Archive for February, 2016

Credit Card Debt and Retirement

Wednesday, February 24th, 2016

According to USA Today, Rodney Brooks, Aug. 12, 2014, whether it’s credit card debt, student debt or mortgage debt — is emergingcredit card debts as a serious threat to a successful retirement for thousands of Americans.

“We saw this huge refinance boom in the 2000s,” says Katherine Dean, head of wealth planning at Wells Fargo Private Bank. “There’s also the trend of people buying homes later in life and buying a second home late in life. We are seeing older Americans saddled with debt.”

In fact, according to the Consumer Financial Protection Bureau, the percentage of homeowners age 65 and older carrying mortgage debt increased from 22% in 2001 to 30% in 2011. Among those age 75 and older, the rate more than doubled, from 8.4% to 21.2%.

Janet Taylor, a psychiatrist and thought leader for AARP’s Life Re-Imagined, said that debt can really take a toll on people, especially retirees.

“Debt is a constant source of stress, and in particular, chronic stress, for many people — especially those who are reaching retirement or in retirement,” she says. “For too many Americans, retirement is where people are on a budget and have to modify what they spend. When you go in with debt, whether it’s debt you know about or is unplanned debt, it just causes a huge amount of stress.”

The recession exacerbated the debt problem among retirees, says Robert Fragasso, principal at Fragasso Financial Advisors in Pittsburgh. “People make indiscriminate financial decisions,” he says. “They are unplanned, and their results are sometimes negative or catastrophic.”

A closer look at the debt issues:

MORTGAGE DEBT

It’s one of the big questions going into retirement. Should I pay off my mortgage, even if I have to dip into my retirement funds?

The answer: It depends. The CFPB says the median mortgage debt for seniors increased 82% from 2001 to 2011, from $43,300 to $79,000. But, “The answer is not how much debt,” says Ron Weiner, president and CEO of RDM Financial Group. “The answer is more complicated and depends on your tax bracket and the size of your mortgage payment,” he says. Not all of the decision is rational. “Some people feel it is emotionally comforting to pay off their mortgage. But that’s not necessarily the right answer.”

But there are some clearly bad choices. Mike Woomer, senior vice president at Fort Pitt Capital Group, says a client refinanced a mortgage for 20 years at age 58. “He’s not going to pay it off until he’s 78,” he says.

CREDIT CARD DEBT

According to the National Center for Policy Analysis, older Americans are also accumulating more credit card debt. The group says the average credit card balance for Americans 65 to 74 was $6,000 in 2010, up from $2,100 in 1989. For those 75 and older, the average balance went from virtually nothing in 1989 to $4,600 in the same period.

“We would advise our clients to not carry credit card debt (into retirement) and pay the balances,” says Tom Mayper, executive vice president at RDM Financial Group in Westport, Conn. “Older people living on a fixed income can really get themselves in trouble paying a high interest rate that is not deductible.”

In these days of low savings rates, retirees don’t understand that paying off a 16% credit card balance is like earning 16%, says says Weiner. “They are better off paying the debt. Their costs go down.”

There’s some evidence that people are starting to be better about credit card debt. “We have seen a downtick in credit card debt,” says Dean. “But you also see increases in other debt, like auto loans. For a couple that is not saving enough, it can be a little bit scary. How are these folks going to be able to afford retirement?”

“Multiple credit cards are not the ally of the financial planner or the client,” says Greg Smith, managing director and senior financial planner at the Wise Investor Group in Reston, Va.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida.  For more information, go to our web site www.BankruptcyforTampa.com
or call (727) 254-1704.

After Bankrutpcy – What Then?

Wednesday, February 17th, 2016
You may think that after bankruptcy, that you will have to conduct your self differently and that can”t do the things that you did before. This is however is not the case. When we say that bankruptcy is a “fresh start”, that’s what we mean. You are really starting over.
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You will be relieved to know that there are no legal limitations on the type of property that you can own after bankruptcy. This means you leave all of your dischargeable debt behind and start over. You can legally buy a house, buy a car, or even start a business.

Obtaining Loans After Bankruptcy

Most people need loans to make big purchases like houses and cars.  Lenders are not prohibited by law from extending credit to you after bankruptcy, but some may be cautious. Mortgages generally take the most time, but it is likely that you will be able to qualify for a mortgage loan within two to four years after your bankruptcy as many lenders follow the FHA guidelines. If you have someone willing to co-sign for you, it may even be sooner. Often you can qualify for a car loan without a co-signer as soon as you receive your discharge.

Rebuilding Your Credit

Of course, after bankruptcy, the interest rates you are offered may not be as favorable as they might have been if you did not have financial problems.  But most people who file for bankruptcy are already experiencing severe financial problems and do not qualify for favorable lending terms even before they file.  After bankruptcy, if you take steps to rebuild your credit, such as making your post-bankruptcy credit payments on time and limiting the amount of credit you use, the terms on which you will be offered credit will improve.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida.  For more information, go to our web site www.BankruptcyforTampa.com
or call (727) 254-1704.

Protecting Property

Thursday, February 4th, 2016

Having a considerable amount of debt from taking out loans or other types of situations can sometimes become difficult for Florida mediationresidents to handle. As a result, they may fall behind on their payments and soon find themselves at risk of losing their property. If individuals are facing such circumstances, they may want to look into ways to protect property before they are in an even worse situation.

It was recently reported that individuals who had already lost their homes to foreclosure years ago are being contacted by agencies looking to collect on the unpaid debt. This situation could come as a surprise to parties who had already lost their homes and were working toward becoming more financially stable. However, banks may still follow through with deficiency judgments in order to get what they are owed.

This tactic is becoming more common because banks have been saddled with considerable fees and other expenses due to foreclosing on houses when the mortgages were not paid. Many individuals believe that parties who owe money should still be held accountable for those debts. Conversely, others think it is unseemly for banks to hound parties who may have just become more financially stable.

Many individuals may have been in situations in which their debt led to their property being at risk of repossession or foreclosure. However, it is important that individuals know that they could potentially be able to protect property from such actions. Florida residents who are burdened by significant debt may want to explore bankruptcy options and how such a filing may allow them to halt repossession and foreclosure attempts. Caroline Secor can help you with this.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida.  For more information, go to our web site www.BankruptcyforTampa.com
or call (727) 254-1704.