March 5th, 2010
What are Payday Loans?
Payday loans are small loans you can use when you are temporarily out of money. Most often, payday loans are short term loans (two weeks or so) for a modest amount of money usually $50.00 to $500.00. To get a payday loan, you typically write a check for the amount you are borrowing – plus a fee. You might leave the check with the lender, and they cash it once you are ready to repay, however interest accrues daily until the loan is paid in full.
Costs of Payday Loans
In general, payday loans are extremely expensive. You end up paying an annual percentage rate that may be several hundred percent, compared to 6-11% on a mortgage or up to 35% on a credit card. For example, you might pay a $20 fee to borrow, plus daily interest, $100.00 for two weeks. The Consumer Federation of America has shown that you would pay about 426% APR on a payday loan. The problem is the people who can least afford to pay the astronomical interest rate are the ones taking out such loans. This is the main pitfall of a payday loan, since the fees are so high, the debt becomes almost impossible to ever pay off and the overall debt increases extremely quickly.
People consider taking out a payday loan if they need a small amount of money, they need the amount of money fast, on a fixed income, already have existing debt maxed out, lack of savings or are embarassed to go to a traditional lending institution. However, instead of putting yourself into deeper debt with an extremely high interest, the long term solution would be to get rid of existing debt.
In the event one files for a bankruptcy, they are able to restructure or discharge their debts and be able to save for their future, rather than paying the high cost of payday loans.
If there are any general questions or topics you would like to read about relating to bankruptcy law in the Philadelphia, Pennsylvania region, you may contact the Philadelphia Bankruptcy Lawyersat Sadek Law Offices, LLC at 215-545-0008 or (877) 4-LAW-411 or email brad@sadeklaw.com. Thank you.
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February 17th, 2010
This post will serve as a follow-up to the August 21, 2009 post regarding new CARD laws. On February 22, 2010 the next wave of CARD laws go into effect. The new enactments focus on credit card laws and regulations to improve consumer awareness and financial management. The four (4) principal changes going into effect on February 22, 2010 are as follows:
1.) Payment Crediting: Generally, payments above the minimum payment due will be applied first to higher interest rate balances and then to lower rates balances. This may help in reducing interest when one holds several credit cards with a single lending institution.
2.) The payment due date will be set a minimum of 21 days following the close of each billing cycle. This will give the cardholder more time to budget and pay the credit card balances. Interest on past debt will continue to accrue during the 21 day grace period and therefore make it increasingly difficult for one to pay their debt and may need to consider a Chapter 7 Bankruptcy filing or a Chapter 13 Bankruptcy filing.
3.) Penalty APR: If a minimum payment is not received within 60 daysof the due date, the Penalty APR will affect all otstanding balances and future transactions.
4.) Overlimit Fee: You will not be charged a fee for spending over your credit card limit unless you agree for the credit card company to do so.
Although these new laws are designed to be in the consumer’s favor, however, credit card debt will still remain a very large and unaffordable expense for most households. For an understanding how these new laws will affect your circumstance, please contact Sadek Law Offices, LLC.
If there are any general questions or topics you would like to read about relating to bankruptcy law in the Philadelphia, Pennsylvania region, you may contact the Philadelphia Bankruptcy Lawyersat Sadek Law Offices, LLC at 215-545-0008 or (877) 4-LAW-411 or email brad@sadeklaw.com. Thank you.
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February 7th, 2010
The most common reasons for filing a Chapter 13 bankruptcy would be for protection from a pending foreclosure or to pay back unsecured debt based on non-exempt equity in real property. As situations change, a bankruptcy filing can as well. A Chapter 13 Bankruptcy may either be modified (change in the Bankruptcy Plan post-confirmation) or converted to another Chapter, usually to a Chapter 7 Bankruptcy. The conversion is triggered by a change in income or intent generally regarding real property. Whether a modification or conversion is desired a motion must be filed and approved by the Bankruptcy Court. The motion must show cause for conversion or change in circumstances for modification.
Normally, in a Chapter 7 case, only prepetition debts are payable from the estate and are subsequently discharged. Postpetition debts are not discharged, nor are they paid out from the bankruptcy estate. However, when the Chapter 7 is a conversion from another chapter, then debts incurred postpetition but pre-conversion become part of the debts that are paid out of the estate and are subsequently discharged.
Conversion and modification in Chapter 13 Bankruptcy can be technical and it is recommended that one seek assistance from a competent attorney specializing in Bankruptcy Law.
