Thursday, 19 April 2018

Who are Debt Collectors?

When you fall behind on a debt for an extended period of time, creditors will often send your account to “collections.” As many of you probably already know, this means that you will have a debt collector calling and writing to you in an attempt to collect on the debt. Millions of Americans are pursued by debt collection companies every year, however, very few are familiar with their business model, the laws that regulate them and how best to put a stop to their abusive tactics. As a bankruptcy lawyer, I’ve seen this time and again. This post will help you get up to speed on the debt collection industry and give you practical tips for dealing with the letters and phone calls.

Who are Debt Collectors

Who are these shadowy figures that call at all hours to collect on past-due debts?

The Fair Debt Collection Practices Act (FDCPA) is a piece of federal legislation that regulates the activity of debt collectors. The FDCPA defines debt collectors as:

any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.

Just as the name implies, debt collectors are individuals or businesses whose primary job is to collect debts. Although they usually have funky names like RNC Financial or Arrow Financial Services, collection law firms who regularly pursue past due accounts qualify as debt collectors. It is important to be aware be aware that original creditors, such as a bank or credit card company, will not be governed by the FDCPA because they do not fit the definition of a debt collector. The principal purpose of their business is not to collect debts. Generally speaking, the only time an original creditor will qualify as a debt collector under the FDCPA is when they use a name other than their own to collect the debt. In these cases, the FDCPA considers creditors to be debt collectors because they are behaving like collectors.

How do debt collectors get paid?

There are two common arrangements under which creditors work with debt collection companies: contingent payment and debt sale. Under a contingent payment arrangement, the original creditor hires a debt collection company to pursue a delinquent debt, with the collection company receiving a percentage of the amount they are able to collect. Depending on the type of debt, the age of the account and how many attempts have already been made to collect on it, the fee for successfully collecting could range from 10% to 50%. The advantage for debt collectors in a contingent arrangement is cost; they aren’t required to front any money in order to gain the right to pursue the debtor.

By contrast, the second most common arrangement under which creditors work with debt collection companies, selling debt, requires debt collectors to purchase past due debts so that they can then try to come after the debtor for the full outstanding balance (or as much of it as they can get). In cases where a borrower has fallen behind and the creditor views the likelihood of successful collection to be small, they may elect to sell the debt at a highly discounted rate to a debt collection company. For example, Creditor X is owed $500,000. Based on the financial picture of the borrower, Creditor X calculates a very small likelihood of collecting the full outstanding balance. In order to recoup some money, Creditor X sells the $500,000 debt to a debt collector for $100,000 or 20% of the outstanding loan balance. The debt collector then pursues the debtor for as much of the outstanding balance as possible. Everything they collect over and above $100,000, is profit.

Consumers need to be aware that the sale of debt in no way guarantees that the debt collector has the legal right to collect. In many cases they do not. Numerous articles have been written on this Forum about debt collection companies who buy “zombie debt,” i.e. debt that is no longer owed due to the expiration of the statute of limitations. In other words, it is not uncommon for debt collection companies to try to pursue consumers for debts that they do not legally owe.

Who regulates debt collection companies? How can I stop them from calling?

Debt collectors are regulated by state and federal law. The scope of this article is to short to address all of the various state laws on the subject, so we will continue to discuss the federal FDCPA instead. I you have questions about your state’s consumer protection laws, it’s always best to contact a local attorney.

Now back to the FDCPA. In order to address widespread abuses in the debt collection industry, Congress passed the FDCPA in order to rein in the tactics of debt collectors. The FDCPA prohibits abusive or coercive behavior in pursuit of a debt and awards consumers statutory damages of $1,000 for each violation of its code of conduct.

Specifically, debt collectors are prohibited from contacting 3rd parties, such as family members and friends of the borrower, when they have knowledge of the borrowers current contact information and address. They must limit collection calls to reasonable hours and must not intentionally harass debtors. Further, once a consumer communicates to a debt collector in writing that they wish for communications to cease or the collector learns that the debtor has hired an attorney, the collection efforts must stop.

Always send written correspondence via fax or certified mail so that you can prove it was sent. If it becomes necessary to pursue a claim under the FDCPA, proof of written communication will help your case.

Debt Collector Law Summary

Debt collectors are third-party businesses whose sole purpose is to collect debts. Under federal law, original creditors do not qualify as debt collectors unless they are attempting to collect under a different business name than was used to extend credit in the first place. Debt collectors get paid when they collect on delinquent accounts; either as a percentage of what they’ve collected or after purchasing the debt outright. State and federal law regulate the debt collection industry. The FDCPA prohibits abusive or coercive tactics on the part of debt collectors when they are pursuing a debtor. If you find yourself overwhelmed by collection calls or letters, it is always a good idea to meet with a local attorney. There are powerful laws that can help.

Free Consultation with Bankruptcy Lawyer

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in or call in for your free initial consultation.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Wednesday, 18 April 2018

Estate Planning for Blended Families

When parents remarry, children naturally feel the need for security and love from their parent. A blended family can be a major adjustment for all children and spouses. With some thought and planning, you can ensure that all of your loved ones are provided for in your estate plan, and ensure that your family remains harmonious and integrated even through the most stressful times.

Estate Planning for Blended Families

An estate planning lawyer can sit down with you and your spouse, learn your unique needs and concerns, hopes and fears, and then craft a custom estate plan and gifting strategy that will respect your wishes and ensure they are carried out.

Second Marriage

So you’ve gotten married, have settled in, and are ready to start your new life with a wonderful new life partner. Congratulations! Second marriages present many opportunities for happiness and fulfillment. They also present the opportunity for spouses to work together to prepare a comprehensive estate plan that considers the needs and concerns of both spouses, their respective children, children born into the marriage, and any goals the new family has set for their future.

