Can A Private Company Do Private Placement?

Private placement is a common method of raising business capital by offering equity shares. Private placements can be done by either private companies wishing to acquire a few select investors or by publicly traded companies as a secondary stock offering. When a publicly-traded company issues a private placement, existing shareholders often sustain at least a short-term loss from the resulting dilution of their shares. However, stockholders may see long-term gains if the company can effectively invest the extra capital obtained and ultimately increase its revenues and profitability. Private placement is an issue of stock either to an individual person or corporate entity, or to a small group of investors. Investors typically involved in private placement issues are either institutional investors, such as banks and pension funds, or high-net-worth individuals. A private placement has minimal regulatory requirements and standards that it must abide by. The investment does not require a prospectus and, quite often, detailed financial information is not disclosed. For an individual investor to participate in a private placement offering, he must be an accredited investor as defined under regulations of the Securities and Exchange Commission (SEC). This requirement is usually met by having a net worth in excess of $1 million or an annual income in excess of $200,000.

Private Placement and Share Price

If the entity conducting a private placement is a private company, the private placement offering has no effect on share price because there are no pre-existing shares. With a publicly-traded company, the percentage of equity ownership that existing shareholders have prior to the private placement is diluted by the secondary issuance of additional stock, since this increases the total number of shares outstanding. The extent of the dilution is proportionate to the size of the private placement offering. For example, if there were 1 million shares of a company’s stock outstanding prior to a private placement offering of 100,000 shares, then the private placement would result in existing shareholders having 10 percent less of an equity interest in the company. However, if the company offered an additional 1 million shares through the private placement, that would reduce the ownership percentage of existing shareholders by 50 percent.

Motivation for Private Placement

The dilution of shares commonly leads to a corresponding decline in share price at least in the near-term. The effect of a private placement offering on share price is similar to the effect of a company doing a stock split. The long-term effect on share price is much less certain and depends on how effectively the company employs the additional capital raised from the private placement. An important factor in determining the long-term share price is the company’s reason for the private placement. If the company was on the verge of insolvency and did the private placement as a means of avoiding bankruptcy, it would not bode well for the company’s shareholders. However, if the motivation for the private placement was a circumstance in which the company saw an outstanding opportunity for rapid growth that simply required additional financing, then the eventual extra profits realized from the company’s expansion may push its stock price substantially higher. Another possible motivation for doing a private placement could be that the company cannot attract large numbers of institutional or retail investors. This might be the case if the company’s market sector is currently considered unattractive, or there are only a few analysts covering the company. At the Investment Risk Analysis stage, the investor will determine a credit rating for the company issuing the private placement, which reflects how capable the issuer is of making interest and principal payments. This process is similar to how rating agencies determine ratings for public bond issuers.

The lender will ask questions such as:
• How stable are the company’s revenues and earnings?
• How stable are input costs and operating expenses?
• How stable is the management team and how deep is the bench?
• Who are the company’s main competitors and what are the competitive dynamics of the industry?
• Who are the main customers, and is there any significant customer concentration?
• Is the company profitable? Why or why not?
• What is the long-term target debt to equity ratio?
• What is the long-term target debt to earnings ratio?
• What other debt obligations are outstanding?
• What is their track record for paying creditors?
• What is the company’s long-term growth strategy?
After answering these questions and performing a full analysis of the company’s financials, an investor can determine how much risk they feel is associated with providing capital to the company. Generally, the higher the risk, the lower the quality rating.

Next, during the Pricing step, the investor determines what interest rate is needed to compensate for the associated risk. Private placements are priced similarly to public securities, where pricing is typically determined by adding a credit risk premium (or spread) to the corresponding U.S. Treasury rate.

Once the company and the investor agree to a spread, they move to the Rate Lock step. This is when the private placement investor and the company agree to lock-in the interest rate (or coupon) based on the agreed upon spread and the prevailing U.S. Treasury rate at a specific day and time. For non-USD financing, the multi-currency swap would also be executed at this stage.

The final step, closing, is the formal exchange during which the actual transfer takes place between the company and the lender; the issuer transfers the security that was offered to the investor in exchange for the capital the investor agreed to pay for it. The steps to closing very much resemble the process for establishing a line of credit with banks.
A private placement memorandum is a disclosure document that is drafted by an issuing company and given to investors for their capital (hopefully). The offering memo will also discuss the management team and their skills, as well as the risk factors of the company. It is important to list the risk factors of the business so that investor can make an educated choice regarding investing. In addition, tax implications of the investor will also be discussed, as well as various rules and regulations involving foreign investment. The private placement memorandum is an opportunity to tell the story of the company, its product and service offerings, the benefits to investors, long term payout and strategy and more. Giving a potential prospect an investor ready private placement memorandum is good business practice and looks professional. A private company is a firm held under private ownership. Private companies may issue stock and have shareholders, but their shares do not trade on public exchanges and are not issued through an initial public offering (IPO). As a result, private firms do not need to meet the Securities and Exchange Commission’s (SEC) strict filing requirements for public companies. In general, the shares of these businesses are less liquid, and their valuations are more difficult to determine.

Types of Private Companies

• Sole proprietorships put company ownership in the hands of one person. A sole proprietorship is not its own legal entity; its assets, liabilities and all financial obligations fall completely onto the individual owner. While this gives the individual total control over decisions, it also raises risk and makes it harder to raise money. Partnerships are another type of ownership structure for private companies; they share the unlimited liability aspect of sole proprietorships but include at least two owners.
• Limited liability companies (LLCs) often have multiple owners who share ownership and liability. This ownership structure merges some of the benefits of partnerships and corporations, including pass-through income taxation and limited liability without having to incorporate.
• S Corporations and C corporations are similar to public companies with shareholders. However, these types of companies can remain private and do not need to submit quarterly or annual financial reports. S corporations can have no more than 100 shareholders and are not taxed on their profits while C corporations can have an unlimited number of shareholders but are subject to double taxation.

Why Companies Stay Private

The high cost of undertaking an IPO is one reason why many smaller companies stay private. Public companies also require more disclosure and must publicly release financial statements and other filings on a regular schedule. These filings include annual reports (10-K), quarterly reports (10-Q), major events (8-K) and proxy statements. Another reason why companies stay private is to maintain family ownership. Many of the largest private companies today have been owned by the same families for multiple generations, such as the aforementioned Koch Industries, which has remained in the Koch family since its founding in 1940. Staying private means a company does not have to answer to its public shareholders or choose different members for the board of directors. Some family-owned companies have gone public, and many maintain family ownership and control through a dual-class share structure, meaning family-owned shares can have more voting rights. Going public is a final step for private companies. An IPO costs money and takes time for the company to set up. Fees associated with going public include an SEC registration fee, Financial Industry Regulatory Authority (FINRA) filing fee, a stock exchange listing fee and money paid to the underwriters of the offering.

