Recently in Financial Planning Category

What Happens to Your Saved Vacation and Sick Leave if You Divorce?

February 4, 2014, by Law Offices of James V. Sansone

scales.jpgYou work hard for your money, and if you're employed by a public agency or a private company that allows employees to accrue sick and/or vacation leave, then the paid leave you accrue over time will eventually be converted to a cash payment when you retire.

So that cash, if you divorce, will be considered a shared asset and will need to be divided with your spouse.

Let's say you're the type of person who doesn't need to take vacations and who never gets sick. If you work for the County of Sonoma or the City of Santa Rosa for 30 years, when you retire you will not only have your retirement pay to look forward to but also a cash payment of your accrued sick and vacation leave.

That is unless you divorce.

In 2011, the courts in California ruled that if an asset is convertible to cash, then it's an asset that must be divided during your dissolution.

If a portion or all of it can't be cashed out and it has no economic value to the employee, then it won't be considered a shared asset.

The Struggle in Colorado Over Paid Leave

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Divorce or Bankruptcy: Which Comes First?

January 28, 2014, by Law Offices of James V. Sansone

BK and Divorce.jpgDid you know that someone gets divorced every 10 to 13 seconds in the U.S.? Some of those divorces occur in couples who are also contemplating filing for bankruptcy. What should they do? File or divorce first, or proceed with bankruptcy?

Despite how difficult if may be for an unhappy couple to stay together and live in the same home, in most, but not all, cases it's best to file for bankruptcy first and complete that process before initiating divorce proceedings.

Chapter 7 vs. Chapter 13

To help you understand the differences between Chapter 7 and Chapter 13 bankruptcy filings, here are some explanations:

Chapter 7 Bankruptcy: Also known as liquidation bankruptcy, Chapter 7 allows for the discharge of unsecured debts including credit cards, medical bills and personal loans. In the average case, a person is usually able to exempt all their personal property. The Chapter 7 process can be completed in as little as 90 days, allowing you to begin rebuilding your financial standing and proceeding to the next phase, your divorce.

Chapter 13 bankruptcy: The Chapter 13 process allows you to create an affordable payment plan that gives you the chance to catch up on past due debts. The payment plan, lasting three to five years, gives you the opportunity to pay off lowered settlement amounts to your debtors and discharge your remaining debt once the plan is complete.

Benefits of Filing for Bankruptcy First

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Fraud in the Foreclosure Market & 8 Tips To Be Thankful For on How to Find Your Starter Home

November 26, 2013, by Law Offices of James V. Sansone

turk2.gifBuying a foreclosed house can be an economical way to purchase your starter home. In some cases, repairs may be needed or kitchens might need some remodeling but despite those improvement costs, there isn't a cheaper way to purchase a house.

In recent years, the real estate market has enjoyed a bounty of foreclosed properties for first-time buyers and investors to scoop up. Home prices began to slide by June 2007 and by 2008, 2,800 homes in Sonoma County were lost to foreclosure. Distressed sales peaked at 76% of all homes on the market in February 2009.

The Great Recession, which began with the subprime mortgage crisis, forced too many families out of their homes, which often ended up in foreclosure or a short sale. The good news is that the worst of the foreclosure crisis is behind us.

Don't worry about losing an opportunity to purchase a foreclosed home. There's always an opportunity to get a foothold in real estate by purchasing a home at an auction.

And there is always someone who figures out a way to defraud the foreclosure system.

Northern California Investor Faces Conspiracy & Mail Fraud Charges

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Graying Boomers More Likely to Divorce

November 12, 2013, by Law Offices of James V. Sansone

baby boomers.jpgWhen people think of divorcing couples, the image that most frequently comes to mind is a couple in their thirties or early forties battling over child custody and support.

Boomer Divorce Rate Is Also Higher in Remarriages

The overall national divorce rate has dropped in recent year. However, among boomers - the demographic known for protesting the Vietnam War and long hair - the rate has doubled, according to the National Center for Family & Marriage Research at Bowling Green State University. Those who are 50 and above now have a 1 in 4 chance of having a marriage end in divorce court.