Considerations in Estate Planning

When spouses have prior children, unique estate planning strategies are needed to ensure that the blended family remains harmonious and cooperative throughout the marriage and after the death of one spouse. We are all too familiar with the family contention and discord that happens when a parent dies without an estate plan in place. Add the concerns presented by children from multiple marriages and it becomes readily apparent that a comprehensive estate plan and gifting strategy is more important than ever: a plan that considers the assets of each parent, their wishes to help their children later in life, and the new couple’s own children’s needs, possibly.

Many people feel that leaving their property to their spouse at death is the easiest way to deal with estate planning. But vague assurances or even the most optimistic of hopes that the children and surviving new spouse can work it out are no substitute for a real estate plan. Leaving property to the spouse does not ensure that all the children of both spouses are provided for. It can also result in unwanted tax consequences, eroding the legacy you worked so hard to provide. Children from the previous marriages need to feel security: they need to know that with dad’s new wife or mom’s new husband, they will not be forgotten. Cherished family heirlooms are meaningful to them, and they want to make sure special memories stay in their lineage.

Beware of joint tenancy

Property held in joint tenancy poses a special danger for the blended family: when one spouse dies, title automatically transfers to the surviving spouse and becomes part of his or her estate. Eventually, it will pass to the children of the surviving spouse only. Your children may have grown up in and become attached to that home, but may end up disinherited from those fond sentiments while the home goes to their step-siblings who do not have the same emotional investment in it.

Free Consultation with a Utah Estate Lawyer

If you are here, you probably have an estate issue you need help with, call Ascent Law for your free estate law consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Tuesday, 17 April 2018

Financial Planning for Beginners

Earlier this year, household debt balances in America rose to $12.73 trillion, the highest in our history. In fact, 73% of us die in debt. With this much debt, it’s hard for many people to reach long-term goals such as retirement savings, or shorter-term goals such as paying for a wedding. Many of us just wing it when it comes to our finances, thereby decreasing our opportunities and our joys in life. But with a bit of planning, we can take control of our finances, which gives us much more control over our lives and our futures.

Financial Planning for Beginners

You will find that the following guidelines make a big difference.

Set Your Financial Goals

We all know it’s impossible to get anywhere without knowing where we want to go. Many of us have more than one financial goal, which means we need to set priorities. That doesn’t mean you can’t work toward more than one goal at once. Think about what is the most important thing to you now:

  • Paying off debt;
  • Contributing to an emergency fund;
  • Saving for short- or medium-term goals, such as paying for a wedding or a vacation; or
  • Saving for long-term goals, such as retiring comfortably.

In order to reduce both your risk and your anxiety, it’s best for most people to prioritize paying down their debt and building an emergency fund but without ignoring their retirement. Of course, your goal setting will depend to a large extent on your priorities in life. Recognize what those are and plan your spending accordingly. For some people, buying a large, comfortable house is paramount. For others, travel and new experiences are more important. Neither is right nor wrong. The point is to plan and act to make your personal goals become a reality.

Pay off Debt

Many people wonder how they got into so much debt and they don’t see a way out of it. But you can climb out of debt with good planning. If you are part of an average American household, you may have $15,654 in credit card debt, $27,669 in auto loans, and $46,597 in student loans. And almost half of credit card holders have revolving debt, meaning rather than paying off their debts every month, they carry it forward. If you have these kinds of debts, you are probably paying thousands of dollars per year just in interest.

Also, if you are in debt, you may occasionally overdraw your bank account trying to cover payments. That’s usually a minimum $34 bank fee and more if you don’t repay the money almost immediately. Banks are thrilled when you overdraw. They make more than $30 billion every year in overdraft fees.

Contribute to an Emergency Fund

If anything is constant it’s that nothing is constant. Life happens, and you need to be have a little cash put away for an emergency. Try to have at least enough money to get you by for three months. Six months is better. Shockingly, about 70% of Americans have less than $1,000 in the bank. If you have sudden medical bills, an accident, or lose your job, you need some cushion. If you don’t have an emergency fund, this should be a top priority.

Save for Short- and Medium-Term Goals

Once you have your debts under control and have a comfortable emergency fund, you may want to turn your attention to some short- or medium-term goals. This could be anything from buying a car, going on vacation, or buying a house. Life is to be enjoyed. Just don’t pursue these goals while going deep into debt or ignoring putting money aside for an emergency.

Save for Long-Term Goals

Of course, a long-term goal everyone should have is saving for retirement. Here are a few ways to do so:

  • Start putting money aside as soon as you can, even if it’s only $50 per week.
  • Don’t put your retirement behind everything else. It is far too easy to push it off. Don’t steal money from your retirement to renovate the kitchen or fly to the Bahamas for a few days.
  • If your employer will match retirement funds, put in the maximum amount they will match.
  • If you are over age 50, you can make a larger retirement contribution. Do this.

Know Where Your Money is Going

The first step to reaching your goals is understanding what you have to work with. You need to know where your money is going before you can redirect it to be more in line with your goals.

  • Go through your bank statements and receipts and list what you are spending on.
  • Separate your costs into two groups. The first group is fixed costs, such as rent or mortgage payment and insurance. The second group is flexible costs such as going to the movies and other entertainment, eating out, and gasoline.
  • Make a note of your assets and net worth.
  • Check your credit scores.
  • Add up your debt.

You don’t need to go back years. Just take a look at your spending and financial information from the last few months.

Build a Budget

Just as you can’t get anywhere without deciding where you want to go (your goal), you also can’t get there without a plan. Once you have a firm grasp on the money you have coming in, your debts, your expenses, and how you spend your extra money, you need to make a budget.

