What should you do if your small business starts to accumulate debt? (West Covina attorney David Lozano offers professional advice to small business owners!)
I talked a little bit about small business bankruptcy in a previous blog–Bankruptcy for the small business owner. Today I want to stress the importance of seeking professional guidance as soon as financial difficulties arise. Small businesses often struggle to compete with corporate businesses or other small businesses in the same region. When your business starts to show signs of falling behind, contacting a professional adviser may stave off future debt and bankruptcy.
A business runs on the incoming revenue from its clients and customers. If several clients happen to be slow on making payments within the same time frame, it can be devastating, especially for a small business. Also with the high prices of many commodities and supplies that businesses use, the struggle to make a profit can be daunting from quarter to quarter!
At the first sign of trouble, it is a good idea to seek professional advice about how to proceed. And if your business is going through a period of slow sales and is struggling with debt, Chapter 11 business bankruptcy may be the solution! Restructuring the business’s financial affairs and payment schedule can give you just the break you need to catch your breath and get your business back on track! Contact me or visit our West Covina location for a free consultation.
Southern California bankruptcy attorney relates the story of the character played by Ben Affleck in the film, The Company Men, to average men and women facing the loss of a job
Ben Affleck, a native of our own California, recently starred in The Company Men, alongside Tommy Lee Jones, Chris Cooper, and Kevin Costner. The film tells the stories of three men named Bobby Walker (Ben Affleck), Gene McClary (Tommy Lee Jones), and Phil Woodward (Chris Cooper) who are businessmen at the GTX Corporation but lose their jobs due to corporate downsizing. The drama is meant to reflect the economical state the US was going through in the late 2000s.
In the film, Bobby Walker discovers the hardships of losing his six-figure job. Walker’s golf club membership is canceled, and he is forced to sell his house–located in the beautiful suburbs–and his new Porsche. Unable to find work anywhere else, Walker reluctantly turns to the house building job his brother-in-law, Jack (Kevin Costner), offers him. The film accurately portrays the struggle that many Americans go through when they find themselves unexpectedly unemployed.
Walker, fortunately, was able to get back on his feet in the end thanks to help from his family. For people who cannot catch a break as Walker did, bankruptcy attorney David Lozano offers his services! The Law Offices of David Lozano can help you cope with the loss of a job and prevent foreclosure! Had Walker gone to a bankruptcy lawyer, he may have been able to keep his home and Porsche! Contact me or visit one of our Lancaster, West Covina, or Ontario locations for a free consultation!
Wondering what to do about the home when going through divorce and bankruptcy? (Los Angeles attorney David Lozano offers his help to divorced couples!)
Not too long ago I wrote about how divorce is one of the three leading causes of bankruptcy–along with medical bills and the loss of a job–in Wondering what you should do when dealing with divorce as well as bankruptcy? (Los Angeles attorney David Lozano offers his advice!) And earlier in the year I wrote a blog entitled, Does filing bankruptcy lead to divorce? Today I’d like to discuss situations that may arise when going through divorce and bankruptcy.
Married couples who are considering or have already gotten a divorce sometimes find themselves in a fix when it comes to what to do about the home. Oftentimes neither spouse can afford to keep the house or apartment on their own. In cases like this, couples may end up living together out of necessity, staying at opposite corners of the house or on separate floors as much as possible. Couples will even try to avoid filing bankruptcy by putting their home up for sale, hoping to make enough money to pay off the mortgage, so that they can buy new homes. Many times the couple is forced to dramatically lower the price of the home to avoid foreclosure, even settling for a price far below the retail value.
In a situation like this, I urge couples to contact me or visit one of our Lancaster, Ontario, or West Covina office locations for a free consultation! With the help of a bankruptcy attorney, the couple may have better luck getting the house sold at a fair price or keeping the house, if they so desire!
A while back there was an article in a Sapurstein & Associates newsletter about a tax ruling concerning the tax deduction for a mortgage that centered around a couple and their son. After filing for bankruptcy some months prior, the couple was looking to take out a mortgage but didn’t qualify due to their credit. Since the couple was still rebuilding their credit score, their son took out the mortgage using his credit score.
Everything went smoothly, but when tax time rolled around the question became who should receive the tax deduction for the mortgage? Although the mortgage was under the son’s name, his parents were the ones actually living in the house, making the mortgage payments, and maintaining the house. The tax court finally ruled that the parents were the equitable owners and gave them the tax deduction.
I am always happy to see things work out for people who have gone through bankruptcy. It is stories like this one that reinforce what I tell my clients everyday–bankruptcy is a new beginning! Although there may be a few stumbling blocks along the way, small setback can be overcome! Contact me for a free consultation and get started on your own new beginning!