If you think mature people who have already been divorced are smarter before tying the nuptial knot a second time, you're wrong, sadly. The rate of divorce is 2.5 times higher for those in this demographic who remarry.

In the United States, the divorce rate is 45 percent, which is the highest in the world.
Among boomers who are even older - 65+ - the divorce rate doubled from 5 percent to 10 percent. Among women, the percentage tripled between 1980 and 2008, from 4 percent to 12 percent.

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Filing for Bankruptcy During the Federal Shutdown: What You Should Know

October 8, 2013, by Law Offices of James V. Sansone

Shutdown.jpgFederal defense worker Rob Merritt was barely making ends meet when President Barack Obama and Congress reached an impasse, forcing many federal departments to come to a halt.

As soon as the shutdown began, visitors to national parks were turned away and U.S. residents found doors shuttered to other federal services. In many departments, large numbers of federal employees were furloughed, leaving those who remained poorly equipped to properly serve members of the public.

For example, the National Labor Relations Board furloughed 1,600 employees, leaving 11 workers in place. The Internal Revenue Service, which employs 94,516 workers, dropped to just 8,752 workers.

Even worse, the U.S. Department of Housing and Urban Development, which subsidizes housing costs for the nation's poor, slashed 8,360 employees from its normal rank of 8,709.

Some federally furloughed employees, some of whom have to continue to work without pay, are now like Merritt, financially vulnerable.

Merritt, who earns $80,000 annually, was already borrowing money using his credit cards to support his wife and four children. He accumulated an insurmountable amount of debt when he underwent heart surgery in April. His wife was in the process of changing careers but had to stop interviewing to help take care of her husband.

If Merritt had been furloughed - like tens of thousands of other federal workers - he would be filing for bankruptcy right now. He's one of the luckier federal employees. Although his check will be delayed, he will eventually receive one - unlike furloughed employees who aren't working and won't ever be able to recoup the lost income.

Is Now a Bad Time to File for Bankruptcy?

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Protect Yourself from Unscrupulous Collection Agencies

September 24, 2013, by Law Offices of James V. Sansone

debt-collectors.jpgAre you being hounded by debt collectors? Did you know that you have rights that can protect you from unscrupulous collection agencies?

A San Francisco federal judge recently approved a preliminary $3.2 million settlement in a class action lawsuit involving a private debt collector who posed as a district attorney in an attempt to collect $20 million from overburdened and scared consumers.

Case Summary

Corrective Solutions, the debt collector in this case, contracted with district attorneys to collect on bounced checks. Then the company targeted consumers with a history of bounced checks.

Corrective Solutions sent the consumers letters on phony district attorney letterhead, threatened them with jail time, and suggested that collection fees of up to $200 would be applied to each check that had bounced.

The debt collector lost his case when a preliminary settlement was reached earlier this month. A final hearing on the settlement is scheduled for January 2014.

This wasn't the first time Corrective Solutions had to deal with unhappy consumers and the justice system. Corrective Solutions was previously called National Corrective Group, Inc., which filed for Chapter 11 Bankruptcy four years ago to avoid four class action lawsuits in several states.

How Can You Protect Yourself from Agencies Like Creative Solutions?

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IRS Issues New Ruling for Same-Sex Marriages

September 17, 2013, by Law Offices of James V. Sansone

1376395773000-AP-IRS-Political-Groups.jpgOn September 16, 2013, a new "state-of-celebration rule" takes effect that recognizes the validity of same-sex marriages regardless of where the marriage took place.

The ruling is a result of the Supreme Court ruling in June when it overturned the Defense of Marriage Act (DOMA) in a 5-4 decision.

The IRS ruling will not apply to state taxes unless a state adopts the IRS rule.

