What are community and common property states?

What Are Community and Common Property States?

Different states view assets and debts acquired during marriage and who exactly owns that property differently. There are two different types of state, community property, and common law property.

What is a Community Property State?

In a community property state, all money earned, assets acquired, and debts incurred during the course of a marriage are equally owned by both husband and wife. At death, all assets go to the surviving spouse unless there is a valid will directing otherwise.

A spouse or member of a couple can own separate assets and dispose of those assets as they wish. Gifts and inheritances are not considered community property.

One of our debt specialists can help you with any questions you might have. Get your free consultation today.

Community Property States

Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Alaska is on “opt-in” community property state where both parties can, in writing, make their property community or keep it separate.

What is a Common Property State?

In a common property or equitable distribution state, property acquired by one spouse belongs 100% to that spouse unless the asset is in both names. All other states are common property.

What is the Advantage to Living in a Community Property State?

The biggest advantage to living in a community property state is in estate taxes and tax planning. In a community state, the surviving spouse receives, tax-free, 50% of the decreases spouse’s separate assets and 100% of commonly held property.

What is Marital Property?

Marital property is any property acquired by either spouse during the marriage. Non-marital property is property acquired before marriage, as a gift or inheritance after marriage.

What is a Spousal State?

Spousal states affect mainly people taking out loans or mortgages. Spouses must sign a document acknowledging the loan, but not taking responsibility for it.

For more information, talk with one of our debt specialists today.

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Disclaimer

This is a complex area and this information just the tip of the issues. If you have questions about community and common property, moving states, or debt, contact an attorney.

References
https://www.legalzoom.com/articles/do-you-live-in-a-community-property-state
https://www.meridianhm.com/resource/blog/spousal-states-community-property-states/
https://www.investopedia.com/exam-guide/cfp/property-titling-transfer/cfp2.asp
https://tomorrow.me/trust-worthy/planning-ahead/7-things-you-should-know-if-you-live-in-a-community-property-state/
https://www.myfloridalaw.com/asset-debts/marital-property-vs-non-marital-property-florida/

What Happens to Debt When You Die

What Happens to Debt When You Die?

What Debts Are Forgiven at Death?

Once you die, what happens with your debt? It depends on the type of debt and if there are cosigners. Basically, all debts pass into the estate along with assets and other liabilities. Even if you have very little, you still have an estate in the eyes of the law.

Most people have wills (and if you don’t, you should). A will determines how assets are distributed. However, before anything is distributed, creditors are given a chance to claim part of the estate.

Talk to one of our debt specialists today to learn more about our debt settlement program.

What Are Different Types of Debt?

  • Secured Loans

  • Unsecured Loans

  • Student Loans

  • Taxes

Secured debt, like mortgages, are passed along with the asset. If you are given a house in a will, you also get the mortgage. If you are unable to pay the mortgage, the bank can seize and sell the house.

Unsecured debt, like credit cards, must be paid as long as there are enough assets in the estate. If the debt is in the name of the deceased and no one else, the debt must be settled with the estate.

If there is a co-signer, the debt passes to the co-signer.

Student Loans

Generally, student loans die with the borrower. In some cases, the debt also dies if the parent(s) of the borrow die. You will have to provide proof of death to the school or lender, which is referred to as a death certificate, or proof of death certificate. A proof of death certificate has to be signed by a funeral director and can be presented to companies and organizations to inform them of the deceased.

IRS Taxes

IRS Taxes never die. In fact, they may even increase because you will still have to pay income tax on anything earned up to the date of death.

Disclaimer

All these categories are very complex, particularly taxes.

You should have the guidance of an accountant or attorney.

Is Family Responsible for Deceased Debt?

This is another complex area. It depends on the type of debt and on the state where the deceased was a resident.  If you live in a community property state, the laws can be extra confusing, so talk to an attorney.

If your deceased loved one has debts,

talk to an accountant or attorney before agreeing to pay anything.

Can Collections Agencies Call You?

Absolutely. They can and will. However, once the estate is probated, all debts owed by the estate are gone. They may call you while the will is in probate. Refer callers to the personal representative (executor) named by the court to handle business on behalf of the deceased.

