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Ann Arbor Law Blog

How Michigan parents can help their kids cope with divorce

Concerned parents who are considering divorce should consider how a split will affect their children. Although divorce can be challenging for the whole family, children do have the capacity to be happy following a separation.

According to the author of "Building Resilience in Children and Teens: Giving Kids Roots and Wings," parents should put their children's needs first and follow the 7 C's: competence, confidence, connection, character, contribution, coping and control. Parents can help kids learn to cope with divorce in a healthy manner by learning these seven key skills. However, there are other helpful practices parents may implement in addition to instilling the 7 C's.

Chapter 7 and the means test 101

Many people do not realize how crippling debt can be until they find themselves dodging phone calls from creditors and ignoring electronic and snail mail demand notices. There is even a misconception that individuals who cannot pay their financial obligations are irresponsible and living beyond their means. While that may be true for some, debt is a significant problem for many Metro Detroit and Ann Arbor households. 

Fortunately, the government offers consumers protection in the form of bankruptcy to those struggling to get their finances under control. Chapter 7 is often more appealing to anyone who wants to discharge their debts. However, there is a means test to determine if it is the best fit. Here is a breakdown of what the Chapter 7 bankruptcy means test is and how it works. 

Credit card debt can become an inescapable trap

Many Michigan residents fall into inescapable debt when they use their credit cards to cover basic expenses after suffering a financial setback. According to the U.S. Federal Reserve, revolving debt in the United States increased by 1.5 percent to $1.037 trillion in July despite a thriving economy and historically low unemployment figures. Consumers sometimes take out payday loans or let their credit card accounts fall into arrears when money is tight, but experts warn that doing so can have dire financial consequences.

Payday loan centers offer short-term financing at high rates of interest, but only about 20 percent of the loans they make are paid as agreed according to the Consumer Financial Protection Bureau. The agency says that the vast majority of payday loans are rolled over into new loans within 14 days, which can result in larger and larger amounts of money being financed at interest rates of up to 400 percent.

Ways to defend against a criminal charge

There are many ways in which Michigan residents can choose to defend themselves against a criminal charge. In some cases, it can be best to tell the truth and hope that the jury is sympathetic to that person's story. Of course, it is generally not in an individual's best interest to lie. Therefore, any story told to a jury must be based on the facts in the case.

As a general rule, the type of defense that an attorney chooses to create will be based only partially on the facts in the case. Typically, an attorney will also need to take into account what the prosecutor is likely to do in the case. It is also possible that legal counsel will take popular sentiment into account when developing a defense strategy. For example, if the police are unpopular in a given area, an attorney may use that to a defendant's advantage.

Overdue child support and getting a home loan

Parents in Michigan who are delinquent in paying child support may find it difficult to obtain a loan to purchase a home. Delinquent child support is classified as a derogatory credit event and can lower the likelihood of getting approved for a loan. However, there are ways parents can address their overdue child support to get a loan.

It is important that a parent examine their credit report and carefully review all of the information that is provided. They should also determine if their FICO score is in line with the requirements set by the mortgage lender. If necessary, a home affordability calculator could be used to determine if they will be able to make the monthly mortgage payments while paying the overdue child support and any other current debts.

Debt settlement has costs

For Michigan consumers who are struggling to pay their credit card debts, it can feel impossible to catch up. In some cases, the balances outstanding are simply too high to pay down, and the cardholder might want to pursue debt settlement. Settling credit card debts is a legitimate process, but there are potential downsides that the cardholder should consider.

Those who hire debt settlement companies to negotiate their debts might be required to pay high fees. Some companies charge based on the amount of the debt forgiven or settled, and the fee might be as much as 25 percent. In lieu of employing a debt settlement company, many cardholders contact the credit card companies themselves or retain an attorney to communicate with them.

Bankruptcy puts a new light on marriage preparations

You are no doubt looking forward to your wedding day. The invitations have been sent out, and the preparations are actually going smoothly. There is only one little issue: Your groom-to-be has recently declared bankruptcy. How will this affect your marriage?

Credit history questions

Gray divorce more common, can cause health problems

Divorce has been linked to depression and stress that can exacerbate existing health conditions and increase the risk of other problems for seniors. People in Texas who are approaching or going through a divorce later in life should keep the increased likelihood of health issues in mind. Knowing what to expect allows for preparation so that divorcing couples are not taken by surprise.

In Texas and across the United States, people are increasingly getting divorced after the age of 50. The movement was first identified in a study by researchers from Bowling Green State University. So-called gray divorce may be growing more likely due to factors like increased financial autonomy for woman and longer life expectancy. Being remarried also increases the chances of gray divorce. Those who are in their second or third marriages are 2.5 times more likely to divorce again.

The positives of getting a prenup

A prenuptial agreement, or prenup, is a legal document that individuals can use to specify how their assets will be handled should they get a divorce. Couples in Pennsylvania who are thinking about getting married should carefully consider how prenups could protect their financial interests.

One situation in which a prenup is advisable is when one spouse has accumulated or inherited more assets than the other. While assets that belonged to an individual before marriage usually remain theirs after a divorce, there are exceptions. Couples who are getting married can save themselves both money and time in the future by specifying how their assets are to be handled if a divorce occurs.

Credit card debt forgiveness is rarely a panacea

Credit card debt forgiveness may seem like an attractive option to Michigan residents who are struggling financially, but they may find that pursuing this course of action is futile because debt collectors expect a sizeable upfront payment before agreeing to forgive part of what is owed. Another problem with debt forgiveness is that it does little to help credit ratings as these offers are not generally made until accounts are seriously delinquent and credit scores have already plummeted precipitously.

Pursuing credit card debt forgiveness can also lead to tax problems as any debt that is forgiven is considered income by the Internal Revenue Service. Financial planners advise borrowers to avoid this situation by contacting their credit card providers before their accounts become 60 or more days past due. While lenders may not be willing to forgive part of the balance in these situations, they could offer to reduce or eliminate interest charges for up to a year. However, interest will usually still accrue and be added to the balance. This leads to an unfortunate situation where consumers are expected to pay interest on interest.

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