If there are any general questions or topics you would like to read about relating to bankruptcy law in the Philadelphia, Pennsylvania region, you may contact the Philadelphia Bankruptcy Lawyersat Sadek Law Offices, LLC at 215-545-0008 or (877) 4-LAW-411 or email brad@sadeklaw.com. Thank you.
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January 28th, 2010
http://taxreducer.net/common/imagelib/index.htm/1245_420_280_crop_c03af.jpg
For small business owners, independent contractors or those who have failed to file taxes in the past, this time of year can be daunting. This blog will discuss options available in paying back or discharging back taxes through either a Chapter 13 or Chapter 7 Bankruptcy filing. IRS back taxes carry a compounding interest rate of at least 7 percent per month. The interest on back taxes begins and continues to compound from the onset of the tax deficiency. When negotiating debt directly with the IRS, interest, penalties and late fees continue to accrue through the pendancy of a negotiated payment plan. Making payment through an offer and compromise or installment agreement with the IRS is usually extremely difficult to catch up and pay off the tax debt.
There is an advantage of filing Chapter 13 bankruptcy where IRS debt is involved. The technical term is known as “bifurcation of claim.” An IRS debt carries two main categories, the principal debt and the accrued interest and penalties. Through Chapter 13 bankruptcy a delinquent taxpayer is usually able to drastically reduce interest and penalties as an unsecured debt and pay back the principal tax debt interest free over three to five years. The Chapter 13 process affords the taxpayer a viable option to pay back taxes and remain debt free.
Moreover, the tax debt may be “discharged” through a Chapter 7 Bankruptcy filing if the following conditions are met:
1. The taxes are “income taxes,”
2. No fraud or willful evasion took place,
3. The debt is at least three years old,
4. You filed a tax return and
5. The tax debt has been assessed within 240 days.
The aforementioned list and types of bankruptcies discussed herein are highly complicated and specialized, if you are having trouble with tax or any other type of debt contact Sadek Law Offices, LLC.
If there are any general questions or topics you would like to read about relating to bankruptcy law in the Philadelphia, Pennsylvania region, you may contact the Philadelphia Bankruptcy Lawyersat Sadek Law Offices, LLC at 215-545-0008 or (877) 4-LAW-411 or email brad@sadeklaw.com. Thank you.
Tags: bankruptcy attorney, Bankruptcy Law Philadelphia, bankruptcy lawyer, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Installment Agreement, IRS Debt, Offer and Compromise, Philadelphia Bankruptcy, Philadelphia Bankruptcy Attorney, Philadelphia Bankruptcy Lawyer, Philadelphia Bankruptcy Lawyers, Philadelphia Chapter 13 Bankruptcy Lawyer, philadelphia Chapter 7 Bankruptcy Lawyer, Sadek Law Offices
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January 17th, 2010
A timeshare purchase usually reserves six (6) nights and seven (7) days in a network of resorts. The timeshare is sold through a presentation hosted by commissioned salepeople that lure purchasers with a free night in a resort and/or a free toaster-oven at best. Often my clients ask me whether they can sell their timeshares, however, a timeshare is under the law deemed only a “license” to use the resort, meaning the purchaser does not have any ownership or titled interest in the resort whatsoever. For greater example, if one has a ticket to attend a sporting event at a particular venue on a particular date, they do not own the team or even the seat, just the right to sit there for the game, they can not sell the seat or the sports team.
The reasons why people purchase a timeshare vary, on it’s face it may be presented as a good deal (ever hear a car salesman say that you are buying a lemon), or after a three-hour presentation people just sign up so they can finally leave.
Generally payment for a timeshare is taken automatically out of the purchaser’s checking account on an ongoing monthly basis, this way the monthly fee is out of sight and mind. Timeshares generally average $300.00 per month with a $75.00 maintenance fee. Let’s do the math, a combined monthly payment of $375.00 per month times 12 months is a total payment of $4,500.00 per year. Now on a per night basis, for a stay of six (6) nights, divide $4,500.00 by six (6) , and the per night cost is an outrageous $750.00 per night.
In addition to the cost of the timeshare, travel and meal expenses are also incurred. Moreover, if one is having a rough financial year, they do not have the flexibility to forego paying for their over-priced vacation because the monthly fee (averaging $375.00) is taken whether the purchaser uses the “time” or not.
Before purchasing a timeshare do your research, go online and see how much it costs to stay at a particular resort per night and compare it to the timeshare cost and most likely the timeshare will be tremendously more expensive.