Advantages of a Private Limited Company

A private limited company (pvt ltd company) is the most common vehicle to carry on business for an entity intending to make a profit and enjoy the benefits of an incorporated entity, particularly limited liability. Besides, limited liability and minimal statutory compliances, pvt ltd companies offer the following advantages:

Separate Legal Entity

An entity means something which has a real existence; a thing with distinct existence. A company is a legal entity and a juristic person established under the Act. A juristic person is a person who is not a natural person or human being. Therefore a company form of organization has wide legal capacity and can own property and also incur debts. The members (Shareholders/Directors) of a company have no liability to the creditors of a company for such debts. Hence, a pvt ltd company is a legal entity separate from that of its members.

A company has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership. Perpetual succession is one of the most important characteristics of a company.

Limited Liability means the status of being legally responsible only to a limited amount for debts of a company. Unlike proprietorships and partnerships, in a limited liability company the liability of the members in respect of the company’s debts is limited. In other words, the liability of the members of a company is limited only to the extent of the face value of shares taken up by them. Therefore, where a company is limited by shares, the liability of the members on a winding-up is limited to the amount unpaid on their shares.

Shares of a company limited by shares are transferable by a shareholder t any other person. The transfer is easy as compared to the transfer of interest in business run as a proprietary concern or a partnership. Filing and signing a share transfer form and handing over the buyer of the shares along with share certificate can easily transfer shares.

A company being a juristic person, can acquire, own, enjoy and alienate property in its own name. No shareholder can make any claim upon the property of the company so long as the company is a going concern. The shareholders are not the owners of the company’s property. The company itself is the true owner.

To sue means to institute legal proceedings against or to bring a suit in a court of law. Just as one person can bring a legal action in his/her own name against another in that person’s name, a company being an independent legal entity can sue and also be sued in its own name.

In the company form of organization it is possible for a company to make a valid and effective contract with any of its members. It is also possible for a person to be in control of a company and at the same time be in its employment. Thus, a person can at the same time be a shareholder, creditor, director and also an employee of the company.

A company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured and can also accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial assistance to a company rather than partnership firms or proprietary concerns. The growth of trade and business led to many problems that traditional forms of business did not solve. For example, the unlimited liability feature of a sole proprietorship form of business resulted in people forming partnerships, but even that proved to be too inadequate and risky. This is when the concept of companies emerged, and private companies form of business is the oldest example of it.

The Companies Act has provided certain privileges and exemptions to private companies that public companies do not possess. These privileges accord them greater freedom in conducting their affairs. Here are some examples of them:
• No need to prepare a report for annual general meetings.
• Only 2 minimum directors required.
• No need to appoint independent directors.
• They can adopt additional grounds for the disqualification of directors and vacation of their office.
• They can pay greater remuneration to their directors than compared to some other types of companies.
Limitations of Private Companies
Despite all the advantages they offer, private companies also have the following limitations:
• Private companies cannot freely transfer shares to the public.
• They find it more difficult than public companies to access external financial support.
• Shareholders have greater risks and liabilities.

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

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Custody Lawyers In Utah County

• Utah County is located 44 miles south of Salt Lake City, Utah.
• The name “Utah” comes from the Native American “Ute” tribe and means ‘people of the mountains’.
• Utah County is the second largest county, in terms of population, in the state of Utah. The population is 622,213* residents.
• Population density of 234.1 people per square mile.
• The county seat is the city of Provo.
• The elevation in the valley ranges between 4,480 – 4,700 feet above sea level. The highest point is Mt. Nebo at 11,928 ft. and the lowest point is at the Jordan River Flood Plain at 4,480 ft.
• The county is 2,142 square miles, 2.45% of the State of Utah and 16th largest in area in the state.
• The average winter temperatures are a maximum of 37 degrees and a minimum of 14 degrees.
• The average summertime temperatures are a maximum of 92 degrees and a minimum of 54 degrees.
• Utah County is a county in the U.S. state of Utah. As of the 2010 United States Census, the population was 516,564, thus making it Utah’s second-most populous county. The county seat and largest city is Provo, which is the state’s third-largest city.

• Utah County is part of the Provo-Orem, UT Metropolitan Statistical Area as well as the Salt Lake City-Provo-Orem, UT Combined Statistical Area.
• In 2010, the center of population of Utah was in Utah County, in the city of Saratoga Springs.
• Utah County is one of seven counties in the United States to have the same name as its state.
• The legislature of the State of Deseret created a county on January 31, 1850, to govern the civic affairs of Utah Valley, which by the 1850s was bustling with newly arrived settlers. The county name derived from the valley name, which derived from the Spanish name (Yuta) for the Ute Indians. The State of Deseret was dissolved soon after (April 5, 1851), but the counties it had set in place continued in existence. There is little record of any official activity conducted by the fledgling county until April 18, 1852, when a full slate of county officials was published and recordkeeping began. The first courthouse was built in central Provo in 1866-67. It was soon outgrown, and was replaced by a second courthouse (1872–73). By the 1920s this building was also cramped, and the decision was made to erect a combined city-county building, which was completed in 1926.
• The county’s boundaries were adjusted in 1852, 1854, 1856, 1862, 1880, and 1884. It has retained its present boundary since 1884.
Utah Child Custody Laws
When a couple with children breaks up, the responsibility to care for the children must be shared by both parents. An important aspect is child custody or with whom the child will live with and what visitation with the other parent will be like. Another part of this responsibility is financial support, in the form of child support.

Best Interest of the Child

Utah family courts, like those in most states, determine child custody matters using the “best interests of the child.” The factors considered by the judge include:
• Past conduct and demonstrated moral standards of the parties
• Parent most likely to act in the best interest of the child, including allowing child frequent contact with non-custodial parent
• Bonding between each parent and the child
• If a parent has intentionally exposed the child to pornography or other harmful sexual-related materials
• Physical, psychological, and emotional needs of the child
• Both parent’s ability to reach shared decisions for the child and prioritize the child’s welfare
• If both parents participated in raising the child before the divorce
• The geographic proximity of the parents’ homes
• The child’s preferences
• Parents ability to protect child from their conflict
• Past and present ability to cooperate with each other in parenting and making decisions
• Any history of child abuse, domestic violence, or kidnapping
• Any other relevant factors
When parents can’t develop their own parenting schedule, the court can establish an appropriate schedule more or less than the statutory minimum parent-time based on the following best interest of the child factors:
• How parent-time would negative impact child’s physical health and emotional development
• Distance between child’s home and the non-custodial parent’s home
• Allegations of child abuse
• Lack of demonstrated parenting skills when there’s no safeguards to ensure child’s safety
• Financial inability of non-custodial parent to provide food and shelter during parent-time
• Child’s preference, if sufficiently mature
• Parent’s incarceration
• Shared interests of the child and non-custodial parent
• Non-custodial parent’s involvement in the child’s school, community, religious, or other related activities
• Non-custodial parent’s availability to care for the child when the custodial parent is working or has other obligations
• Chronic pattern of missing, canceling or denying regularly scheduled parenting time
• Parent-time schedule of siblings
• Lack of reasonable alternatives for nursing child
• Any other criteria the court feels is relevant to the best interests of the child

