If you have made the decision to file for Bankruptcy, you can start making an effort to repair your credit and get back on track.
The financial decisions you make after you file will impact how fast your credit can improve.
Check your credit. Within a few months of your finalization of bankruptcy, check to make sure your credit reports have discharged your debts and closed accounts are properly reported. You can request one free report per year from each of the three major credit-reporting agencies (Equifax, Experian and TransUnion).
Start a budget. You need to get your spending on track and under control. Check out our article on setting up a budget. If money is tight you may want to get an extra part time job and use that paycheck to jump start an emergency savings fund for any unexpected financial hardships. Another smart move is an emergency savings fund to help you weather unexpected financial hardship. You can set up Automatic Transfers from your checking account to a savings account. If money is tight, take a part-time job and use that paycheck to jumpstart your emergency savings fund.
Pay bills on time. Bill paying habits make a huge impact on your credit score. Making on time bill payments will improve your credit score over time. Meeting payment dates is a huge step in recovering from bankruptcy.
Acquire new credit but do it wisely. There are different products and services you can take advantage of to rebuild your credit. If you receive a secured credit card make sure they send reports of your payment history to the credit bureaus. Use your credit card wisely in order to build up credit only on items you can afford to show you are in control of your spending.
Apply for a loan. If you want to rebuild your credit score, two years after your bankruptcy you will be eligible for an FHA loan assuming you meet qualification rules. Some lenders can even qualify you for a car loan sooner than that however it will probably be at a high interest rate.
While the formal record of a bankruptcy remains on your credit report for 7 to 10 years, its impact recedes over time. Your bankruptcy is a reflection of the past. The future is completely within your control, and how you handle your finances going forward will tell your creditors whether you in fact are a good “risk” to do business with. By following these steps to recover from bankruptcy, you improve your chances of increasing your credit score over time, and having a better financial future.
One of the most common types of corporations is a C Corp.
A C Corp creates a separate legal structure that helps shield business owners’ personal assets from judgments against the company.
C Corporations have specific structures that include shareholders, directors and officers. There are many advantages to forming a C Corp:
A business owner protects his or her personal assets from the business.
Your business will be able to exist even if the owner leaves the company.
A C Corp has no limit on the number of shareholders.
You have unlimited growth potential through the sale of stock.
You get to take advantage of certain tax advantages such as tax deductible business expenses.
However, a C Corp’s profits are taxed when they are earned and taxed again when distributed as shareholders’ dividends – also known as “double taxation”. Shareholders in a C Corp cannot deduct corporate losses, which is possible to do with an S Corp.
If you are interested in forming a C Corporation for your business, call The Law Offices of Page, Lobo, Costales and Preston. We have helped many businesses form C Corporations and S Corporations and can help you too!
When looking for a bankruptcy lawyer, it is important to keep the following in mind:
Make sure you hire an expert – It is important to find a lawyer who specializes in bankruptcy. You should find out what percentage of a lawyer’s practice is comprised of bankruptcy and how many cases he has filed. It is best to avoid a “jack of all trades” type of lawyer.
You’ll get what you pay for – Of course you are already tight on money if you are filing for bankruptcy however it is important to keep the saying in mind: “You get what you pay for”. Don’t go with the least expensive lawyer because you may end up having to pay more money in the long run.
Make sure you will get detailed attention – Many law firms will run their clients through a bankruptcy mill resulting in lousy legal work, unhappy clients and wary judges and trustees. In order to spot a mill, check with your local bar association for recommendations on attorneys who specialize in bankruptcy. Most mills will not be on top of the networking which is a normal characteristic of a local bar association.
Last but not least, make sure you have a comfortable relationship with your lawyer – Picking a lawyer you are comfortable with is most important. If you don’t have a good feel about the attorney, find another one. Filing bankruptcy is an emotional roller coaster and you want to feel right about what your lawyer is doing for you.
There are many different entities you, as a business owner, can choose to have your business fall under.