Remember, generally, and unless, your attorney/accountant says otherwise, you DO NOT owe anything.

Do not make promises or payments to collectors. Do not give the collector personal information including bank account numbers or social security numbers. The collector is not necessarily a collector but could be a scam artist who reads obituaries.

If the callers violate the Fair Debt Collection Practices Act (FDCPA) or your state’s FDCPA, report them.

What if the Primary Credit Card Holder Dies?

It depends on the status of the secondary credit card holder. If the secondary was only an authorized user, the secondary is not liable for the debt, the estate is.

Hint: don’t use the card after the primary dies, or you may end up with the debt. Credit card use after death can also be considered fraud.

If the secondary is a co-signer, the secondary is responsible for the debt of the primary cardholder.

Are there Deceased Credit Card Collectors?

Yes and no. They are either regular debt collectors or scam artists. Again, talk to an attorney or an accountant before agreeing to pay anything to anyone.

What Happens with Credit Card Debt after Death?

If there is not enough money to cover debts, the creditors will be notified as to that fact. They should write off the debt as part of the cost of doing business.

If there is money, the credit card company must stop adding interest and fees while the will is being probated.

In most cases, debt is not inheritable.

Again, talk to an attorney BEFORE agreeing to pay any debts.

Stopping Credit Cards After Death

The personal representative should contact the credit card companies. They may require a death certificate. Some credit card companies can be unpleasant about canceling cards. Keep at them until you get the cards canceled.

Do everything in writing and keep records of who you talk to, what you send, and what response you get.

If you are not the personal representative, refer everyone to the personal representative. You have no legal standing in the deceased’s business.

We can’t stress enough that you should talk to an attorney and/or accountant before settling debts. Debt after death can be a complex issue and you will probably need expert guidance.

For more information, talk with one of our debt specialists today.

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References

https://www.nerdwallet.com/blog/finance/debts-after-death-life-insurance/

https://www.creditcards.com/credit-card-news/credit-card-debt-death-1282.php

https://www.cardratings.com/what-happens-when-someone-dies-with-credit-card-in-th…

https://www.creditcards.com/credit-card-news/6-steps-when-credit-card-holder-dies.php

Is Debt Settlement A Good Idea?

Is Debt Settlement A Good Idea?

When you are in debt, you have several options. Bankruptcy, consolidation, settlement, credit counseling, and ignoring the whole mess are all options. What is the best one for your situation? In this article, we’ll take a look at debt settlement.

What is Debt Settlement?

In debt settlement, you and your creditors reach an agreement in which you pay less than you owe. A debt settlement company like Pacific Debt can help you to settle your credit card debt and learn to live debt free.

How Do I Settle?

Debt settlement works best if you are NOT current on your payments. If you are making payments on time, creditors may assume that you are capable of paying back your debt.

Once you convince them that you are unable to pay your debt, they may be more willing to reach a debt settlement agreement. Pacific Debt has an excellent track record of settling accounts and knows which creditors are most like to settle.

Some creditors will insist that you settle in full. Others will settle for far less than you owe.

You will make lump-sum payments to eliminate each debt.

I Don’t Have Money for a Lump Sum Payment

Most people don’t have a savings account large enough to cover their debts. If you did, you’d pay off your debts upfront. Pacific Debt has a solution.

Pacific Debt will set up an escrow account that you deposit money into regularly. Since you will not be paying on your debt, you take that money and set it aside. As it builds up, you settle each debt as you have funds.

How Long Does Debt Settlement Take?

Depending on how much you owe and how much you can set aside, debt settlement can take between 2 and 4 years.

How Much Debt Do I Have to Have?

Pacific Debt requires you to have $10,000 in unsecured debt, generally credit cards, and be unable to make more than minimum payments.

Many people panic when they hit a $15,000 credit card debt amount. Since that is more than most Americans earn in 3 months, a $15000 credit card debt is frightening. Pacific Debt can help.

Can I Settle Student Loan Debt?

Yes, you can settle student loan debt. However, it is not easy. Federal student loans have three options to settle student loans. All three come with a big catch.