Uniform Child Custody Act: The Uniform Child Custody Jurisdiction and Enforcement Act (UCCJEA) was enacted in Utah in 2000. This Act superseded the previously adopted version, the Uniform Child Custody Jurisdiction Act (UCCJA).
Joint Custody: In Utah, parents can have joint custody, including joint physical custody (where the child lives) and joint legal custody (who can make life, medical, educational, etc. decisions for a child).
Grandparent Visitation: Grandparents can get visitation rights to see their grandchildren. Additionally, a grandparent or any other adult relative by marriage or blood who raised a child could get custody or visitation of the child, if it’s found to be in the child’s best interests.
Child’s Wishes: A child’s wishes are considered by the court when the judge feels the child is sufficiently mature and has the capacity to reason to form an intelligent preference.
If you need to create or modify a parenting plan in a Utah court, than you should speak with an experienced local child custody lawyer about your options.

What Does it Cost to File for Custody in Utah?

The filing fee for a child custody case in Utah is $360. There are also costs associated with service. See, once you file your initial custody documents with the Court, you have to have someone serve your soon-to-be ex with those documents. The Utah Rules of Civil Procedure specify you can’t do that personally (too much room for monkey business), so you should have a professional process server do it. That might be a constable with the sheriff’s office, or a company that serves these sorts of documents regularly. Either way, the cost will likely range from $15 to $30. All told, the cost to file and serve a custody case averages around $400.
Reasons Parents Lose Custody Of Their Children
Although most laws are designed to help divorced parents maintain a healthy relationship with their children, there are times when some issues may disqualify divorcees from having legal custody of their kids. Most of these cases involve allegations related to child abuse or neglect. However, some allegations could be false statements from a contentious former spouse. If you are dealing with a child custody matter is best you contact a child custody attorney to discuss your legal options.
The Process
The process generally starts with one of the parents notifying the court about his or her concern involving a former spouse or parent of the children. Evidence must be provided otherwise the allegations of abuse are not valid. If the judge determines the behavior is a threat to the child’s safety, an investigation will take place. An investigator may take a look at the circumstances surrounding the allegations and decide whether or not the allegations are true.

This is a common reason why some parents may lose the custody of their children. The court will see if there is a history of child abuse. Some factors that help the judge determine if there was child abuse include scars, bruises, marks, and cuts. Whether it was initiated by anger or inappropriate behavior, child abuse will definitely cause the parents lose custody of their children. If you suspect your former spouse has abused your child, notify the police and contact child custody attorney.
Domestic Violence
There are cases that don’t involve child abuse yet if the child witnessed child abuse against the other parent during the last 5 years; the court may deny sole child custody. A history of abuse will be considered when making custody decisions. Granting custody to an abusive parent is not in the child’s best interest.
Drug And Alcohol Abuse
Courts will also take a look at other factors such as the use of controlled substances. The habitual use of drugs or alcohol by either parent is detrimental to the interests and safety of the kids, therefore, the parent addicted to these substances can’t be trusted with raising the children.
Violating A Court Order
Parents should respect custody orders. Doing otherwise may result in a parent losing custody. Although it’s all based on how the order was written, violating the order doesn’t help advance the case. Some cases involving joint custody, for example, require both parents making important decisions about the child. If one of the parents fails to consult the other parent before making an important decision, the custody order could be modified and the parent may lose custody.

Parental Alienation and Co-Parenting

When one of the parents is manipulative and he or she uses these tactics to alienate the children from his or her former spouse, there is a chance he or she will lose the custody. Co-parenting is sometimes the best option in some scenarios as it allows parents that can’t get along to follow a strict joint custody schedule.
Types of custody orders
There are two kinds of child custody:
• Legal custody, which means who makes important decisions for your children (like health care, education, and welfare), and
• Physical custody, which means who your children live with.
Legal custody can be:
• Joint, where both parents share the right and responsibility to make the important decisions about the health, education, and welfare of the children.
• Sole, where only 1 parent has the right and responsibility to make the important decisions about the health, education, and welfare of the children.
Parents with legal custody make decisions or choices about their children’s:
• School or child care
• Religious activities or institutions
• Psychiatric, psychological, or other mental health counseling or therapy needs
• Doctor, dentist, orthodontist, or other health professional (except in emergency situations)
• Sports, summer camp, vacation, or extracurricular activities
• Travel
• Residence (where the children will live)
Parents who share legal custody both have the right to make decisions about these aspects of their children’s lives, but they do not have to agree on every decision. Either parent can make a decision alone. But to avoid having problems and ending up back in court, both parents should communicate with each other and cooperate in making decisions together.
Physical custody can be:
• Joint, which means that the children live with both parents.
• Sole or primary, which means the children live with 1 parent most of the time and usually visit the other parent.
Joint physical custody does not mean that the children must spend exactly half the time with each parent. Usually the children spend a little more time with 1 parent than the other because it is too hard to split the time exactly in half. When 1 parent has the children more than half of the time, then that parent is sometimes called the “primary custodial parent.” Sometimes, a judge gives parents joint legal custody, but not joint physical custody. This means that both parents share the responsibility for making important decisions in the children’s lives, but the children live with 1 parent most of the time. The parent who does not have physical custody usually has visitation with the children.
Types of visitation orders
Visitation (also called “time-share”) is the plan for how the parents will share time with the children. A parent who has the children less than half of the time has visitation with the children. Visitation orders are varied, depending on the best interests of the children, the situation of the parents, and other factors. In general, visitation can be:
• Visitation according to a schedule: Generally, it helps the parents and children to have detailed visitation plans to prevent conflicts and confusion, so parents and courts often come up with a visitation schedule detailing the dates and times that the children will be with each parent. Visitation schedules can include holidays, special occasions (like birthdays, mother’s day, father’s day, and other important dates for the family), and vacations.
• Reasonable visitation: A reasonable visitation order does not necessarily have details as to when the children will be with each parent. Usually, these orders are open-ended and allow the parents to work it out between them. This type of visitation plan can work if parents get along very well and can be flexible and communicate well with one another. But if there are ever disagreements or misunderstandings, this kind of an open schedule can cause issues between the parents, and the children may suffer as a result.
• Supervised visitation: This is used when the children’s safety and well-being require that visits with the other parent be supervised by you, another adult, or a professional agency. Click for more information on supervised visitation. Supervised visitation is sometimes also used in cases where a child and a parent need time to become more familiar with each other, like if a parent has not seen the child in a long time and they need to slowly get to know each other again.
• No visitation: This option is used when visiting with the parent, even with supervision, would be physically or emotionally harmful to the children. In these cases, it is not in the best interest of the children for the parent to have any contact with the children.
The law on deciding custody and visitation
The law says that judges must give custody according to what is in the “best interest of the child.” To decide what is best for a child, the court will consider:
• The age of the child,
• The health of the child,
• The emotional ties between the parents and the child,
• The ability of the parents to care for the child,
• Any history of family violence or substance abuse, and
• The child’s ties to school, home, and his or her community.