Provisions of the IRS Ruling

The new IRS rule includes these provisions:

  • The terms spouse, husband and wife will now refer to same-sex individuals who were lawfully married.
  • For same-sex couple living in a state that doesn't recognize same-sex marriage, as long as they were married in a state that does recognize gay marriage, the IRS will recognize the marriage.
  • For the ruling to apply to same-sex unions, couples need to marry. The terms spouse, husband and wife will not include individuals who have a registered domestic partnership or other formal relationship that is recognized under state law but isn't considered a marriage by the state
You May Be Entitled to a Tax Refund

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Abusive Debt Collection Tactics Are Under Fire

bigstock-Tax-Man-898892-300x199.jpgAre you being harassed by a debt collector? You now have a formidable advocate on your side: President Barack Obama.

Obama's consumer protection agency, angered by the tactics of some debt collectors, is on a mission to teach consumers how to battle abusive attempts at debt recovery.

From Home Loans to Credit Cards

Not so long ago, federal regulators began targeting the debt collection practices of some mortgage lenders. Unfortunately, some of those same, harassing tactics are now being used in the credit card business as they attempt to recoup delinquent debt.

It's been reported that national banks and large department stores sometimes relentlessly pursue consumers who are delinquent in their payments even though this debt collection method is restricted under the Fair Debt Collection Practices Act.

Dodd-Frank Wall Street Reform and Consumer Protection Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act prohibits collection firms from committing deceptive or abusive acts or practices. The Consumer Financial Protection Bureau (CFPB) is using this regulation to curb the efforts of collection firms by teaching consumers how to protect themselves.

If you are being targeted by a collection firm and feel that its actions against you border on being abusive or deceptive, you can use a letter the CFPB created to send to your bank or other collection agency to stop the abusive tactics.

The CFPB also has letters to let collection firms know that you need additional information before proceeding with payment. In addition, there are templates for informing collection agencies that you dispute the collection amount and that it needs to stop contacting you until it can provide evidence proving that you're responsible for the subject debt.

The CFPB is also educating consumers about the little known fact that consumers have the right to tell collection agencies to stop harassing them with their incessant phone calls.

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How to Divide Retirement Accounts In Your Santa Rosa Divorce

Retirement Account Bank.jpg

"She works hard for the money
So hard for it, honey
She works hard for the money
So you better treat her right"

In case you didn't recognize the lyrics, they are from the Donna Summer song, "She works hard for the money."

Summer was right. People - men and women - do work hard for their money. They also save hard for retirement.

You've probably stashed as much money as possible in a 401k and IRA, or in stocks, bonds and treasury notes. Instead of traveling to Italy, you visited your in-laws or you camped in Big Sur last summer.

You've done whatever you could to give yourself some assurance that when you turn 60 or 70, you would have sufficient funds to feel comfortable as you age. With your wife or husband, you saved because with the fate of Social Security so uncertain, you would be crazy not to have a retirement fund.

But what if after years of saving, your marriage disintegrates? How would your retirement be divided?

But that's My Retirement Account?

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Are Santa Rosa College Students Headed for Bankruptcy?

Ball-Chain-student-loan-debt-wedding-300x295.jpgAfter years of studying and spending tens of hundreds of hours in the library, you're finally free from school.

Unfortunately, you're not free of the student loan debt you accumulated.

If you just graduated from law school or medical school, your student loans will be even higher and possibly saddle you with debt you'll need to repay for many years to come.

The good news - if you consider this good news - is that you're not alone. It is now estimated that 70 percent of the graduating classes of 2013 owe an average of $35,200.

$1.1 Trillion in Student Loan Debt

According to the Consumer Financial Protection Bureau and the Department of Education, 38 million student-loan borrowers now owe in excess of $1.1 trillion. Their debt includes federal, state and private loans and loans made by their families. Some students placed a portion of their debt on their credit cards and are paying exorbitant interest rates.

The student loan debt in California is lower than the debt in New York but more students in California are delinquent in repaying their debt, according to a Wall Street Journal report. Some experts believe this discrepancy is due to students attending East Coast private schools that better equipped them to repay their loan debt.

Hello, McDonalds!

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Answers to Questions about Community Property Law in California

Community property.jpgCouples considering a second marriage often have many questions about their assets.

Should they continue deposits into their IRAs? Would their pre-marital assets be exposed if their new spouse were sued?

