Comments for AFCPE | Blog http://afcpe.gripserver3.com/blog AFCPE Blog Sat, 31 Jul 2010 23:03:53 +0000 http://wordpress.org/?v=2.7.1 hourly 1 Comment on Wage Garnishments by Jerry Buchko http://afcpe.gripserver3.com/blog/?p=65&cpage=1#comment-294 Jerry Buchko Fri, 30 Jul 2010 01:06:55 +0000 http://afcpe.gripserver3.com/blog/?p=65#comment-294 Hi Elizabeth Most states allow a creditor to pursue legal garnishment of wages for an unpaid commercial debt. Only a few states do not allow wage garnishment for commercial debts, but even in some of these states creditors have alternative legal means to pursue a debtor for repayment of commercial debts. In my experience working with clients, creditors pursuing wage garnishments is not anything new, but I think there is some indication that creditors and debt collectors are pursuing wage garnishment with increased frequency. There was actually an article in the NY Times in April about this: “Pay Garnishments Rise as Debtors Fall Behind” by John Collins Rudolf: http://www.nytimes.com/2010/04/02/business/economy/02garnish.html In my experience, a creditor is unlikely to lift a garnishment voluntarily until the debt is repaid in full. It's my understanding that clients may sometimes be able to appeal or claim an exemption against a garnishment to address the amount being garnished, if, for example, the garnishment was causing undue financial hardship, if it was obtained improperly, if it was in violation of federal or state wage garnishment restrictions, etc. If your clients have not already done so, it might be helpful for them to consult with the Legal Assistance personnel, a consumer law attorney or other local legal resource, so that they might better understand their rights and protections under the law. If you happen to have a copy of either Surviving Debts or Money Troubles, both books provide provide information about the legal process of debt collections and the typical steps a creditor or debt collector must take to obtain a judgment and garnishment order for a commercial debt. Nolo, which publishes Money Troubles, also provides some information about garnishment on their web site: “If Your Wages are Garnished: Your Rights” by Barbara Repa, J.D.: http://www.nolo.com/legal-encyclopedia/article-33050.html On a similar note, there was an article published in a local (Minnesota) paper about other legal problems people are encountering with increased frequency, like arrests and jail time for failing to show up at court hearings regarding their debts or for not making court ordered debt payments: “In Jail for Being in Debt” by Chris Serres & Glenn Howatt: http://www.startribune.com/local/95692619.html ~ Jerry Gerald Buchko, MA AFC | Financial Counselor & Personal Finance Coach | http://www.linkedin.com/in/jerrybuchko | jerry.buchko@gmail.com | @jerrybuchko Hi Elizabeth

Most states allow a creditor to pursue legal garnishment of wages for an unpaid commercial debt. Only a few states do not allow wage garnishment for commercial debts, but even in some of these states creditors have alternative legal means to pursue a debtor for repayment of commercial debts.

In my experience working with clients, creditors pursuing wage garnishments is not anything new, but I think there is some indication that creditors and debt collectors are pursuing wage garnishment with increased frequency. There was actually an article in the NY Times in April about this:

“Pay Garnishments Rise as Debtors Fall Behind” by John Collins Rudolf: http://www.nytimes.com/2010/04/02/business/economy/02garnish.html

In my experience, a creditor is unlikely to lift a garnishment voluntarily until the debt is repaid in full. It’s my understanding that clients may sometimes be able to appeal or claim an exemption against a garnishment to address the amount being garnished, if, for example, the garnishment was causing undue financial hardship, if it was obtained improperly, if it was in violation of federal or state wage garnishment restrictions, etc. If your clients have not already done so, it might be helpful for them to consult with the Legal Assistance personnel, a consumer law attorney or other local legal resource, so that they might better understand their rights and protections under the law.

If you happen to have a copy of either Surviving Debts or Money Troubles, both books provide provide information about the legal process of debt collections and the typical steps a creditor or debt collector must take to obtain a judgment and garnishment order for a commercial debt.