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

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The post Custody Lawyers In Utah County first appeared on Michael Anderson.

Utah Divorce Code 30-3-32

Utah Code 30-3-32: Parent-Time — Intent — Policy — Definitions

1. It is the intent of the Legislature to promote parent-time at a level consistent with all parties’ interests.
2. (a) A court shall consider as primary the safety and well-being of the child and the parent who experiences domestic or family violence.
(b) Absent a showing by a preponderance of evidence of real harm or substantiated potential harm to the child:
I. it is in the best interests of the child of divorcing, divorced, or adjudicated parents to have frequent, meaningful, and continuing access to each parent following separation or divorce;
II. each divorcing, separating, or adjudicated parent is entitled to and responsible for frequent, meaningful, and continuing access with the parent’s child consistent with the child’s best interests; and
III. It is in the best interests of the child to have both parents actively involved in parenting the child.
(c) An order issued by a court pursuant to Title 78B, Chapter 7, Part 1, Cohabitant Abuse Act, shall be considered evidence of real harm or substantiated potential harm to the child.
3. For purposes of Sections 30-3-32 through 30-3-37:
(a) “Child” means the child or children of divorcing, separating, or adjudicated parents.
(b) Subject to Subsection (5), “Christmas school vacation” means:
I. for a single child, the time period beginning on the evening the child is released from school for the Christmas or winter school break and ending the evening before the child returns to school; and
II. for multiple children when the children’s school schedules differ, the time period beginning on the first evening all children’s schools are released for the Christmas or winter school break and ending the evening before any of the children returns to school.

(c) “Extended parent-time” means a period of parent-time other than a weekend, holiday as provided in Subsections 30-3-35(2)(f) and (2)(g), religious holidays as provided in Subsections 30-3-33(3) and (17), and “Christmas school vacation.”
(d) “Supervised parent-time” means parent-time that requires the noncustodial parent to be accompanied during parent-time by an individual approved by the court.
(e) “Surrogate care” means care by any individual other than the parent of the child.
(f) “Uninterrupted time” means parent-time exercised by one parent without interruption at any time by the presence of the other parent.
(g) “Virtual parent-time” means parent-time facilitated by tools such as telephone, email, instant messaging, video conferencing, and other wired or wireless technologies over the Internet or other communication media to supplement in-person visits between a noncustodial parent and a child or between a child and the custodial parent when the child is staying with the noncustodial parent. Virtual parent-time is designed to supplement, not replace, in-person parent-time.
(h) If a parent relocates because of an act of domestic violence or family violence by the other parent, the court shall make specific findings and orders with regards to the application of Section 30-3-37.
(i) A Christmas school vacation shall be divided equally as required by Section 30-3-35.
Parents who come to court about child custody and parenting time (also called “visitation”) face decisions about parenting plans for their children. This section gives you information about parenting after separation or divorce. It helps you understand what your children may be going through and what they may need to adjust to the changes in their lives. It also gives you information to make a parenting plan for you, your children’s other parent, and your children that is based on the best interest of your children.

Children and Separation or Divorce

When parents separate or get a divorce, their children are affected in many different ways. Get information to help you understand what your children may be going through so you can help them cope with your separation. You know your children best and you can use the information provided here to help them and come up with a parenting plan that is in their best interests.

Parenting Plans

A parenting plan, also called a “custody and visitation agreement” or a “time-share plan,” is the parent’s written agreement about how much time the child will spend with each parent, and how the parents will make decisions about the child’s welfare and education. Learn what you should think about when deciding on a parenting plan that is in the best interests of your child, what should be in your parenting plan, and how to write up your parenting plan.

Children are entitled to financial and emotional support from both parents.
The public child support system strives to ensure children receive financial support through their role in establishing and collecting child support orders for the children they serve. Ensuring children receive emotional support is more complicated. Research suggests that one way to address the emotional support and well-being of children is through frequent and continuous contact with both parents. This can be achieved through parenting time arrangements established for children born to unmarried parents or upon the divorce or separation of parents who were married. It is often noted that the more time a noncustodial parent spends with their child, the more child support will be paid. A 2011 Census Bureau report showed custodial parents with joint-custody/parenting time arrangements received full child support payments over half of the time, while just 30.7 percent of custodial parents received full child support payment when there was no contact between the child and the noncustodial parent. This intersection of child support and parenting time is a complicated one that affects a large number of children and families.

In 2011, 23.4 million children under the age of 21 lived with just one parent and in 2014; approximately 40 percent of births were to unmarried mothers. While many states allow for child support to be adjusted based on the amount of time each parent spends with the child, most child support orders established by the public child support system do not include a corresponding parenting time order or arrangement. In fact, nearly 7 of 10 parents involved with the public child support program do not have an official parenting time order. The primary reason for this disconnect is that Title IV-D of the Social Security Act, which governs the public child support enforcement system, does not allow expenditure of federal funds for the establishment or negotiation of parenting time arrangements. With the passage of the Preventing Sex Trafficking and Strengthening Families Act of 2014 (PL113-183) Congress specifically addressed the issue of parenting time with the following Findings and Sense of Congress (§303):
The Congress finds as follows:

• the separation of a child from a parent does not end the financial or other responsibilities of the parent toward the child, and
• increased parental access and visitation not only improve parent-child relationships and outcomes for children, but also have been demonstrated to result in improved child support collections, which creates a double win for children, a more engaged parent and improved financial security.

The Act also expresses the sense of the Congress that:
• establishing parenting time arrangements when obtaining child support orders is an important goal which should be accompanied by strong family violence safeguards, and
• states should use existing funding sources to support the establishment of parenting time arrangements.
In addition to the lack of funding for services to establish parenting time orders, the court process and the marital status of the parents can have major impacts on whether parents establish official parenting time orders. States have addressed this issue in varying ways, through state legislation as well as using federal grants to establish programs aimed at increasing parental engagement and parenting time orders.

Married vs. Unmarried Parents

When a married couple is ending their relationship, the state is generally responsible for formalizing the dissolution of that relationship. When a married couple with children gets divorced, state family law statutes have procedures for determining child support and parenting time as part of a unified court process. States may require mediation, parent education classes, or development of specific parenting plans as part of the divorce process all based upon the presumption that both the mother and the father will continue to have ongoing contact and time with their children. In general, only in unusual or extreme situations (e.g. abuse or neglect, domestic violence) is the presumption of ongoing contact overcome. Conversely, unmarried parents do not require the state to end their relationship. And unlike divorcing couples, state family law varies widely in its presumptions related to the parenting rights of unmarried fathers. Unmarried parents needing assistance with paternity establishment and child support can, at little or no cost, receive assistance from the state child support agency, but there is no similar resource available to assist unmarried parents with establishing parenting time arrangements.