Should they get a prenuptial agreement?

What Is Community Property?

So far, just nine states and the U.S. Territory of Puerto Rico have adopted a community property system. California is one of the states with community property laws in effect.

First, let's take a look at what constitutes community property. In California, it is any asset either acquired or earned (as in income) by a married person living with a spouse.

What about your inheritance from Grandma Betty that you received prior to your wedding? That inheritance will remain as your separate property.

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Dividing Marital Property in a Santa Rosa Divorce

DISSO Prop Divide.jpgAfter your wedding, you reveled at all of your gifts.

There was the shiny new toaster from your Aunt Betsy, the Cuisinart from your best friend, the teak patio set from your parents.

Now, on the verge of finalizing your divorce, you have the task of splitting into "mine" and "yours" what was once "ours."

If you want to fight over the toaster you can, but doing so will only run up your attorney's fees and there are more important issues to quarrel over, such as child custody and support.

Here's What You Get to Keep

It's always a good idea to start by making two lists, one for the property you consider to be exclusively yours and a second list of assets acquired during the marriage.

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Financial Instability of Sonoma County Families Breeds New Forms of Fraud

bankownedpic.jpgSonoma County foreclosures may be less common than they were two years ago, but they continue to besiege financially vulnerable homeowners.

According to The Real Estate Report, notices of default in Sonoma County - the first step in the foreclosure process - jumped 52.1% in February. But the good news is that there were still down by 70.1% from the previous year.

Due to the avalanche of foreclosures in recent years, banks continue to own about 685 properties in the county.

Financial Vulnerability Breeds New Forms of Fraud

The Great Recession saw too many people lose their jobs and their homes. Unfortunately, unscrupulous individuals saw a window of opportunity amid this atmosphere of pain and financial uncertainty.

As part of their fraud, companies cropped up, claiming they could prevent foreclosure by negotiating with a consumer's lender or obtaining a loan modification.
These services were offered at a price and naïve and desperate homeowners facing the prospect of foreclosure gladly paid the fee.

Many of the companies pretended to be affiliated with the government or government housing assistance programs. Others falsely claimed to offer legal services or "audits" of consumers' loan paperwork to help them negotiate a resolution with their lenders.
Unfortunately, promised services were never delivered.

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What Do You Do When Your Credit Report Is Wrong?

CreditReportIllustration.jpgHave you checked your credit card report lately? It could have errors that are causing you to unnecessarily pay higher interest payments, mortgage and vehicle loans, and insurance premiums. Those errors could even prevent you from landing a new job.

According to a study by the Federal Trade Commission (FTC), as many as five percent of consumers had errors on one of three major credit reports. In some cases, the errors worsened the consumer's overall credit rating.

Credit reports contain more than a record of your debts. It also includes information about whether pay your bills on a timely basis and will note if you've been sued or filed for bankruptcy.

Your Credit Information Is for Sale

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American Taxpayer Relief Act and Your Santa Rosa Divorce

February 26, 2013, by Law Offices of James V. Sansone

Uncle Sam Taxes.jpegWith the passage of the American Taxpayer Relief Act (ATRA) on January 1, 2013, the United States avoided the financial abyss of the much-feared "fiscal cliff."

Do You Understand How the ATRA Is Going to Affect Your divorce in 2013?

If you're seeking alimony, your spousal support is taxable (this isn't new). However, if once you become a single filer and you earn $400,000 or more annually, your tax rate will increase under ATRA from 35% to 39.6%

Whether you command a high salary or not, you will want to discuss with your lawyer the balance between spousal support and child support. Unlike spousal support, child support isn't taxable so you may negotiate a higher child support payment and lower spousal support allotments.

Another alternative for spouses entitled to alimony is to receive a lump sum payment. By accepting a one-time payment in lieu of monthly spousal support, you can avoid taxes.
If you are paying spousal support monthly, the payments are deductible. However, if you settle on a lump-sum payment, you will not receive a deduction on your taxes.

Your Investments, Capital Gains and Retirement Funds

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