The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
Ignoring a collection agency can negatively impact your credit, cause your debt to accrue interest and potentially result in a lawsuit. It’s ultimately better to pay or dispute a debt than avoid debt collection agencies altogether.
While it may be tempting to simply ignore debt collectors, that is generally a poor long-term strategy. Several potential consequences of not paying a collection agency include negative changes to your credit, continuing interest charges and even lawsuits. Even if you can’t pay the debt in full, it’s often best to work with the collection agency to establish a payment plan.
Collection agencies are unlikely to give up on a debt, especially if you owe a substantial amount. The stress of having a debt sent to collections can be tremendous, but waiting out a collection agency and hoping the problem goes away isn’t a viable option.
Read on to learn more about four possible consequences of not paying your debt—and at the end of the article, we’ll offer some strategies for dealing with debt collectors.
1. Interest charges
Even after your debt goes to collections, interest charges can continue to accrue. According to the Fair Debt Collection Practices Act (FDCPA), the collection agency can also charge any fees or interest rates outlined in your original contract—like the interest rate of a loan.
The collection agency cannot raise your interest rate or add new fees, but it may choose to continue generating interest or charge late fees if they were part of the original agreement. That means ignoring the debt collector doesn’t just fail to make your debt go away—in fact, the amount you owe may continue to grow.
2. Credit effects
Having an account sent to collections will lead to a derogatory mark on your credit report. Unfortunately, the mark will likely stay on your credit report for up to seven years even if you pay off your debt with the collection agency. It’s also possible that paying off your collection account may not improve your credit.
Nevertheless, paying off a collection account could help your credit situation in several ways:
The account will be shown as “paid in full” or “settled.” When future creditors look at your report, a collection account that was paid in full sends a more positive signal than an unpaid debt.
Updated scoring models, like the FICO® Score 10 Suite, may regard paid collection accounts differently. Changes to the way FICO calculates credit scores may mean that collection accounts paid in full won’t affect your credit
Sticking to a payment plan could help establish good credit habits. As you work to pay off your debts, you’ll establish positive credit behaviors and work to fix your credit over time.
While you may not see an immediate improvement to your credit after paying off a collection account, it’s an excellent first step toward creating a more positive credit history for yourself. Over time, the impact of a collection account on your credit will start to decrease, which means that your new credit habits—paying on time each month and keeping utilization low, for instance—will start to have a strong effect.
3. Collector communications
Collection agencies will continue to try to reach out to you unless you pay your debt, particularly if you owe a significant amount. Collectors can contact you by phone, mail, fax, or email from 8 a.m. to 9 p.m. Additionally, they are allowed to contact your friends and family to try to locate you—so simply avoiding their phone calls is not a viable strategy.
Also, it’s important to know that collection agencies can continue to reach out to you as long as it is still within the statute of limitations. The statute of limitations, or how long your debt is considered valid, varies based on the type of debt and your state. That said, since the longest statute of limitations can be upward of 10 years, some collectors could call you long after the seven-year mark, which is when the collection account clears from your credit report.
According to federal debt collection laws, you do have the right to request in writing that agencies stop contacting you. If they don’t stop contacting you, the Consumer Credit Protection Act lets you file a complaint with the Consumer Financial Protection Bureau.
However, asking a collection agency to stop contacting you doesn’t mean the debt goes away. If you continue to ignore the debt, the collection agency may file a lawsuit.
4. Lawsuits
If a collection agency intends to get paid for your debt, it may decide to initiate a lawsuit against you. After the collection agency files the lawsuit with the state, you’ll receive a copy and a summons to appear in court.
You’ll want to consult with an attorney immediately, as failing to appear in court will mean you lose by default. In that case, the judge could award the collection agency the ability to do the following:
Place a lien on your property, which can be a mark on your public record.
Garnish your wages, which means your employer may give part of your paycheck to the collection agency before you receive it.
Freeze some or all of the funds in your bank accounts.
If you do receive a court summons, work with a qualified lawyer to help build a case, which will hopefully lead to a settlement with the collection agency.
Can bankruptcy help me deal with a debt collection agency?
Bankruptcy is a legal process that can help businesses and individuals eliminate their debts and stave off collection agencies. There are multiple types of bankruptcy plans (called Chapters) that each come with several drawbacks. Bankruptcy can also drastically hurt your credit and stay on your report for 10 years, so it’s ultimately considered a last resort.
Chapter 7 bankruptcy
Credit card debts, medical bills and personal loans can all be eliminated by Chapter 7 bankruptcy. This process usually occurs over three to four months and is overseen by a federal bankruptcy court. The court then issues an automatic stay and assigns a trustee to your case.
The trustee will then appraise your possessions and liquidate assets to help reduce your debt.
Chapter 13 bankruptcy
Chapter 13 bankruptcy covers many of the same debts covered by Chapter 7 bankruptcy. Here, filers work with bankruptcy courts and attorneys to create a repayment plan. After three to five years of routine payments, a filer’s bankruptcy will eventually be discharged. Chapter 13 doesn’t seek to liquidate your assets, so you ideally won’t have to sell your valuables.
It’s possible to avoid filing for bankruptcy altogether, which requires making a plan to deal with debt collectors rather than ignoring them.
Strategies to deal with debt collectors
Although it can be overwhelming to receive communication from a debt collector, you can formulate a plan to deal with debt collectors to improve your finances. With the right approach, you’ll be able to slowly fix your credit and get back on track.
Use the following approach to begin dealing with the collection agency:
Set up a payment plan with the debt collector, or see if you can reach a debt settlement for a smaller amount of money.
Start practicing good financial habits by keeping your credit utilization low, making payments every month and only spending what you can afford. Members of the “800 club,” Americans with credit scores of 800 or higher, often have great financial habits that you can take inspiration from.
If the debt is not yours or has already been paid, you can start the dispute process and potentially get the collection mark removed from your credit report.
Over time, you can rebuild your credit and pay your debts. However, if the debt is illegitimate or misreported, you should immediately challenge it. To help with that process, consider working with the credit repair consultants at Lexington Law Firm, who can assist with credit repair and address negative items on your credit report.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Paola Bergauer
Associate Attorney
Paola Bergauer was born in San Jose, California then moved with her family to Hawaii and later Arizona.
In 2012 she earned a Bachelor’s degree in both Psychology and Political Science. In 2014 she graduated from Arizona Summit Law School earning her Juris Doctor. During law school, she had the opportunity to participate in externships where she was able to assist in the representation of clients who were pleading asylum in front of Immigration Court. Paola was also a senior staff editor in her law school’s Law Review. Prior to joining Lexington Law, Paola has worked in Immigration, Criminal Defense, and Personal Injury. Paola is licensed to practice in Arizona and is an Associate Attorney in the Phoenix office.
A generation-skipping trust (GST) allows people to leave assets to grandchildren or other people at least 37.5 years younger. Passing assets from Generation 1 to Generation 3 avoids paying federal estate taxes twice on assets — once when passing to Generation 2 and again when passing to Generation 3.
