Many residents are facing financial difficulties as a result of the pandemic, and so might be nervous about mounting debt. While it’s important to be informed on the assistance available during the crisis, equally vital is knowing what financial mistakes to stay away from.
This is the reason Bankruptcy Attorney Louis Esbin is talking about a few major mistakes he has witnessed his clients making as they try to take care of their debt.
With a variety of government and nonprofit assistance currently available, there is a wide range of opportunities for financial aid, Esbin said.
But concerns that come with this assistance often include if a person qualifies or how long it can take to process requests for aid.
Esbin noted that choosing to write a “hardship letter” can help residents get the assistance they need “quicker than not.” He explained that this letter should explain how the pandemic has impacted your finances and include information on employment status and monthly budget.
One suggestion Esbin had is to obtain the email of a person at the creditor so you can create a paper trail through an email chain, sending the letter to that person and then following up using the same email.
A hardship letter can also be included in applications for government and nonprofit assistance.
“If you need help in writing the letter, ask for help,” Esbin said. “Contact our office. We may be able to help you with that.”
Instead of keeping high interest rate loans and credit card debt, Esbin recommended moving to lower interest loans whenever possible.
“If you can, you … want to transfer from higher rate interest credit cards to lower rate interest credit cards,” Esbin said. “But don’t stop there. Take those higher rate interest cards and shred them. Put them away. Do not use them.”
A caution Esbin had was that lower interest rate card payments need to be made timely over a period of at least six months, or more, to prevent the creditor from contending the transfers were fraudulent.
Choosing to keep using high interest credit cards after transferring or consolidating debt can slow a person’s progress toward repaying debt. Low interest credit cards and loans are a more preferable option compared to high interest credit cards whenever possible, and payday loans should be avoided always.
“You will be barraged in the mail by unsolicited offers to get loans. Do not take them up on those offers,” the Santa Clarita bankruptcy attorney warned. “Shred those documents. They have your name on it. Shred them. Do not throw them away. … Do not get a payday loan.”
Anyone under 59.5 years old should use caution if considering drawing down on retirement funds.
“Over the years, we’ve seen countless clients come in who thought that they can remedy their debt issue by drawing down on their retirement,” Esbin said.
But choosing to do this before reaching retirement age means tax penalties could apply.
“Consult with your CPA on the tax penalties that you may incur if you even are thinking of drawing down on your retirement,” Esbin said.
He continued, “The amount (of tax penalties) that you will have to pay will make having paid off your debt pale in comparison, and stick to an austerity budget, so you don’t incur new debt. Nothing is worse than taking your retirement to pay off debt, only to incur new debt.”
Anyone who thinks their finances “may be in peril” is encouraged by Esbin to ask a professional for help.
“If you believe that you are going to lose any sleep, please contact our office,” Esbin said.
The Santa Clarita bankruptcy attorney noted that his office is using Zoom teleconferencing software to communicate with clients during the pandemic.
“You get the same benefit without the risk of any of us being exposed to the coronavirus,” Esbin said. “We are here to help you. We’ve always been here to help this community.”
Louis Esbin of the Law Offices of Louis J. Esbin is an attorney in Santa Clarita and Canyon Country, Valencia, Saugus, Stevenson Ranch, Newhall and Castaic neighborhoods who specializes in bankruptcy law, business law and consumer protection. The motto of his firm is, “When experience counts, count on experience,” and Esbin has been practicing law locally since 1993. His experience in Los Angeles, San Francisco and New York also enables him to pledge to provide his clients with high quality, big-city legal services as a Santa Clarita attorney. In addition, the bankruptcy attorney in Santa Clarita is founding treasurer of the Santa Clarita Valley Bar Association, a founding member of the Central District Consumer Bankruptcy Attorneys Association and a member of the Financial Lawyers Conference and California Bankruptcy Forum. Those searching for the best attorney in Santa Clarita or an “attorney near me,” can contact the Law Offices of Louis J. Esbin today for more information.
27451 Tourney Road, Suite 120
Valencia, CA 91355-6304