Many people in Walnut Creek, Concord, and Antioch may wonder, what is a payday loan?  Payday lenders offer small, short term loans with little or no credit check or income verification.  They are usually small shops in strip malls.  Typically the loans are for about $300 and are due in 14 days.  Generally, the borrower writes a post-dated check for $300 but gets only $250, and in just two weeks the full $300 is due.  The borrower can pay about $50 to extend the loan for another two weeks or pay the full $300.  If the borrower fails to pay either the $50 or the full $300, then the payday lender deposits the post-dated check.  These loans are easy and convenient but carry interest rates ranging from 100% to 500% on an annualized basis.  How can that be legal?  Payday lenders exploit loopholes in the usury laws so that even a 500% interest rate is legal.  With interest rates like that, it’s no wonder payday lenders are popping up like weeds in the spring!

Most people who borrow from a payday lender have been turned down for traditional loans and only out of desperation take a payday loan.  Too often, the person takes a second payday loan to pay the first and begins a downward cycle.  Like quicksand, the payday loan cycle is nearly impossible to get out of.  Soon the person – in dire financial straits before the first payday loan – has several loans with payments due every two weeks.  Often the payments are taken directly out of the borrower’s bank account on payday, hence the name.

As the cycle continues, the borrower goes deeper and deeper in debt.  Many borrowers will have up to 5 payday loans, usually from different lenders   Soon some of the post-dated checks begin to bounce, marking the beginning of the end.  As the checks bounce, the borrower incurs bounced check charges, further compounding the problem.  Often on the verge of eviction due to unpaid rent, the borrower asks “How can this craziness end?”  The answer might be bankruptcy.  A bankruptcy is a federal court order that gives people a “fresh start” by forgiving debts including payday loans.

This is a general discussion of the law and should not be relied upon.  Any person considering bankruptcy should consult a lawyer for a detailed discussion of his or her rights and options.

At the Law Office of Michael Primus, we have helped hundreds of clients get out of debt, stop wage garnishments, and start fresh through bankruptcy.  If you live in Contra Costa County and have debt problems, contact us for a free in-office consultation.  We have offices in Walnut Creek, Antioch and Hercules.

I need to do it, you need to do it.  Most of us realized long ago that saving money is easier said than done.  In this strong economy, it seems like saving would be easier, yet between daily temptations and a myriad of unexpected expenses it just never seems to happen.  In fact, saving for the future is a combination of economics and psychology.  A recent study by Bankrate.com confirmed that 32% of people age 30 to 49 have more credit card debt than savings.  Other age groups are only slightly better off.    So, if you’re one of those people with more credit card debt than savings, what can you do?

Make a Plan – According to a survey done by AmericaSaves.org, people with a plan are far more successful savers then those without.  You don’t need to hire an accountant but you do need to take an honest assessment of how you spend your money.  Studies show that only 55% of people are saving enough for retirement, so any long term plan needs to provide for retirement.

Reduce Expenses – Invariably you have been told to “cut back” by many well-intentioned people.  There are many little things that can help.  Perhaps you can spend an afternoon at a public park or library instead of a movie theater.  Maybe try camping as an inexpensive vacation idea.  Make coffee at home instead of going to Starbucks.  Simple ideas can be a part of the solution.

Get a Better Job – Of course this would be wonderful.  Unfortunately many people have limited options.  Do you have children in school and need a job close to home with some flexibility?  Are you a senior citizen who fears age discrimination in the job market?  The fact is, finding a better job may not be realistic.

Move Out of the Bay Area – Study after study show the Bay Area is one of the most expensive places to live.  In fact, some studies conclude the cost of living in the Bay Area is the highest in the country.  If you’re retired or planning to retire soon, moving can make sense – a fixed income will go much farther somewhere else.  However, if you’re not ready to retire you may find the lower wages  keep the monthly budget tight.

Likely you’ve spent sleepless nights considering your options but still each month live paycheck to paycheck.  Maybe it’s time to take a hard look at things.  Did you know you have a right to bankruptcy?  The word scares most people.  The truth is, the never-ending cycle of living paycheck to paycheck is more daunting than bankruptcy.  Imagine what it would be like if your credit card debt vanished.  Picture yourself making a plan, being successful at saving.  How would it feel to finally be able to save the way you need to?  None of us are getting any younger so now is the time.

At the Law Office of Michael Primus we have helped thousands of clients get out of debt, stop wage garnishments, and start fresh through bankruptcy.  If you live in Contra Costa, Alameda or Solano counties and have debt problems, contact us for a free in-office consultation.  We have offices in Walnut Creek, Antioch, and Hercules.

These days many people in Contra Costa County and the greater Bay Area are stuck with unpaid debts from the recession of 2007 to 2010.  Often people trying to get their finances back on track get a copy of their credit reports and see delinquent debts still showing after many years.  Naturally, they wonder what they need to do to get past all this?  The answer requires an understanding of the important distinction between legal liability and credit reporting.  Generally, things can remain on a credit report long after the debt becomes legally unenforceable as discussed below.

Statute of Limitations

These laws exists in every state and limit when a lawsuit can be filed.  In California, Code of Civil Procedure section 337 requires any lawsuit for breach of a written contract – like a credit card, medical bill, payday loan – be filed within 4 years of when the last payment was made on the account.  This means if no payments are made on an account for 4 years, the creditor loses its right to obtain a court judgment.  The trouble is that unless you go to court and assert the statute of limitations, the court may enter a judgment against you.

New Rule Protects Consumers From Late Claims by Debt Buyers

Delinquent debts are often sold from one company to another.  In fact, there is an entire industry dedicated to buying and selling debts.  These companies are called “Debt Buyers,” and are now subject to new laws in California.  California Civil Code section 1788.56 prohibits a “debt buyer” from filing suit to collect on a debt when the statute of limitations has expired.  The definition of debt buyer is broadly worded.  The difference is that consumers will not be summoned to court by debt buyers to defend claims after the statute of limitations has expired.  Similarly, the courts will not be burdened with useless lawsuits.  The new law provides for damages and attorney fees if a debt buyer intentionally violates the law.

Credit Reporting is Different

A credit report is designed to be an accurate chronology of what happened with a person’s finances, good and bad.  Most items will appear for 7 years.  This means the car you paid off 5 years ago will still show as good credit, it also means the bill you got behind on or failed to pay 5 years ago will show as bad.  The result is that credit reports can list unenforceable debts.  People often assume if they pay a delinquent bill it will no longer show as bad on their credit report which is not the case.  The only way to avoid having things show as bad credit is to pay on time, paying late is not the same.

What About a Judgment?

Perhaps you’ve been sued and the creditor obtained a judgment?  In most cases it’s too late to assert the statute of limitations or any other defense.  If you have a judgment against you it gives the creditor the right to garnish wages, levy your bank account, put a lien on your house or business or all of these.   The bankruptcy laws are the laws society provides to allow a person to have most debts forgiven.  Bankruptcy can wipe out credit cards, medical bills, and collection agency bills.  After bankruptcy the calls, letters, and lawsuits all stop.  Bankruptcy does not forgive student loans, alimony, child support or crime.  Bankruptcy is a viable, long term solution for many people struggling with debts.

At the Law Office of Michael Primus we have helped thousands of clients get out of debt, stop wage garnishments, and start fresh through bankruptcy.  If you live in Contra Costa, Alameda or Solano counties and have debt problems, contact us for a free in-office consultation.  We have offices in Walnut Creek, Antioch and Hercules.