Although GSTs may avoid estate tax, they aren’t totally tax-free. Assets passing through a generation-skipping trust may be subject to the generation-skipping transfer tax. This tax rate happens to equal the estate tax rate, which ranges from 18% to 40%
. However, the generation-skipping tax generally only applies to estates over $12.92 million in 2023 or $13.61 million in 2024. That number is set to fall to $5 million after 2025.
Price (one-time)
None
Price (one-time)
One-time fee of $159 per individual or $259 for couples.
Price (one-time)
$89 for Basic will plan, $99 for Comprehensive will plan, $249 for Estate Plan Bundle.
Price (annual)
$99 to $209 per year.
Price (annual)
$19 annual membership fee.
Price (annual)
None
Access to attorney support
No
Access to attorney support
No
Access to attorney support
Yes
Who are GSTs good for?
Generation-skipping trusts are best for higher net worth families that want to minimize taxes on their estate, says Diedre Braverman, managing attorney with Braverman Law Group in Boulder, Colorado. People who don’t have a will or estate plan may end up leaving their heirs with taxes that they could have avoided, she adds.
Pros and cons of GSTs
When considering if a GST works best for you, think of the following.
Advantages
When set up properly, a GST may save money in taxes that Generation 2 may have had to pay had they received the assets first. This allows people to leave assets to grandchildren, nieces, nephews, grandnieces, grandnephews, or a younger spouse without having a lot of it swallowed up by taxes, Braverman says.
Trusts may be able to shield assets from lawsuits, bankruptcy and divorce settlements.
Setting up a GST gets you thinking about your legacy. “It may get you into estate planning in general,” Braverman says, “which is a good thing for everybody.”
Disadvantages
Attorney fees associated with setting up a GST vary greatly across the country and can be hefty.
Money in the trust can only be withdrawn for living expenses. While those amounts can be generous, it still has to have some relationship correlated to the beneficiaries’ standard of living, Braverman says.
Trusts require a trustee, which is an ongoing expense.
The generation that gets skipped may have objections. “Generation 2 can typically get income from the trust, but they don’t have ownership in the trust,” says Brian Hill, a partner at Ball Morse Lowe in Norman, Oklahoma. “They can’t sell the asset and go buy a bigger personal home. Because of that, there could be tension.”
How to set up a GST
Work with an estate planning attorney to set up your GST. Some things to keep in mind:
Go slow. Setting up a GST involves at least three generations of people, so it’s essential to think through the process. “This is in place for a long time,” Hill says.
Talk to various advisors. Speaking with different people helps you think through all the different what-ifs, Hill says. Consider including tax professionals, financial planners and even other family members in your conversations.
Keep your appointment. People tend to cancel their appointments when they don’t have all the answers to questions that a lawyer may have sent them before their first meeting, Braverman says. This is a mistake. Working with a good attorney will help you get the answers you need.
Think about what you want your trust to encourage or discourage. Lawyers can put all kinds of provisions in trusts, Braverman says. Stipulations on substance abuse or GPAs or beneficiaries being self-supporting, for example, can help express the client’s overall intent.
GST mistakes to avoid
People often make two common mistakes, according to Braverman.
Naming family members as trustees. Money creates suspicions, and the trustee has a lot of power, she says. This can build resentment and cause problems.
Not considering who will be trustee if your original trustee passes. Consult with your attorney about who will take over if your original trustee can no longer handle the role. Braverman suggests three options for these successor trustees: Trust departments in large financial institutions, trust companies or professional, private fiduciaries.
Frequently asked questions
Can I only leave money to family members in a GST?
No. Money in a GST can go to grandchildren, grandnieces, grandnephews, or anyone who is at least 37.5 years younger than the grantor.
What is the beneficiary of a GST called?
A “skip” person is the beneficiary of a GST who is two or more generations below the settlor’s generation.
Is there a way to avoid paying the generation-skipping tax?
The IRS exclusion allows grandparents to give away $12.92 million in 2023 without paying this tax. This number is set to drop drastically after 2025 — to $5 million.
Real estate attorney Lauren Griffin said UCC liens ‘are a new kind of fraud that we haven’t seen before.’
NEW ORLEANS — David Bryan and his wife Annemarie Ellgaard both grew up in New Orleans, met at Tulane University and sent their daughter to their alma mater. A quarter century after moving away to Minneapolis, they bought their forever home Uptown and decided to retire back in the Crescent City.
But their dream was nearly derailed this spring, by something that looked like typical junk mail. Bryan almost threw away a letter from a California lender called GoodLeap, thinking it was solicitation for a home equity loan. It turned out to be a statement for a $45,000 loan taken out in his name, without his knowledge, to cover new doors and windows that he never ordered and were never installed.
“GoodLeap paid the construction company directly,” Bryan said. “They didn’t have any proof that the work was done or anything. They just took their word for it that the work was done, paid them directly the $45,000… If it didn’t happen to me, I’d sit back and think, boy, this is ingenious.”
WWL Louisiana has learned that GoodLeap accepted more than three dozen loan applications with New Orleans property owners’ real names and addresses, but automated signatures and fake Social Security and telephone numbers. Law enforcement sources confirm that GoodLeap paid loans for about 20 of those applications directly to Metairie contractor Deep South Renovations, based on automatic signatures from Deep South’s owner, Samantha McGee.
GoodLeap says it’s a victim of fraud and is working with the FBI field office in Sacramento, Calif. But property owners say GoodLeap failed to perform basic due diligence to confirm their personal information before releasing the money to Deep South and slapping a UCC lien on their properties – liens that prevented some of them from taking out legitimate loans or selling their houses.
“To protect consumers and GoodLeap itself, GoodLeap has an extensive due diligence and fraud prevention process,” said Jesse Comart, GoodLeap’s executive vice president for communications. “GoodLeap is also a victim of this fraud. And we certainly regret that these innocent consumers were also swept up in this fraud.”
Stealing Social Security numbers
Comart said GoodLeap was victimized by “a highly sophisticated group that appears to have the ability to create or obtain fraudulent (Social Security Numbers), and then associate the SSNs with innocent property owners.”
GoodLeap has canceled 20 UCC liens in New Orleans alone since August. Comart said the lender has canceled all loans it identified as fraudulent but declined to say how many were specifically associated with Deep South and how much McGee’s company received, citing the pending FBI investigation.
But it appears Deep South used more than one lender to collect bogus home-improvement loan proceeds. Quentella Livers found out Deep South collected $45,000 on a loan from GoodLeap to put solar panels on her house, using a fake application using her maiden name, Richard. Not only did she not get any solar panels, but she also discovered a second UCC lien for new floors and other home improvement work she didn’t get. She said she then found out another California lender, Dividend Solar Finance, had paid Deep South $54,000 for that bogus loan.
She managed to get GoodLeap to cancel its lien in August. Dividend just canceled its lien last week.