“Budget” is a word that can strike terror into the hearts of many people to the point that they become paralyzed with fear. The word can conjure images of failure, similar to the word “diet.” There is no need to put yourself through this. Your budget doesn’t have to look like anyone else’s. Recognize your personal priorities and be realistic.

If you are saving for a short- or medium-term goal that is extremely important to you such as a big wedding or a vacation, you might be willing to tighten your belt in some areas for a bit. But if you live and die for weekend golf or morning lattes, those may not be the first place to look at cutting your spending.

Just realize you may not be able to have it all, at least not all the time.

Get Help if You Need It

Some people become almost paralyzed with fear when it comes to dealing with their finances. If sifting through your financial records and creating a budget is too much for you, get help. There are various levels of help according to your needs. Help can come in the form of budgeting software, budgeting services, financial advisors, accountants, and bankruptcy attorneys.

The most important thing is that you get started immediately, because your future won’t wait.

Free Initial Consultation with a Utah Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Monday, 16 April 2018

An Employee is Hurt During a Workplace Emergency – Can the Employer be Held Liable?

Whenever a crisis arises in the workplace, there is often concern regarding who is liable — whether it’s the government, a healthcare provider or the company itself. Liability during emergency situations is a tricky matter, and many businesses could be held accountable for employee injuries if they respond in the wrong way or fail to respond at all.

An Employee is Hurt During a Workplace Emergency - Can the Employer be Held Liable

Emergency situation liabilities can stem from a wrongful death case to a slip and fall case that may involve a lawyer. This can put a lot of pressure on both employers and government officials from West Jordan, Utah to the rest of the state.

Potential Areas of Liability

Emergency first responders can potentially be held liable under matters of civil and criminal liability. They may be protected by different liabilities and waivers, but there’s still room for egregious conduct when responding to an emergency situation. For instance, an unfortunate slip and fall could arise during an emergency — and first responders could potentially be held liable on grounds of negligence.

Civil Liability

Civil liability is most likely where liability issues are going to arise. Civil liabilities include negligence, intentional harm, privacy violations, discrimination or misrepresentation. Even though one particular employee may have been responsible for an injury, the employee’s company would be held liable, as an employee acts as a representative of his or her company. However, an intentional tort can place blame upon an individual, if intent to harm can be successfully proven.

So if an employee were to intentionally trip someone, resulting in a slip and fall injury, then the employee could be held liable. If an accident were unintentional, then a company would have to hire a good lawyer out of West Jordan in order to ensure a smooth court case.

Defense in Intentional Torts

If you and your lawyer find yourself involved in an intentional tort case, there are two general arguments that you can make: you can either argue consent or necessity. In the argument of consent, such as in the case of a drug injury, one can argue that the patient was informed beforehand of what drug was going to be administered. This argument can also be used if medicine was administered while the person was unconscious.

Another argument that can be used is necessity. This could be used in a case in which someone intentionally causes a person to slip and fall in order to protect the person from further harm. These are a couple of routes that your West Jordan-area lawyer may take if you are involved in an intentional tort lawsuit.

Negligence

In an emergency situation, employers should do everything within their power to assist employees in danger — if not, they could be held liable for an injury due to their negligence. This could be a tough case for your lawyer to argue, especially if you had to opportunity to provide assistance but failed to take action. Your West Jordan-based company could be found liable for an injury due to negligence if you weren’t properly prepared, or breached some kind of employee confidentially.

If you find yourself in court in West Jordan Utah due to a slip and fall case during an emergency situation, use this knowledge and be prepared.

Free Consultation with a Utah Business Lawyer

If you are here, you probably have a business law issue you need help with, call Ascent Law for your free business law consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Sunday, 15 April 2018

Claims in a Business Divorce

When conflict within a privately owned company cannot be resolved through negotiation and the parties stand at the brink of filing litigation to resolve their disputes, the parties must analyze whether their claims are direct or derivative in nature. The distinction between direct and derivative claims and claim procedures may trap the unwary.

Claims in a Business Divorce

Direct Claims in a Business Divorce Case

Direct claims are those claims brought by an owner for losses suffered directly to that owner and are unique to the owner. In the personal injury context, the plaintiff is entitled to bring claims based upon their bodily injuries caused by the wrongful conduct of the defendant(s).Similarly, claims by a business owner must only be for the economic harm or equitable relief necessary to correct the wrong by the defendant(s).

Derivative claims are claims brought by an owner on behalf of or in the right of a corporation or LLC. The shareholder steps into the shoes of the company to enforce the rights of the company against the defendant(s).The owners’ claims arise because of their ownership in the company.

Stemming from these basic definitions are issues related to whether damages being sought are truly direct or damages suffered by all shareholders. If the damages claimed are suffered by all shareholders then the claim is not direct.

Derivative Claims in a Business Divorce

In Utah, the code discusses the necessary steps for a derivative claim. An LLC derivative proceeding is governed similarly under the Utah Code Annotated as well. First, a shareholder may not commence or maintain a derivative proceeding until it is established that the shareholder was an owner in the corporation at the time of the act or omission or became a shareholder through transfer by operation of law from someone who was an owner at the time of the wrongdoing. In addition, the shareholder must fairly and adequately represent the interest of the company in enforcing the rights of the company.

A shareholder may not start a derivative lawsuit until a written demand has been made upon the corporation to take suitable action to correct the wrongdoings and recover losses for the company. In addition, once a written demand is received, ninety days must expire from the date of the demand before a lawsuit may be commenced. Exceptions to this rule exist when the demand has already been rejected, the statute of limitations will expire within the ninety days, or irreparable injury to the company would result by waiting for the expiration of the ninety days. The purpose of the written demand is to give the company an opportunity to investigate the claims and take action prior to being embroiled in litigation. If the corporation does commence an inquiry even after the demand and a Complaint has been filed the court may take action to stay the derivative proceedings for a period necessary to complete such investigation.

