Archive | January, 2013

Can You Reach The Max Part 2

Should I file for chapter 13 bankruptcy to save my house from foreclosure or my car from repossession or should I cash out my 401k to get the money to pay the mortgage or car payment? People ask me this question all the time. Here is my answer: With few exceptions, I strongly recommend a chapter 13 bankruptcy reorganization over cashing out a 401k account with the purpose of staving off a foreclosure or preventing a vehicle repossession.

Here are the next five Forbes.com steps to help you boost your 401k:

5. Taking loans out of you 401k is hard because many times you have to pay the money back. But hardship withdrawals can be allowed. If you are behind on payments such as your mortgage that would be a loan you would have to pay back but if your house was foreclosing you could be able to take out a hardship withdrawal. Not everything is a hardship though so just make sure you know the rules.
4. Many times if you make a lot of money you can only contribute a certain amount to your 401k as to prevent discrimination. If your spouse has access to a 401k, they should be saving as much as they can as well. If you or your spouse have access to saving for a 401k, take advantage of that especially if one of you has limitations on your savings part.
3. If you have an old 401k account, you should combine the two in most cases. Add the old account to the new; it is much easier to keep track of one account.
2. When you first sign up for a 401k you pick investments and many times don’t get around to changing, or revising it to make the best choice for your savings. For example don’t just choose company stock because it’s there, don’t forget to revise your 401k and choose your best options.
1.Don’t cash out your 401k as soon as it is available to you. Leave it as long as it is still invested in good options. Just because it reaches the penalty free mark or you retire, doesn’t mean that’s the best time to cash out for you.

I might also add that under most circumstances you should not take a 401k loan or cash out a 401k or IRA to pay off federal income tax debt because you can almost always pay back the federal income tax debt interest and penalty fee though Chapter 13 bankruptcy reorganization, or often enter into a very reasonable tax repayment plan with the IRS.

If you have already taken out a big 401k loan or cashed out an IRA (or taken a large withdrawal or fully or partially cashed out a 401k) you really need to begin to rebuild.

Can you reach the max?

10 Steps to Boost Your 401(k) Balance

Should I file for Chapter 7 bankruptcy to wipe out debts or should I cash my 401k to pay off debts? Many face this question and it is an inquiry I must often answer: Here is my response: With only a few exceptions, I strongly recommend a bankruptcy filing over 401k withdrawals.

If you have already cashed out your 401k account or IRA (or taken a large withdrawal or large loan) you really need to begin to rebuild. I found this article with many helpful 401k tips and I wanted to share with you.

Tips 6-10:

10. Many companies suspended 401k’s during the recession and are now slowly reinstating them. Make sure to match their contribution so you can restart the building of your 401k.
9. Start saving your salary increase and thinking about adding it to your 401k. If you get a raise, add that much more to your 401k and if you receive a bonus try to contribute as much as you can to it.
8. Most employers let you set your contribution to your 401k mid year, not just during a special enrollment time or at the start of a new job. Don’t forget you can reset your percentage mid year, not just at one time.
7. If you are on the younger side, consider the Roth 401k, if your employer offers it. The special thing with a Roth is that it lets you contribute already taxed dollars to your 401k and then withdrawals in retirement are tax-free!
6. A lot of employers allow their employees to take loans out of their 401k, and many people take advantage of it. The problem with that is that many people who take the loans forget to pay them back or just cant afford to. But if you get laid off or find another job, your loan is due immediately, which can put you into deep debt.

Stay tuned for the next five steps to help you reach your max 401k savings,

The article can be found here:

http://www.forbes.com/pictures/lmf45ekmg/can-you-reach-the-max/

Dating, Marriage and Credit Scores: A New Twist in the Road To A Happy Life

He was tall, religious, well employed in finance and had great teeth. Even better, he came from a nice family background, and was brought up similarly to her. She was attractive, peppy and fully employed as a flight attendant.

But Chicago’s Jessica LaShawn was dumped after a first date when somewhere between salad and dessert Jessica truthfully answered a question about her credit score. Jessica’s FICO score was subprime (below 660), as she had paid late on some bills and had some lingering unresolved debts. A couple of days later, Jessica received an apologetic text message from her potential prince charming – no second date – it wasn’t Jessica, it was Jessica’s credit score which caused him to decline a second date with her. Good bye prince charming. Good bye, white picket fence…

Credit Scores are newly becoming a relationship metric, as many people are deciding who to consider and who not to consider for marriage based in part upon credit scores. Dating site executives report that they are receiving more inquiries and interest about when and how to bring up the issue of credit scores when deciding whether to date or pursue a relationship with a potential suitor.

Similarly, many marriage counselors relate that improving credit scores is a frequent topic of discussion with marital and relationship counseling clients. Dissimilar levels of concerns about maintaining an acceptable credit score can lead to significant friction in a long term relationship.

So how does bankruptcy fit into the universe of dating, marriage and credit scores?

Credit scores affect us all. Credit scores are kept on about 200 million Americans by FICO. More than 34% of these Americans (68.6 million) tracked by FICO have subprime credit scores of less than 660. FICO is short for Fair Isaac Corporation.

About 18.5% of Americans (37 million) enjoy the highest credit score range of 850-900, another 19.0% (38 million) enjoy very good credit scores of 750-800. About 16.0% of Americans (32 million) enjoy “good” credit scores of 700 – 750 and 12.2% of Americans (24.4 million) have borderline FICO credit scores of 650-700.

If unpaid bills, high credit card balances, lingering tax debts, old foreclosures and unresolved vehicle repossession deficiency obligations are keeping you in the “below 700” catagory with respect to FICO scores, what can you do?