“It’s taken a lot out of me. It’s been a whirlwind,” she said.
Real estate fraud has been on the rise this year, with scammers using automated signatures to falsify deeds in attempts to sell properties out from under the rightful owners. But real estate attorney Lauren Griffin said UCC liens “are a new kind of fraud that we haven’t seen before.”
Griffin, a lawyer at New Orleans based Crescent Title, said she got a call this summer from a client about a GoodLeap lien that he didn’t even know about until another victim called to warn him.
“Fraudsters are trying anything they can right now,” she said.
Loans taken out in the victims’ names
The first warning came from a Gentilly property owner, who researched the Orleans Parish property records, then spoke to eight others who all said GoodLeap had placed UCC liens on their properties and paid Deep South Renovations $45,000 for work at their houses that was never done.
Livers said if it hadn’t been for the Gentilly man writing her a letter to warn her, she might not have known about the $45,000 GoodLeap loan or the $54,000 Dividend loan in her name.
“I figured that I couldn’t possibly be the only victim,” said the Gentilly man, who didn’t want to give his name because he filed a police report against McGee and said he’s concerned for his safety. “It’s really galling that somebody can get away with this so easily.”
Bryan, Livers and the Gentilly man say they have been interviewed by FBI agents about McGee. The FBI’s Sacramento field office said it could not confirm or deny an investigation. But the New Orleans Police Department confirmed its White Collar Crimes Unit is investigating.
Deep South appears to have walked away with close to a million dollars in bogus loans, even though its state contractor’s license has been revoked and its office in Metairie is a vacant storefront. McGee is also facing financial default in multiple court cases.
In one of them, a Jefferson Parish judge ordered McGee to pay Louisiana Pain Specialists more than $400,000 on a debt that’s been in default for more than two years. Court records show she failed to show up for a garnishment hearing last month and the judge issued an attachment for her arrest.
Also this summer, she was renting a townhouse in Metairie and entered a bond for deed agreement to purchase the home over time. The seller, Ronald Lopiparo, said she only paid half of the $100,000 down payment and hasn’t made any of the monthly purchase payments since. He issued a default notice last week and says he plans to evict her.
The U.S. Marshals Service confirmed agents went to the townhouse in tactical gear in April 2022. Brian Fair, a U.S. Marshals spokesman, said McGee was arrested for failing to show up in federal court on a separate matter.
Neighbors saw McGee pull up in her late-model Mercedes earlier this week and WWL Louisiana went to knock on her door shortly after she entered the house, but she wouldn’t answer the door. She hasn’t answered any phone calls or text messages over the last few weeks, either.
How to protect yourself
Griffin says property owners can do a few things to protect themselves against fraudulent UCC liens. They can freeze their credit. They can also sign up for notifications whenever a new document is filed in the land records. That service is available through the Jefferson and St. Tammany parish clerks offices, but not yet in Orleans or St. Bernard parishes.
Orleans Parish Chief Deputy Clerk Alexandria Irvin said Orleans is in the “testing stages of our Land Records courtesy real estate notification service with an anticipated launch date January 2024.” She said property owners will have to register an email address to receive the alerts.
Buying a home can at times feel like quite an uphill climb, what with socking away cash for a down payment and getting approved for a mortgage. One option that may promise to ease the path for some people is what is known as a rent-to-own arrangement.
If you enter into this agreement, you may be able to rent and then decide to purchase the property at the end of the lease. That can give you some time to build your savings and your credit. What’s more, while renting, part of your monthly payment may be earmarked for your down payment.
However, in addition to these positives, there are potential downsides, such as losing a nonrefundable upfront fee if you decide not to buy. If you’re curious about rent-to-own homes, read the following guide. You’ll gain important insights that can help you decide if this form of homebuying is right for you.
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What Is Rent-to-Own?
Renting vs. buying a home is a big decision, but in some cases, you may be able to do both. With a rent-to-own home, you lease a property and have the option to buy it at the end of that period. Your monthly rent (which may be higher than the going market rate) can include a portion that is earmarked as down payment money should you decide to buy.
A key benefit of rent-to-own agreements is that they can help make homeownership possible for people who might not otherwise be able to purchase a property. Someone who doesn’t have a hefty chunk of change saved for a down payment may be able to buy a home. Or it might give a prospective homebuyer a chance to build their credit history en route to applying for a mortgage a little later on.
In these ways, rent-to-own could put you on the path to buying a property while still renting.
💡 Quick Tip: Thinking of using a mortgage broker? That person will try to help you save money by finding the best loan offers you are eligible for. But if you deal directly with an online mortgage lender, you won’t have to pay a mortgage broker’s commission, which is usually based on the mortgage amount.
How Do Rent-to-Own Agreements Generally Work?
Now that you know what a rent-to-own home is, here’s a closer look at how they work. With these agreements (also sometimes called “lease with option to buy”), the renter typically commits to renting the property for a specific period of time, with the option (or obligation) to buy.
• In many cases, the renter pays an upfront nonrefundable option fee. This is what can secure the option to buy, and it typically ranges from 1% to 5% of the purchase price.
• Another feature of a rent-to-own agreement can be that a portion of the monthly rent goes toward the down payment at the end of the lease, should you decide to buy. So if the going rental rate is $1,700 in your area, you might pay $2,000 a month, with that $300 additional going toward the down payment. (You may have to hunt if you want a rent-to-own home with low monthly payments.)
• It’s important to note that there are two different kinds of rent-to-own arrangements. There’s lease-option, which means you will have the choice of whether to buy the property, and there’s lease-purchase, in which you are committing to buy the property in the future. The latter can be a legal obligation, so proceed with caution.
• With these rent-to-own or “lease with option to buy” deals, you can either decide on the purchase price upfront or agree that the sale will be contingent upon an appraisal at the time of purchase. It is generally recommended to get a home appraisal and inspection upfront before entering into a contract.
• The appraisal, if done up at the start, can set the market value of the home and can also give a rent schedule showing rents paid in the area for the same type of home. The rent schedule confirms the base rent charged is reasonable before any option to buy surcharge is added on top.
Benefits of Rent-to-Own Homes
Here are some of the potential advantages of a rent-to-own agreement.
• A rent-to-own property may offer a way to get into your dream house before you’re totally ready to buy. Perhaps you don’t have enough money saved for a down payment and don’t see a path to accruing enough to buy a home in today’s market. Rent-to-own could open a door to home ownership.
• Another benefit of renting to own is that it buys you time to build your credit. Maybe you’re still cleaning up a past credit problem that’s keeping you from qualifying for a mortgage. Renting first could give you time to accomplish this.
• You can potentially save money on repairs. With a rent-to-own arrangement, a landlord and tenant often split the cost of repairs. In some situations, the landlord agrees to cover larger expenditures. This can be helpful to those trying to save money to buy a home.
• There’s flexibility. You get to try on homeownership of a property by living there as a renter first. At the end of the rental period, you can choose to buy or move. That is, unless you’ve entered into a lease-purchase arrangement, in which case you can be legally obligated to buy.