In addition, unmarried parents generally must navigate an entirely different court process than the one through which they received a child support order. This can be costly, confusing and time consuming. The different family law processes specific to unmarried parents frequently begin at birth. Married fathers are automatically presumed to be the child’s father while unmarried fathers must sign a voluntary acknowledgement of paternity or prove their legal standing as a father some other way. In addition, state laws give married fathers equal custodial and decision-making rights as mothers (because it is assumed that married parents live together). This is not the case with unmarried parents. In fact, in 14 states (Arkansas, Arizona, Florida, Georgia, Iowa, Maryland, Massachusetts, Minnesota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Wisconsin), when a child is born to unmarried parents, even though the father signs a paternity acknowledgment form, the mom is automatically given sole custody. In the other 36 states, unmarried fathers who sign a paternity acknowledgment form are given the same legal presumptions to custody as married fathers. Many states have attempted to address the disparate treatment of unmarried fathers by granting those fathers, once they have legally established paternity, with similar rights and responsibilities as married fathers. Most recently, Nevada enacted 2015 Assembly Bill 263 which specifically expands the applicability of the custody and visitation laws to all children regardless of whether they were born to parents who were married or unmarried. The bill defaults the custody arrangement to joint legal and physical custody until or unless a court orders otherwise.

State Policies

States that address child support and parenting time together do so in various ways. The majority of states provide an adjustment in their child support guidelines for parenting time. Some states provide limited assistance to parents interested in parenting time orders through court-based self-help services or family law facilitators, and a few states provide methods for addressing both child support and parenting time in the same order, or at the same time.

Child Support Guideline Adjustments for Parenting Time

Approximately 36 states and D.C. have an adjustment in the child support guidelines for parenting time. This means that if the parents have established a parenting time order, the amount of time that each parent spends with the child will impact the amount of child support he or she pays or receives. Many jurisdictions will allow parents to informally agree on the amount of time the child spends with each parent to facilitate determination of child support obligations, but these informal agreements are not legally enforceable orders.

In Utah, there are minimum schedules for parenting time based on whether the child is under 5 years of age or between the ages of 5 and 18 As with most parenting-time laws, these schedules are applicable in the case of divorce, and do not necessarily apply to unmarried parents. These minimum parenting time schedules have the potential to provide the type of consistency that the Texas standard possession order affords parents, allowing them to rely on predictable parent-time orders if they are not able to come up with an agreement otherwise. During the 2015 legislative session, Utah enacted an optional schedule for parenting-time for children 5 to 18 years of age and includes a provision for child support adjustments based on this schedule. The bill states that any child support calculation should be consistent with the rules regarding joint physical custody in the child support guidelines.

Promote Parenting Time

Some states, through federal grants, have developed resources to address child support and parenting time issues simultaneously.

The federal Office of Child Support Enforcement (OCSE) administers an Access and Visitation program which provides total pool of $10 million in formula grants to states each year. The grants are designed to facilitate noncustodial parents’ access to and visitation with their children. States are permitted to use the grant funds for:
• Mediation
• Development of parenting plans
• Education
• Counseling
• Visitation enforcement, including supervised visitation and neutral drop-off and pick-up; and/or
• Development of guidelines for visitation and alternative custody arrangements
Some states have used these grant funds to facilitate parenting time orders for unmarried parents going through the child support process, but these efforts have generally been small scale and limited in scope. According to the Access and Visitation Grant Program, the programs saw the following results:
• Noncustodial fathers and custodial mothers comprised the highest percentage of participants, 36 and 34 percent respectively.
• Parent education was the most utilized service at 41 percent, follow by mediation at 24 percent.
• Nearly two-thirds of participants were referred by either a court or child support agency.
• More than half of participants had never been married to one another
• Nearly half of participants earn less than $20,000, with over a quarter earning less than $10,000.
• 49 percent of participants were white, while the other half belong to a minority group
• Participation in the AV program increased parenting time for 62 percent of noncustodial fathers and 47 percent of noncustodial mothers.
Terms Used In Utah Code 30-3-32
• Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.

Utah Divorce Lawyer

When you need a Utah Divorce Lawyer, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506

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Foreclosure Lawyer North Salt Lake Utah

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Foreclosure Lawyer North Salt Lake Utah

North Salt Lake is a city in Davis County, Utah, United States. It is part of the Ogden–Clearfield, Utah Metropolitan Statistical Area. The population was 16,322 at the 2010 census, which had risen to an estimated 20,850 as of 2018. North Salt Lake is located in southern Davis County; it is bordered to the north by Woods Cross, to the northeast by Bountiful, and to the south by Salt Lake City in Salt Lake County. According to the United States Census Bureau, North Salt Lake has a total area of 8.6 square miles (22.2 km2), of which 0.1 square miles (0.2 km2), or 0.80%, is water.

How To Serve Foreclosure Documents Properly

Service of process and protecting due process rights is always an important part in any legal matter, but knowing how to serve foreclosure documents requires additional expertise and knowledge. To serve foreclosure documents properly, it is important to have a process server you can trust.

The Impact Of Defective Service

Once it’s been determined service is defective or improper, cases generally need to start over from the beginning no matter how far they are into the case. From the perspective of the lender and the attorney there are significant cost ramifications for delaying the timeline. Not only will additional time need to be spent on the case exceeding what was originally planned, in the instance of vacant and abandoned properties there is also the cost of maintenance. The longer these homes and buildings sit the longer there is the possibility for additional issues to arise from lack of use.

Strict Court Foreclosure Requirements

Given the magnitude of foreclosures in terms of both monetary value and emotional impact, courts have set a very high bar for what constitutes proper service. A lack of due diligence or a challenge to service is going to be thoroughly examined. No matter what documents being served in a foreclosure matter they should all be given the same level of attention. Multiple attempts at different times of the day, efforts to locate an alternate address if the subject has moved and thorough documentation are all necessary from your process server.

How To Serve Foreclosure Documents

Every single day matters when it comes to timelines and costs. A foreclosure process server should have thorough knowledge of the rules and laws to avoid any possibility of defective service. They should be skilled in how to prove due diligence, making multiple attempts at different times of the day in an effort to complete personal service. When choosing a process server, it’s also important to select one who will be able to back up their service attempts in court. Should they be in called in for a Traverse Hearing a professional demeanor, detailed notes and ability to recall the service will go a long way toward proving service was actually completed in accordance with all rules.

