Wednesday, August 17, 2011
REAL ESTATE SALES
Kevin Ryan is now affiliated with the Howard Hanna Real Estate Sales Office in North Olmsted, Ohio. If you are thinking about selling your home, or if you are current in default on your mortgage payments and would like to discuss a Short Sale listing of the property, please contact Kevin at (440) 610-0972 (cell) or (440) 327-3800 (office).
Saturday, February 19, 2011
web site address for the Chapter 13 Trustee (Cleveland District)
The web site address for the Chapter 13 Trustee for the
U.S. Bankruptcy Court, Northern District of Ohio Cleveland Division is
www.13trusteecleveland.com
there is helpful information posted at this site. Don't forget to sign up for online
case access if you are currently a Chapter 13 debtor with an open case. You
can track all of your payments, claims history, and other information relevant
to your case. Contact your attorney if you have any questions.
U.S. Bankruptcy Court, Northern District of Ohio Cleveland Division is
www.13trusteecleveland.com
there is helpful information posted at this site. Don't forget to sign up for online
case access if you are currently a Chapter 13 debtor with an open case. You
can track all of your payments, claims history, and other information relevant
to your case. Contact your attorney if you have any questions.
Tuesday, January 25, 2011
New office location for Ryan Legal Services, Inc.
We are opening a new satellite office at 26777 Lorain Road, Suite 608, North Olmsted, Ohio. This is a small office that is next to the Great Northern Mall and St. Richard's Catholic Church. Our hope is to attract clients from North Olmsted, Olmsted Falls, Olmsted Township, and Fairview Park, cities that are currently under-served by bankruptcy attorneys. Please note that this is an office for client meetings only, so please call us at 440-327-3800 to schedule an appointment.
Mistake : Transferring property prior to filing bankruptcy. Don't do it!
Transferring property before bankruptcy is risky business!
Lately, a number of clients coming to see me have just transferred real property (or their interest in real property) to a family member or friend, or they are inquiring about transferring their property to a family member or friend – and, of course, for no money in return. AND, they want to file bankruptcy ASAP. Bad decisions and bad ideas! Bankruptcy law has several provisions that penalize a transfer made with the intent to hinder, delay, or defraud creditors. Any transfers made within two years of filing bankruptcy (and in some instances – further back than that) the bankruptcy trustee can undo those tranfers pursuant to his avoidance powers under Section 548 of the Bankruptcy Code.
I recently turned down filing a case for a potential client who, after several months of being laid off from work and no foreseeable job offer coming, decided to transfer a second parcel of land (approximately 20 acres) – not his homestead to his son. He wanted to protect his land from his creditors. Unfortunately, this is considered a fraudulent transfer and the trustee could undo the transfer. He, of course, was sick to learn that his actions had only made matters worse for him since he is unable to file aChapter 7 bankruptcy now and keep his land.
If you are thinking about filing for bankruptcy and are thinking about transferring or giving property of any value to someone else, PLEASE talk to a bankruptcy attorney before you take that action.
How Will I Find a Place to Live If I File for Bankruptcy?
Many of my clients worry about where they will live if the file for bankruptcy and surrender their (usually far under water) house. They’ve heard horror stories about people with bankruptcies on their credit being unable to rent. But things aren’t as bad as they fear.
My usual recommendation is not to look at the traditional large apartment complexes. Many will, indeed, reject applicants with a recent bankruptcy on their credit.
Much more likely to rent to you are individual landlords. They are usually far more concerned about you, the individual, than about your credit. A good job and first and last month’s rent often are sufficient to satisfy these landlords.
The best bet, however, is usually a “Lease With Option to Buy,” or LWOB. This is a special form of rental, typically involving three provisions in addition to the usual rental clauses:
1. You have the first right to buy the property at some time in the future (usually 2 or 3 years);
2. Some or all of your monthly rent payment is credited to the purchase price if you buy the property; and
3. The purchase price is set today.
A LWOB gives someone who has filed for bankruptcy a number of advantages. First, you can usually get a nicer condo, townhouse or single family home that might ordinarily be available for rent. Second, the landlord usually offers the LWOB because he or she can’t sell the property and is desperate for cash flow. This means that the landlord will usually care much less about your credit and the bankruptcy. Third, you are locking in the potential purchase of the property at today’s lower prices, rather than the price the property might sell for in 2-3 years. And finally, you are building up a substantial down payment if you decide to buy the property later.