💡 Quick Tip: You never know when you might need funds for an unexpected repair or other big bill. So apply for a HELOC (a home equity line of credit) brokered by SoFi today: You’ll help ensure the money will be there when you need it, and at lower interest rates than with most credit cards.2
Some Problems with Rent-to-Own Agreements
There are usually pros and cons of buying a starter home, but doing so via a rent-to-own arrangement can have its own set of considerations. Now that you know the potential upsides of renting to own, consider these potential disadvantages before you sign on the dotted line.
• Selection may be limited. If you have your heart set on a certain neighborhood or home style, you might be out of luck. Unless you can find a seller in your target neighborhood who’s willing to do a rent-to-own or lease arrangement, you’ll likely have to stick with the conventional choice of renting or buying.
• You could lose money if you decide not to buy. That option fee discussed above is often nonrefundable, and any surcharge you pay on the monthly rent (to go toward a down payment) may not come back to you either. The bottom line: If you walk away at the end of the lease, your finances could take a hit, which could be a significant homebuying mistake.
• What’s more, if you’ve signed a lease-purchase document, it can be legally binding in terms of having to buy at the end of the rental. If you can’t or don’t want to purchase when the time comes, you could be in a very difficult spot.
• If you agree to a purchase price at the beginning of your rental term, there is the chance that the home’s value could drop with market fluctuations. Then, when it’s time to exercise your option to buy, you might be faced with an overpriced property.
• Just because you have entered into a rent-to-own agreement doesn’t mean you will qualify for a mortgage at the end of the rental term. Yes, you may have more money set aside for a down payment or you might have built your credit, but again: There are no guarantees that a lender will approve you to move ahead with the purchase.
• If the owner stops making payments and the property goes into foreclosure, you may be out of luck. And you may not have much say if the property isn’t maintained to your standards.
Recommended: Is Now a Good Time for Buy a House?
Do These Contracts Compare to Qualifying for A Mortgage?
A rent-to-own home may seem helpful if you are not quite ready to buy a home outright; say, you might need more time to accumulate a down payment or build your credit history. Or perhaps you think you want to buy a property, but you’d like to live in it before committing 100%.
Keep in mind, however, that signing a rent-to-own agreement doesn’t mean you’ll necessarily qualify for a home loan. At the end of your rental term, if you decide to buy, you will still have to apply and be approved for a mortgage. Your financial credentials will be reviewed in depth to determine your creditworthiness.
If you’re serious about becoming a homeowner, a traditional home purchase along with a mortgage may offer a wider array of options. With a traditional mortgage, you take out a loan to cover the purchase price of your new home minus your down payment. A mortgage loan allows you to immediately purchase your home, as opposed to renting first.
In addition, there may be some tax benefits to owning right away vs. renting first; you might talk with a tax advisor to get more details.
If you don’t feel ready to put down as much money as you’d like, you might consider conventional loans that let you put down as little as 3% to 5% down or government-backed loans that may even allow you to buy with no money down. You could also look for down payment assistance programs you might be eligible for in your area. These can help make a purchase more affordable.
Recommended: Quiz: Should You Buy or Rent a Home?
The Takeaway
Rent-to-own homes can offer a way to buy a home after leasing it. This can provide time to the prospective homebuyer to save up funds for a down payment or to build their credit. However, an option fee (usually nonrefundable) and a higher rent can be part of the arrangement, so it’s wise to consider this carefully. Having a lawyer review the agreement up front can be a good idea so you fully understand the potential risks and rewards.
If you think you’re ready for homeownership (whether after renting or right away), you may want to check out your mortgage options: what kinds of home loans are available at what interest rates from which lenders. That can help you understand your home-buying budget.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
FAQ
What does it mean when someone says rent-to-own?
Rent-to-own arrangements allow a person to rent a property and then have the option (or obligation) to buy at the end of the lease. There is usually a nonrefundable option fee to be paid up front, and the rent may be higher than the norm in the area. That’s because a portion may be earmarked to go toward a down payment at the end of the rental.
Is it smarter to rent or own a home?
Deciding whether to rent or buy a home is a very personal decision. It can depend upon your financial situation, your need for flexibility vs. your desire to put down roots, and other factors.
What is the main reason to avoid renting to own?
Renting to own can have a few drawbacks. However, here’s a key one: There are often nonrefundable fees and rent surcharges, which could cause financial loss if you decide not to move ahead and buy.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
This article is not intended to be legal advice. Please consult an attorney for advice.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Do you want to become a bookkeeper and earn money from home? If so, you may be interested in learning about the most popular bookkeeping course out there – Bookkeeper Launch. In this Bookkeeper Launch Review, I will help you learn everything that you can about this course so that you can decide if you…
Do you want to become a bookkeeper and earn money from home? If so, you may be interested in learning about the most popular bookkeeping course out there – Bookkeeper Launch.
In this Bookkeeper Launch Review, I will help you learn everything that you can about this course so that you can decide if you should take it or not.
Bookkeeper Launch is a popular course that teaches people how to do bookkeeping and start their own virtual bookkeeping businesses. It’s made for people with various levels of experience (even if you’re a beginner!) and covers what you need to start a successful bookkeeping business.
In this article, we’ll explore what Bookkeeper Launch teaches, how it’s organized, and what people who have purchased it think, to help you decide if it’s a good use of your time and money.
Please click here if you want to sign up for Bookkeeper Launch.
10
This free training will teach you what you need to know to become a virtual bookkeeper and make money from home.
Key Takeaways
Bookkeeping jobs are great because you can learn the skills you need from the comfort of your home, and then you can also work the job at home while creating your own schedule.
Bookkeeper Launch is a complete program that teaches bookkeeping skills and guides students in starting their own businesses.
The course is around 60 hours long and over 10,000 people have taken this course!
The course teaches a lot, starting from the basics of accounting to ways to get clients through marketing.
You do not need to have previous experience in accounting or bookkeeping to get started.
There is a free workshop that helps you get started with becoming an online bookkeeper.
The cost for Bookkeeper Launch is $249 a month for 12 months, or $2,499 up front.
Bookkeeper Launch Review
What is a bookkeeper?
A bookkeeper is a person who keeps track of money-related activities for businesses and individuals. They make sure that all the financial records are correct, current, and well-organized. If you become a bookkeeper, you’ll do things like putting in numbers, making sure bank records match, and creating financial reports.
Bookkeeping tasks may include:
Recording financial transactions
Categorizing and organizing financial information, such as filing receipts
Producing financial statements
Bank statement reconciliation
Creating financial reports
Processing invoices
Cash flow management
Running payroll
People with virtual bookkeeping jobs work remotely from home, and they do not physically need to go into the office. Bookkeeping is a great option for remote work because all of a bookkeeper’s work can be done online or with computer software.
If you are a freelance bookkeeper, you may have several clients or just one. It simply depends on what type of bookkeeping business you want to run.
