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Financial Slip-ups to Avoid.

1. Raiding your 401(k). Don’t think of retirement savings as “now” money. It’s money you’ve got to save for later. “Some people use their IRAs, and wind up in bankruptcy,anyway.” Even if you end up having to use it post bankruptcy, it will go a lot further towards survival of your family after bankruptcy; when you are buying necessities with it instead of trying to keep up with an impossible pile of credit card payments and other non-essentials that will be discharged in bankruptcy.

2. Debt-wipeout scams. Be careful when talking with debt– consolidation firms. Many are shams. Be very, very cautious. For the most part, stay away. Many find themselves seriously behind in payments that were current when they first approached this “solution” to their debt loads. They make payments religiously, believing they are working their way out of overwhelming debt, only to find that all of the payments made were applied first to the fees of those they hired to help get them out of debt. The wakeup call comes when one or more of their creditors sues for non–payment.

3. Ignoring the card balance.  Although credit card usage dipped more than 13% inFebruary, almost 15% of American families still owe more than 40% of their income, accordingto the Federal Reserve… “Ask yourself a question, ‘Do I really need that?’, or more important, ‘Can I afford it?’” In these days of lenders looking for any excuse to raise rates and add fees toyour balance, credit cards should be limited to convenience use only. If you can’t pay for thecharge at the end of the month in addition to the regular payment, don’t incur the charge. Ifyou are already overwhelmed, see a bankruptcy attorney A.S.A.P. You and your family will beglad you did.

4. Co–signing a loan. If a friend or relative asks you to co–sign a loan, it means his credit is so shaky no lender will give him money on his own merits.  Why should you?  C–signing is a business transaction, but people don‘t think of it as a business transaction.  They think, “I‘m helping my friend out.”  Lenders have no such illusions, nor do those who make these kinds of loans concern themselves with the destructive impact they may have on perfectly productive lives; family or business relationships don‘t matter in this element.They will tell you that are just protecting their interest in that to which they are entitled.  Yet when junior lost the job he was counting on to make that car payment, the lender had no problem dispossessing an unsuspecting mom from her home to make up for the $3,500deficiency on the car that the lender knew the son couldn‘t pay for. Why did the mom risk her home anyway? Because the nice man down at the loan office assured her it would never come to that! The best way to help a friend or a loved one where they need money or help with a loan is to GIVE it to them if you can afford it; or make sure the loan payment is enough to afford to pay yourself in addition to all your other bills.  Otherwise, let the lender take risks with HIS OWN money instead of yours. THE BEST ADVICE IS DON‘T!

5. Payday Loans. The Center For Responsible Lending reports that about 19 million Americans have resorted to these high–interest loans, although the number has dropped in the past year.  They are marketed as short term cash advances to meet emergency expenses between paychecks.  However, consumers often become trapped in repeat borrowing, according to the Consumer Federation of America.  For the average two week payday loan, the annualized interest rate can range to as much as 391% to 521%, As outlandish as this seems, people turn to new resources for lack of other alternatives.  If people knew the reality of how much these loans really cost and how they serve to keep the impoverished, they would RUN to bankruptcy court to relieve themselves of the debt load these loans end up servicing.  In a word, the best way to use these loans is DON‘T! SEE A Bankruptcy Lawyer Port St Lucie INSTEAD.

6. Reverse Mortgages. Older actors pop up on television marketing these mortgages as an easy income stream for seniors who are house rich and cash poor. But the fees and other costs associated with reverse mortgages can sometimes be considerably higher than on other loans.  Other options: Take out a home equity loan, or sell the home and move to a smaller, less expensive one.  Or sell the home to the kids and rent it back.  The kids get a good investment property with preferred tenants and a tax write off to boot! Mom and Dad can have an annuity for extra income and get to stay at home.  If there are debts problems, however, see a bankruptcy lawyer Port St Lucie Florida before implementing this strategy.

7. Problems with the IRS. If you look at the small print when you sign your tax return, you will see that basically you are affirming that everything in it is accurate and true.  What happens is you are audited and everything is not accurate?  If it‘s a small amount, and they can be sure it‘s intentional, then they could charge your client with fraud, and there could be penalties involved.  If your client has a long standing problem, the issues can become economically impossible to resolve. For most cases, this means getting an experienced tax attorney or CPA to help.  Sometimes, however, if your client is facing unfiled returns or past due tax problems, bankruptcy may provide some relief, especially if other debts have become unmanageable as well.  Under certain circumstances, some taxes can even be discharged in bankruptcy. Check with a bankruptcy attorney Port St Lucie Florida to see if there‘s a better way to handle tax problems other than the traditional payment plan or offer in compromise.


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