If the parties are now prepared to file their litigation, they must also comply with the Utah Rules of Civil Procedure. The Complaint should be verified and allege that the plaintiff was a shareholder or member of the company at the time of the transaction or obtained their ownership interest by operation of law from someone who was such an owner. The Complaint must further allege with particularity the efforts made to obtain the action desired from the directors or other management authority of the company and the reasons for the plaintiff’s failure to obtain the action sought or for not making such an effort. In addition, the plaintiff must demonstrate that they fairly and adequately represent the interest of all shareholders or members similarly situated in enforcing the rights of the company.

Termination of Derivative Proceedings

A derivative proceeding may not be dismissed or compromised without approval of the court after notice. On the termination of the derivative proceedings, the court may make orders with respect to expenses incurred including attorney fees. If the court finds that the plaintiff’s derivative action has resulted in a substantial benefit to the corporation it may order the corporation to pay the plaintiff’s expenses and fees. However, if the court finds that the derivative proceeding was commenced or maintained without reasonable cause or for an improper purpose, the court may order the plaintiff to pay all defendant’s reasonable expenses and fees.

The Utah statutes have a procedure which effectively terminates the plaintiff’s derivative claim and the right to be heard before a jury or a judge if certain conditions are met. First, if the corporation investigates the matter and resolves internally the issues raised in the derivative demand the basis for the lawsuit is eliminated. The second method available to obtain early termination of the litigation is for the corporation to move the court to appoint a panel of one or more independent persons to determine whether the maintenance of the derivative proceeding is in the best interest of the corporation. The court appointed panel, like the company appointed panel, must conduct a reasonable inquiry in good faith and if it concludes that the maintenance of the derivative proceeding is not in the best interest of the corporation, the corporation may ask the court to dismiss the claim. In sum then, the plaintiff’s claim falls to the hands of either a court appointed or company appointed independent panel to determine whether or not the claim should effectively be maintained in litigation. If in fact it is determined by this panel that the maintenance of the derivative proceeding is not in the best interest of the corporation, the plaintiff then has the burden to prove by clear and convincing evidence that the panel has not acted in good faith, may not have conducted a reasonable inquiry and has drawn a conclusion that is not in the best interest of the company.

In a business divorce context, plaintiffs pushing for separation who file direct or derivative claims, effectively have two fronts to attack the wrongdoers or those from whom they would like to separate. Derivative proceedings present a procedure that may reduce the cost of litigation by use of the independent panel. The pressures of litigation may force the parties to separate hopefully by settlement rather than litigation because of the direct or derivative claims.

Free Consultation with a Utah Business Lawyer

If you are here, you probably have a business law issue you need help with, call Ascent Law for your free business law consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Payday loans and Bankruptcy

Even though the holidays are over, people of every income range have been buying gifts for others and now the lenders want to collect. For many, this is just an added year-end expense. Others who feel the pressure to give to family and friends but don’t have the money may look for other ways to fund this seasonal expense. The ads for “payday” loans tend to prey upon that need, offering quick cash now with a short-term temporary loan. But before giving into temptation, be aware of the pitfalls that could affect your financial future into next year…and beyond.

Payday loans and Bankruptcy

What is a payday loan?

Also known as a cash advance or a check loan, a payday loan was originally given that name because repayment of the loan was typically due on the borrower’s next payday.

Some common features of payday loans include:

  • the loan is for a small amount, generally $500 or less;
  • repayment is usually due on the borrower’s next payday;
  • the date of your next payday is disclosed to the lender to allow the lender to draft a payment from your checking account when the payment is due; and
  • the loan has unusually high interest rates.

Generally, the loan can be used for whatever purpose it is needed: the necessary, such as an emergency medical bill or an overdue electricity payment, or the frivolous, such as a quick weekend trip. But the key to using the loan in the most advantageous way depends on when and how the loan is repaid.

The Trouble With Payday Loans

Regardless of when the loan is repaid, the interest rates charged by the lenders are exorbitant compared to other credit sources. Interest on credit cards typically ranges from 12 percent to 30 percent on an annualized basis. A payday loan, on the other hand, generally carries a finance of charge of $10 to $30 of every $100 loaned. The annual percentage rate (APR) on a charge of $15 per $100 rate would be about 400 percent.

The interest rate alone is bad, but the real problems begin when the loan is not repaid within the two-week period. Obviously, most people who turn to a payday loan for a critical expense one week are unlikely to be in a greatly improved financial position in two weeks. In many cases, the borrower has to rollover the loan to the next payday (or the next, or the next…) and the high interest rates continue to accrue.

Payday Lending Online

That’s an ugly picture, but it can get worse. Payday lending is illegal in many states, but lenders will often operate online in order to get at consumers across state lines. Beware the online payday lender – many of them are just scams. They’ll collect an upfront fee and leave you with nothing. The website (and your fee) will disappear into the night and you’ll be left with less cash than before.

Who uses payday loans?

When considering the “typical” payday loan borrower, the obvious answer is someone in at least short-term financial trouble. But a study done by Pew Research in 2012 provides more specific information: most payday loan borrowers are white women between the ages of 25-44. In addition, the study identified five groups that are more likely to take out a payday loan:

  • those without a four-year degree;
  • those who rent, rather than own, a home;
  • African-Americans;
  • those who earn less than $40,000 per year; and
  • those who are separated or divorced.