Recommended reading: How To Become a Bookkeeper and Make $40,000 Per Year
How much do virtual bookkeepers make?
The amount that a virtual bookkeeper can make will vary.
This is because it depends on how many hours you put toward it each week (do you want to work part-time or full-time, for example), what you’re doing to grow your business, and more.
As an online bookkeeper, you may be able to earn around $40,000 or more each year. This is around 12 to 16 clients each month. Per-hour pay may range anywhere from $60 to $100 an hour.
It’s not uncommon for a bookkeeper to make approximately $300 a month for one client, and that’s working around 4 to 5 hours a month total.
Recommended reading: Online Bookkeeping Jobs: Learn How To Get Started Today
What is Bookkeeper Launch?
Bookkeeper Launch (formally called Bookkeeper Business Launch) is an online course that teaches you how to begin and grow your own bookkeeping business.
It’s sold by Bookkeepers.com and created by Ben Robinson, who has more than 15 years of experience as a Certified Public Accountant, and he used to own a CPA firm until he sold it.
The course covers important areas like basic bookkeeping, starting your business, ways to promote it, and finding customers. When you join Bookkeeper Launch, you’ll learn what you need to start a virtual bookkeeping business and work from your home or any place you like.
Who is Bookkeeper Launch for?
Bookkeeper Launch was created for people who want to either start their own bookkeeping business or improve their current bookkeeping skills. It doesn’t matter if you’re a beginner or already have some experience, the course has useful tools and direction tailored to what you require.
It’s a good fit for people who want a flexible work schedule, like dealing with numbers, and are careful about details. If you’re prepared to establish a thriving bookkeeping business, Bookkeeper Launch could be just the right choice for you.
This course is made for people who are thinking about changing their careers and for those who are already experienced. It helps you learn all the details of bookkeeping and also how to start and expand your own business.
What’s in Bookkeeper Launch?
Below I will be talking about what is in the Bookkeeper Launch course.
What’s included in the Bookkeeper Launch course?
The Bookkeeper Launch course teaches you everything you need to know to start a 100% virtual bookkeeping business from scratch.
There is a lot included in this course from lessons, practice exams, checklists, and more.
Bookkeeper Launch is made up of 3 main categories plus the “Power Units,” each focusing on the 3 key areas of learning about bookkeeping.
Category #1 – 21st Century Bookkeeping Skills is all about becoming a high-quality bookkeeper. You will learn exactly what a bookkeeper does, all about the most important financial statements that you will be creating (Balance Sheets, Income Statements, Statements of Cash Flow), how to create financial reports, and more. You will even learn how to clean up a business owner’s books and organize the worst financial mess.
Category #2 – Clients is where you’ll get your first handful of clients to get your business off the ground. This module is all about how to get clients and find bookkeeping jobs. You’ll learn how to find clients, how to price your services, how to send proposals, and more. There’s even a lesson on “How to Yakkity-Yak” which is how to promote your bookkeeping services without being spammy or annoying.
Category #3 – Business Systems is where you’ll develop the systems you’ll need to succeed (and run your business day-to-day). This module will teach you how to be as efficient as possible with your bookkeeping services so that you can get things done quickly but also correctly. You will learn how to set up and manage your business, how to save money with your business, how to save time running your business, and more.
Power Units are for when you’re ready to grow your business. They will teach you how to follow up with possible new clients, how to get referrals, and more. There is a helpful email template that you can use as well as a follow-up system for email outreach.
You also get to use the Bookkeeper Launch Resource Libraries. This includes guides, templates, worksheets, and more so that you can start a successful bookkeeping business.
When you’ve finished the course and the exams, you will receive the Bookkeeper Launch Certificate of Completion as well as a badge to show on your website or social media accounts.
Bookkeeper Launch also provides a 7-day plan to launch your business. This is a step-by-step plan to get your business started in just one week. You will learn how to set up your business legally, how to onboard a client, and more.
You can see the full syllabus here.
Support and community
A great thing about the Bookkeeper Launch program is that it has strong support and a community. You can get lots of help and tips from experienced bookkeepers in online groups and live sessions when you purchase the course.
There is a support group community for everyone who has taken this course that is hosted on Facebook. There are over 8,000 people in this private group! You can ask questions whenever you like, and learn tips from others in the group.
Once you join the course, you can get help whenever you need it from their team. There is unlimited email support which is great for whenever you have questions. There are also 2 weekly live question-and-answer sessions that they host in their group.
They even have a “Legal Lunch” in their group so that you can get help from a lawyer. Each month, Bookkeeper Launch invites a lawyer into their group consultation call. You can ask any questions on the live call about setting up your business.
How much does Bookkeeper Launch cost?
The Bookkeeper Launch course teaches you everything you need to know to be a successful bookkeeper. It’s split into different sections that cover important topics. There is Bookkeeper Launch Pro, Bookkeeper Launch Premier, and Bookkeeper Launch Team.
You can sign up by making one payment or by paying monthly, which makes it affordable for different budgets.
Free training: They also have free training that you can take. If you are interested in finding online bookkeeping jobs, I recommend signing up for this free workshop that’s all about finding a virtual bookkeeping job. Here, you will learn how to start a freelance bookkeeping business. You can sign up for free here.
Below, I will be talking about each of the Bookkeeper Launch options:
Bookkeeper Launch Pro
With this option, you get the full course (the Bookkeeper Launch System) and access to the private Facebook group of virtual bookkeepers as well as resource library access.
You get the bookkeeping course plus bonus materials such as Hacks & Facts and Profit Maximizers. This comes with unlimited access and updates.
Bookkeeper Launch Pro costs $249 monthly for 12 months, or $2,499 up front.
Bookkeeper Launch Premier
This is your fastest path to becoming a bookkeeper, and you get access to everything in Bookkeeper Launch Pro plus more. You get the full course and the private community plus weekly group coaching to guide you through building your business.
This level comes with 8 group coaching sessions, unlimited open mic sessions, accountability, and more.
Bookkeeper Launch Premier costs $299 monthly for 12 months, or $2,999 up front.
Bookkeeper Launch Team
With Bookkeeper Launch Team, you get everything in Bookkeeper Launch Pro and Bookkeeper Launch Premier, as well as:
The Marketing Machine
Outstanding Processes & People (OPP)
Exclusive “Elite” Community of Bookkeeping Entrepreneurs
Licensed access for 2 of your team members to the 21st Century Bookkeeping Skills section of Bookkeeper Launch (these are called Knowledge Licenses)
Bookkeeper Launch Team costs $4,999 up front.
Bookkeeper Launch refund policy
This course has a 30-day money-back guarantee. So, if you are not 100% happy with the course, you can get a refund.
Pros and cons of Bookkeeper Launch
As someone who is considering the Bookkeeper Launch course, it’s important to think about the pros and cons before making your decision. Below is a list of some key things to consider in order to help you make the best choice.