Nolo, which publishes Money Troubles, also provides some information about garnishment on their web site:

“If Your Wages are Garnished: Your Rights” by Barbara Repa, J.D.: http://www.nolo.com/legal-encyclopedia/article-33050.html

On a similar note, there was an article published in a local (Minnesota) paper about other legal problems people are encountering with increased frequency, like arrests and jail time for failing to show up at court hearings regarding their debts or for not making court ordered debt payments:

“In Jail for Being in Debt” by Chris Serres & Glenn Howatt: http://www.startribune.com/local/95692619.html

~ Jerry

Gerald Buchko, MA AFC | Financial Counselor & Personal Finance Coach | http://www.linkedin.com/in/jerrybuchko | jerry.buchko@gmail.com | @jerrybuchko

]]> Comment on Wage Garnishments by Louis Bromley http://afcpe.gripserver3.com/blog/?p=65&cpage=1#comment-293 Louis Bromley Fri, 23 Jul 2010 18:41:25 +0000 http://afcpe.gripserver3.com/blog/?p=65#comment-293 This is not a new process, creditors have been useing it for years. I guess my question would be why did the clients take so long to seek help? In order to use the wage attachment process you must have a court order, this takes several weeks to obtain. Once the wage attachment is in place very few creditors will release it. I haven't seen an increase here but that could change very quickly. I wish your clients well. This is not a new process, creditors have been useing it for years. I guess my question would be why did the clients take so long to seek help? In order to use the wage attachment process you must have a court order, this takes several weeks to obtain. Once the wage attachment is in place very few creditors will release it. I haven’t seen an increase here but that could change very quickly. I wish your clients well.

]]> Comment on Effects of Unemployed Teens by Glenn Muske http://afcpe.gripserver3.com/blog/?p=57&cpage=1#comment-292 Glenn Muske Mon, 12 Jul 2010 13:28:30 +0000 http://afcpe.gripserver3.com/blog/?p=57#comment-292 I would ask where public service might fit into this mix? There are many jobs that need doing but not enough people power to get them all done. Do we encourage such alternatives? May not be a solution for all but from my limited perspective may help many. I would ask where public service might fit into this mix? There are many jobs that need doing but not enough people power to get them all done. Do we encourage such alternatives? May not be a solution for all but from my limited perspective may help many.

]]> Comment on How vs. What by Glenn Muske http://afcpe.gripserver3.com/blog/?p=62&cpage=1#comment-291 Glenn Muske Mon, 12 Jul 2010 13:23:01 +0000 http://afcpe.gripserver3.com/blog/?p=62#comment-291 I find this stream of though interesting. Debbie's comment I think is accurate. I might suggest though an expansion of it to not only WIIFM to "what's in it for me today." Those I have come into contact are much more often looking for an immediate benefit (i.e. - I can buy groceries this weekend) as opposed to something far in the future (i.e. - I will have a great retirement). We need to think about how we "sell" current benefits while also knowing our tools will bring future rewards. I find this stream of though interesting. Debbie’s comment I think is accurate. I might suggest though an expansion of it to not only WIIFM to “what’s in it for me today.” Those I have come into contact are much more often looking for an immediate benefit (i.e. - I can buy groceries this weekend) as opposed to something far in the future (i.e. - I will have a great retirement). We need to think about how we “sell” current benefits while also knowing our tools will bring future rewards.

