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3 Ways to Use Your Tax Return

Let’s be honest, if you are eagerly awaiting your tax return, you are not planning to spend it on the right things.  Too often people get a chunk of money they usually do not receive at any other time in the year and their eyes light up.  If you are really excited to get your refund this year, it is doubtful that you plan to pay off credit card debt, take care of healthcare-related expenses, or pay down your car loan.  Read on to find out why you should do exactly those things.

PLEASE Use Your Tax Refund to Pay Down Credit Card Debt

If there is one good thing you do with even a portion of your tax return, make it credit card debt annihilation.  You would be hard pressed to find a loan with a higher interest rate than that of a credit card.  Use this year’s tax refund to reduce the savage interest payments you make every month and lower the principal balance.   The average tax refund in 2017 was about $3,000.  The average credit card debt was approximately $6,375.  If you are average, you could save yourself a lot of money in interest payments by cutting that debt in half.

Medical Expenses

The most common debt on a person’s credit report is that of medical expenses.  Medical expenses are the number one cause of bankruptcy.  Medical debt is often passed around from collector to collector until something is done about it.  Every day people are hassled and sued for medical debt worth less than $1,000.  If this is you, please use your tax refund to pay it off.  Negotiate with the collector and save yourself some money, but most importantly, improve your life by stopping the phone calls and snail mail associated with this sort of debt.

Pay Down Your Car Loan

Maybe you have always had a monthly car loan payment and you do not know what is like to exist without one.  Let me tell you, it is possible, and it is SWEET.  Imagine a world where you get paid and you do not have to fork over 25% of your paycheck.  Take your tax refund and pay off even a few months of your loan term.  Down the road, you will be so happy you did.  This will save you from paying expensive interest if your rate isn’t great.

Paying off debt with your tax refund is one of the best things you can do for yourself (albeit not fun).  If you are ready to take your debt seriously but you do not know where to start, contact Elias Dsouza.  Elias can help you plan and negotiate the elimination of your outstanding debt.

Two Payday Loan Horror Stories

It is always important to read the “fine” print when agreeing to anything.  This is especially true when signing up for a payday loan.  Interest rates are often 300% – 1000%.  Sometimes referred to as “predatory loans”, payday loans are designed to give the customer money quickly and allow them to pay the loan and interest back over time.  Read on to learn about two truly terrible scenarios in which desperate people agreed to terrible payday loan terms.

Payday Loan Victim Number One – “Bob”

Bob’s story began over 12 years ago.  Due to a medical emergency, Bob became the only earner in the family.  Medical bills totaling at over $20,000 and recent events, forced Bob to take out five payday loans which totaled at $2,500.  These loans required Bob to make two $95 payments each month per loan.  Keep in mind the principal balance of each loan was only $500.  It took Bob and his wife 5 years to pay off the loans and, in the end, they paid over $50,000 in interest.  As a result, Bob and his wife lost their home.

Payday Loan Victim Number Two – “Ed”

Ed, a veteran and Social Security beneficiary, ran into some car trouble.  The repairs were estimated at $400.  Unable to cover the costs, Ed went online and took out a $400 14-day loan.  In most cases, if a person cannot pay off a 14-day loan in the agreed upon term, there is a renewal option.  When the loan is renewed, the borrower must pay a fee and interest continues to accumulate.  In an attempt to pay off the existing loan, cover his rent, and avoid bank overdraft fees, Ed took out more online loans.  In the end, Ed borrowed over $3,000 and owed well over $12,000.  He subsequently lost his apartment and became homeless.

Payday Loan Quick Facts:

  • Over 12 million payday loans are handed out each year in the United States.
  • The 12million loans have fees totaling at over $9 billion.
  • A 14-day loan averages $55 in fees if paid off on time.
  • The average payday loan borrower is in debt for 5 months of the year due to loan fees and interest.

