on properties in Snohomish, King and Pierce counties, according to the Tacoma News Tribune. Is the present house price increase another housing price “mini-bubble”, or are these price increases here to stay? Only time will tell.

So, What Can I Do To Prepare To Invest In Pierce County Real Estate?

If you want to buy a home, but you either have rocky credit or perhaps you had a your home foreclosed upon in the recent Great Recession, then preparing to buy another home soon to avoid potential steep increases in housing prices could be timely. In some cases, filing bankruptcy is a prudent step towards eventual home ownership. Bankruptcy can eradicate debt and improve your debt to income ratio, making it clear to home mortgage lenders that you do not owe any further debts and you are a safe bet for a new home loan.

You or someone you know may want to turn over a new leaf, and get started towards a brighter financial future now. Call us at (253) 383-1001, or contact us through the form on our web site, in order to schedule a free, no obligation, personal consultation with me. During our meeting, I will listen to your situation, examine your options with you, and explain how and why bankruptcy may be the right choice for you. Don’t wait; stop procrastinating! Act now to regain your peace of mind right away.