Are your children’s education saving funds exempt when you file bankruptcy? (Lancaster attorney David Lozano is here to put your mind at ease!)
Couples and single parents frequently take advantage of my offer for a free consultation to discuss their options for dealing with debt. For many their concerns involve not only them, but their children as well! Parents worry whether the savings they’ve set aside for their children’s future education will be affected when they file bankruptcy.
I am pleased to say that you can protect your children’s education funds by using special savings plans, such as a 529 or Coverdell Education Savings Account (ESA). Wikipedia compares and contrasts the two plans well:
Important differences with 529 plans
- Coverdell ESAs have lower maximum contribution limits; currently $2,000 can be contributed per year per child, while 529 plans generally have no restrictions on contributions, up to the maximum lifetime contribution.
- Coverdell ESAs can allow almost any investment inside including stocks, bonds, and mutual funds, while 529 plans only allow a choice among a number of state run allocation programs. The rules for investments allowed in ESAs are the same as those for IRAs.
- Balances in a Coverdell ESA must be disbursed on qualified education expenses by the time the beneficiary is 30 years old or given to another family member below the age of 30 in order to avoid taxes and penalties; there is no age limit for 529 plans.
- Coverdell ESAs allow withdrawing the money tax free for qualified elementary and secondary school expenses; 529 plans do not.
- The income level of a donor may affect contributions into a Coverdell ESA, but would not affect contributions to a Section 529 plan.
Important similarities to 529 plans
- Money in both a Coverdell ESA and a 529 plan is not considered the child’s (beneficiary’s) money when applying for federal financial aid as long as the owner of the account is someone other than the beneficiary, such as a parent. This works to increase the child’s potential financial aid because parents are expected to contribute only around 6% of their assets to finance college education, as opposed to the child’s 35%.
- The custodian of both an ESA and a 529 plan can designate a new beneficiary without incurring taxes or penalties provided that the new beneficiary is an eligible family member of the previous beneficiary.
When filing bankruptcy, money that has been in a 529 or ESA savings account for over two years is exempt from the bankruptcy process! And up to $5,000 worth of money in the account that has accumulated for at least a year but under two years is also exempt. In addition, only money that has been added to the savings account within a year prior to bankruptcy is available to creditors–everything else is protected!
The future depends on the well-being of the next generation, and a large part of that well-being involves the extent of their intellectual growth! Visit our Lancaster location for a free consultation. Protecting the education funds of our children helps to ensure their continued intellectual growth!
To the IRS and many collection agencies, to forgive debt means that while you don’t have to repay the debt, there is a possibility that you will still owe income tax on it! In bankruptcy, having debt discharged means that you are exempt from having to pay all or part of the debt you owe–depending on the type of bankruptcy claim you file. The whole point of bankruptcy is to give people a second chance and a fresh start!
Coming to terms with your debt is difficult thing to do. Many clients come into my office thinking they could have done something differently to avoid bankruptcy. But in most cases the circumstances that lead to debt are beyond your control, such as the loss of a job or unexpected medical bills!
Although collection agencies may have a somewhat distorted view of what forgiveness is, they are on the right track in their terminology! Friends, family members, and employers need to show forgiveness to people who are in debt or filing bankruptcy. More importantly though, you need to be able to forgive yourself! You cannot blame yourself or let others place the blame on you. Contact me for a free consultation. By filing bankruptcy you are doing the responsible thing by taking charge of the situation!
Your pets can be affected by foreclosure, too! (Bankruptcy attorney David Lozano wants to help both you and your pets through debt!)
In a time when prices are on the rise and employment options are scarce and selective, there is one aspect of people’s lives that they are still spending their money on–their pets! Pets often become a part of the family. A dog or a cat is the equivalent to a child to many people and, like good parents, they tend to all their little one’s needs.
According to APPMA’s 2009-2010 National Pet Owners Survey, the number of dogs and cats owned in the United States was approximately 77.5 million dogs and 93.6 million cats with an estimated $47.7 billion spent on these pets. Pet food and regular veterinary care make up a large portion of this figure, but Americans are spending a decent chunk of change on pampering their pets as well. Pet beds, toys, treats, cosmetics, even clothing make for high selling products in the pet industry.
While this may indicate that pet care is the industry to be in, there’s a downside to all this spending. Sometimes when pet owners are down to their last penny and their home is foreclosed, the family pet gets left behind. This has happened often enough that these pets are being called foreclosure pets.
It’s unclear what the family is thinking, whether they fear the animal will be put down if they take it to a facility or simply cannot bear to see their beloved pet at a shelter. Although taking the animal to a humane society location or the animal shelter is better for the pet. At least the animal has a chance of finding a new home and loving family.
