Bankruptcy and Joint Accounts - Interesting Facts

Transcription

1 Money! Money! Money! Catherine T. Martin Economic Empowerment Knowledge Is Power! Why economic issues are important Economic self-reliance supports independence Ensure stability necessary to maintain custody of children Knowledge of rights can reduce some of the stress 1

2 Common forms of economic abuse Financial control Loss of housing (eviction, foreclosure) Educational sabotage Employment sabotage Credit destruction Topics for Discussion Today: Prioritizing Debt Mortgage Problems Joint Debt Utilities Can Bankruptcy Help? Identifying Financial Goals Resources Debt Prioritization Always pay family necessities first Pay housing bills next Pay minimum required to keep utilities on Pay car loans or leases if car is a necessity Child support: income taxes Unsecured debts (most credit cards, doctor and hospital bills, merchant accounts) are of low priority 2

3 Two types of debt SECURED DEBT Secured by collateral. E.g.: car loan, home mortgage, home equity loan UNSECURED DEBT Not secured by collateral E.g.: credit card bills, payday loans, medical bills Secured v. Unsecured Debt Secured debt pay or lose the collateral Unsecured debt creditor cannot take property if you fail to pay unless they sue Unsecured debt collector cannot: Threaten to take actions they cannot legally take, such as take your home, put you in jail, or have your children removed Use obscene, insulting language Call you at work after you have told them not to Make repeated phone calls Call at unreasonable times (before 8 am and after 9 pm) Contact you by telephone after receiving a letter telling them to only communicate with you in writing. 3

4 Unsecured debt collector can: Report the default on your credit report File a lawsuit If you lose the lawsuit and cannot afford to pay the judgment, the creditor can take certain steps to collect: freeze bank account, try to sell personal property or even real estate. But you won t go to jail! It is not a crime to be unable to pay your bills! Mortgage Issues Who owns the house? - Names on the Deed: You? Partner? Both? Who owes the Money? - Names on the loan: You? Partner? Both? Mortgage Issues continued Bad news: you can lose your home if mortgage payments aren t made even if your partner is ordered to pay them. Do not assume that your partner is paying the mortgage. Contact lender and request that all bills and correspondence be sent to you. Contact an attorney immediately if the mortgage is in default. 4

5 Mortgage Issues continued Good News: Help is available Housing Counselors PHFA loan programs: HEMAP/Act 91 Various loan Modification programs Utility Bills Victims of family violence in Pennsylvania have extra protection. Service cannot be shut-off in the winter months, December through March You cannot be made to pay a bill in someone else s name Utility Bills continued To get those protections you may need to g p y y give a copy of your PFA order to the utility company. Call the P.U.C if the utility company does not help you P.U.C Phone Number:

6 Interesting Facts about Joint Accounts: In Pennsylvania, most creditors cannot hold someone responsible for a debt they did not incur. If a joint debt is in default, the creditor can usually try to collect the total from any of the people on the account. They do not have to divide the amount due. What can you do about Joint Debt? Try to remove your name from joint accounts or close those accounts. Remove your partner s name as an authorized user on your accounts. Notify utility companies if you move. Cancel service in your name. BUT VERY IMPORTANT: Make sure you will be able to still get the services you need if you change the accounts. Bankruptcy: Q: Is bankruptcy a good idea? A: Sometimes. Bankruptcy can wipe out certain debts and help you repay other debts. 6

7 Bankruptcy Continued Chapter 7: Will wipe out many debts but does not help to repay secured debt. Filing Fee: $ Chapter 13: Permits repayment of secured debts over time up to 5 years. e.g. Can help you catch up on a mortgage or pay real estate taxes to save your house. You need to have enough income to make the payments. May not need to repay all your debts. Filing Fee: $ Bankruptcy continued Either Ch. 7 or Ch. 13 can stop most civil legal actions. A sheriff s sale, utility termination, etc. Depending on individual details, may stop an eviction. If you filed bankruptcy before, eligibility to file again depends on details of past cases. A bankruptcy stays on your credit record for up to10 years. WHAT NOW? After this review of some financial and legal basics what should you do? 7

8 The Thinker: BAD Ideas Pay day loans Credit card checks Credit repair companies Home equity loans (especially ones taken out with an unreliable partner) More BAD Ideas Refinancing unsecured debt and securing with property Getting new credit cards Making a repayment plan you can t afford 8

9 GOOD IDEAS: Use available resources - Housing Counselors - Credit Counselors - Legal Help Identify your present situation - Make a Budget Identify your goals - What are you trying to achieve? - What are the obstacles to your goal? - Who or what can help you achieve your goals? To apply for legal help at NLSA: Neighborhood Legal Services Association Intake Line: Special Thanks to Amber VanSchuyver Texas RioGrande Legal Aid for help with these materials. 9