How can you buy the property after a bankruptcy? Under current regulations, assuming your post-bankruptcy credit is good and you’d otherwise qualify (wages, savings and debt-to-income ratios are OK), you can get an FHA-guaranteed mortgage only two years after your discharge.
Monday, December 6, 2010
ARTICLE THE THREE WORST MONEY MOVES YOU CAN MAKE
The 3 worst money moves you can make
Some of today’s most common personal-finance decisions also happen to be some of the most destructive. Here are the primary pitfalls -- and how to avoid them.
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Sound financial advice doesn't change much from year to year. Bad money management ideas, however, seem to mutate and flourish with each passing season.
Borrowing against our home equity and retirement funds, for example, was once tough to do -- and generally understood as a bad idea. Today, financial services companies encourage us to do both. Lenders also urge us to stretch farther and farther to buy our homes, often to our peril.
Ultimately, it's up to you to resist bad advice and protect your own financial futures. Here's what you need to know about three of the most popular pieces of bad advice today:
Use a home equity loan to pay off credit-card debt
Lenders love to tout home equity loans and lines of credit as a way to pay off your plastic. You'll even see some personal finance journalists parroting the company line that such loans make sense, because home equity rates are typically lower than the interest rates you'd pay on your cards -- and the interest is usually tax deductible.Americans have been taking this advice with a vengeance, cashing out more than $2 trillion of the equity in their homes between 2002 and 2005, according to SMR Research and Freddie Mac. Comparatively low home-equity rates, and stubbornly high credit-card rates, have convinced millions that this is the way to go.
The only way this maneuver really helps you, however, is if you stop using your credit cards to run up debt. Otherwise, you're just digging yourself a deeper hole.
Unfortunately, the ability to live within their means is beyond many people. Nearly two-thirds of the people who borrowed against their home equity to pay off credit cards had run up more card debt within two years, according to a study by Atlanta research firm Brittain Associates.
Oh, sure, you can borrow more against your home to pay off the new debt -- thus whittling away the amount of equity that's available to you in an emergency, and ensuring that you continue to pay hundreds or thousands of dollars a year in interest to your lender. The credit-card balances you should be paying off every month instead get stretched out for years, ultimately costing you more in interest -- even with the tax savings.
More from MSN Money
But Levin, like other planners, is adamant about not tapping home equity to pay off credit cards or anything else that won't last as long as the debt.
"The people who need to do a debt consolidation (using home equity loans) tend to need to do it again and again and again," Levin said. These folks never learn to manage their money, and they put their homes at risk in the bargain. While unpaid credit-card debt can be erased in bankruptcy, the penalty for not making your home equity payments is losing your house.
If you've already borrowed against your home equity, pay off the debt as quickly as you can. If you haven't and think you need to, cut up your credit cards first. Don't use your home equity to pay for luxuries or for anything else that won't last as long as the loan.
Borrow from your 401(k)
Companies don't have to offer a loan feature with their 401(k) retirement plans, but according to the Employee Benefit Research Institute, most of them do. Eighty-three percent of American workers covered by 401(k) plans can borrow against their accounts, and about one in five participants had an outstanding loan in 2005. The average balance was $6,946, said the Investment Company Institute.Financial services companies have encouraged employers to make loans available, saying the ability to tap retirement funds will increase worker participation in the plans. The idea is that workers are more likely to contribute if they don't feel their money is being locked away.
Video on MSN Money: Get more from your IRA
Here's a simple, no-cost way to boost the earning power of your Individual Retirement Account. Click here to play the video.
People who borrow from their workplace retirement funds, meanwhile, love to think it's a smart move, since when they repay the loan they're essentially paying interest to themselves rather than to a credit-card company or other lender.