Before you subject yourself to the horrors that come with payday loans, take a look at your other options.  If you have unsecured debt such as credit card or medical bills, you may be able to get it forgiven utilizing a tool such as bankruptcy.  Contact Elias Dsouza today for a free consultation and take control of your financial situation once and for all.

How to Choose the Perfect Franchise to Invest in

Choosing the right franchise can be a daunting process.  It is a major and consequential decision.  Much of the success and enjoyment of owning a franchise depends on the franchisor.  A franchisor is the company that gives you license to open a store with their name and products, but also expects certain rules and regulations to be followed.  Before you decide what franchise to invest in, there are some things to consider.

What Are Your Goals?

This may seem like a basic place to start, but many people get excited and do not take time to stop and think about WHY they want to be a franchisee.  Are you in this for the money, do you want to be your own boss, are you seeking to spend more time at home, or are you an entrepreneur at heart?  You also need to decide if you want to be an owner or an owner/operator.  An owner/operator is much more involved in the day-to-day operation of the business.

Are You Right for the Franchise? 

Shopping for a franchise is a little different than shopping for other items.  While it is essential that the franchise is right for you, you also have to be right for the franchise.  You have to consider if your starting budget is appropriate.  Some franchisors are looking for people with expertise in their specific market whereas others want people with entrepreneurial drive and basic business knowledge.

What to Look for in a Franchisor

Support.  A good franchisor will help you find the best opportunities for real estate.  They will help you negotiate the best possible business transactions for equipment and any other essentials.  They will help you plan and market your opening.  They will also have excellent training methods and advice to give you the best possible chance at success.

Protection.  You should get the geographical space required to own a market.  If a franchisor allows too many properties to cluster, they are not protecting you.  Also, they should not be directly engaging with your customers if there is a chance they could steal business from you.

Standards.  A great franchisor will only accept franchisees that are a good fit.  Accepting anyone with money can tarnish the brand and reputation of a business if certain systematic processes are not in place and enforced.

Entering into a business arrangement such as a franchise agreement is very complex and you should protect yourself.  Costly mistakes are made in business every day.  If you are considering buying into a franchise, enlist an experienced attorney such as Elias Dsouza of Dsouza and Strachan Lawgroup Group to assist with your protection.

A Quick Guide to Shared Equity Mortgages

Short on funds and looking for a home?  Looking for an investment that could yield nice returns?  A shared equity mortgage may be the arrangement for you.  Before you decide to jump into this type of partnership, you should know exactly what the loan is as well as the risks involved.  Also, the term “lender” is used throughout this article.  The “lender” may not necessarily be the investor in this partnership.  Independent investors can be a partner.

What is a Shared Equity Mortgage?

A shared equity mortgage is an arrangement in which the lender and borrower become partners.  The borrower still lives in the home just like a normal mortgage agreement, but the lender also invests a certain amount of money into the loan.  This means the lender owns a portion of the equity in the home (when equity is available).  When the home sells, the lender gets a portion of the profits as well.

How Is This Beneficial for the Borrower?

As previously stated, the lender invests money to cover a portion of the loan for the home.  This means the borrower is only responsible for the remainder of the loan.  For example, say the purchase price of the home is $200,000 and the lender invests $50,000 into the loan.  The borrower is then only responsible for $150,000 or (75%) of the loan.  A monthly payment on $150,000 (let’s say a 30-year mortgage in this example) is less than a monthly payment on a $200,000.  Another benefit for the borrower is that the lender’s investment can be used as the down payment.  If the down payment is large enough, you can avoid paying private mortgage insurance (PMI).

What Are the Drawbacks of Shared Equity Mortgage?

Of course, there are a number of potential downsides.  Sticking with the same scenario, if a lender invests 25% of the total loan amount, they are entitled to 25% of the profit when the home sells.  Other drawbacks include:

  • A mandatory 20% down payment on the home.
  • You cannot take out a second mortgage on the home.
  • If the investor is not the same as the lender, you could be required to pay double mortgage fees.
  • If you want out of the arrangement, you must pay the lender and investor an amount equal to their investment.