There is good news. Timeshares are a dischargeable debt in Bankruptcy. Meaning that the monthly fee through bankruptcy will be turned into monthly savings. With those savings the Petitioner in Bankruptcy can save for a vacation that is affordable and on their own terms. If you have any questions about your particular timeshare, call our Philadelphia Bankruptcy Law Firm and I will be happy to discuss the financial implications of having one. Thank you for reading this post.
If there are any general questions or topics you would like to read about relating to bankruptcy law in the Philadelphia, Pennsylvania region, you may contact the Philadelphia Bankruptcy Lawyers at Sadek Law Offices, LLC at 215-545-0008 or (877) 4-LAW-411 or email brad@sadeklaw.com. Thank you.
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January 5th, 2010
Currently, mortgage modifications are negotiated between the lender and borrower outside the state or federal court systems. Representative Conyers from Michigan, has proposed a Bankruptcy Mortgage Modification Amendment as part of the Wall Street Reform and Consumer Protection Act (H.R. 4173).
The Bankruptcy Mortgage Modification Amendment seeks to allow Bankruptcy Judges to modify the first mortgage on the bankruptcy filing party’s primary residence in Chapter 13 Bankruptcy.
This would be a great help to homeowners. Currently mortgage modifications lower interest rates, spread arrearages through the duration of the loan and may lower the principal balance through federal assistance programs and/or private negotiations with the mortgage lender. However, the new bill would allow the homeowner to modify their mortgage based on the current value of their home. Therefore, if the current value of the home is $125,000.00 and the current mortgage is $175,000.00, the proposed legislation would allow the mortgage amount to be crammed down to the value of the home, in this example $125,000.00, leading to a substantial savings for many homeowners. In Chapter 13 Bankruptcy, the $50,000.00 crammed down would be deemed unsecured debt and the Petitioner would pay only a small percentage of the forgiven debt. With a lower payment and a mortgage based on fair market value of the property, homeowners would be more inclined to pay for and afford their mortgages on an ongoing monthly basis.
Such legislation is not new and has been discussed since in or about, 2007. However, the resurgence in the legislation has been fueled by the less than anticipated success of the current mortgage modification system’s ability to grant homeowners help in a timely and ongoing manner.
If there are any general questions or topics you would like to read about relating to bankruptcy law in the Philadelphia, Pennsylvania region, you may contact the Philadelphia Bankruptcy Lawyers at Sadek Law Offices, LLC at 215-545-0008 or email brad@sadeklaw.com. Thank you.
Tags: Bankruptcy Law Philadelphia, bankruptcy lawyer, Chapter 13, Chapter 13 Bankruptcy, Chapter 7, mortgage modification, Philadelphia Bankruptcy, Philadelphia Bankruptcy Attorney, Philadelphia Bankruptcy Attorneys, Philadelphia Bankruptcy Law Firms, Philadelphia Bankruptcy Lawyer, Philadelphia Bankruptcy Lawyers, Reasons to File for Bankruptcy, Sadek Law Offices
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December 23rd, 2009
To best answer this question, there are a few questions that must be asked. First of all, how much debt do you have, secondly what is the interest rate(s) and lastly what amount of money do you pay per month toward the debt(s)?
Let’s say that a person has only one credit card with a $20,000.00 balance, 15% interest rate and makes a regular monthly minimum payment in the amount of $300.00. Although that person is doing his/her best to pay off the debt in a timely basis, it will take them 95 years and 6 months to pay off the $20,000.00. Further, that person will have paid the balance of $20,000.00 plus $86,974.31 in interest charges for a total payment of $106,974.31.
If you are reading this blog, most likely you have debt of some kind. I would advise you to follow the link below to the “debt reduction planner.”
http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp
You will realize that there is probably not enough time or money to pay off your existing debt and a bankruptcy filing is most likely the quickest and least costly alternative to becoming debt free and getting the fresh-start you need.
If there are any general questions or topics you would like to read about relating to bankruptcy law in the Philadelphia, Pennsylvania region, you may contact the Philadelphia Bankruptcy Lawyers at Sadek Law Offices, LLC at 215-545-0008 or email brad@sadeklaw.com. Thank you.