This is true, but 401(k) borrowers also could be putting their retirements at risk. If they lose their jobs or get fired, the loan must be repaid, typically within weeks. If that's not possible -- and often it's not, since people who lose their jobs don't tend to have a lot of cash sitting around -- the outstanding loan balance is taxed and penalized as a premature distribution.
So in addition to the $6,800 you borrowed to spend on whatever, you'll be coughing up thousands more for taxes and penalties.
It gets worse, since you can't put that money back. Whatever the $6,800 might have earned in future years is gone forever. Assuming an 8% return that could cost you more than $75,000 in future retirement funds.
Like home equity, retirement funds are best left alone to grow -- and to be there for you in case of real emergency.
Stretch to buy a house
Beware, homebuyers. Everyone around you is conspiring against your financial best interests.Your real estate agent may be pushing you to buy the most expensive house you can: the higher the price tag, the bigger her commission. Your lender is in cahoots, as well. Not only will a larger loan rack up more fees and interest, but also the lender knows you'll move heaven and earth to pay your mortgage even when you're falling behind on other bills.
Your friends and family also may get into the act, telling you it's okay to stretch to pay that mortgage, since your income will eventually rise and make the payments more comfortable.
Maybe, maybe not. But anyone who's been house-poor knows the emotional, psychological and financial stress of stretching too far.
"You never want to buy as much house as lenders are willing to lend you," declares Delia Fernandez, a Long Beach, Calif. financial planner who specializes in middle-income clients. "Some people think they're willing to sacrifice to live in their dream home, but they should think long and hard about what that really means."
Buying too much house could mean giving up other things you want: vacations, eating out, a college fund for your kids, a sufficient retirement kitty. Or it could mean ever more debt, as you borrow to try to maintain your lifestyle.
Fernandez has had clients who overextended to buy a house, ran up $50,000 in debt on a home equity line of credit and then had trouble making even the minimum payments on their loans. Now any new purchase is a struggle.
"Sometimes they can't stay in the house, or they let maintenance and repairs go, which doesn't do them any good" since the value of their house declines with deferred maintenance, Fernandez said.
Traditionally, lenders limited the amount you could borrow so that your housing costs --principal, interest, taxes and insurance, or PITI -- equaled 26% to 28% of your total pretax income. Lenders today, however, are often willing to go to 33% or even higher, said mortgage broker Allen Bond.
Bond, president of the California Association of Mortgage Lender's Southern California chapter, has seen lenders approve mortgages that eat up 50% to 60% of the borrower's income.
Mortgage payments, of course, are just part of the costs of owning a house. Homeowners should plan on spending at least 1% of their homes' value each year on maintenance and repairs, according to Eric Tyson, author of "Home Buying for Dummies." Include other costs, such as bigger utility bills, homeowners' association dues and decorating, and the typical homeowner could spend an amount equal to the monthly mortgage payment on such upkeep.
That's why Fernandez recommends her clients limit their PITI to 25% of their total income.
"That's the most comfortable level for most people," she says.
If you're set on buying your dream house, figure out how much more you'll be paying each month for your new home -- and start living now as if you were already shelling out that amount. If you can pull this off comfortably for six months or more, then you can proceed with some confidence. In the meantime, Fernandez said, you can save the difference between what you're spending now and what you'll be spending in the future -- thus bolstering your emergency fund and giving yourself an even larger comfort zone.
DUMBEST MISTAKES : PART 2
Bankruptcy Planning: Ten Dumbest Things NOT to Do–Part Two
You’re considering bankruptcy, or just suffering through financial problems due to job loss, divorce, illness, other problems, or a combination of all of those things, and you want to avoid costly mistakes. Continuing my list of things NOT to do, here is part two. Call them pitfalls, call them dumb ideas, call them mistakes, but whatever you call them, don’t fall for these.
