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Recent Blog Posts
Don't neglect estate planning as a new parent
Your children count on you to support them throughout the time they live at home. They usually don't worry about what's going to happen to them if you and their other parent both pass away, but this is something that you need to consider. As their parent, you have the responsibility to set a plan in place for them now just in case the unthinkable happens.
When you're setting up the estate plan, one critical component is the guardianship designation. You must ensure that you're thinking carefully about who is going to raise the children if you aren't able to. This person must be able to keep up with the kids and raise them in a manner in which you'd approve.
If you have more than one child, you can name one guardian who will raise them all. You can also name a different person for each child. You have to do what you feel will be in each child's best interest because the court will consider this if the guardianship has to be put into place.
Do your kids inherit your debts when you die?
If you have a lot of debts, you're far from alone. The average American household now has a debt load of $137,063 — and that's probably not going to change any time soon. For people who are in their senior years, that often leads to a lot of worry about what happens to those debts when they die.
Here are some things to know:
- Your mortgage may have a pay-off clause. Check the loan documents you signed when you took out the mortgage on your home. Many banks and credit unions offer insurance that will pay off a property if the homeowner dies before the loan is repaid. Lacking that, your mortgage will have to be paid off through your estate before the rest of your assets are distributed.
- Credit card debt and other bills may also pursue your estate for payment. However, the credit card companies, doctors and hospitals that probably hold most of your debts can only pursue what's actually in your estate — not anything that bypasses it.
Drop in job postings shows that bankruptcy could be coming
It's been a tough couple of months for the economy, and many people are out of work. It's hard to find new jobs or bring home any sort of income at all. That may mean that a lot of bankruptcy filings are on the way if the economy does not recover quickly.
You can track the risk in a lot of different ways, but let's just look at job postings. On ZipRecruiter, a popular job posting site, the total number of listings has plummeted by a staggering 48% since January. There are few more clear indicators that the job market just isn't there.
When asked about it by Fortune magazine, many legal professionals said that they definitely thought a wave of filings was in the works. They were preparing by hiring more staff, though they admitted that they did not know how soon it would begin happening or exactly how many new cases they would see.
Should you seek bankruptcy for credit card debt?
At this time a few months ago, you were very happy with your finances. You were carrying a few thousand dollars in debt, but you had also gotten a wonderful job that made making payments (and payments of more than you owed) possible.
Then, you went to work one day and saw a notice on the door. Your employer went out of business, and you were all fired. There was no warning.
You had a month of savings, but you weren't able to find a new job that quickly. Even when you did, it didn't pay what your old job did. Now what do you do? You're swimming in debt, and you're missing payments.
Bankruptcy can be a good choice for people in your situation. You didn't plan for things to go badly, and you had a savings in place. Though you had debt, you had been making headway on eliminating it. Needing help now isn't a sign that you weren't careful enough or that you made bad decisions. Losing a job, suffering from a medical emergency and other sudden changes affect people all the time.
Do not wait until you're older to do estate planning
One of the most common things that people say, when asked when they are going to do their estate planning, is that they're just going to wait until they're older. They feel like the time isn't right.
This can happen to all age groups. Maybe it's a newly married couple that wants to wait until they have children. Maybe it's middle-aged parents who decide to wait until after the kids are out of the house. Maybe it's a couple who is nearing retirement age and decides that, after they retire, they'll take stock of what they own and put together an estate plan.
No matter what the specifics look like, the truth is that you should not wait. Some have gone so far as to call it estate planning's number one rule. A lot of people procrastinate and it is perhaps the biggest mistake made when it comes to end-of-life planning.
The reality is that you can't predict when your family will need that estate plan. You may hope that you'll live to be in your 80s, but that's actually higher than the life expectancy in America. You can't count on that for certain. Even young, healthy people lose their lives in car accidents every day. Others pass away from sudden diseases.
Why bankruptcy may be your best hope
Oh, the shame. Imagine what people will say when they find out you are bankrupt. There is a stigma attached to bankruptcy, but there shouldn't be. Read the news, millions of people like you are losing their jobs, all across the world. Big-name companies are on their knees.