  • Option 1 – pay off current balance plus accrued interest
  • Option 2 – Pay the total principal and half of the interest balance
  • Option 3 – Pay 90% of the total principal and balance owed

What is the catch? You must make a lump sum payment within 90 days.

Pacific Debt can work with you or refer you to a trusted partner who can help settle student debt. Get your free debt settlement consultation today.

What are the Drawbacks to Debt Settlement?

If this sounds too good to be true, good for you for thinking about the drawbacks! There are several and these should play into your decision making.

When you stop paying on your debt, your credit score will take a hit. It generally recovers as you pay back your debts. The fact that you settled will show up on your credit report. It can take up to seven years to remove a debt settlement notation from your report.

You may be sent to collections. This comes with its own set of annoyances, from phone calls to letters. Once you have convinced creditors that you are serious about settling, creditors generally settle.

What are Pacific Debt’s Settlement Steps

First, you need to enroll and get a free consultation. You will be given options that may work for you. Choose the best solution for your unique situation.

Next, stop making payments on your unsecured debt. Pacific Debt will help you set up an FDIC insured Special Purpose account. You will make deposits into that account every month.

While the balance grows, Pacific Debt negotiates with your creditors. Your account manager will be in contact every few weeks. As your account grows, your settled debt will be paid off.

It takes about 24 to 36 months.

If you only want to improve your credit scores or lower interest rates, debt settlement is not the way to do it.

If you have questions, contact us today.

For more information, talk with one of our debt specialists today.

FREE CONSULTATION

Disclaimer: We are not attorneys or accountants and can not give you legal advice. If you have legal or tax questions, you should contact the appropriate expert.

Should you file bankruptcy because you cant pay your credit card bills?

Should You File Bankruptcy Because You Can’t Pay Your Credit Card Bills?

Americans collectively have $1 trillion in revolving debt balances – most of that is credit card debt. If you are one of the millions of Americans with credit card debt, know that you are not alone. It might not help, but misery does love company!

If you are having trouble paying your credit card bills, you are probably looking for a solution. Bankruptcy might seem like a great option. You might get your debt wiped out and be able to start over again.

Before you decide on bankruptcy, check out your options very carefully. Bankruptcy has some serious consequences.

Is Bankruptcy an Option?

There are two forms of consumer bankruptcy. Chapter 7 is designed for people who absolutely can not pay their bills. You must pass a means test and earn under your state median income for your family size. Chapter 13 is for people with a steady source of income and specific amounts of unsecured and secured debt.

For some people, bankruptcy is the only option. If you owe more than you can realistically pay off, you may need to seriously consider bankruptcy.

Bankruptcy can provide immediate debt relief and puts an immediate stop to the harassment. In some cases, all of the unsecured debt is forgiven, and you get a “clean slate.”

Pros of Bankruptcy

  • Stops Bill Collections – No more collection calls and letters.
  • Eliminates Credit Card Debt – Depending on the BK you file, all your debts could get wiped away.
  • Allows the opportunity to start rebuilding your credit – Enjoy a fresh financial start!

Cons of Bankruptcy

  • Damaging to your Credit – Your credit rating takes a hit after you file a bankruptcy. It stays on your credit report for 7-10 years depending on the type of bankruptcy that was filed.
  • Cost of Filing and Lawyers – Bankruptcy can be expensive. There are filing fees, and lawyers can cost thousands of dollars. Make sure to check all your options carefully.
  • Physical and Mental Drain – Until your bankruptcy is finalized, you’ll still get creditors’ harassing phone calls and threatening legal letters. Many people agonize over the stigma of bankruptcy.
  • New Credit and Loans – Your credit will probably take a severe hit. You will, at some point, need to start rebuilding your credit. It’s very difficult to get approved for new loans with a bankruptcy on your credit history.

If bankruptcy appears to be your only option, you may be a candidate for debt settlement. Pacific Debt may be able to help you avoid bankruptcy while getting out of debt.

For more information on debt settlement, talk with one of our debt professionals.

FREE CONSULTATION

Is Debt Settlement a better option than Bankruptcy?

Debt settlement is a last resort to filing a bankruptcy. First, what is debt settlement? In debt settlement, you negotiate with your creditor to agree on a reduced balance. Pacific Debt is one of the leading debt settlement companies in the United States. We will negotiate with your creditors while helping you learn to live debt free.