6. Be careful of trying to pay mortgage payments ahead. Sometimes what looks like smart financial planning turns out to be a problem. One example is an attempt to pay your mortgage payments ahead. Let’s say you know you are going to be on short term disability for a while. You take your savings and use it to pay your mortgage payments (or even car payments) ahead, for the time you won’t be drawing a regular paycheck. You might well think that is sound financial planning. The problem with your plan is that the mortgage company may not apply the money as you intended. Many banks and mortgage companies will apply any excess over your current payment (and any escrow shortages) to principal. So, if you send them three payments this month, they will apply the money to any the current month first, and then to principal. Next month they will still look for you to make a payment. The problem is that once they have applied the funds in that way, it is almost impossible to get them to reverse it. A better idea: leave that money in savings until it’s time to make the payment. If you are worried that you’ll fritter the money away, put it in a wholly separate savings account. Or write the checks out, but wait to send them until the payment is due. Even if your mortgage company seems willing to apply the payments as you intend, I would be cautious. Many of these practices are driven by regulation or language in the mortgage documents, and the lender may not be flexible at all. (By the way, it’s worth noting that some lenders, including student loan lenders, use the opposite tactic, called “paid ahead status,” to get you, too.)
7. Don’t borrow against your home to pay unsecured debt. Don’t take unsecured debt (like credit cards, medical bills, personal loans and payday lenders and turn it into a mortgage. It is far easier to deal with unsecured debt, and protect your assets, than it is to pay off a mortgage on your home. Not to mention the fact that it could cause you to lose your home.
8. Don’t wait until the wolves are at the door before seeking help. This one is easier said than done, and often it is the folks who are trying the hardest who are the worst offenders. I recently met with a couple who told me that they had been struggling with the decision to seek help for three years. During that time, they lost their home and two investment properties to foreclosure, closed their business, and practically everything. Ironically, they knew more than most about what they could do, and should do, but were so engaged in the struggle that they ignored the advice they would have given anyone else. I don’t know any bankruptcy lawyer who doesn’t see some version of this story on a regular basis. Seeking help early can be invaluable, can help you avoid the worst mistakes, can help you preserve assets, and may help you avoid bankruptcy–exactly the things you are trying to do on your own. Seeking help is not an admission of defeat, it’s a way to fight better.
9. Don’t exhaust your cash. This sounds a lot like paragraph 5, but my focus here is a little different. One of the most persistent urban myths about bankruptcy is that you aren’t allowed to have bank accounts, or any cash. It isn’t true–you can keep your bank accounts and you not only can keep some cash, you are going to need it. Filing bankruptcy will immediately, and probably for some time, put you on a cash basis, and you are going to need a little bit of a nest egg to cover both ordinary expenses and emergencies. An experienced bankruptcy lawyer can tell you how much it is safe to keep, and what steps you need to take to protect your cash from creditors, whether you are in bankruptcy or not. Laws can vary from state to state, so you need to ask someone who is familiar with your jurisdiction.
10. Don’t ignore the problem. It is tempting to just stick your head in the sand. It is stressful and unpleasant to deal with financial problems. I occasionally have a client who comes in carrying a grocery bag full of unopened bills and notices. I can identify with the impulse to stick them somewhere unopened. But it can cost you, especially if you are missing critical notices of legal action taken against you. You can lose your rights, and sometimes your property, by not paying adequate attention to what your creditors are trying to do. Read your mail–that is crucial. You can talk to your creditors or not–I usually recommend NOT talking to the ones who call you, but if you want to talk to them, you place the call to them. You tend to get someone higher up the totem pole that way, who is actually in a position to help you. File your tax returns, even if you can’t pay the taxes–there is nothing more crucial than this. Besides the legality of failing to file tax returns, you need to know how much you owe in taxes. I’ve had more than one client over the years who didn’t file a return because he didn’t think he had the money to pay, only to find out years later that the actual tax was fairly minimal. Of course, the penalties and interest due for failure to file is NOT minimal. Even if you are what lawyers call judgment-proof, you still need to track follow what your creditors are doing, to make sure they don’t do something they aren’t supposed to. So don’t be an ostrich, man up, and go see someone about those financial problems. I’d be willing to bet you’ll feel better afterward.
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