A sole proprietorship is the easiest way to start a business however there are many risks that come with setting up your business as a sole proprietor. Page, Lobo, Costales and Preston APC would like to share the top 5 risks associated with running your business as a sole proprietor:
You run the risk of being sued personally. If you incorporate your business it provides a layer of protection between you and any losses your company may encounter. If you get sued as a sole proprietor, you can lose all your personal property in addition to your business holdings.
It is more difficult to get a business loan. If you apply for a loan as a sole proprietor, a lender will look at your personal finances. If they are less than stellar it may be difficult to receive a loan to help your business grow.
You are more liable as a sole proprietor. As a business owner you are held directly responsible for any losses, debts or violations coming from the business. If the business must pay any debts, they will be satisfied from the sole proprietor’s own personal funds.
You must pay self-employment tax. Some other tax benefits may not be deductible as well such as health insurance premiums for employees.
There is less stability of the business. If the owner becomes deceased or incapacitated, the business cannot continue. If the owner passes, the business is liquidated and becomes part of the owner’s personal estate to be distributed to its beneficiaries. This can result in heavy taxes to the beneficiaries.
Congratulations! Owning your own business is exciting and rewarding. Page, Lobo, Costales and Preston APC would like to share some tips for starting up your own business.
Page, Lobo, Costales and Preston APC helps small businesses get setup legally and would like to share some questions and answers for all you entrepreneurs out there. If you are setting up a new business, call The Law Offices of Page, Lobo, Costales and Preston.
Q: What type of business entity should I setup my business as?
A: You can begin as a “sole proprietor” to start doing business. It is easy and inexpensive to start as a sole proprietor however there is no legal protection for your personal assets. This means you have no limit to your personal liability for business failures or mistakes. If you want to limit your liability, set your business up as a corporation instead.
Q: Do I need a Federal Tax ID number?
A: If your business is a corporation, an LLC or has employees you need a Federal Tax Identification Number. Even if you are a sole proprietor you might want to get an EIN. If you do not have one as a sole proprietor, you can use your social security number however an EIN is more professional and less risky than giving out your SSN.
Q: What is a resale license?
A: A resale license will enable your company to purchase goods or materials for manufacture or resale without paying sales tax.
Q: Do I need to file a fictitious business name?
A: If you use any name other than your own, you will need to file a “doing business as” name. This will enable the public to know who is actually operating the company.
Have questions about setting up your business? Call us to get answers: 951-461-2500.
If you are buying a home, it is important to know the details of your loan.
Whether you go with a conventional loan, FHA loan or a VA loan, there are different features that many loans offer.
The following are some features of a home loan:
Fixed Rate – A mortgage with a fixed rate means your interest and mortgage payments remain the same, or “fixed”, through the entire loan. Typically the loans are for 15 to 30 years. A 15 year loan will obviously have higher monthly payments but you will end up saving more than half of the interest costs than a 30 year fixed loan and pay it off in half the time.
Adjustable Rate – This type of mortgage is also known as an ARM. The interest rate on an ARM fluctuates during the entire life of the loan. Your interest rate will be modified based on a predetermined economic index established at the beginning of the loan. Most of the time a max is set on the interest rate to avoid enormous increases. An ARM is usually safe only if your budget can afford to handle fluctuating payments.
Payment Option Adjustable Rate – This type of loan accommodates a households fluctuating cash flow which include minimum payment options, interest only payment options and others. You will want to thoroughly understand these types of loans because you need to make sure you are prepared for a sudden increase in payment.
Balloon Rate – A balloon mortgage has a fixed rate but for a shorter term than 15 or 30 years. At the end of the balloon rate (the fixed rate), the borrower must pay the remaining lump sum or refinance. If the buyer is purchasing unimproved property that they plan to build on in less than ten years, a balloon mortgage may be a good option.
Talk to a lending professional to find out what the best type of loan for you is. We highly recommend knowing exactly what you are getting into when you apply for a home loan.