Pacific Debt can help you if:

  • Have more than $10,000 in unsecured debt (generally credit card debt)
  • Live in a state where we do business
  • You are having difficulties making minimum payments

Pacific Debt is not for you if:

  • You want ONLY to improve your credit score
  • You ONLY want lower interest rates
  • You can make more than minimum payments and have a good credit score

Is debt settlement a better option than bankruptcy? It depends on your unique situation but here are some points to take into consideration.

  • Do you only make minimum payments on your credit cards?
  • Do you use credit cards to pay for necessities?
  • Are you using one credit card to pay off another?
  • Are bill collectors calling or creditors suing you?
  • Are you in danger of foreclosure?
  • Are you thinking of withdrawing 401K monies to pay your debt?
  • Have you lost your job?
  • Do you have a lot of medical bills?
  • Are you getting a divorce?

If you answer yes to any of these, you may be a candidate for debt settlement.

For more information on debt settlement,
talk with one of our debt professionals.

Who Can Help me with Debt Settlement?

Pacific Debt is a Debt Relief Provider with over 15 years of experience. Pacific Debt offers debt relief solutions tailored to your unique situation and budget. Our certified counselors help you work up a budget and  explain your options to you

  • Accredited by the Better Business Bureau with an A+ Rating
  • Rated 4.5/5 stars by ConsumerAffairs.com (over 450 verified reviews)
  • Rated 5/5 stars by TrustPilot based (over 400 verified consumer reviews)
  • US News and Report  – named Pacific Debt as One of the Best Debt Settlement Companies of 2018

Pacific Debt has helped thousands of people reduce their debt. We have settled over $250 million in debt for our clients since 2002. Contact us to see how we can help you.

How do I get started and how long will it take?

Once you make the decision to get out of debt, you apply through our website. You’ll be connected with a certified debt relief specialist who will review all your options. If debt settlement is right for you, we move forward on getting you enrolled.

If it is not, we refer you to one of our Trusted Partners who can help you with other options.

As you enter our debt settlement program, your certified debt relief counselor will analyze your debt, monthly expenses, and your income. They look at your current budget and determine a payment estimate that works for you. They then work with your creditors to agree on a lesser amount of debt and a repayment schedule. An Account Manager will be with you every step of the way.

For more information, talk with one of our debt specialists today.

FREE CONSULTATION

Disclaimer: We are not lawyers and are not giving legal advice. We strongly recommend speaking to a professional before making any decisions.

References
https://www.cardrates.com/advice/credit-card-debt-statistics/
https://www.debt.org/bankruptcy/should-i-file/

How Does Debt Consolidation affect your Credit Score

How Does Debt Consolidation Affect Your Credit Score

What is Debt Consolidation?

Debt consolidation combines most of your debts into one loan with a lower interest rate. It allows you to consolidate your monthly payments and hopefully allowing you to get debt-free sooner.

There are several ways to consolidate your debt. You could do a balance transfer credit card, take out a personal loan, borrow from your retirement account or against your home’s equity. You can also work with a debt consolidation company.

There are other options than debt consolidation. Pacific Debt offers debt settlement options for people with more than $10,000 in unsecured (generally credit cards) debt.

For more information on both debt consolidation and debt settlement,
talk with one of our debt professionals.

Does Debt Consolidation Hurt Your Credit Score?

Debt consolidation hurts your credit score in the beginning. Before getting a loan or getting a new credit card, you will have to have a “hard” credit check. This generally lowers your credit rating by a few points on each inquiry. Before you apply for new credit, research the different loans and ask for quotes based on “soft” credit checks. You can make an informed decision and limit the number of hard checks.

Opening the new account will also lower your credit scores for a short time period. However, as you pay off your debts on time and the account age, your credit score will improve. As you pay off your debts, keep some of the oldest credit cards open (and debt-free) to improve your credit history.

Should I Consolidate My Debt?

There are good reasons to consider debt consolidation. By lowering interest rates, you’ll save money. Just make sure that balance transfer fees don’t eat up the savings.