Pros:
Good income potential – Many Bookkeeper Launch graduates have reported earning $50,000 or more per year as bookkeeping professionals.
Quality content – According to reviews, the course has comprehensive, easy-to-understand lessons that set you up for success as a bookkeeper.
Expert guidance – Ben Robinson, a Certified Public Accountant with over 20 years of experience, teaches the course. His credibility in the field contributes to the course’s value.
Strong track record – Thousands of people have gone through the Bookkeeper Launch program and started successful bookkeeping businesses, attracting high-paying clients in the process.
Cons:
Price – One of the main drawbacks is the cost of the course. Some potential students may find it difficult to justify the expense, especially if they are just starting out in the bookkeeping profession and may have financial constraints.
Time – The course takes around 90 days to complete, as it teaches you everything that you need to know.
Bookkeeper Launch reviews and ratings
No review is complete without looking for feedback from actual course students. The Bookkeeper Launch course has received many positive reviews from numerous students.
People who finished the course really liked what they learned and how supportive it was. A lot of them have started their own bookkeeping businesses, which shows that the course really works. These good reviews make the Bookkeeper Launch course seem even more trustworthy and show that it’s a great start for a bookkeeping career.
You can read Bookkeeper Launch success stories here.
Bookkeeper Launch course review BBB
Bookkeeper Launch has an A+ rating from the Better Business Bureau. With over 40 reviews, they have managed to maintain an average of 5 stars. This high ranking from the BBB shows that the course has a good reputation and provides excellent value to its students.
Bookkeeper Launch course review Reddit
I browsed Reddit for firsthand reviews of the course and found many positive reviews for Bookkeeper Launch.
One review I found said:
“I highly recommend BL over the DIY/free method. I was a bit skeptical at first, but purchasing BBL (as it was called back then) was one of the best decisions I’ve made. You will learn about much more than just the bookkeeping, and will forever have access to a HUGE network of bookkeeping professionals.” – BookToTheFutureLLC
Frequently Asked Questions About Bookkeeper Launch Course
Below are answers to common questions about the Bookkeeper Launch course.
Is it hard to become a virtual bookkeeper?
Becoming a virtual bookkeeper may seem hard at first, but with the right training and resources, you can develop the skills and knowledge to succeed. It’s important to be dedicated, focused, and open to learning new things as you go through your training.
Does Bookkeeper Launch teach bookkeeping?
Yes, Bookkeeper Launch is a course designed to teach you everything you need to know about bookkeeping, along with marketing and business-building strategies to help you launch your own virtual bookkeeping business.
How effective is the Bookkeeper Launch course?
Bookkeeper Launch has a proven track record, with thousands of people who have successfully started their own bookkeeping businesses and attracted high-paying clients. The course holds an A+ rating with the Better Business Bureau and has received numerous positive reviews from its students.
What is the cost of the Bookkeeper Launch?
Bookkeeper Launch Pro costs $249 monthly for 12 months, or $2,499 up front.
Are there any prerequisites for this course? Do I need to be an accountant beforehand?
No, this course is great for beginners with no prior knowledge of bookkeeping. It starts with basic concepts and gradually progresses to harder topics.
Who is the founder of Bookkeeper Launch?
Bookkeeper Launch was founded by Ben Robinson, a former Certified Public Accountant (CPA) who has dedicated himself to helping aspiring bookkeepers start successful businesses.
Is there a certification provided upon completion?
There is not a certification, but you do get a certificate. When you’ve finished the course and the exams, you will receive the Bookkeeper Launch Certificate of Completion as well as a badge to show on your website or social media accounts.
Is Bookkeeper Launch accredited?
Bookkeeper Launch is not accredited by any educational institution. However, it has an A+ rating with the Better Business Bureau and over 10,000 students have taken the course.
Is Bookkeeper Launch self-paced? How long is the Bookkeeper Launch program?
Yes, Bookkeeper Launch is a self-paced, online course, which means you can go through the lessons and complete the training at your own pace. This flexibility makes it a great option if you have other commitments or are looking for a course that fits your schedule.
Is Bookkeeper Launch free?
Bookkeeper Launch is not free. But, they do have a free training workshop that you can sign up for. Their free workshop is all about how to find a virtual bookkeeping job. Here, you will learn how to start a freelance bookkeeping business. You can sign up for free here.
Are there any discounts or promo codes available?
Discounts and promo codes for Bookkeeper Launch may be available from time to time. It’s best to check the Bookkeeper Launch website or sign up for their newsletter to receive updates on any current promotions or discounts. If you sign up for their free workshop, you’ll be informed of any sales. Also, there is a 30% military discount for active duty or retired service members as well as their spouses.
Is Bookkeeper Launch legitimate and worth it?
If you want to be a successful independent bookkeeper, turning what you know into a real business can be scary. It’s not always easy to figure out how to make it work. That’s why this course for beginning bookkeepers can really help.
A good bookkeeper course covers more than just the basics. It also teaches important things that are sometimes forgotten but really important for starting a bookkeeping business. This includes how to get clients and handle money.
Bookkeeper Launch Review
I hope you enjoyed this Bookkeeper Launch Review.
Bookkeeper Launch is a great course to take if you are looking to start a virtual bookkeeping business. Over 12,000 people have taken this course, and there are many, many positive reviews for it.
Bookkeeper Launch teaches you how to start your own online bookkeeping business right from the very beginning, even with no experience.
This course will teach you how to learn real bookkeeping skills (such as how to prepare financial statements and other tasks you may be doing for businesses as a bookkeeper) and actually find clients so that you can make money and work from home.
The course is self-paced too, which means that you can take the course as quickly or as slowly as you would like.
I have heard great reviews about this bookkeeping course from many of my readers, and I know of many people who have found bookkeeping jobs because of what they have learned through this training.
Do you want to become an online bookkeeper? What did you think of the Bookkeeper Launch course?
The decision whether to seek debt forgiveness can have serious consequences for taxes and credit standing. This article is not intended as legal advice for your specific circumstances and does not create an attorney-client relationship with Lexington Law.
Debt forgiveness occurs when a lender forgives either a portion of or the entire debt owed by a borrower from a loan or credit account.
Debt forgiveness occurs when a portion of a loan or the entire remaining amount of a loan or credit line is canceled, relieving the borrower from the obligation of repayment. Before moving forward with debt forgiveness, it’s important to consider the potential benefits and drawbacks so that you’re fully prepared.
It’s also important to note that debt forgiveness differs from debt relief, which involves reorganizing debt to facilitate repayment—but doesn’t cancel the debt.
Continue reading to learn more about debt forgiveness and explore different options that you may qualify for.
Debt forgiveness benefits
Debt forgiveness can provide relief to those who are struggling to make payments, and it has the following benefits:
You can avoid filing for bankruptcy: Debt forgiveness can prevent the need to file for bankruptcy, which would severely damage your credit for up to seven to 10 years.
You can pay less than your original obligation: While the amount you’ll pay varies depending on the program you choose, it is typically much less than the amount you originally owed.