Payday Lending Under Pressure

Many states have outlawed payday loans, having found them to be predatory and taking advantage of the people who use them. On the other hand, the lenders may choose to not do business in states that do allow them because those states have tightened their regulations on payday lenders to the extent that the lenders no longer make enough of a profit in those states due to the restrictions on interest rates and fees.

In 2013, the Consumer Finance Protection Bureau launched an aggressive investigation into payday lenders and their effect on American finances, soliciting complaints from consumers about their experiences with the loans. A year later, the Bureau has investigated almost 1600 of these complaints. Of those investigations that have been closed, only about 11 percent have resulted in a favorable outcome for the borrower.

During its investigation, the CFPB found that about 12 million Americans use some form of these loans. But the most disturbing part of the investigation was the discovery that almost 4 out of every 5 of the loans are not repaid within 14 days, causing the continuing high-interest renewal or rollover. And over 60 percent of those borrowers roll the loan over so many times that the interest and other fees end up being more than the original loan amount.

One consumer group, the Consumer Federation of America, states that the fault with the system is that the lender focuses on the ability to collect, not necessarily the borrower’s ability to repay. With access to the borrower’s checking account or employer information, the lender is in a position to collect the money owed if necessary.  But why do that when more money can be accrued by just continuing to rollover the debt and increase the interest owed over and above what was originally loaned.

Another consumer group, Consumers Union, is looking for changes to be made and enforced in the industry. Among its recommendations are:

  • limit the fees and interest that can be charged on the loans;
  • make repayment schedules longer, e.g., a few months rather than a couple of weeks; and
  • put a cap on the number of payday loans one person can borrow in one year.

Payday Loans in Bankruptcy

For those whose financial picture doesn’t improve enough to stop the continual rollovers and renewals, bankruptcy may eventually be an option to consider. If taking out payday loans is all that keeps a budget afloat, it may be time to look at putting a stop to the revolving door.

While payday loans in general may be discharged in bankruptcy, there are situations where the lender may have a valid objection. First, some debts incurred within 70 to 90 days of filing bankruptcy cannot be discharged because the creditor may claim that the debt was incurred while planning to file bankruptcy and discharge the loan with no intention of ever paying it back.

Free Consultation with a South Jordan Bankruptcy Lawyer

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in or call in for your free initial consultation.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Saturday, 14 April 2018

Trust Is Crucial in Attorney-Client Relationships

There is no substitute for building trust with clients. It establishes open lines of communication, increases cooperation and ultimately drives the profitability of a law practice. Clients who trust their lawyer are eager to meet their lawyer’s needs, making the working relationship enjoyable for the lawyer and supporting staff. Yet, increasingly, I hear lawyers voice their frustration with the practice of law and specifically with clients who demand too much of their time, or clients who are not eager enough to support the lawyer in meeting the client’s objectives. A lack of trust or a breach of trust is often at the root of these problems.

Trust Is Crucial in Attorney-Client Relationships

Trust is Determined by the Client

Trustworthiness of the lawyer is a subjective determination made by the client. If this feels like a burden to lawyers, well, welcome to the practice of law. Another way to look at the subjectivity of this determination is that it’s an opportunity. A lawyer who believes that every interaction with a client will result in either building or diminishing trust looks for—and creates—opportunities to strengthen the relationship at every turn. Bankruptcy lawyers are no exception.

Bankruptcy clients are admittedly anxious and fearful. They don’t know who to trust. They’ve often been lied to and they’ve been told numerous stories. They feel like they are failing, which leads to embarrassment and often anger. To boot, they typically enter the lawyer-client relationship with a perception of lawyers that has the potential to be an ongoing barrier for both the lawyer and the client.

What’s a lawyer to do?

Rather than resent a client who is reluctant to give information or calls too often, try a different approach. Imagine what their experience must be like. Put yourself in their shoes. Actually connect with the anxiety that comes from a phone that won’t stop ringing; every caller a constant reminder of your failure to meet your obligations. You may not have gone through a bankruptcy, but surely you’ve been anxious, angry.

The next time you interact with a client, listen for cues to their emotional state. Does their tone of voice change when discussing a particular creditor or an upcoming financial hurdle? If so, use that as an opportunity to openly reflect that you have been thinking about them and their situation. Ask them how they are feeling. Guess at how they might feel. And then let them talk. You’ll be surprised by the results.

Trust can be built in the moment. These small pieces of a conversation take a minute, sometimes two minutes. As a result, the lawyer-client relationship is strengthened, and both parties benefit from it for the duration of the representation. A human connection is made. That connection inspires you to understand the client’s full range of needs, and inspires the client to do whatever it takes to assist you in getting the job done. It also happens to be an enjoyable way to practice law.

What Property Can I keep In A Bankruptcy?

People considering bankruptcy often have the misperception that they will lose all of their property if they decide to file. Fact is, only non-exempt property will be eligible for sale in a chapter 7 bankruptcy.

Filing bankruptcy doesn’t have to mean losing all of your property

As a matter of public policy legislatures at both the state and federal levels have enacted exemption laws to ensure that those who seek bankruptcy protection are able to retain property through the process. Exemption laws vary by state and designate certain property that is exempt or protected from creditors.

An example using real estate

For example, let’s say a state’s homestead exemption allows a married couple filing a joint bankruptcy case to protect $37,500 of equity in their home. Therefore, assuming they could afford the mortgage payments after bankruptcy, this theoretical couple could keep a $500,000 home through the bankruptcy process as long as home equity does not exceed $37,500 (as long as the mortgages encumbering the home added up to about $460,000). Equity is calculated by subtracting debt on the property from its value. The entire value of property is not the determining factor for exemption purposes.

The same principle applies for cars

The same principle applies for cars. If you currently owe $10,000 on a car that is worth $12,000, most exemption statutes will allow the $2,000 of equity in the car to be protected from your creditors. You will be able to file bankruptcy to shed burdensome debt while retaining your car.

