Archive for September, 2017

Financial Things to Avoid

Wednesday, September 27th, 2017

Avoid mistakes like these and your bankruptcy will become a distant memory. Thanks and a tip of the hat to the bankruptcy network.

Mistake 1: running a monthly balance on your credit cards. Credit card companies charge between 15% and 28% interest on monthly balances. By contrast, mortgage loan rates are around 4% and car loans are around 2% to 6%. Banks pay depositors just over 1%. Interest rates at 15% plus will cost you hundreds or thousands of dollars. 14% or higher is loanshark territory.

Look at the credit card interest calculator here and plug in whatever numbers you wish. I plugged in 25,000 at 14% interest and a minimum payment of 2% of the balance each month. In this scenario it would take over 31 years to pay off the $25,000.

Credit card debt is a major component of most bankruptcies. If you can’t pay off your balance each month, you are spending more than you can afford and this problem will not magically disappear. It will lead you back into bankruptcy.

As a practical matter, once your running balance reaches $8,000 to $10,000 you will most likely never pay it off.

Instead of using a credit card, use a debit card that withdraws funds from your checking account immediately. Debit cards have a way of minimizing impulse purchases.

Mistake 2: not recognizing the total cost of a purchase. We see this in  auto loans. The auto loan may be $325 per month but the total cost of ownership may be $650 or more when you factor in fuel, insurance, tires, service, repairs and other associated costs. Further, an accident (unexpected) may cause insurance costs to rise and may give rise to repair or rental car expenses.

Real estate purchases also result in extra expenses. Property ownership always results in unexpected expenses, in addition to normal expenses that you would not see as a renter. When you budget for a home purchase, assume that you need to budget several hundred dollars each month to repairs and maintenance.

Mistake 3: not using a budget. We suggest that you  prepare a budget. More often than not, this budget represents the first time that you may have looked at your family’s income and expenses in black and white.

Budgets help you understand where you are spending money and often where you can cut back. Business owners know that you can’t change what you don’t measure and the same holds true for individuals. You should aim for a budget that results in some level of disposable income (which you can allocate to a savings account or retirement plan).

Mistake 4: not preparing for retirement. If you are relying on Social Security to fund your retirement years, you are asking for trouble.

In most cases, Social Security retirement will pay you enough to live at the “Poverty +” level. Everyone should be putting money away – even $100 per month. Most retirement plans have favorable tax consequences so every dollar you put away will benefit you.

Squeezing $100 or more from your budget may be painful but you should see this type of contribution as a necessary investment – just as necessary as paying for electricity or car insurance.

Mistake 5: cashing out a retirement plan to pay credit card or other debts. Most retirement money is protected from claims by creditors. With very, very limited exception you should never tap into retirement money because these funds will almost never be at risk.

If you are tempted to encroach upon retirement money, talk to a lawyer first so she can talk you out of this bad idea.

Mistake 6: failing to buy insurance. No one likes to spend money on insurance because you are buying protection against events that may never happen. No one expects to be diagnosed with a debilitating disease or injured in an accident but every year people end up facing the unexpected.

Insurance is another necessity that should come before “wants” like that new TV or cosmetic improvements to your house.

All of these mistakes or “exposure points” may seem like common sense, but most of these problems are very common among bankruptcy filers.

You can look at this another way – intentionally do the things I call mistakes and you will almost certainly end up in or close to bankruptcy. The good news is that these types of mistakes to avoid are not moral failings; they represent poor planning and a lack of basic financial literacy.

There are dozens of books out there and plenty of free online resources. Google “basic household budgeting” and you will see dozens of entries. Spend a little time improving your financial literacy and your quality of life 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
or call (727) 254-1704.

Credit Cards and Social Media

Monday, September 18th, 2017

You might not think that the the two things have anything in common. However, if you aren’t careful in what you post on social media, you could accidentally disclose information that could be harmful to you.

social media

Here are six tips to make sure you keep your credit card numbers to yourself.

1. Celebrate big moments without oversharing

People are most likely to accidentally post a credit card number or other sensitive financial information when they are sharing a milestone moment, such as a first credit card, a new driver’s license or a final tuition payment, and not think about the ramifications of the post.

2. Review the background of photos carefully

You might be capturing a celebratory moment at the end of a meal, but the check with your credit card could be in the background. With the high-resolution cameras built into many phones, it could be easy for a thief to zoom in and grab the numbers.

Look around and make sure no paperwork is on a desk and no credit cards on a table. Don’t have a window open on a computer where you might submit that information.

3. Safeguard your personal details

Sharing seemingly innocuous images, such as a picture with your street number in the background or a driver’s license with a home address and other details listed, can also make it easier for someone to hack into your credit card (or other financial) account. The answers to security questions, such as your mother’s maiden name, may be easy to figure out through Facebook.

4. If you share card info, contact your issuer

If you think you’ve done something stupid, go ahead and cancel the card. Still, even with the fraud protection, replacing a card can be a hassle. If you do it enough, the card companies will say, ‘We might not give you another card.’”

5. Check your privacy settings

If you’re posting on Facebook, as opposed to other social media, you may be more likely to share personal photos that thieves could use to glean information, from the name of your high school to your wedding anniversary, in an attempt to access financial accounts.

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
or call (727) 254-1704.

Which Type of Bankruptcy is for Me?

Friday, September 8th, 2017

If you are considering filing for bankruptcy, you probably have heard the terms Chapter 7 and Chapter 13, and you may be wondering which one is better for you. Chapters: Chapter 7 bankruptcy is known as liquidation bankruptcy and Chapter 13 bankruptcy is referred to as reorganization bankruptcy or the wage earner’s plan.

bankruptcy court

• Qualifying – Due to laws that limit access to Chapter 7 bankruptcy to only certain consumers and require certain factors for those who file under Chapter 13, you might not always have a choice of which Chapter you can file under. This is because you need to meet qualifying criteria. This is important to understand, as you can’t simply choose a Chapter and launch into the process.

• Chapter 7 – Chapter 7 bankruptcy is intended to help debtors who face the most pressing debt concerns. It is typically reserved for consumers who have little to no assets, and who do not have the financial means to continue making monthly payments toward pre-existing debts. In order to qualify for Chapter 7, filers must pass a means test that compares their monthly income to the median monthly income in the state of Texas. Generally, if your average monthly income is less than or equal to the state’s median income, you will be eligible for Chapter 7. If it is more than the state median, you will need to determine if you have enough disposable income to make payments. If your disposable income is too high, you likely will not be able to choose Chapter 7.

• Chapter 13 – Chapter 13 bankruptcy is a wage earner’s plan that reorganizes debt and allows filers to make consolidated monthly payments toward them over three to five years. As such, filers must have enough available funds and income to make payments over the course of their reorganization plan. Chapter 13 bankruptcy doesn’t mean you don’t get a discharge, that still happens at the end of a plan. It also enables filers to keep certain property by paying back all or at least some of what they owe on property with pre-existing debt.

Your choice in which Chapter of bankruptcy to file under depends on qualifying criteria, your personal situation, and your ultimate goals for the financial future. Understanding the unique benefits of each Chapter, as well as how they will impact you, can be a difficult matter, which is why it becomes important to work with experienced attorneys.

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
or call (727) 254-1704.