Attention Small Businesses: Don't Overlook Your Books!

In my practice I represent a lot of small business owners. Most of my clients are hard working self employed people. Many rush from one deal or job to the next. Some get into trouble that requires a bankruptcy to liquidate or reorganize their business.

What can get lost in this haste are some basic mandatory accounting skills all business owners need to manage their business. Get a handle on your books. This starts with solid record keeping and recording of your income and expenses. It cannot be avoided! Make sure you have a designated business account and a designated personal account and always keep them separate.

How do you do all this? Get help. Accounting can be dull and this is usually not the reason people go into business. My clients are busy and looking to grow their business, not keep books and records. However, you cannot overlook the value of a bookkeeper or accountant so that you have the solid data you need at your fingertips. You need "your numbers" to really understand whether you are growing with more debt, or becoming a profitable business. Having this data will help you understand your weekly and monthly trends so your can track your expenses effectively, to add or cut as need. You may even begin to start developing projections! This is why it is crucial to always track your expenses.

Please see the following suggestions from the article below for small business owners and do not hesitate to contact our firm for a consultation about your business.

http://tinyurl.com/3fdv5rn

Lee M. Perlman, Esquire

This month my firm was exclusively interviewed on the NJ Law Network site. Check it out!

NJLB:  You’ve been practicing bankruptcy law in NJ for 15 years now. Have the laws become more complex during that time?


LMP:  Many lawyers have decided to specialize after the law changed in 2005. Because filing now requires involved means testing formulas and since new cases interpreting the new law are being decided almost daily, yes,  the area has become much more complex. In many cases a matter may appear to be simple, but overlooking something could result in your case being dismissed or not being granted discharge, the result everyone desires!


NJLB:  I know some bankruptcy firms dig deep to investigate creditors for any bankruptcy violations. Is this something your firm does?


LMP:  We are always on the look out for creditors violating the law. This can come in many forms. For example, creditors may improperly seek to be paid in bankruptcy court by attaching defective forms or documents that do not meet the requirements of the rules. As a debtor you are expected to take an oath to disclose all of your assets, liabilities and income; likewise creditors must follow the rules relating to how they can and should collect their potential claims.


NJLB:  I would imagine that embarrassment is one of the highest concerns a person facing bankruptcy has. How do you protect your clients from this fear?


LMP:  The concept of bankruptcy is  biblical, the roots of a fresh start can be traced back to the Old Testament. Everyone is entitled to some breathing room and a chance to reorganize. I tell clients that seeking relief from a bank levy or wage garnishment is usually more responsible than hiding and hoping for the best.  At the point the creditor levies or takes a portion or your pay check, you lose control and often the ability to provide for your family. I urge my clients to carefully consider which is the more responsible course of action.


NJLB:  Should a bankruptcy lawyer let clients know how this will affect their credit – pre and post bankruptcy?


LMP:  Look, the ability to get credit is important. But the impact of the filing sometimes is not worse than the client’s present credit score. We help clients understand what the impact will be post filing and after your discharge. There are specific steps we help clients with, including reviewing all 3 credit reports, post discharge, for accuracy and possible FCRA (Fair Credit Reporting Act) violations.


NJLB:  Do you educate your clients on how their daily lives will be affected after bankruptcy?


LMP:  I try to ask clients to truly consider what debt issue is giving them the most discomfort when they see me. I regularly see clients who have become physically sick from creditor phone calls and letters. These clients want to pay their bills, but truly are without an ability to do so. Sometimes they can only pay one bill, so when all the bills are collectively added it becomes insurmountable and overwhelming. So I try to have clients imagine a meal without a creditor call or interruption; or a day without a collection letter; or the comfort they may have in knowing that their paycheck is safe from garnishment. We also make every effort to make sure clients are not subjected to creditor harassment, in the form of phone calls or letters as soon as clients retain our firm.


Lee M. Perlman, Esquire

Your Credit Report May Have Errors!

Repairing your credit can be difficult and often time consuming.  If you have filed for bankruptcy, you need to be even more fastidious in analyzing your credit report for potential errors after your discharge.  Companies or ways that promise to improve a credit score or, quick-fix efforts, are the most likely to backfire.  So be very cautious of any advice that claims to improve your credit score unrealistically fast.  If the dispute seems involved and you need counsel to help, please call a lawyer.

Remember that notice is essential in the dispute process, so all communications to and from the credit bureaus must be certified mail, return receipt requested.  Save your proofs and make a timeline.  Stay away from on-line disputes.  This dispute process requires a "real" paper trail.

Under Federal Law, you can check your credit report at www.annualcreditreport.com.  This central site allows you to request a free credit file disclosure, commonly called a credit report, once every 12 months from each of the nationwide consumer credit reporting companies:  Equifax, Experian and TransUntion.  This is the only free site.  Beware of other sites that claim to be free, even if "free" is contained in the name!

There are some things you can do now:

Check Your Credit Report - If you find errors on any of your reports, dispute them with the credit bureau and reporting agency.

Set Up Payment Reminder - Online banking reminders are a great way to stay current and avoid late fees.