When you think about it, the application of the laws make sense. We no longer have debtor’s prisons. People in financial peril need relief, and often the Bankruptcy Code is the means to receiving this relief. Could a consumer truly obtain a fresh start financially if they were left with no home and car? Of course not. Therein lies the policy justification for exemption laws. Consumers who find themselves in financial trouble must be left with some property so they can get back on their feet.

Even is stuff is sold, you’ll receive a check for the amount of the exemption

It should be noted that even if you have non-exempt equity in property, you may have the option of paying the value of the non-exempt portion of the property to the bankruptcy trustee in order to keep it. If the property is sold by the trustee, you will still be entitled to a check for the value of the exemption. To harken back to our homestead example, if you had $60,000 of equity and the trustee sold your real estate, you’d get a check for $37,500 after the sale. A sale does not defeat the exemption.

Then there’s always chapter 13 bankruptcy

Alternatively, chapter 13 bankruptcy can provide a nice solution for consumers who want to get their debt under control but have significant non-exempt assets. Chapter 13 bankruptcy allows debtors the option of paying out the value of non-exempt property to their creditors over time while slashing credit card debt and other unsecured debt. It is important to consult with a knowledgeable bankruptcy attorney in order to determine the effect that your state’s exemption laws will have on you and your property.

Free Initial Consultation with a Utah Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Exercise, Eat Healthy and File Bankruptcy

If you find yourself deep in debt and are desperately trying to avoid bankruptcy, it might be time for a paradigm shift.

Not only does bankruptcy provide relief from debt, it provides relief from chronic stress that can lead to poor health. Constantly worrying about bills and your financial future is far more toxic than a negative line on your credit report.

It is rarely, if ever, discussed, but filing for bankruptcy could actually improve your health and prolong your life

How did I reach this conclusion?

Exercise, Eat Healthy and File Bankruptcy

For starters, I’ve represented clients in numerous bankruptcy cases and have seen firsthand the relief that starting over financially can provide. People generally don’t regret filing bankruptcy, they welcome the opportunity to begin anew, and many are able to successfully turn their lives around. Unfortunately, the reason for personal bankruptcy success stories is often lost in more technical discussions of the amount of debt that was discharged, what chapter the debtor filed under or whether tax debts were eliminated.

The real value of bankruptcy is stress relief.

Arnold Palmer famously said that golf is 90% mental. Well, the same is true of debt.

It’s never the actual red in the ledger that causes debtors to suffer, it’s the worry about supporting a family, collection phone calls, lawsuits, foreclosure and the myriad of other mental beatings the seriously indebted are forced to endure. Whether it’s fear of having a credit card rejected at the grocery store or concern over a pending wage garnishment, consumers who find themselves in debt are constantly reminded of their predicament. They can’t escape mentally. The debt follows them wherever they go, becoming their constant companion, causing incredible stress that breaks up marriages and ruins friendships.

Make no mistake, this debt stress can make you sick.

According to the Clinic, the following conditions are caused in whole or in part by stress:

  • Heart disease
  • Sleep problems
  • Digestive problems, such as irritable bowel syndrome
  • Depression
  • Obesity
  • Memory impairment
  • Worsening of skin conditions, such as eczema

Heart disease is still the number one cause of death in America today. Over time, digestive disorders, such as irritable bowel syndrome, can lead to cancer and other more serious conditions. Depression robs its victims of their desire to use their God given talents, taking the very meaning out of one’s life. You get the idea, the implications of stress caused by debt reach well beyond your checking account.

It’s not just about debt, it’s about your health.

Consider your daily thought patterns. If you’re deep in debt, they will be consumed by plans to pay back creditors, stave off lawsuits, keep your children from finding out how bad things have gotten, keeping up appearances with neighbors, and on and on the nightmare goes. Although the mental aspect of health doesn’t get as much play as more “scientific and provable” diagnoses, the toxicity created by debt stress is very real.

How can you properly focus on a child’s sporting event, or a project at work when you are consumed by stressful thoughts about debt?

How can you and your spouse enjoy and support each other when your interactions are constantly blighted by fear and uncertainty?

Bankruptcy is not anyone’s first choice, and it is certainly not a process to be entered into lightly, however, it does provide an opportunity to start over spiritually as well as financially.

For some, the benefits of that opportunity do far more than merely eliminating debt.

Free Consultation with a Utah Bankruptcy Attorney

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in or call in for your free initial consultation.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Friday, 13 April 2018

Why Draining Your Retirement To Save a Doomed House from Foreclosure Before Filing Bankruptcy is a Mistake

Should I use retirement to pay a mortgage?

Twice in the last two days I have had the same discussion with two prospective clients. Each client owned a house that at the height of the market was worth over two million dollars. In each case, the client had encumbered the house with a loan for about a million dollars a few years back. Each client had suffered significant financial set backs related to the current economic recession. Both clients had been paying mortgage payments close to $10,000.00 per month from their retirement accounts for the past year, and both clients were now at the end of their rope, with their retirement accounts dwindled to a mere pittance.

Why Draining Your Retirement To Save a Doomed House from Foreclosure Before Filing Bankruptcy is a Mistake

Monday morning quarter backing on the eve of filing bankruptcy does not bring back a depleted 401K or IRA. But there is a lesson for others in these two cases. Before tapping out your 401K or IRA to continue paying a mortgage on a house that is doomed to end up in foreclosure, know your bankruptcy options.