Foreclosure of loan: Here’s how to do it

An outstanding home loan calls for monthly PMI. In case a person receives a lump sum amount, he can choose to foreclose the existing home loan to be financially debt free. To foreclose a home loan, you must follow the procedure detailed below.
Application
First, write an application to the finance company/bank for foreclosure of loan. Existing home loan account number and copy of address proof may be enclosed with the application.
Payment
Once the application is received, the bank will calculate the amount outstanding after taking into account the interest paid so far and the date of foreclosure. The amount payable shall be communicated. This amount needs to be paid by way of check or online transfer.
Foreclosure charges
No pre-payment penalty can be levied on foreclosure of floating rate loans. Some charges on fixed rate loans may be levied. These charges will have to be added while making the foreclosure payment. On receipt of outstanding dues, the bank will complete the foreclosure formalities. EMI instructions will be stopped forthwith. Original documents such as property title deeds and related documents will be returned to the customer within 10 -15 working days.
No dues certificate
Along with original papers, the customer needs to receive a no-dues certificate from the bank stating that no amount is payable. The certificate must include address of the property and personal loan is one of the most popular borrowing options for individuals seeking quick access to funds for a variety of personal reasons. However, the unsecured (collateral-free) nature of this loan makes it vitally important for lenders to ensure the credit worthiness of the applicant. In this regard, one of the first things that prospective lenders look at is the credit score of the loan applicant.

What Is a Notice of Intent to Foreclose?

In general, as a project participant on a construction project, you can file a mechanics lien. This process of filing a mechanics lien secures the right to file a claim against the property in the event of non-payment. If filing a mechanics lien does not spur payment, you have the option to initiate a lawsuit, but this article will discuss a better option than initiating a lawsuit. You can instead send a Notice of Intent to Foreclose which is not only a powerful collection document, it also helps the claimant avoid having to file a lawsuit to enforce the lien.

Mechanics Liens – Not Ideal, But Sometimes Necessary

Nobody likes liens, but if you’re not getting paid on a construction project – money that you’ve already earned – then sometimes, filing a lien is necessary. When it gets to the point that a lien is filed, this significant step is usually enough to get the attention of the interested parties on the project and to prompt payment. However, if filing the lien does not prompt payment, then the claimant always has the option to initiate a lawsuit to enforce the lien, which is also known as a foreclosure action. We already know that everyone hates liens, but guess what? Everyone really hates litigation. Initiating a foreclosure action is not very attractive because it is costly and risky. But don’t worry there is an option that may help claimants avoid court. It’s a document, a “warning letter” called a Notice of Intent to Foreclose.

What Is a Notice of Intent to Foreclose?

A Notice of Intent to Foreclosure is a cost-effective way to provide one last warning prior to initiating a lawsuit. It is a voluntary warning letter that clearly states that if payment is not made then the claimant will initiate a lawsuit. And since we already know how much everyone hates lawsuits, sending a Notice of Intent to Foreclose can be very effective at prompting payment (so that a lawsuit can be avoided). Sending a Notice of Intent to Foreclose is a cost-effective tactic because it adds pressure on property owners due to the threat of pending litigation, on top of the lien filing which is already on their property. This pressure on property owners gives more incentive to the interested parties to satisfy the lien. This also avoids litigation costs for both sides – by avoiding legal costs associated with litigation such as court costs and legal fees.

This warning letter is optional. That being said, if you choose to send a Notice of Intent to Foreclose, the main requirement is that there has to be an existing, filed mechanics lien to foreclose upon. Or in other words, sending an optional Notice of Intent to Foreclose has to come after a mechanics lien has been filed. Then, there are other deadlines on your mechanics lien so the best practice is to send the Notice of Intent to Foreclose well before the lien’s deadline-to-enforce date. So, to recap, the window of time to send a Notice of Intent to Foreclose is after a lien has been filed, but well before the deadline to enforce the mechanics lien. And you’ve got to be careful here because these deadlines vary greatly from state-to-state and according to several other factors.
What Is the Home Foreclosure Process & How Long Does it Take?
A foreclosure occurs when a homeowner defaults on her mortgage payments. The process typically begins after the fourth missed payment with the issuance of a Notice of Default. The length of the entire foreclosure process depends on state law and other factors, including whether negotiations are taking place between the lender and the borrower in an effort to stop the foreclosure. Overall, completing the foreclosure process can take from 6 months to more than a year.
Mortgage vs. Deed-of-Trust
State law determines the method through which homes are purchased. As a result, homes can either be purchased with a mortgage or a deed-of-trust. The lender would benefit from a deed of trust because it allows them to pursue a non-judicial power of sale; (also known as trustee sale ;), thereby circumventing court procedures. On the other hand, having a mortgage would require that the lender obtain court permission in order to foreclose on the borrower.

Notice of Default

The Notice of Default starts the official foreclosure process. This notice is issued 30 days after the fourth missed monthly payment. From this point onwards, the borrower will have 2 to 3 months, depending on state law, to reinstate the loan and stop the foreclosure process.
Judicial vs. Non-judicial Foreclosure
The primary difference between a judicial and a non-judicial foreclosure proceeding is that the former involves court action. The lender would have to file a lawsuit with the court and prove that they have taken the necessary steps to remedy the situation and collect any debts still owed. This process could take between 2 and 3 months after the Notice of Default has been issued

Redemption Period

The redemption period allows homeowners to remain in their property without risk of eviction after the foreclosure has been completed. Furthermore, the redemption period also gives the homeowner an opportunity to buy the property back by at the “redemption price,” which is the price the property sold for at the foreclosure sale. The amount of time allowed is dependent on state law. However, if the property was purchased using a deed-of-trust, the homeowner forfeits this provision; though, in some deed-of-trust sales such as in California, a judicial foreclosure is still possible, and through this the redemption period still exists.
Steps After Receiving a Foreclosure Notice
No homeowner wants to receive a foreclosure notice in the mail. If your lender does send you one of these, don’t panic. Receiving a foreclosure notice doesn’t mean that you will automatically lose your residence. There are steps you can take to avoid losing your home to foreclosure. The worst move you can make after receiving a foreclosure notice is to do nothing.

Call your bank or mortgage lending company immediately after you receive a foreclosure notice. You may not want to do this. You may be embarrassed. But your lender is in the best position to help you avoid foreclosure. Don’t forget that banks and lenders are not in the business of owning homes. They don’t want to have to sell your residence. It’s in their best interests to keep you in your residence and making payments. Your bank or lender might be able to work out a compromise that result in lower monthly payments for you.

Compose a Hardship Letter

Your lender will listen to you if you’ve suffered a financial hardship that makes it impossible for you to pay your monthly home loan payment. You may have lost a job. You may have taken on a new job, out of necessity, that comes with a lower annual income. Maybe you’ve suffered a serious illness that kept you from working. When you call your lender, explain your financial setback. Your lender will most likely ask you to write a financial hardship letter. Use this letter to explain the financial problems you now face. Your lender will consider this letter when deciding whether to modify your mortgage loan to one with a lower monthly payment.