Of course the best solution would be to prevent foreclosure and keep the pet, especially given the current stress the owner is going through. It has been proven that pets help reduced stress, which in turn lowers the risk of stress-related health problems. It’s true! If you take care of your pets, they will take care of you! Contact me for a free consultation, together we can figure out a solution that has you and your pet’s best interest in mind!
Do you have something in common with Will Smith? (Bankruptcy attorney David Lozano says, “more than you might think!”)
Do you have a flair for the dramatic, a thirst for action and adventure, a good sense of rhythm with a dash of witty humor and charm to tie everything together? See, we’ve already established some strong similarities between you and the Fresh Prince! One likeness that might come as a surprise to you, however, is Will Smith’s close encounter with bankruptcy.
Will Smith was once an up-and-coming rapper with dreams of one day becoming a movie star! He earned the nickname “Fresh Prince” for being able to smooth talk his way out of trouble. In 1988, as part of a hip-hop trio, Will Smith won a Grammy for the song “Parents Just Don’t Understand” and became a millionaire. Smith then went on a spending spree and underpaid his taxes, which nearly forced him into bankruptcy. To be fair, Smith was only 18 and a million dollars is enough to go to anyone’s head!
Regrettably, the Fresh Prince couldn’t smooth talk his way out of the debt he accumulated after squandering his fortune. He owed 2.8 million dollars in tax debt to the IRS, a number of his possessions were repossessed, and his income was heavily garnished. Will Smith narrowly escaped bankruptcy thanks to NBC signing him on the sitcom, The Fresh Prince of Bel-Air. It was a close call, but fortunately the sitcom was a hit and put Smith on the road to stardom.
Now, you certainly aren’t in debt as the result of reckless spending, I’m sure! The average Californian’s debt problems are due to unforeseen circumstances, such as the loss of a job or unexpected medical bills. Whatever the case may be, David Lozano is here to help! Contact me for a free consultation. Bankruptcy is not an end-all, it is merely a stepping stone to getting your life back on track!
Business owners often devote a full 40-hour work week to managing their business. This simply goes with the territory of owning a company, but I’ve found small business owners go a step further. They spend more than the allotted 40 hours a week making sure every project and final piece of paperwork is in order, down to the last minute detail!
Many small business owners will cancel or reschedule personal plans when a situation at work arises that needs their immediate attention. In fact, a small business owner’s personal life and business affairs are usually so entwined it is hard to tell where one ends and the other begins.
It is in cases like these–when the business is not a corporation, partnership, or a limited liability company (LLC)— that it falls on the owner to file bankruptcy if the business is in danger of going under. It is also important to understand that filing Chapter 7 or Chapter 13 for a business is different than filing personal bankruptcy.
In Chapter 7 business bankruptcy, ownership of the business is transferred to the bankruptcy lawyer, who is responsible for ceasing operations and liquidating the business’ assets with the proceeds going to the creditors. Chapter 13 business bankruptcy gives the owner more time to sell assets. The benefit of this is that the owner may be able to sell the assets for a better deal than what the assets would be sold for with Chapter 7 business bankruptcy.
When small business owners must file business bankruptcy it can seem like asking the owner to give up an arm or a leg. I know how attached small business owners can be to their company, and I do everything in my power to ease the process. Contact me for a free consultation to determine what needs to be done for your small business!
To cope with the current state of our economy people will often take on extra shifts at work or cut back on frivolous spending. But what about individuals who are retired and their frivolous spending consists solely of buying the grandkids holiday and birthday gifts? That’s right, I’m talking about generous Grandmas and Grandpas here!
The elderly are struggling with debt just as much as the rest of society. A common assumption has been that social security and a good 401(k) plan will be enough to support the elderly after retirement. What I’ve seen happening more and more frequently, however, is elderly folks dipping into their savings for the sake of their children and grandchildren.
Supporting ones children is a hard habit to break. So when Mom and Dad see their son or daughter low on cash, struggling with unemployment, beset with unexpected hospital bills, or in need, the automatic response is to help out.
Lending cash when one is on a fixed income is difficult though. Many elderly men and women turn to borrowing against the equity on their house or relying on credit cards to get by. Unfortunately, both of these methods lead to trouble! Taking out a second mortgage can easily result in foreclosure and missing a few payments on the credit card quickly develops into hefty credit card debt. The elderly may even go without prescribed medication or scrimp on food in an effort to keep up with their bills.
No one likes the thought of dear old Grandma and Grandpa risking their health and comfortable living during retirement! That’s why it is important that elderly individuals get professional financial advice before it comes to that!
Bankruptcy was designed to give people relief from their debt! Mom and Dad have been taking care of you all your life! It’s probably about time to return the favor. Contact me for a free consultation. Together we will make sure that your elderly loved ones can enjoy their retirement to the fullest!