Rolling many debts into one debt can make your life simpler. If you’ve been plagued by missing or late payments, you may save money by avoiding penalties. Not having missing and late payments will help your credit score. Payment history makes up 33% of your credit score, so a better payment history is important.

A lower-interest loan will let you put more money toward the principal instead of interest fees.

For more information, talk with one of Pacific Debt’s debt professionals.

Where Do I Start?

    1. There are several strategies that make debt consolidation work.
      1. Have a plan: transferring debt around without paying it off won’t get you debt free or improve your credit score.
      2. Make certain that your consolidation loan will save you money, get you out of debt, and raise your credit score. Take fees into consideration.
      3. Investigate several options
        1. Balance transfer credit cards – these come with fees, so double check them to make sure that any interest savings aren’t eaten up. Check the time limits on paying off your transfer. The interest rate may increase dramatically after that time limit. Promo dates are generally between six and 24 months. PAY OFF your transfer before that date. If you cannot, this may be a terrible idea. Know the payment due date!
        2. Personal loans – Lower interest rates can help you pay off higher-interest credit cards. Shop around and ask for quote based on soft credit checks. Double check the terms as the interest rates may be very high.
        3. Retirement account loans – Talk with a professional accountant before doing this. There are severe tax penalties for not paying back a retirement account loan.
        4. Home equity (HEL) or line of credit (HELOC)- If you own a home with equity (you owe less than you can sell the house for), investigate this type of loan. You will need to have more equity than you do debt for this to work in your favor.  Be aware that if you do not pay your home equity loan back, you can lose your house.

Pacific Debt can help you understand your options.

What Should I Expect?

Expect a hit on your credit score, although you can limit the effect with soft credit checks. If you pay off debts, stop missing or making late payments, and then pay off your new loan, you should see improvement in your score over time.

If you have questions, Pacific Debt may be able to help you understand your options.
However, Pacific Debt is not able to offer legal advice or answer tax questions.

References
https://www.creditkarma.com/advice/i/how-debt-consolidation-affect-credit-score/
https://www.lendingtree.com/debt-consolidation/does-debt-consolidation-hurt-your-credit-score/
https://www.nerdwallet.com/blog/finance/consolidate-debt

Our Debt Specialists can help you explore your alternatives to bankruptcy, including debt consolidation and debt settlement options.

FREE CONSULTATION

Disclaimers

We are not lawyers and are not giving legal advice. We strongly recommend speaking to a professional before making any decisions.

Financially Stable Couples How to Manage Marriage and Finances

Financially Stable Couples: How to Manage Marriage and Finances

Few things are as painful or frightening to a child as parents fighting.

And few things are more destructive to marriages as financial troubles. According to Ramsey Solutions, the only thing that causes divorce more than money is infidelity.

So, how do you resolve the issue between marriage and finance? The obvious answer is to establish financial goals and live frugally. But, sometimes, the obvious answer isn’t the cure-all.

No doubt financial wellness will ease the strain on marriages, but financial wellness doesn’t guarantee happy marriages. And sometimes, the strain on your marriage goes deeper than money itself.

Luckily, there are some great ways to heal relationships damaged by financial strain, as well as ways to avoid financial strain altogether.

Take a look at these tips for handling marriage and finance woes:

How Does Money Affect Relationships

According to Dr. Kathleen Hall from Sharecare, “the first wound in a relationship usually involves finances.” This cause of marital wounds becomes more understandable when you realize that almost two-thirds of all newlyweds start off in debt.

On the other hand, money troubles don’t guarantee a divorce. In fact, couples who have great relationships also discuss money with their spouse. Another finding from the Ramsey Solutions study points out that “Ninety-four percent of respondents who say that have a “great” marriage discuss their money dreams with their spouse.”

Talking about money with your spouse doesn’t always have to be a fight. Dr. Hall adds that “money can be a source of destruction or a source of creativity in a marriage.”

So before you write off your marriage when financial hardship hits, make a promise to yourself and to your spouse that you will use your financial struggles as stepping stone to a stronger relationship.

How to Deal with Financial Stress as a Family

The first rule of surviving financial stress as a family is to know the value of family compared to the value of money.