Reduce the Amount of Debt You Owe - Begin to work on a budget.  Stop using your credit cards, now.  This is easier said than done, but reducing the amount that you owe is going to be a bigger notch on your belt than improving your credit score.  Use your credit report to make a list of all of your accounts and what interest rate they are charging now.  Then come up with a plan to pay down all of the debt in your budge first.

See this recent article for more information about the frequency of errors in credit reports today, including yours:

http://bucks.blogs.nytimes.com/2011/06/07/are-serious-errors-lurking-in-your-credit-report/

Lee M. Perlman, Esquire

Some Lessons to Learn: Rent or Buy

We do a lot of budgetary work in our law office.  It is my regular observation that many clients have obligated themselves into home ownership prematurely.

So before rushing to buy, it may be important to look carefully at some of the realities and economics of renting vs. buying.  Know the neighborhood and pricing trends, to the extent you can.  Understand what you are signing on for prior to the purchase.  In some cases, that may be condo fees and lawn maintenance, etc.

With the volatile housing market now, know the risks of buying.  Values have fallen and they may continue to fall.  Do not assume that this purchase will translate into an investment.  Market conditions have changed and could again.

See a good expert.  Good tax and financial planning is out there.  This is a big decision.  Seek opinions and understand how and why the advisor is relying on that specific opinion.  Sometimes a lawyer's input could be useful!

Rent vs. Own Online Calculator:

http://www.nytimes.com/interactive/business/buy-rent-calculator.html

Article on issue:

http://tinyurl.com/3t7mptj

Lee M. Perlman, Esquire

Purchasing a Vehicle 4/13/11

As a consumer bankruptcy lawyer for over 16 years, I see budgets with different car payments every day.  Many are too high when compared to a client's income.

When my firm prepares and revises budgets for clients with financial related problems, I am always sensitive to someone's car payment.  Many of my clients are locked into terms with high interest and high payments and feel stuck and victimized from the car buying process.  This is often made worse if the car is unreliable too!

While filing bankruptcy provides options for that "bad deal" like modifying a loan in some cases or surrendering a car through filing bankruptcy, it is still important to be sensitive to a dealer's predatory tactics before you sign.

One of these dealer tactics is the "yo-yo" where dealers let buyers drive a new car home in hopes of locking them into a deal and later tell them their financing fell through.  Here, consumers get locked into that bad deal without even realizing what happened.

Many have argued that some of these dealers tactics, like inflating a car's value is identical to what the banks and mortgage companies did in the financial crisis.  Now, Wall Street is buying bundled sub prime auto loans too.

Consumers need to be aware, after heavy lobbying by car dealers, that the new Consumer Protection Agency is largely exempt from overseeing car financing.  This means that even though a car is one of the largest purchases that many Americans will ever make, consumers are still not getting critical terms disclosed to them, like other industries are forced to do.

If you have questions about car financing, budgeting or financial distress issues, do not hesitate to contact us for advice.

Please see the video and article below for some insider tips!

http://www.iwatchnews.org/2011/04/11/4070/buyer-beware

Lee M. Perlman, Esquire

Force Placed Insurance

Force placed insurance is an insurance policy taken out by a lender or creditor when a customer does not carry insurance on an asset.  The charges for this insurance are passed on to the customer.

The problem is that many consumers/homeowners have a policy in place and they inadvertently ignore mortgage company letters that ask for verification of their coverage, not good!

This process of "checking for coverage" as described below in the article seems innocent, but can plague a consumer if you ignore the mortgage request.  I have seen it happen to my clients!

So, if you have coverage, you need to respond to the letter.  If you are confused about the request or how to reply, speak to a consumer lawyer right away.  The failure to respond could lead to charges on your mortgage statement that are very costly.  This is because the insurance company's policy is usually not purchased competitively and these costs get passed on to you.  I have seen polices that are double!  This over billing may trigger a wrongful foreclosure for homeowners who are current on their payments.  This is another deceptive mortgage practice that has to be carefully monitored!

http://www.nytimes.com/2011/03/26/your-money/home-insurance/26wealth.html?pa

gewanted=2&ref=business

Lee M. Perlman, Esquire

Reverse Mortgages

This article from The New York Times highlights some of the problems related to reverse mortgages.

http://www.nytimes.com/2011/03/09/business/09mortgage.html


The lawsuit here alleges that HUD made rule changes that allowed underwater homes with reverse mortgages to be sold for less than the full mortgage balance so that heirs or spouses are unfortunately left having to satisfy the full mortgage balance later on!

I have been warning my senior citizen clients for several years now about some of the dangers of reverse mortgages.  One of the issues to be aware of is how long you will stay in the house.  In many cases, these loans only make sense if you will be in the home for a number of years.  Some experts say that if you will move in less than 7 years, these products are too dangerous.

In our practice, where we regularly see clients who owe so much more than their mortgage loan balance, it is even more important than ever to evaluate these transactions, and with counsel in most cases.

Please let me know what your thoughts and questions are!

Lee M. Perlman, Esquire