Retirement accounts are often exempt in bankruptcy

Nearly all retirement accounts that are governed by the Employee Retirement Income Security Act (ERISA, as it is called), including pensions and 401Ks, are not assets of a bankruptcy estate because they almost all universally contain an anti-alienation clause that protects them from the reach of creditors. Due to recent amendments to Section 522(n) of the Bankruptcy Code, Individual Retirement Accounts (IRAs), and other similar retirement savings vehicles, while assets of the estate, enjoy special protection capped at $1 million.

What does all this mean? It means in most cases, all the money drained from retirement accounts to keep a doomed mortgage out of foreclosure for an extra year, could have survived a bankruptcy. Retirement accounts exist to help you survive in your twilight years. It does you no good to waste these assets to delay an otherwise inevitable foreclosure. If you find yourself in this situation, before draining your 401K or IRA, talk with a bankruptcy lawyer with experience in foreclosure defense about your bankruptcy options and foreclosure defense options.

How Can I Repair My Credit?

Whether you filed Bankruptcy or have faced foreclosure, repossession or a delinquency on a loan, it is a fact of life that your credit score can fluctuate. Access to credit is important when applying for a car or home loan or when starting a new business, the lower your credit score, the higher your interest rate will likely be.

Improving credit after bankruptcy or foreclosure

FICO scores range from 300 to 850; the median score is 723. To get the best rates, you’ll usually have to have a score of at least low- to mid-700s, so how can you repair your credit score after it has been damaged?

Credit Repair Steps to take

Unfortunately, it is far easier to bring your credit score down than it is to make improve it. Nevertheless there are steps you can take.

Step #1: visit annualcreditreport.com

Start by visiting www.AnnualCreditReport.com, a website set up under federal law to give consumers access to their credit reports. Be on the lookout for impostors, AnnualCreditReport.com is free, there will be no need to supply your credit card or make any payment. There are three different consumer credit agencies (ExperianEquifax and TransUnion) that compile information that factors into your credit score. Not surprisingly, the three agencies don’t always agree. It is important that you go through each report and identify any errors. Did you recently pay off a debt that is listed as delinquent?

Step #2: Write to the credit agencies

It is important to write to the credit reporting agencies both to correct errors as well as to explain any delinquencies. It is perfectly reasonable to write a letter to the credit reporting agencies explaining why you have been late on a mortgage or were forced to file for bankruptcy. Lenders view your credit score in its proper context. Perhaps you have been a victim of mortgage fraud and were forced to file bankruptcy to protect your assets from an aggressive lender. Maybe the economic downturn has caused a salary decrease that made it hard to stay current on car payments. Whatever the Cause of your credit taking a hit, it is crucial that you weigh in on the problem and voice your perspective. It can help.

Step #3: pay your bills on time

I advise my clients who have filed for bankruptcy to be meticulous in paying every bill on time after filing. The same principle applies to anyone trying to repair their credit as payment history is one of the biggest factors in determining your credit score. It may be a good idea to open a single credit card, use it only for groceries and then pay the balance in full each month.

Step #4: debt to income ratio

Filing bankruptcy can actually improve your credit score. Why? Because another factor lenders use in their underwriting process is how much of a debt load is the potential borrower carrying? Are they swamped in debt? If the answer is yes, they will be less likely to be able to service more. When large chunks of credit card debt are discharged in bankruptcy it can often have a positive impact on credit just a few months after filing.

Step #5: be patient

Your credit history factors into your score as well. The longer you’ve been borrowing and paying on time the better. In some ways this is the lender’s way of developing a friendship with you. When you meet someone for the first time, you might like them but can only develop a friendship or romance over time. If you have been paying your bills for a long time, lenders are more likely to court you.

Be of good cheer, with a little patience and responsible use of credit, your score will improve.

Free Consultation with Bankruptcy Lawyer

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506. Attorneys in our office have filed over a thousand cases. We can help you now. Come in or call in for your free initial consultation.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Thursday, 12 April 2018

Does the Utah Anti-Deficiency Law Protect Me?

When most families purchase a home, they don’t envision ending up facing a foreclosure sale, but in states like Utah where the housing market has been particularly hard hit, foreclosure is an all-too-common event. In cases where a home has plummeted in value, borrowers have two main concerns:

  1. I’m afraid to lose my home.
  2. I’m afraid my lender will sue me for deficiency judgment after the foreclosure sale and my personal property will be attached.

Does Utah law allow for a bank to sue a borrower after their property has been sold at foreclosure? When it comes to residential real estate, generally speaking, the answer is no, although the facts of each case will determine the outcome.

Below are some general principles to keep in mind when trying to determine whether you will be protected by Utah’s anti-deficiency statute.

Does the Utah Anti-Deficiency Law Protect Me

You Must be Underwater in Order for a Deficiency to Arise in the First Place

First and foremost, a lender cannot sue a borrower for a deficiency judgment where the foreclosure sale price is high enough to satisfy the outstanding mortgage balance.

By definition, a deficiency judgment arises when a home is underwater, the bank forecloses and the sale price is insufficient to pay back the mortgage balance. If your home sells at foreclosure for more than what you owe, there is no deficiency and can therefore be no deficiency judgment.

As a practical matter, the scenario where a foreclosure sale completely satisfies the mortgage debt simply won’t apply to most Utah homeowners who are underwater on their property thanks to the national housing downturn. Assuming your home is underwater and you’re facing foreclosure in Utah, we’ll move on to the next important set of facts, which deal with the type of mortgage you have and the size of your property.

Utah Anti-Deficiency Statute: The Basics

Utah’s anti-deficiency statute is codified in the Utah law prevents a lender from seeking a deficiency judgment after foreclosure when the mortgage loan was made to help purchase the home, the property is less than 2.5 acres in size and less than two “dwelling units” in size.