Tags: bankruptcy, bankruptcy attorney, Bankruptcy Law Philadelphia, Bankruptcy Laws, bankruptcy lawyer, Chapter 7, Chapter 7 Bankruptcy, Credit Cards, Debt, debt free, file Chapter 7 in Philadelphia, get out of debt, Philadelphia Bankruptcy, Philadelphia Bankruptcy Attorney, Philadelphia Bankruptcy Attorneys, Philadelphia Bankruptcy Lawyer, Sadek Law Offices
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November 30th, 2009
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There are many financial decisions that can be made without too much research and analysis. However, the most common impulsive buying decision that my Philadelphia Bankruptcy Law Office sees is with respect to automobiles. If you are able to read this blog, you have some sort of internet access, which means there is no excuse for an impulsive buying decision.
However, with respect to automobiles, there are numerous automobile information sites such as www.edmunds.com, www.kbb.com, www.nada.com. There is no such thing as the deal of a lifetime with respect to an automobile and doing your individual research can save you thousands of dollars in the price of the new car, value of trade-in and on financing terms. Moreover, if one wants to know their estimated car payment they may consult bankrate and utilize their automobile calculator. http://www.bankrate.com/calculators/auto/auto-loan-calculator.aspx. Please be advised that a longer payment term of years may reduce the monthly payment amount, however, the buyer will be paying interest for a longer period of time and the car will be depreciating quickly in value during the payment terms, usually causing an equitable deficiency.
Too many impulsive buying decisions and lack of planning may cause one to become financially overwhelmed and a bankruptcy may be the best option.
If there are any general questions or topics you would like to read about relating to bankruptcy law in the Philadelphia, Pennsylvania region, you may contact the Philadelphia Bankruptcy Lawyers at Sadek Law Offices, LLC at 215-545-0008 or email brad@sadeklaw.com. Thank you.
Tags: automobile buying, bankruptcy attorney, Bankruptcy Law Philadelphia, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Pennsylvania Bankruptcy Exemptions, Philadelphia Bankruptcy, Philadelphia Bankruptcy Attorney, purchase vehicle, Reasons to File for Bankruptcy
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November 25th, 2009
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November 23rd, 2009
Bankruptcy Relief and Small Businesses
First, is the business a corporation, a partnership, or a proprietorship?
- Proprietorships are just an extension of the owner meaning, a bankruptcy cann not be filed on behalf of the proprietorship alone, meaning the proprietor (individual owners(s) must file bankruptcy. The bankruptcy will look into the assets and liabilities of the individual owner as an extension of the business itself. The individual owner may file a Chapter 7 Bankruptcy, Chapter 11 Bankruptcy or Chapter 13 Bankruptcy.
Advantages and disadvantages to corporate reorganization under Chapter 11 Bankruptcy.
- Reorganization can’t create a market; increase gross revenue, or make up for a poor fit between the skills available and the skills required to run the business.
- Reorganization could free up cash from servicing the old debt to permit current operations; permit rejection of leases or contracts that are no longer advantageous (an expensive facility lease or improvident equipment purchase); or prevent the loss of vital assets or cash to creditor collection actions.
Bankruptcy reorganization in Chapter 11 requires significant time on the part of the owners and managers to comply with the requirements of the bankruptcy system, interface with counsel, and negotiate with creditors. The “bankruptcy bargain” is that, in exchange for the protection of the bankruptcy protections, including the automatic stay, the debtor provides full disclosure of its financial condition to creditors and the court, both at the beginning of the case and on a monthly basis thereafter, and operates as a fiduciary for its creditors while the bankruptcy is ongoing.
Businesses that require little capital, have few assets, or are really just extensions of the owner’s skills and personality are ones that it may not pay to reorganize. The owners may be better off liquidating the business, in or out of bankruptcy, and starting over in a fresh entity.
When Chapter 7 is best
A Chapter 7, whether for the individual or a corporation, may be the best choice when
- The business has no future,
- It has no substantial assets or qualities that cannot be reproduced after bankruptcy, or
- The debts are so overwhelming that restructuring them is not feasible.
If there are any general questions or topics you would like to read about relating to bankruptcy law in the Philadelphia, Pennsylvania region, you may contact the Philadelphia Bankruptcy Lawyers at Sadek Law Offices, LLC at 215-545-0008 or email brad@sadeklaw.com. Thank you.
Tags: bankruptcy attorney, Bankruptcy Guide, Bankruptcy Law Philadelphia, bankruptcy lawyer, Business Bankruptcy, Chapter 11 Bankruptcy, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, LLC, Pennsylvania Bankruptcy Exemptions, Philadelphia Bankruptcy, Philadelphia Bankruptcy Attorney, Philadelphia Bankruptcy Attorneys, Philadelphia Bankruptcy Lawyer, Philadelphia Bankruptcy Lawyers, Sadek Law Offices
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