by Shakeal Masoud, Attorney at Law
When many consumers are in desperate need for cash they turn to payday loans or check loans. Many of these payday lenders are located in urban areas and target individuals and minorities who are struggling to make ends meet.
The concept behind a payday loan is simple. Consumers write a check for the amount they want to borrow and the lender gives the consumer the cash value minus a fee. Now perhaps the most egregious part is that the annual percentage rate could be be 500% or higher. That is not a typo, five-hundred percent! While some consumers pay back the face value of the loan with fees, many get caught in a continuous cycle of debt by extending such loans or rolling them over for another period. As fees add up and the stratospheric interest rates accrue, consumers are trapped.
Although these loans could help you overcome an immediate need for cash, their value is only immediate. The long term effects of such loans could have you filing bankruptcy quickly than you may think. A payday loan is dischargeable under a bankruptcy similar to other unsecured debts.
Nonetheless, my advice is to steer clear of payday loans, for the potential long term damage to your financial livelihood far outweighs the immediate need for cash.
If you have questions regarding payday loans contact an experienced Los Angeles bankruptcy lawyer at Sky Law Group today!
Tagged as:
Bankruptcy,
Los Angeles Bankruptcy Lawyer,
Payday loans,
Sky Law Group,
Unsecured Debts
by Shakeal Masoud, Attorney at Law
The means test is one of the new requirements under BAPCPA for an individual filing bankruptcy. The intent of the means test is to prevent abuse of the bankruptcy system. The means test is determined based on an individuals income and expenses. If a debtor does not qualify under the means test for a Chapter 7 bankruptcy filing, than most debtors typically file a Chapter 13 bankruptcy. Debtors might be aware of the means test, but very few understand what exactly is involved with each step.
We will discuss the means test, step by step, in our upcoming posts so you get a better understanding of the mechanics behind the test.
If you have questions regarding the means test, contact an experienced Los Angeles bankruptcy lawyer at Sky Law Group today!
Tagged as:
Bankruptcy,
Chapter 13 bankruptcy,
Chapter 7 bankruptcy,
Los Angeles Bankruptcy Lawyer,
Means Test,
Sky Law Group
by Shakeal Masoud, Attorney at Law
When you typically think of an insider, you automatically conjure images of an individual with secret insider information relating to shares of a company stock. Recent headlines in the media are rampant with Wall Street insider trades. However, an insider under the bankruptcy code is different.
If you are a family member, relative or even a close friend of the debtor and have received repayment for a loan prior to the debtor’s bankruptcy the trustee could consider your status as an insider. The reason is to prevent a debtor from making preferential payments at the expense of similarly situated creditors prior to a bankruptcy filing.
The bankruptcy trustee carefully reviews payments and transfers of property up to a year prior to your bankruptcy filing. If you are deemed to be an insider and made a substantial repayment to a family member than the trustee will seek to recover those funds. The trustee will sue the family member to recover those funds.
Thus, it is imperative that you do not pay a family member for a loan prior to filing bankruptcy. You must avoid preference and insider status under the bankruptcy code. You can always wait until after the bankruptcy is over to think about repayment.
If you have any questions regarding your bankruptcy, call an experienced Los Angeles Bankruptcy Attorney at Sky Law Group today!
Tagged as:
Bankruptcy,
Insider,
Loans,
Los Angeles Bankruptcy Attorney,
Preference,
Sky Law Group,
Trustee
by Shakeal Masoud, Attorney at Law
In an age where the cost of education is skyrocketing out of control, student financial aid debt has snowballed to an astronomical level. The warning signs were there twenty years ago as the price of tuition at higher learning institutions was far outpacing inflation. Overall, student debt in the United States is approaching a trillion dollars according to FinAid.org. Many students are graduating with a mortgage payment of sorts and are suffocated with monthly payments that can span twenty to thirty years if not longer. What’s most astonishing about this number is that student loan debt has now surpassed credit card debt in this country.
This leaves students who have a mountain of student loan debt with few options besides the obvious route of forbearance or deferment of their respective loans. As many people are keenly aware, unlike credit card debt, student loan debts are generally not dischargeable in a bankruptcy. In essence, private and federal loans, are with you for life as interest accrues on these loans at a staggering rate. By amassing student loan debt you are essentially exposing yourself to a life sentence of debt that simply can not go away.
Many times clients ask why student loan debt is so difficult to eliminate in a bankruptcy. The standard that a debtor must satisfy is that of “undue hardship” often applied using the three part “Brunner Test.” In the Central District of California, the Brunner Test is a difficult test to meet and therefore a student loan discharge is rarely granted. In our next article, we will look more closely at the Brunner Test and examine why it remains so extremely challenging to satisfy.
In sum, before you decide to pursue your educational ambitions, think carefully about the potential consequences that could arise.
If you have any questions relating to student loan debt contact an experienced Los Angeles bankruptcy lawyer at Sky Law Group today.
Tagged as:
Bankruptcy,
Brunner Test,
Discharge,
Los Angeles Bankruptcy Lawyer,
Sky Law Group,
Student Loan Debt,
Undue Hardship
by Shakeal Masoud, Attorney at Law
Your credit score means the world to you, so naturally when you file bankruptcy you worry how long it will take to increase your score. Often times, for many debtors a bankruptcy will help your already low credit score slowly improve. It is important to note, that after filing a Chapter 7 bankruptcy, your FICO score will increase because your debt to income ratio has improved. The key to increasing your credit score, however, is to convince lenders you are credit-worthy. Thus, it is imperative to focus on your spending habits and implement a plan to manage your finances accordingly.
To start, I often advise clients to make a stop at their local bank and get a secured credit card. A secured credit card means you are giving your bank a certain amount of money and in turn they give you a secured credit card to use for purchases up to that limit. Start by using this card for everyday purchases and always monitor your spending activity to demonstrate to lenders that you can actively manage your finances. In due time, if you have used your secured card prudently, you can request them to increase your spending limit. Although your limit is secured by the money you give your bank, this is typically the first step towards repairing your credit. Make sure your bank reports your credit history to all three credit agencies – Equifax, TransUnion and Experian.
Once you have established your credit savviness with a secured card its time to apply for an unsecured credit card. Try and get a high credit spending limit and be wary of the fine print many creditors hide with the use of such cards. Your real goal here is to always pay your balance in full each and every month. This is your time to shine to show lenders that you are able to pay your balance in its entirety and can manage credit. The rule of thumb that i give every client is to never pay the minimum balance as this is the trap that most creditors want you to succumb to. If you must use credit, set aside enough funds to pay off the balance in full.
As time passes, check in on your credit score and if you have managed your finances wisely you will be in for a sweet surprise – a higher credit score. Use this second opportunity and your fresh start as a chance to truly build a solid credit score.
As always, to discuss more strategies towards improving your credit score contact an experienced bankruptcy lawyer at Sky Law Group today!
Tagged as:
Bankruptcy,
Credit Score,
Secured Credit Card,
Sky Law Group
When many consumers are in desperate need for cash they turn to payday loans or check loans. Many of these payday lenders are located in urban areas and target individuals and minorities who are struggling to make ends meet.