If you think of finances and family in terms of investment, people generally invest much more time and willpower into money than they do family.

Think about it, at least 8 hours of every day are spent working and 8 hours are spent sleeping. Be honest with yourself, do you invest nearly as much time in your family as you do your money?

Of course, measuring your investment in money and family isn’t really fair — most people are trying to make money in order to support their family. But, we need the perspective that comes from believing we owe something more than money to our families.

This mindset teaches us one important thing that we should always remember: creating a strong family requires an active, daily investment of time and attention.

Contact Pacific Debt today to get your FREE Consultation.

Here are some great ideas for dealing with financial stress in marriage:

  • Family Night

    Set apart time to spend with your family. Make it a weekly habit. Family nights help families grow stronger and happier. Family nights are a great time to play games together. In general, playing games as a family is highly beneficial for both children and adults.

    For example, U.S. News revealed that playing helps people learn to be friends, learn difficult subjects, learn to cooperate and play fair, and improves all areas of life. Family night is also a great time to learn how to cope with difficult circumstances, such as financial troubles.

  • Family Dinner

    Eating together has shown to drastically improve the mental and physical health of children.

    Most notably, a report from The Atlantic showed that “children who do eat dinner with their parents five or more days a week have less trouble with drugs and alcohol, eat healthier, show better academic performance, and report being closer with their parents.”

  • Set Family Financial Goals

    Your kids should learn the basic principles of handling their finances while they’re young. You never know, you may pick up a few financial tips yourself while training your kids to be financially independent.

    If your kids ever get the urge to put up a lemonade stand, teach them to save and budget the money they make. Did you know that your kids could actually owe taxes from small entrepreneurial efforts? While this may be annoying, it does provide a great opportunity to learn and grow as a family.

  • Get a Jumpstart on Taxes

    The peak of financial stress for many couples is tax season. To prevent any marital duress due to financial stress, make sure you prepare your taxes well before the tax deadline.

    If you’re putting off your taxes for one reason or another (especially if you owe back taxes), it’s even more important that you get your taxes in order. The added weight of an IRS audit is enough to push any family to the breaking point.

  • Backyard Campouts

    Camping with children is stressful and tedious — like every other activity done with children. Fortunately, backyard camping is all the rage and has actually proven to be a great bonding experience for many families.

    Backyard camping eliminates the hassle of long trips into the mountains and keeps you within arms reach of the comforts of home; it also allows you to sit around a campfire as a family, tell stories, play games, and grow closer than you would by staying indoors.

How to Manage Finances in a Marriage

Most individuals have some sort of personal financial plan before getting married (no matter how poor the plan actually is). Once two people get married, these personal financial plans hardly ever work anymore. There are added expenses, additional debt, and new streams of income.

It’s important that you revise your financial plan once you get married. Luckily, there are many things you can do to handle your joint finances in marriage.

The first step for most couples will be to find a great budgeting app. The best budgeting apps will allow you to track your income, prioritize your spending, and create a budget that fits your unique financial situation.

Another option that many couples find helpful is the combination of debt and finances. If you do decide to combine, take advantage of zero percent interest on balance transfers from select credit card companies.

You may also consider using a debt resolution company to get your combined finances in order.

Other successful couples choose to separate their finances, though this is a much riskier path, in terms of marital success. Combining finances can mean greater financial risk, especially if they file joint tax returns (many people have been held responsible for mistakes/inaccuracies on their spouse’s tax return).

Remember that good marriages lie upon a foundation of teamwork and trust — this is still possible while keeping finances separate, but it is tricky.

Make sure you offer your help and support to your spouse when they are experiencing financial difficulties. You may even consider paying a bit more than your share on the monthly bills every once in a while. It may also be smart to put off a joint bank account until after your individual debts are paid off.

No matter your preferred method a managing finances, make sure you follow the three rules of marital financial success: communication, trust, and self-sacrifice.

Our Debt Specialists can help you explore your alternatives to bankruptcy, including debt consolidation and debt settlement options.

FREE CONSULTATION

Disclaimers

We are not lawyers and are not giving legal advice. We strongly recommend speaking to a professional attorney.

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