As long as the deceased is the sole person responsible for the credit card, the credit card debt falls on the estate to be paid through assets after going through probate. The remainder of the assets are then distributed according to the deceased’s will or state law if no will was written.
If there is a co-signer on the credit card, however, responsibility for the debt falls to the co-signer–in addition to or in place of the estate. Fortunately, a second cardholder who is not a co-signer and merely an authorized user is not liable for the credit card debt. But due to community property laws, a spouse may still be held responsible for debt even if they are not a co-signer on the credit card.
Another thing to keep in mind is that not all assets go through probate. As CreditCard.com puts it…
Some items, such as IRAs, 401(k)s, brokerage accounts, and insurance, typically pass to whomever you’ve named as a beneficiary, which is one good reason to keep those designations up to date. In many cases, those assets aren’t considered part of the estate.
Since these assets don’t go through probate, the executor can’t use them to pay estate bills.
The loss of a loved one is hard enough without having to worry about debt. Make sure your loved ones finances and will are in order. Contact me or visit our West Covina office for a free consultation! David Lozano is dedicated to making things as easy as possible for you and your loved ones!
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!
Wondering what you should do when dealing with divorce as well as bankruptcy? (Los Angeles attorney David Lozano offers his advice!)
Along with the loss of a job and medical bills, divorce is one of the most common contributing factors that lead to bankruptcy. Divorce settlements don’t always leave one or both parties with enough to sustain themselves. Many times people are left without a house or car and are sometimes required to pay for child support or alimony.
When it comes to filing bankruptcy due to divorce, there are a few tips you should keep in mind. Only existing debt that has been incurred prior to filing is affected by the bankruptcy claim. So if the divorce hasn’t been finalized, you will be held responsible for all expenses that come up after filing bankruptcy. Another fact to be aware of is that some payments will not be eliminated by filing bankruptcy, such as child support or alimony. On the flip side, if you are receiving child support or alimony, that money is typically exempt from the bankruptcy process!
Bankruptcy is difficult enough without having to worry about divorce litigations on top of that. Should this happen, however, you can rest assured that David Lozano will get you through the bankruptcy process as smoothly as possible! Contact me for a free consultation!
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!
I’ve told you in past blog posts about the drawbacks that go with payday loans, but a bad payday scheme isn’t the only risky deal out there! Banks offer what is called an overdraft protection plan to prevent a check from bouncing due to insufficient funds. Of course this sounds like good thing but, as with the payday loans, there is a major downside!
If you should happen to make a withdrawal that exceeds the amount of money you have in your account, you are charged a penalty fee. Well that sounds reasonable, right? The bank simply wants to discourage people from overdrawing their accounts. The only problem is that the fee can be up to $20 or $35 per overdraft! On top of that, there is a $2 to $5 daily fee until the balance is paid!
An overdraft is most common at the ATM or when using a debit card, but it can also occur when writing a check. Overdrawing an account usually happens when someone doesn’t monitor his or her account activity as closely as he or she should. But even the most scrupulous account holder is capable of making a mistake!
Of course by itself, an overdrawn account doesn’t typically result in bankruptcy, but the little things can add up! Someone who is dealing with the loss of a job or medical bills doesn’t need anything else on his or her plate! At the Law Offices of David Lozano, we do everything we can to make your financial life easier! Stop in at our West Covina location or contact me for a free consultation.
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!
Do you give yourself and your credit card enough credit? (Bankruptcy attorney David Lozano sheds a little limelight on the subject!)
It is probably safe to say that the majority of Californians are credit cardholders. The U.S. Census Bureau recently collected data on the number of credit cardholders there were in the United States and found that there were 159 million in 2000 and 176 million in 2008. With this data, they then estimated the count for 2011 to be 183 million. I’d like to think these astonishing figures support the idea that Americans are, in general, becoming more financially responsible!
Getting your own credit card is almost like a right of passage for many young adults. It symbolizes that they are–or at least have the potential to be–financially responsible. When managed correctly, a credit card is a useful and often beneficial method of payment. Some credit cards even come with rewards or cash back on essentials, such as groceries, gas, dining, or travel.
There are many brands of credit cards offered by different companies, but did you realize there are just three basic types of credit cards?–unsecured cards, high risk cards, and secured cards.
An unsecured card is most commonly offered to individuals with a good, solid credit history. These cards do not require cash deposit and have no collateral loans. High risk cards often go to people who have a slightly less polished credit history. These cards tend to have an activation fee, annual fees, and late payment penalties attached to them. The last type is a secured credit card, which comes with steep annual fees and late payment penalties. This type of credit card functions similarly to a debit card in that you need to have a certain amount of cash in an account as “insurance”.
When it comes to credit cards, there are many options out there. But no matter what type of credit card you have, as a bankruptcy attorney, I am equipped to handle any type of credit card debt you may have. Contact me for a free consultation on settling your credit card debt!
The uncertainty that accompanies filing for bankruptcy is a discomfort that has dogged nearly every client I’ve ever had. Until debt began to pile up, their lives had a fairly comfortable and predictable rhythm. Deciding to file bankruptcy throws off that rhythm and requires people to find a new one. Oftentimes it is difficult to adjust to the new rhythm, but fortunately I am here to help!
It’s like Chinese dragon boat racing. In dragon boat racing you have paddlers, a drummer, and a steersman. The paddlers propel the boat. The drummer sets a rhythm to which the paddlers row to. And the steersman determines where the boat goes. So let’s say you are the paddlers and your bankruptcy attorney is the drummer–we’ll get to the steersman later.
For the first half of the race your rowers move at a steady pace, following a rhythm that is comfortable and works well. Then, out of nowhere, a rival racing team with the name “debt” printed on the side of their boat overcomes you! If you don’t do something about it, debt is going to win and your ship will be sunk! That’s when I step in as the drummer for your team. I step up the pace and beat to a different rhythm. The rhythm might seem frantic and you may have trouble getting into the groove of it at first, but once you start the new rhythm, things go smoothly again. Debt falls behind and you take the lead! The finish line is in sight and with your new and improved rhythm, nothing stands in your way! Victory will be yours!
This is where the steersman comes in. You are in charge of steering the boat. I may have helped you find a new rhythm, but it’s your responsibility to make sure that you’re heading in the right direction! You are in control of where you go from here. And without debt to weigh you down, you can row with ease. So pick a direction and go for it!