Review this below:

If a mortgage is given to secure the payment of the balance of the purchase price, or to secure a loan to pay all or part of the purchase price, of a parcel of real property of two and one-half acres or less which is limited to and utilized for either a single one-family or single two-family dwelling, the lien of judgment in an action to foreclose such mortgage shall not extend to any other property of the judgment debtor, nor may general execution be issued against the judgment debtor to enforce such judgment, and if the proceeds of the mortgaged real property sold under special execution are insufficient to satisfy the judgment, the judgment may not otherwise be satisfied out of other property of the judgment debtor, notwithstanding any agreement to the contrary.

What does this legalese mean? Well, a mortgage is given to “secure the balance of the purchase price” of a home when you take out a mortgage to finance your property. If you’re like most of us and couldn’t afford to buy your home in cash, you relied on mortgage financing to buy your house. If you did, the Utah legislature believes that your lender shouldn’t be permitted to sue you for a deficiency and come after your personal assets after they’ve foreclosed on you. As long as your property is 2.5 acres or less in size and you used mortgage financing to purchase the property, you’re protected from a deficiency judgment.

Similarly, Utah Code prohibits the bank from seeking deficiency judgment where they have foreclosed by power of sale. We’ve included the language of the statute below:

If trust property of two and one-half acres or less which is limited to and utilized for either a single one-family or a single two-family dwelling is sold pursuant to the trustee’s power of sale, no action may be maintained to recover any difference between the amount obtained by sale and the amount of the indebtedness and any interest, costs and expenses.

This provision adds an additional layer to the Utah anti-deficiency laws. Foreclosure by power of sale is a quick, inexpensive way for lenders to take back property; however, because there is no judicial oversight, the process is more highly scrutinized by the court. In this regard, Utah law says that a bank can foreclose by power of sale, but if they do they will not be permitted to seek a deficiency judgment.

How do you know whether your home is subject to power-of-sale foreclosure? Although Utah allows both judicial foreclosure and power of sale foreclosure, power of sale is the most common. Look at your mortgage documents: If you have a Deed of Trust, your lender is entitled to foreclose by power of sale. It should be noted that the 2.5-acre requirement applies in the power of sale legislation just as it does in other areas.

HELOC Mortgages, Investment Property Not Protected

It is important to keep in mind that while Utah’s anti-deficiency laws are consumer-friendly, they are not uniform in application. There are limits to the protections from deficiency judgments not only to purchase money mortgages and properties that are smaller than 2.5 acres in size, but also requires that the number of dwelling units not exceed two (2). This limitation was put in place to protect homeowners from deficiency judgments while classifying real estate investors separately from homeowners.

For example, if you own a multifamily apartment building on property that is less than 2.5 acres in size and lose the building to foreclosure, you still will be subject to a deficiency lawsuit under Utah law. Similarly, if you tapped into home equity by taking out a second mortgage on your property, that lender can pursue you for deficiency judgment as well because the money was not borrowed to finance the purchase of your home.

Free Initial Consultation with a Utah Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Wednesday, 11 April 2018

How Adultery and Infidelity Relates to Divorce in Utah

As a divorce lawyer, I’m regularly asked about how adultery affects divorce. In Utah, adultery (infidelity) is one of the statutory grounds for divorce.  Incompatibility, gross neglect of duty, extreme cruelty, and habitual drunkenness are also grounds for divorce in Utah.  None of these grounds are more legally significant than any of the others – they will all suffice to allow the court to find that there are grounds to terminate the marriage.

In Utah, as in most states, adultery is not legally relevant to custody matters.  In the eyes of the law, a person can be a bad spouse and that has nothing to do with whether they are a bad parent.

How Adultery and Infidelity Relates to Divorce in Utah

In Utah, adultery has no legal relevance to the division of property.  A court will not give one spouse more property than the other in order to punish the spouse who has been unfaithful.  In Utah the primary purpose of the divorce court is to divide things and end things.

In Utah, one spouse’s commission of adultery does not automatically mean that the other spouse will be awarded the marital home in the divorce.  If the one spouse asks the other to leave as a result of adultery, the faithful spouse will not be any more entitled to have the house than he or she would have been if adultery were not an issue.

In Utah, just because the marriage is ending after adultery, that does not mean a court will fail to consider shared parenting.

Once the marriage is over, the court will rarely enter an order requiring separation between the “object of affection” and the children.  Unless a court finds a parent unfit, that parent will have the right to make their own child care arrangements.

When one spouse is leaving a marriage because of adultery, the other spouse may unnecessarily prolong divorce litigation in order to maintain a connection.  While adultery is not legally relevant, it is not unusual for divorce litigation to confuse the feelings surrounding infidelity with the legal issues surrounding the end of the marriage.

If one of the parties alienates the children by disclosing the other parent’s infidelity, or worse, by stating the infidelity as the reason for the end of the marriage, a court may find that the disclosing parent is unable to put the needs of the children before their own need for vindication.  A pattern of such behavior, with no regard to the strain it causes on the children, could result in custody of the children being awarded to the party who committed adultery, rather than the party who chose to discuss the adultery with the children.

In Utah, the court does not care if you were a good spouse to the unfaithful party, and you did not cause the end of the marriage.  The court only cares that the marriage is ending and things have to be ended and divided.  You will not be awarded any more spousal support (alimony) than you would receive otherwise, and the court is not going to order the leaving party to “find a way” to let you maintain the exact same lifestyle that you lived before the end of the marriage.  The court is going to expect you to live as if the income available to the parties is now being divided among two households.

Be honest with your lawyer about infidelity – it is never a good thing for your lawyer to find out about any relevant information by surprise.

Free Consultation with Divorce Lawyer in Utah

If you have a question about divorce law or if you need to start or defend against a divorce case in Utah call Ascent Law at (801) 676-5506. We will help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506