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Albuquerque Law Blog

Erase bad debt with the help of bankruptcy

Debt could be either good or bad depending on the intentions of the debtor. For example, a mortgage loan that has a payment within 36 percent of the borrower's monthly income would be a good debt. On the other hand, if the payment on a New Mexico property is more than a third of the homeowner's income, they are more likely to struggle financially.

When deciding whether to take on new debt, families should determine whether it will help them improve their financial well being or make their lives more difficult. Using credit to purchase discretionary items like clothing or a vacation may make a person feel better about themselves temporarily but repaying the debt could lead to financial hardship. Taking on more than one of these high-interest debts could make it more challenging to recover without debt relief assistance.

Millennial generation starting own businesses at a record pace

Millennials are often unfairly blamed for “ruining” certain industries, among them sit-down restaurants, diamonds, fine jewelry and more. Regardless of whether this is true, millennials are also being credited with innovation in business, as more of them are starting their own businesses or pursuing freelance opportunities than ever before.

Thousands of the millennial generation (those between 30 and 37 in 2018) were surveyed by MetLife to determine the rate of entrepreneurship and freelance work. A whopping 40 percent of those surveyed reported that they plan to quit their current jobs and start their own businesses or pursue freelance work full-time in the next five years.

Bankruptcy and divorce

While it's true that many American bankruptcies stem from medical expenses, job loss or sudden loss of income, a fair amount of them relate to divorce. A divorce means divvying a single household - and its income - into two. This means twice the expenses, twice the utilities, twice the mortgage or rent payments, etc.

Whether the divorce comes first or the bankruptcy does is really a "chicken and egg" type of issue. One can invariably lead to the other, regardless of which came first. Seeing as bankruptcy and divorce so often intertwine, though, it's important to understand how the interplay between the two.  

Recovering from bankruptcy

When you are thinking about filing for bankruptcy, you may find yourself wondering about what the long-term impact will be. You might worry you won’t ever be able to have a credit card, buy a new car or get a mortgage. Thankfully, these worries are unfounded. All of these things are possible following a Chapter 7 or Chapter 13 bankruptcy filing.

It will take time and patience, but it is possible to use bankruptcy as the first step not only towards recovery from a negative financial past, but into a brighter financial future.

Tax debt and bankruptcy discharge

Most debtors assume that tax debt, like student loan debt, are simply non-dischargeable even while many other types of debts are. What most don't realize, though, is that while that is generally true, particularly for Chapter 13 filings, it might be possible to discharge limited tax debts under certain circumstances in a Chapter 7.

So, when is tax debt dischargeable?

Storefront loans in New Mexico: what you should know

Storefront loans (also widely known as “payday loans” or “short-term loans”) are notoriously predatory in nature. So much so that the New Mexico legislature took the extraordinary step of capping interest rates, demanding a minimum number of payments and extending the repayment period for this type of loan.

Whereas before, lenders charged upwards of 400-500 percent annual interest on the original loan amount, new limits prevent anything over 175 percent. Lenders previously kept people in a cycle of debt lasting years by forcing them to take out new loans – with new terms and fees – every time the loan became due, often within as little as one-to-two weeks. Now, the minimum loan term is 120 days. Loans prior to the passage of the law were typically due in one lump sum after only a few weeks, but new loans must have the total loan amount divided into at least four payments.

What is a creditors’ committee?

If you are a creditor, one thing that might fill you with worry is if a business that owes you money ends up in bankruptcy, such as Chapter 11 bankruptcy. You may worry about whether the debt will be repaid and whether your rights and interests will be protected during the bankruptcy process. These worries may be particularly strong if the debt you are owed isn’t backed by any collateral (known as unsecured debt).

The Chapter 11 bankruptcy process for businesses involves a business restructuring through a debt reorganization plan. The process contains certain safeguards aimed at protecting creditors. One of these is the unsecured creditors’ committee.

The future of commercial real estate in Albuquerque

It is no secret that New Mexico’s commercial real estate market has lagged behind other regions in the southwest when it comes to growth. However, performance with retail and multifamily housing is in line with historical averages. Because of this, it is increasingly important for entrepreneurs and real estate investors to carefully analyze the potential of real estate, particularly distressed properties in order to make sound business decisions.

A recent Commercial Property Executive report found that Albuquerque’s core submarkets are showing signs of growth, buoyed by job gains in the educational and health services markets. The region’s aging population means that the health care industry is poised to be the state’s primary driver in the job market.

How overdraft fees can get you into trouble

Of the annoying fees that banks charge for the “privilege” of accessing your money, overdraft fees are arguably the most nerve-wracking. Most banks charge $35.00 for each purchase that exceeds the amount currently in the account, on top of the actual cost of the offending purchase. So that $4.00 mocha frappuccino that overdrafts your account could cost upwards of $40.00.

A study by the Consumer Financial Protection Bureau found that these types of expenditures and fees are fairly common. They found that the fees associated with overdrafts are on purchases of less than $24.00.

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