As this arrangement is not typical, you may have questions and require guidance to get through the mortgage process.  You may require the services of a knowledgeable real estate attorney in Florida to make sure you know what you are signing up for.  Elias Dsouza of Dsouza and Strachan Lawgroup group in Plantation, Florida has the knowledge and experience to protect you from avoidable mistakes in your journey toward home ownership.

 

Should I File Bankruptcy Before I File Taxes?

Filing taxes is just about as fun as having a root canal. Unfortunately, every April 15 the IRS expects a return to be filed by every working citizen, and if a payment is due the IRS will expect to receive that by April 15 also. If you are fortunate enough to be owed a refund, it probably doesn’t matter to you when you file your return and in fact you may want to file it as soon as you have all of your documents gathered so you can receive your refund faster. But if you owe or are experiencing other financial difficulties, the timing on when to file taxes can be called into question.

This is especially true if you are considering filing for bankruptcy. When you file for the protection that bankruptcy offers, your financial picture is scrutinized by the bankruptcy trustee. In some instances this means if you are owed a refund, the trustee may try to intercept the funds. So, the timing of your tax filing and bankruptcy may go hand in hand. Here are some more facts about how the two issues commingle:

  • The trustee will ask for tax returns to verify income, if you have not yet filed for the year you may be asked to submit copies once you do file.
  • If you have filed for the year and received a refund, the trustee will still want to see your return. If you have spent the refund, the trustee may ask what you spent the funds on and if there is anything left.
  • If you have not filed, it is not uncommon for an attorney representing the IRS to ask that you provide your return them prior to filing and they will file it on your behalf and keep a copy for themselves.

For most people that receive a tax refund, the money goes to pay bills or home repairs. These are acceptable expenses and it is not likely you will have to repay the bankruptcy court any of this money. But, because your budget is already tight, it is a good idea to have a skilled bankruptcy and debt management professional review your situation before taking any action. Call our office today to find out more about how your tax return might impact the timing of your bankruptcy filing.

For more information about bankruptcy, contact us at  www.DsouzaLegalGroup.com. We will help by coming up with solutions that work for you.

Three Things To Look For In A Bankruptcy Attorney

Being unable to pay your bills is a stressful situation, and one that nearly everyone you know has an opinion about. If you were to ask your family or a trusted friend for their advice on how to get out of debt it is likely you would end up with several well intentioned pieces of information, but be more lost than when you first broached the subject. In order to make certain the method you choose is the best one for your circumstances, it makes the most sense to enlist the help of a qualified bankruptcy and debt management attorney.

Three things to look for when searching for a bankruptcy attorney are:

  • Does he or she know the difference between a chapter 7 and a chapter 13 case? A chapter 7 is generally shorter, and offers benefits a chapter 13 case does not offer. But, not everyone is qualified to file a chapter 7 and it is important to make sure you file the right way. If you do not file with the proper information, under the correct chapter, the United States Trustee may question your entire case. Avoiding the eye of the U.S. Trustee will help move your case along at a quicker pace, which means your case will complete faster and with little fanfare.
  • Whether the attorney you are considering has recent experience filing bankruptcy. The law changed in 2005, and while that is a decade ago, there are always changes to local practices being implemented. It is important to go with an attorney that is aware of the latest trends and rules, so you do not have any deficiencies in your case.
  • Your attorney should be responsive, not just to you but also to your creditors. One of the benefits of turning your case over to a qualified attorney is to allow your creditors to contact the attorney rather than to contact you.

The choice is personal, and should only be made after careful thought. Our approach is to take each case on an individual basis, and give it the attention it requires. Call us today to find out more about bankruptcy, what is needed to prepare to file a case, what to expect during your case, and to learn how we can help you.

 

For help with bankruptcy issues, contact us at  www.DsouzaLegalGroup.com. We can help you regardless of your age or financial position. Call today to schedule an appointment with one of our debt management legal professionals.