To prove that you’ve suffered a financial hardship, you’ll have to make copies of several important financial papers. These include your last two paycheck stubs, your last two federal income tax returns, your current credit card statements and the statements from any student, auto or personal loans that you may hold. You want to show your lender that while your monthly debt obligations have not changed, your gross monthly income has plummeted, making it impossible for you to pay your mortgage bill each month. If your lender agrees, it may reduce your interest rate, rework the terms of your loan or even forgive a portion of your principal balance, all of which would result in lower monthly payments.

The federal government offers a Home Affordable Modification under its Making Home Affordable program; this provides incentives to lenders to negotiate with homeowners who are delinquent on their payments for more affordable mortgage payments. The federal government also offers a Home Affordable Foreclosure Alternatives program. This program provides financial incentives to mortgage servicers who agree to complete short sales or deeds-in-lieu of foreclosure for homeowners who would otherwise lose their homes to foreclosure. In a short sale, homeowners agree to sell their homes for less than what they owe on their mortgage loans. Their loan servicers have to agree to this, which is why the government is offering these institutions financial incentives to approve short sales. In a deed-in-lieu of foreclosure, the owners of a home voluntarily transfer ownership of their home to their servicer.

Before a bank can sell your house at a foreclosure sale, you will get some sort of formal notice about the foreclosure. The kind of notice you’ll get depends on whether the foreclosure is judicial or non-judicial, and what your state’s foreclosure laws require.

Utah Foreclosure Attorney

When you need legal help with a bankruptcy or foreclosure in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506

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Residential Debt Negotiation

The Department of Banking has started licensing “Debt Negotiators.” Licensed Debt Negotiators, for a fee, offer the services of assisting a consumer faced with significant debt or negotiating on behalf of a consumer, the terms of a consumer’s obligation to a mortgagee or creditor, including:
• Negotiation of a short sale of residential property (one to four family owner-occupied real property);
• Providing services related to avoiding or delaying actual or anticipated foreclosure proceedings; and
• Addressing the delinquency and default of a mortgage loan. No fees may be received until the Debt Negotiator fully performs the services.
Persons exempt from acquiring a Debt Negotiator license include:
• Attorneys licensed to practice in Connecticut when engaged in debt negotiation as an ancillary matter to such attorney’s representation of a client
• Financial Institutions
• Licensed Debt Adjusters while performing debt adjuster services
• Bona fide non-profit organizations

Consumer Protections

Debt Negotiators are required to provide in each debt negotiation contract the following consumer protections:

• Complete and detailed lists of services, costs, and statements of the results to be achieved.

• A statement that the Debt Negotiator has reviewed the consumer’s debt and an individualized evaluation of the likelihood that the debt negotiation services will reduce the consumer’s debt or, if applicable, prevent foreclosure of the consumer’s home.

• A three-day right of rescission along with the statement: “If you wish to cancel this contract, you may cancel by mailing a written notice by certified or registered mail to the address specified below. The notice shall state that you do not wish to be bound by this contract and must be delivered or mailed before midnight of the third business day after you sign the contract.” “ Business day” means any calendar day except Sunday or any of the following business holidays: New Year’s Day, Washington’s Birthday, Memorial Day, Independence Day, Labour Day, Columbus Day, Veterans’ Day, Thanksgiving, and Christmas. Any debt negotiation contract that does not comply with Connecticut Banking Law will be voidable by the consumer. In addition, the Banking Commissioner has established a schedule of maximum fees that the debt negotiator may charge for specific services. The Commissioner has the authority to review any fees and charges assessed by the debt negotiator and order the reduction of such fees that the Commissioner deems to be excessive.

Avoid Foreclosure “Rescue” Scams

Be aware of foreclosure rescue scams that target homeowners having serious problems making their mortgage payments. In these “rescue” scams, a con artist promises to help you save your home, but is actually intent on stealing your home or most of the equity you have accumulated in your home.
According to the Federal Trade Commission, the following predatory scams have been reported:

• The foreclosure prevention specialist: The “specialist” really is a phony counsellor who charges hefty fees in exchange for making a few phone calls or completing some paperwork that a homeowner could easily do for himself. None of the actions result in saving the home. Turning to a HUD-approved counsellor for assistance is one way to avoid this type of fraud.

• The lease/buy back: Homeowners are deceived into signing over the deed to their home to a scam artist who tells them they will be able to remain in the house as a renter and eventually buy it back. Usually, the terms of this scheme are so demanding that the buy-back becomes impossible, the homeowner gets evicted, and the “rescuer” walks off with most or all of the equity.

• The bait-and-switch: Homeowners think they are signing documents to bring the mortgage current. Instead, they are signing over the deed to their home. Homeowners usually don’t know they’ve been scammed until they get an eviction notice.

Debt Settlement

Debt settlement occurs when a debtor successfully negotiates a payoff amount for less than the total balance owed on a debt. This lower amount is agreed to by the creditor or collection agency and is fully documented in writing. Ideally, this lower negotiated amount is paid off in one lump sum, but it can also be paid off over time. Negotiating and paying lower amounts to settle debts is far more common than many people may imagine.

Why Would a Bank Settle Debt for Less?

At first blush, it may appear surprising that banks would be willing to settle for less than what is owed them. However, banks are aware of the statistical certainty that not all borrowers to whom they extend credit will pay them back. This bank’s carefully formulated lending model accounts for defaults. Knowing this makes it easier for a debtor to understand that there are numerous opportunities available for settlement. From a bank’s perspective, as an account grows more and more delinquent, the probability of receiving even one more payment on it progressively diminishes. In fact, roughly 80% of all accounts that go unpaid for more than ninety days and are then dispatched to collection agencies, law firms, or sold to debt buyers never result in any further payments being made on them. Banks and other creditors, therefore, are focused on losing as little as possible, recognizing that taking a smaller piece of the pie is better than not receiving anything back at all.

Basics of Debt Settlement

One of the basics of settlement is to focus primarily on unsecured debt, such as credit cards. This type of debt is known as unsecured because there is no collateral behind it that can be seized in the event it goes unpaid. Now, when it comes to deciding which cards you should settle, there are several things to consider and to be aware of. Importantly, be aware in advance that debt settlement will only take place on an account in which you have already fallen behind three months or more. In fact, the best savings are often realized when an account is closest to charge-off status and a bank is eager to negotiate and collect a settlement. Because it takes several months of missed payments for an account to approach charge-off status, it is best to leave cards with low balances of $1,000 or less out of any settlement plan. This is because the late fees that accrue with the resultant higher interest rates that often result from missed payments will disproportionately raise the debt balance on a percentage basis. This often makes any eventual settlement close to a break-even (or worse) than your out-of-pocket costs would have been had you simply maintained making relatively small payments while doing no further damage to your credit score. However, if you have small balances that are already charged-off, then you should include these in your settlement plan, as the balances have already risen due to late fees and the damage to your credit score has already taken place.