]]> Comment on How vs. What by Debbie Nixon http://afcpe.gripserver3.com/blog/?p=62&cpage=1#comment-290 Debbie Nixon Mon, 28 Jun 2010 22:56:53 +0000 http://afcpe.gripserver3.com/blog/?p=62#comment-290 I agree with the author's point that anyone with expertise can over-focus on data, and in the process, lose the audience in "knowledge". Clients usually want to know how the information benefits them. Sometimes as experts, we can forget to connect the data to the unasked question that is often the one the client is thinking about the whole time: "WIIFM" (Whats In It For Me)? When you ask yourself "how will I present this", first put yourself in your clients shoes and try to see it from their perspective. What concerns, questions or fears want to be addressed? Once you do that, you can have a richer conversation with that client about how the product or data relates to what they care about most. Having the conversation the client wants to have, instead of the one that might come naturally (logic based) is a skill that wins client trust and retains them in uncertain times. I agree with the author’s point that anyone with expertise can over-focus on data, and in the process, lose the audience in “knowledge”. Clients usually want to know how the information benefits them. Sometimes as experts, we can forget to connect the data to the unasked question that is often the one the client is thinking about the whole time: “WIIFM” (Whats In It For Me)?
When you ask yourself “how will I present this”, first put yourself in your clients shoes and try to see it from their perspective. What concerns, questions or fears want to be addressed? Once you do that, you can have a richer conversation with that client about how the product or data relates to what they care about most. Having the conversation the client wants to have, instead of the one that might come naturally (logic based) is a skill that wins client trust and retains them in uncertain times.

]]> Comment on Debt-to-Income Ratio by Ty Kennerly http://afcpe.gripserver3.com/blog/?p=64&cpage=1#comment-289 Ty Kennerly Thu, 24 Jun 2010 01:58:59 +0000 http://afcpe.gripserver3.com/blog/?p=64#comment-289 After just going thru the homebuying process debt to income ratio played a big part. Certain loans require a specific percentage of debt to income. For one loan my percentage was a little high which would require a lesser loan amount. According to my credit, there was really nothing I could have possibly done to bring it down b/c my particular bank did not go by credit card debt. They stated they didn't b/c you can payoff your credit card debt one day and then use it the next. They mainly went off of installment payments which I only had student loan. I did qualify for a different type of loan where my debt to income ratio was ok. After just going thru the homebuying process debt to income ratio played a big part. Certain loans require a specific percentage of debt to income. For one loan my percentage was a little high which would require a lesser loan amount. According to my credit, there was really nothing I could have possibly done to bring it down b/c my particular bank did not go by credit card debt. They stated they didn’t b/c you can payoff your credit card debt one day and then use it the next. They mainly went off of installment payments which I only had student loan. I did qualify for a different type of loan where my debt to income ratio was ok.

]]> Comment on Debt-to-Income Ratio by Tyler Peck http://afcpe.gripserver3.com/blog/?p=64&cpage=1#comment-288 Tyler Peck Wed, 23 Jun 2010 18:00:37 +0000 http://afcpe.gripserver3.com/blog/?p=64#comment-288 I have never seen any thing that talks about different debt to income ratio's for those who are wealthier than others. Sure because they earn or have more money, they can borrow more, but the percentages stay the same. I think this is a good answer to your question from bankrate.com "It's all about proportion, says Laura Russell, a certified financial counselor with GreenPath Debt Solutions. "You can be making a lot of money every month, but if you've got the debt to match it, that can be a problem, she says. It's important not to overextend yourself. The higher your number, the riskier it is for lenders to offer you loans -- and the more they'll make you pay for them." http://www.bankrate.com/brm/news/mortgages/20070116_debt_income_ratio_a1.asp I have never seen any thing that talks about different debt to income ratio’s for those who are wealthier than others. Sure because they earn or have more money, they can borrow more, but the percentages stay the same.
I think this is a good answer to your question from bankrate.com
“It’s all about proportion, says Laura Russell, a certified financial counselor with GreenPath Debt Solutions. “You can be making a lot of money every month, but if you’ve got the debt to match it, that can be a problem, she says. It’s important not to overextend yourself. The higher your number, the riskier it is for lenders to offer you loans — and the more they’ll make you pay for them.” http://www.bankrate.com/brm/news/mortgages/20070116_debt_income_ratio_a1.asp