The difference between you and the big companies is that the government always seems willing to bail them out, using the taxes you and everyone else pay. Remember how the government bailed the banks out in the last recession? Did you see them doing that for people like you?
The world is not going to work if everyone files for bankruptcy continually, but you deserve a chance to start with a clean slate. Filing for Chapter 7 bankruptcy may be the answer.
What does a Chapter 7 bankruptcy do, and what does it not do?
- A Chapter 7 bankruptcy can clear your unsecured debts such as credit card debt and medical bills.
Can bankruptcy stop foreclosure?
You start getting foreclosure notices in the mail. It's no surprise. You lost your job and have not been able to make your mortgage payments.
When you tell one of your friends that you are worried you're going to lose your home, they tell you to file for bankruptcy. They claim that doing so will stop the foreclosure. Is this true?
It's not entirely true, but there is some truth within your friend's claims. A bankruptcy filing puts an automatic stay on all other financial legal actions pending against you, such as a foreclosure. This delays the case. It cannot move forward until you get through your bankruptcy case.
Now, a bankruptcy case may take months, and you get to stay in your home at that time. Plus, if your bankruptcy eliminates the other types of outstanding debt you have — credit card debt, etc. — then you may find that your mortgage is affordable again. You may be able to work out an agreement with your lender so that you do not lose your home after all.
Can you keep your home if you go bankrupt?
When financial pressures mount, the anxiety you feel can quickly escalate — especially if you're worried about losing your home. You think bankruptcy may be your only solution, but you hate the idea of giving up the home you've loved, tended and lived in for years.
Take heart. As long as you can afford the payments, there's a fair possibility that you will be able to keep your home. Here are some of the factors that will ultimately determine what happens:
- The value of your home: If you have a lot of equity in your home, that could be considered assets that can be used to pay off your debts — although exemptions sometimes apply.
- The type of bankruptcy you file: Chapter 13 bankruptcies are more flexible and let you reorganize your debt, while Chapter 7 bankruptcies do not. If you file Chapter 13, you may be able to keep your home even when it has a bit of equity.
Understand how bankruptcy might impact you
Life's circumstances sometimes aren't the best. When your money is impacted by things out of your control, you might feel helpless. You know that your bills need to be paid, but you don't have a way to make that happen. Your focus then becomes making sure that you're doing your best to take care of necessities. Other bills, such as credit cards and medical accounts, might go untouched.
For some people, the situation becomes too much to handle, and they know they need to do something. Filing for bankruptcy is one option that they have in these cases. Consumers will typically either file a Chapter 7 or Chapter 13. The primary difference between these two is that the Chapter 7 bankruptcy liquidates nonexempt assets and doesn't require the person to make any payments. A Chapter 13 liquidates some assets, but the person has to make payments to the bankruptcy trustee on a set schedule.
One benefit that both bankruptcy types offer is the automatic stay. Once you file, creditors can't contact you to demand payment. This puts a stop to phone calls and collection letters, so you can have peace of mind while you're getting your finances back in order.
Don't forget to update your beneficiaries
When it's time to update your will and your estate plan, take a moment to update your beneficiary designations, as well. This is something that people often forget, and it can prove very costly.
For instance, your life insurance company asked you to pick a beneficiary when you bought the policy. You probably picked a child or your spouse. That's what most people do.
Say that you chose your spouse, wanting to support them even if you passed away. However, you and your spouse have since gotten a divorce. You updated your estate plan to leave items to your children and cut out your ex. However, if you don't update that beneficiary designation, the life insurance payment could still go to your ex — and not your kids.
One potential issue here is that your beneficiary designations carry precedence over your will. People sometimes write in the will that they want to move the life insurance money to someone else, but they'd don't contact the insurance company to change their paperwork. The insurance company only cares about what they have on file. If it is in conflict with your will, they're going to ignore your will and follow the directions that you gave them specifically.
From our office in Geneva, Illinois, we serve clients throughout the region, including the communities of St. Charles, Batavia, Aurora, Elgin, Elburn, Sugar Grove, North Aurora, South Elgin, West Chicago, Fox Valley, Winfield, Wayne, Big Rock, Naperville, Wheaton, and Downers Grove, as well as other municipalities in Kane County and DuPage County.
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