You can pay your debts quicker: Through debt forgiveness, you can significantly reduce your debt in a much shorter time frame than you initially expected.
Debt forgiveness drawbacks
On the other hand, debt forgiveness has the following downsides that you should be aware of:
You may owe taxes on the amount that’s forgiven: In general, canceled debt is considered taxable income that you may be responsible to cover.
You could owe more than your original obligation: Many debt relief companies charge excessive fees that could equal or exceed the amount you originally owed. Additionally, it’s important to change your financial habits so you don’t continue to rack up debt.
Your credit may take a hit: Depending on the type of debt that’s forgiven, you could notice a negative effect on your credit. However, this will likely not be the case if the debt in question is student loans or medical bills.
Because of these drawbacks, you may want to consider other debt management options.
Debt forgiveness vs. debt consolidation
An alternative to debt forgiveness that you may want to consider is debt consolidation. While this method doesn’t cancel the debt, it can help you pay it off faster and accrue fewer interest charges.
One of the most common debt consolidation methods is a balance transfer, which involves moving debt to a new credit card that offers 0% APR for a few months. During this time, you can work to pay off your debt without racking up interest.
Other options include taking out a personal loan or home equity loan to pay off your debt. The strategy here is that your new loan would have a lower rate than that of your current debt, allowing you to save on interest
Just be wary of for-profit companies that promise debt relief via consolidation, as they’re often pricey. Instead, look to nonprofits such as the National Foundation for Credit Counseling.
How to get debt forgiveness
If you’re moving forward with debt forgiveness, you have a few options depending on loan type and your overall personal and financial situation.
Federal programs
One of the few ways to get true debt forgiveness without consequences is to see if you’re eligible for a special program. Typically, these are only offered for student loan debt and home mortgages:
Student loan forgiveness: In mid-2023, student loans totaled $1.7 trillion. To help alleviate this, the Public Service Loan Forgiveness (PSLF) program provides Direct Loan forgiveness for full-time workers of U.S.-based or non-profit organizations who have made 120 qualified monthly payments. Another type of student loan forgiveness is income-driven repayment plans, which forgive the remaining loan balance at the end of a repayment period. Thirdly, if you’re a teacher, you may be eligible for a Teacher Loan Forgiveness program.
Mortgage debt forgiveness: The Mortgage Forgiveness and Debt Relief Act, enacted in 2007, lets eligible borrowers exclude up to two million dollars in forgiven mortgage debt from their taxable income. This allows forgiven mortgage debt and foreclosure balances to be truly penalty-free.
You may be eligible for other federal programs to help manage debt. To explore your options further, the Federal Trade Commission has guidelines for getting out of debt.
Settlement
Settlement is by far the most common form of debt forgiveness. It’s the process of negotiating your debt to only repay a portion of your outstanding balance. The rest is forgiven, meaning repayment is not necessary.
Borrowers tend to choose debt settlement if they can’t afford expensive and persistent debt payments. They may also choose this route as an alternative to declaring bankruptcy, since debt settlement should only stay on your credit report for seven years.
However, it’s important to watch out for hefty fees from these companies. If hiring a debt settlement agent is beyond your means, keep in mind that negotiating on your own is an option. First, you’ll need to determine your outstanding balance and what monthly payment you can afford. Next, contact your creditor. You’ll need to explain why you can no longer afford the loan and then negotiate a lump sum. If they agree, ask for a written letter so you have legal proof of the settlement.
Statute of limitations
If you’re seeking debt forgiveness for credit card debt, you may be able to leverage the statute of limitations (SOL) in your state. The SOL is applicable once a certain amount of time has passed (typically three to 15 years depending on what state you live in) and your debt collector hasn’t pursued debt collection in court. After this time frame, they have no legal claim to your money, and they should no longer be able to successfully sue you to collect the debt. However, this approach is risky for a number of reasons.
SOL start to accrue after the date of last activity, which includes payments and charges. After your SOL expires, a lawsuit can still be filed against you—but you can use the SOL as a defense in court.
Bankruptcy
Filing for bankruptcy is an option and that decision will remain on your credit report from seven to ten years. That said, it may help forgive some of your debt.
If you file for Chapter 7 bankruptcy, your debt is forgiven and some of your assets remain with you subject to certain state and federal exemptions.
If you file for Chapter 13 bankruptcy, you’re still required to pay off your debts. However, the court will assign you a payment plan spanning anywhere from three to five years, and they may reduce your outstanding balance to lessen the financial burden.
What are the consequences of debt forgiveness?
After you have a portion of your debt forgiven, you may feel like you’re out of the woods—and for the most part, that’s true. However, there are a few circumstances you’ll need to be aware of so that you’re prepared for the effects debt forgiveness may have on your finances.
Taxes
No matter which debt forgiveness route you take (with the exception of bankruptcy), you’ll likely end up with a higher taxable income. If the amount of forgiven debt exceeds $600, you’ll receive a 1099-C form titled “Cancellation of Debt” from the creditor.
With this form, you report the amount of your forgiven debt to the IRS and pay income tax on it. When you first take out a loan or borrow money, you’re not charged taxes on it because there’s the assumption that you’ll pay it back. But after debt forgiveness, that assumption no longer applies, which is why this essentially “free money” is now considered taxable income.
The upside is that the income tax you owe on the forgiven debt amount is less than what you would have to pay if you still owed the debt. Make sure to plan for this expense so that it doesn’t surprise you, especially if the forgiven amount is sizable.
Consider contacting a qualified tax professional for help accurately filing your taxes. Then, once you properly report your debt forgiveness to the IRS, you’ll want to check your credit report.
Credit score
The unfortunate reality is that debt forgiveness may negatively affect your credit score. Of course, there is no way to say for sure. What will improve is your debt to income ratio. The effect to which debt forgiveness impacts your credit largely depends on how you choose to seek debt forgiveness.
Bankruptcy can be the most devastating option for your credit score. According to Debt.org, a FICO score of 780 could take a 240-point dip, and a score of 680 could take a hit of 130 – 150 points. If your credit score is much lower than 680, you may not see as large of a dip. However, if you have no late payments or charge off on your credit report prior to filing bankruptcy, your score dip is far less.
Debt forgiveness provides a much-needed solution for borrowers struggling to make payments. However, it also comes with conditions. When considering which debt management plan is right for you, a little careful planning can go a long way.
If overwhelming debt has caused your credit to dip below where you’d like it to be, see if we could help. We can take a look at your credit report and assist you with moving forward.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Nature Lewis
Associate Attorney
Before joining Lexington Law as an Associate Attorney, Nature Lewis managed a successful practice representing tenants in Maricopa County.