]]> Comment on Debt-to-Income Ratio by Denis Paquette http://afcpe.gripserver3.com/blog/?p=64&cpage=1#comment-287 Denis Paquette Wed, 23 Jun 2010 06:02:44 +0000 http://afcpe.gripserver3.com/blog/?p=64#comment-287 Debt to income ratio limits change depending on what type of loan is being sought after. If talking about mortgages, there are typically two ratios that are taken into consideration: Housing Expense Ratio (Front-end) and the Mortgage Debt Ratio (Back-end). The Housing Ratio is the monthly mortgage payment to monthly gross income ratio and has a typical limit of 28%. The Mortgage Debt Ratio is the total monthly debt payments to gross monthly income ratio and has a typical limit of 36%. Federal Housing Authority and Veteran's Administration mortgages allow a debt to income ratio as high as 41%. These limits are often displayed as 28/36 or 28/41 when working with lenders. As for specific treatment, most lenders will adjust their limits based on the individual. An example is moving to 45% (back-end) for an individual who has great credit and a quantifiable reserve (months or even years). Debt to income ratio limits change depending on what type of loan is being sought after. If talking about mortgages, there are typically two ratios that are taken into consideration: Housing Expense Ratio (Front-end) and the Mortgage Debt Ratio (Back-end). The Housing Ratio is the monthly mortgage payment to monthly gross income ratio and has a typical limit of 28%. The Mortgage Debt Ratio is the total monthly debt payments to gross monthly income ratio and has a typical limit of 36%. Federal Housing Authority and Veteran’s Administration mortgages allow a debt to income ratio as high as 41%. These limits are often displayed as 28/36 or 28/41 when working with lenders. As for specific treatment, most lenders will adjust their limits based on the individual. An example is moving to 45% (back-end) for an individual who has great credit and a quantifiable reserve (months or even years).

]]> Comment on Debt-to-Income Ratio by John Bohnsack http://afcpe.gripserver3.com/blog/?p=64&cpage=1#comment-286 John Bohnsack Sat, 19 Jun 2010 19:26:49 +0000 http://afcpe.gripserver3.com/blog/?p=64#comment-286 A recent article posted on TheStreet.com published on 6/16 spoke about the average debt/income ratio currently being at 13.9%. This makes me curious with averages how this is calculated. But the interesting note in the articles indicates that the decrease in the ration has to do with the large default rate, not the fact that people have been paying off their debts. The articles also says that "we found is a strong indication that consumers might be falling into pre-recession habits (credit card use), which we cannot afford in our fragile economy". Which should be a big concern for all Americans this point considering the mountain of debt which the country carries. Going back to the original question it would be interesting to see if higher income earners use debt structured in tax efficent ways to handle the large debt loads. Papadimitriou, Odysseas (2010). Consumer Debt Is on Track to Spike This Year. Retrived from: http://www.thestreet.com/story/10784408/1/consumer-debt-is-on-track-to-spike-this-year.html?cm_ven=GOOGLEN A recent article posted on TheStreet.com published on 6/16 spoke about the average debt/income ratio currently being at 13.9%. This makes me curious with averages how this is calculated. But the interesting note in the articles indicates that the decrease in the ration has to do with the large default rate, not the fact that people have been paying off their debts. The articles also says that “we found is a strong indication that consumers might be falling into pre-recession habits (credit card use), which we cannot afford in our fragile economy”. Which should be a big concern for all Americans this point considering the mountain of debt which the country carries.
Going back to the original question it would be interesting to see if higher income earners use debt structured in tax efficent ways to handle the large debt loads.

Papadimitriou, Odysseas (2010). Consumer Debt Is on Track to Spike This Year. Retrived from:
http://www.thestreet.com/story/10784408/1/consumer-debt-is-on-track-to-spike-this-year.html?cm_ven=GOOGLEN

]]> Comment on Debt-to-Income Ratio by collin schriver http://afcpe.gripserver3.com/blog/?p=64&cpage=1#comment-285 collin schriver Thu, 17 Jun 2010 19:02:50 +0000 http://afcpe.gripserver3.com/blog/?p=64#comment-285 I just applied for a mortgage to buy a 2nd home. The lender told me my D/I was good at 21%. That's the highest it's ever been in my adult life! I just applied for a mortgage to buy a 2nd home. The lender told me my D/I was good at 21%. That’s the highest it’s ever been in my adult life!

]]>