Subtleties to be Aware of during Negotiations

The existence of balance transfers on your card balance can impede the effectiveness of any potential settlement. Both the recency and size of balance transfers are considered. Banks may frown upon settlement (or raising the percentage of debt owed that they may ultimately accept) on accounts that show balance transfer activity within 12-24 months of when payments stopped being made or when the percentage of balance transfers held on the card approaches 20% of the total card balance. Similarly, cards that show aggressive recent purchasing activity will likely be less eligible for settlement. In these type situations, it can make better sense to wait to settle with an outside collection agency than with the original creditor bank that issued the card. It may also make sense to keep one or more of your accounts open. Part of keeping a reasonably healthy credit score is maintaining open and active revolving accounts within your credit profile. Keeping open one or two accounts with low balances that you can then use responsibly will help mitigate the damage that settlement on other accounts may do to your credit score.

Don’t Pursue Settlement Too Soon

A basic fundamental to debt settlement is that creditors won’t show a willingness to settle until the debtor has already demonstrated an inability to pay. If you fall behind on payments temporarily as a result of a relatively brief rough patch, then the debt settlement process might not be your best option, given its irreversible quality once it has begun and the negative consequences it can have on your credit profile. Individuals in this situation should consider a credit counselling service or investigate short-term hardship plans that a creditor bank could make available. However, if you’ve already fallen behind on payments by four or five months and there isn’t much light showing at the end of the tunnel, it could be time to start negotiating directly with your bank for the best settlement before it assigns your account to a collection agency. This is often the sweet spot in terms of timing – the bank still controls your account but also knows that the clock is ticking closer to charge-off, the point at which it would likely never recover anything from the account again – and your credit score takes a hit. This moment in time is a win-win for all involved – the debtor pays less than is owed while limiting credit score damage, and the creditor loses the least by recovering some value from a delinquent account that would otherwise be recognized as a loss on its books.

Get Your Settlement Documented in Writing

It is important to understand that a settlement agreement is not fully closed until it is agreed upon in writing. In other words, a verbal agreement with a creditor simply is not enough. Reaching a settlement agreement rarely happens in a single phone call to a creditor, rather, it usually evolves over several well-placed calls spanning several weeks or months. However, once a deal has been struck, be certain to get all of the following critical information drafted into a dated settlement letter:
• Your Name and Account Number,
• The name of the Creditor/Collector,
• The outstanding balance on the account and the amount agreed to as settlement,
• The terms of the payment (lump sum vs. periodic payments over time) along with payment due dates, and, finally, a clear written statement indicating that the account has been satisfied in full.

A reputable debt settlement company will never guarantee a specific settlement amount, but rather, it will provide a realistic estimate and time frame for making offers to creditors that can ultimately result in settlements that save you significant amounts of money. Since creditors actually have no legal obligation to settle, any debt settlement company that goes so far as to guarantee settlement is acting dishonestly. When contacting a debt settlement company, expect all fees and costs to be disclosed up-front, and look for clear written guidelines regarding their debt resolution program. You should be provided with an estimate of how much time may elapse before settlement offers are made on your behalf, and how much money you must save up before these offers will be made. Finally, make certain that the settlement company has a practice of sending all settlement offers to you, its debtor customer, for your approval, prior to them being sent to creditors. A reputable debt settlement company staffed with experienced credit counsellors who have relationships with major credit card lenders and an understanding of the marketplace can help you wade through these waters. A settlement company can also advise you as to how much money you should put aside in advance of negotiations and set up an escrow account in your name that will be managed by a trustee or administrator. Depending on your individual budget constraints and size of your settlement, you will make regular monthly payments into this FDIC insured bank account for several months or years until your debt is fully paid. However, there are a few more things to consider. Debt settlement companies often charge a fee equal to 25% of the amounts saved in your settlement, or 15% of the original total debt load. Additionally, the IRS recognizes forgiven debt as taxable income, so if you save anything over $600, you will have to pay taxes on it. Be especially wary of any debt settlement company that promises to settle your debt for “pennies on the dollar.” With rare exceptions dating back to the financial crisis of nearly ten years ago, these claims have almost always proven too good to be true.

If you decide that a debt settlement is the right move, the next step is to choose between doing it yourself or hiring a professional debt negotiator. Keep in mind that your credit card company is obligated to deal with you and that a debt professional may not be able to negotiate a better deal than you can. Furthermore, the debt settlement industry has its fair share of con artists, rip-offs, and scams, which is why many people choose to try it on their own first. Debt settlement can adversely impact your credit score, making it more difficult to borrow money at affordable interest rates in the future.

Whether you use a professional or not, one of the key points in negotiations is to make it clear that you’re in a bad position financially. If your lender firmly believes that you’re between a rock and a hard place, the fear of losing out will make it less likely that they reject your offer. If your last few months of card statements show numerous trips to five-star restaurants or designer-boutique shopping sprees, your lender will be unlikely to view you as being in need or worthy of sympathy. To raise your chances of success, cut your spending on that card down to zero for a three- to six-month period prior to requesting a settlement. On the same note, if you’ve been making your minimum payment (or more) on time every month, you will look like someone who is attempting to walk away from your debt obligations. Your debt settlement offers should always be directed toward companies with which you’ve fallen behind on your payments.

Start by calling the main phone number for your credit card’s customer service department and asking to speak to someone, preferably a manager, in the “debt settlements department.” Explain how dire your situation is. Highlight the fact that you’ve scraped a little bit of cash together and are hoping to settle one of your accounts before the money gets used up elsewhere. By mentioning the fact that you have multiple accounts on which you’re pursuing debt settlements, you’re more likely to get a competitive offer. Offer a specific dollar amount that is roughly 30% of your outstanding account balance. The lender will probably counter with a higher percentage or dollar amount. If anything above 50% is suggested, consider trying to settle with a different creditor or simply put the money in savings to help pay future monthly bills. Last but not least, once you’ve finalized your debt settlement with your lender, be sure to get the agreement in writing. It’s not unheard of for a credit card company to verbally agree to a debt settlement only to turn over the remaining balance to a collections agency. Be sure the written agreement spells out the amount you have to pay in order to have your entire balance excused from further payment. While the possibility of negotiating a settlement should encourage everyone to try, there’s a good chance you’ll hear a “no” somewhere along the way. If so, don’t just hang up the phone and walk away. Instead, ask your credit card company if it can lower your card’s annual percentage rate (APR), reduce your monthly payment, or provide an alternative payment plan. Often your credit card’s debt settlement representative will feel bad for having had to reject your offer and may be willing to agree to one of these other options.

Debt Negotiation Lawyer

When you need help to negotiate a debt or to file for bankruptcy, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506

Ascent Law LLC

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