How about a bankruptcy? What? Doesn’t bankruptcy ruin your credit, you ask?

Well, sometimes you have to go down before you can go up.

Many experts recite that a bankruptcy will temporarily dump your credit score down to 550, but then in many circumatances you will automatically start a very steady and sure climb back to a level of 700 (good), 750 (very good) or maybe even higher.

The New York Time (April 12, 2012) reports that the car loan or credit card for which you were unable to qualify right before bankruptcy can very likely immediately be yours right after a bankruptcy filing. This might suprise you, but after bankruptcy, many creditors will actively and very aggressively again solicit your business. This sounds very counterintuitive and maybe even a bit crazy, but strangely it is true.

After almost 19 years, I keep thinking that some day I will have seen it all when it comes to Creditors. However, the Creditors keep suprising me with new ideas and schemes, and these are often to your benefit, so check out this new shocking twist: I have had a few Chapter 7 clients show up at Court bearing letters that recite in essece the following:

“Dear Newly Bankrupt Potentially Valued Client: We have reviewed that you have a vehicle financed with another lender. We want you talk to your lawyer at court about giving up that old financed car in a voluntary repossession, thus giving the car back to your lender. If you do this, then on your way home from bankruptcy court just stop by our car lot and secure quick financing for a newer and better car.”

How does that grab you? Stop by the car lot on the way home from bankruptcy court and pick up a new car? Strange, but often true.

If your marriage relationship is suffering the stress of not meeting financial and mateiral goals due to chronically low credit scores, then consider a bankruptcy filing to charge up the material needs which, face it, are an important part of living with some contentedness in a long term relationship.

We all like to say that love is enough, but we all know that every marriage has material needs and material aspirations. Even if such material goals are modest, such as replacing that aging car, starting to save for retirement or college, moving up to a more suitably sized home, getting on a cell phone data plan instead of being stuck with an expensive “prepaid phone” or maybe even renting a little nicer place to live – we all have needs and aspirations. Chronically low credit scores can take away some of the material comforts that we look forward to enjoying with our mate in a long term relationship, and these disappointments can take a little of the joy out of your daily walk of relationship and marriage.

And in Jessica’s LaShawn’s date with Mr. Right, he had her at hello…but it was quickly goodbye due to Jessica’s chronically low credit score. If Jessica had filed for bankruptcy well before her dream date appeared and had thus already started the amazingly quick post-bankruptcy credit score recovery process, she would probably have received that offer of a second date. But she was not proactive and did not file for bankruptcy. Jessica just ignored her declining credit situation because it was too uncomfortable to face. The result? Sadly, for Jessica the story is “white picket fence postponed”.

Get on with your life and start living now: Consider bankruptcy as a strategic tool for your long term dating, relationship and marital hapiness. You will be shocked at how quickly your creditworthiness is restored post-bankruptcy.

And while you are at it, spread the good news that there is hope for the future through bankruptcy- people need to know, and if you won’t tell them, they will never learn.

[Special thanks to Jessica Silver-Greenberg, for writing “Perfect 10? Never Mind That. Ask Her for Her Credit Score.” NY Times, Page A1, Wednesday, December 26, 2012.]

Considering the need for a bankruptcy filing to get your credit back on track? Contact us at 253-383-1001 for an appointment in Tacoma, Puyallup, Olympia, Chehalis, Renton or Bremerton.

Retirement But Not Totally Overview

The economy has had a great impact upon those people facing retirement. Many have lost jobs, or been forced to take jobs paying much less then pre-recession employment. In addition, many people have lost homes due to foreclosure, feeling compelled to walk away because of mortgages balances which greatly exceed their home’s value. Bankruptcy filings in the pre-retirement demographic are skyrocketing, and have been high for many years.

With rising medical costs, rising food costs and expensive gasoline, many people are worried whether social security and perhaps a small pension will provide a comfortable retirement.

One way to improve the quality of life in retirement is to continue to work, and some places in the country offer better working opportunities for retirement age people than do other locations.

Is retirement on the horizon for you? Are you worried whether your retirement income will stretch to provide a quality lifestyle? If these are concerns for you, consider relocating to one of these 25 havens for retirees who might wish to continue to work past retirement age.

Forbes magazine compiled a list of places to where a retiree or a person facing retirement might want to consider relocating if there is a need or desire to work past retirement age. Below is the “James Magee short list” of the top three places for a quality retirement.

1. Iowa City, Iowa: With Iowa Medical School in its midst, Iowa City’s doctor count is six times above the national average. Also unemployment is at 3.8% and job opportunities are growing.
2. Corvallis, Oregon: Corvallis is a college town which helps the strong economy, this city has a 5.8% unemployment rate and room for even more economic growth. There’s no state sales tax, and has plenty of doctors and a low violent crime rate.
3. Pittsburg, Pennsylvania: Unemployment is at 6.6%. Although the winters here are extremely cold, the cost of living is 6% below the national average and homes are going for $121,000. Also the doctors per capita ranks at one of the nations highest.

Retirement is a lot different then it was many years ago. In this country’s current economy, it is much harder to retire and retirement occurs at an older age. A wonderful alternative is to pursue a working retirement, keeping a job but still enjoying the retired life. Any of the 25 cities on Forbes.com’s list are wonderful alternative cities to relocate to. If you are so far in debt but you have bankruptcy as an option, it may be your best option. Your debt can be taken care of by filing for bankruptcy and once debt free you can easily relocate and start a fresh retirement in one of these cities with low unemployment rates, nice climates and so many other perks.

The Forbes.com article can be found here:

http://www.forbes.com/pictures/mjd45idmk/retirement-but-not-totally/