Through her representation of tenants, Nature gained experience in Federal law, Family law, Probate, Consumer protection and Civil law. She received numerous accolades for her dedication to Tenant Protection in Arizona, including, John P. Frank Advocate for Justice Award in 2016, Top 50 Pro Bono Attorney of 2015, New Tenant Attorney of the Year in 2015 and Maricopa County Attorney of the Month in March 2015. Nature continued her dedication to pro bono work while volunteering at Community Legal Services’ Volunteer Lawyer’s Program and assisting victims of Domestic Violence at the local shelter. Nature is passionate about providing free knowledge to the underserved community and continues to hold free seminars about tenant rights and plans to incorporate consumer rights in her free seminars. Nature is a wife and mother of 5 children. She and her husband have been married for 24 years and enjoy traveling internationally, watching movies and promoting their indie published comic books!
When you owe a large amount of unpaid debt, you risk becoming a target for untrustworthy creditors and debt collectors.
The Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA) provide a legal framework for your rights and responsibilities as a borrower in debt.
However, it’s important to fully understand these two federal laws and recognize potential illegal debt collection activities before they affect you.
Re-aging debt can be a confusing process because, in some instances, it’s legal and beneficial to you. However, in other instances, it can be detrimental, not to mention illegal.
We’ll walk you through the ups and downs of re-aged accounts. We’ll also help you identify other common tricks debt collectors may attempt to pull on you.
What is Debt Re-aging?
What does it mean when a debt is re-aged? For credit reporting purposes, a debt is considered re-aged when the date of first delinquency is moved forward. So, for example, a debt that was originally past due in August 2015 may be “re-aged” to show that it was originally past due in August 2016 or even later.
This process can also be known as “curing” or a “rollback.” Occasionally, this can help your credit score, while other times, it’s simply a way for debt collectors to gain more time in collecting payments from you. Let’s break down the details into two different categories: positive re-aging and negative re-aging.
Positive Account Re-aging
Positive re-aging occurs when you work directly with a credit card company or lender to make payments and minimize the damage done to your consumer credit reports. This typically comes as part of a debt repayment plan.
That’s because your unpaid debt can still be reported as late every month, even if you’re making payments and attempting to catch up. In addition, each of these rolling late payments works against your credit score.
“Paid On Time”
As part of a repayment plan, your creditor may agree to re-age the credit account so that it is reported as “paid on time.” They can either bring past payments up to date or re-age all your payments going forward.
This is a helpful way to get yourself out of a cycle of debt. You might also consider enrolling in a debt management plan. A credit counselor can help negotiate the specifics of your agreement.
In many situations, the credit card companies will agree to re-age your accounts once you’ve made a few consecutive months of on-time payments. It’s a good incentive for both parties to actively get your unpaid debt under control.
Negative Account Re-aging
Unfortunately, there is another type of “re-aged” debt. When your past-due bills are charged off by the original creditor, they are oftentimes sold to debt collectors.
These collection agencies pay mere pennies on the dollar to acquire these debts. Then, they attempt to collect and make a profit. Sometimes, unscrupulous debt collectors will “re-age” this newly purchased debt. This is a major problem for two reasons:
Re-aging makes the debt look like a new debt that is delinquent, rather than the same old debt simply owned by a new creditor.
Re-aging gives the debt collector additional time to attempt to collect the debt, even if the debt is too old to legally collect.
The additional delinquent account will cause your credit scores to take another hit, and the revised delinquency date gives them a longer time to pursue the debt.
Illegal Debt Re-aging
While this type of “re-aging” is illegal, there is no simple way for the average consumer to get immediate relief from this type of unfair practice. But you can take steps to prevent further damage to your credit score and avoid reopening the statute of limitations.
If you’ve made a payment on one of these “re-aged” debts, it can be almost impossible to have the matter corrected. This is because the payment automatically renews the time that the debt remains on your credit report!
This means a payment to a debt collector can leave you with a delinquent debt that cannot be removed for another 7 to 10 years if it is not paid off.
It also reopens the statute of limitations on the amount of time they may pursue repayment from you. The timeframe varies from state to state but generally lasts between three and seven years. Clearly, it’s in your best interest to monitor your credit report and fight back against illegally re-aged collection accounts.
How to Dispute Re-aged Accounts
Unscrupulous practices like these are why it is crucial to monitor your credit report and credit score carefully. It’s also important to avoid dealing with any creditor or collection agency that uses high-pressure, unfair tactics to attempt to get you to pay. Most importantly, if the unpaid debt in question is too old to collect based upon the laws of your state, do not offer to pay.
It is in your best interest to state that the debt is past the statute of limitations for collections. You may also want to send them a certified “cease and desist” letter.
Credit Bureau Disputes
You can also file a dispute with the credit bureaus directly. Start by requesting your free credit report from one or all three credit bureaus. According to the FCRA, you are entitled to view any information on your credit report for free once every 12 months.
Once you receive your credit report, you can compare the date of first delinquency from the original creditor to the new delinquency date provided by the collection agency.
Assuming these documents show proof that your collection account has been illegally re-aged, you can open a dispute with the credit bureau. A successful dispute will result in the collection account being completely removed from your credit report.
Hiring a Credit Repair Professional
Credit repair companies can help you challenge inaccurate negative items to potentially get them removed from your credit report. These items can include late payments, collection accounts, charge offs, foreclosures, bankruptcies, and more.
Credit Saint offers credit repair services, and has been working with people on their credit for many years. They have experience dealing with collection agencies, creditors, and the credit bureaus. They also offer a free credit report consultation, which includes a review of your credit report for free. Visit their website to learn more.
Ready to Raise Your Credit Score?
Learn how credit repair professionals can assist you in disputing inaccuracies on your credit report.
Potential Legal Action
If you’re still within your state’s statute of limitations, the collection agency may turn around and sue you for the amount owed.
In addition to disputing the re-aged account with the credit bureau, you should also file a complaint with the Federal Trade Commission (FTC), your state’s attorney general, and the Consumer Financial Protection Bureau.
If the collection agency states that the falsely re-aged debt is legitimate, you may be able to sue in a small claims court for violating your rights. So don’t let “re-aged” debt ruin your credit scores or your chances of having good credit history.
Other Illegal Debt Collection Practices
Account re-aging is definitely a shady tactic to watch out for, but there are many other illegal practices to be aware of. Understand the most common ones so you can avoid being taken advantage of when you’re in debt.
Collection agencies should not contact anyone besides yourself about your amounts owed, with just a few exceptions allowed. Those include your attorney, the credit bureaus, and the original creditor.
They can also contact your spouse and your co-debtors unless you have already sent a letter with a request that they stop contacting you.
If the debt collector does contact another third party, it may only be to attempt to find your whereabouts. But even this comes with several restrictions. Most notably, they cannot state that you owe any debt and may only identify their employer when asked.
There are also legal restrictions on when and where a debt collector may contact you. Usually, any time before 8:00 a.m. or after 9:00 p.m. is off-limits.
They also can’t call you if they know a lawyer is representing you. Calls at your place of work are also forbidden once you tell them your employer prohibits personal phone calls on the job.
Exhibiting Inappropriate Behavior
Some debt collectors are known to get nasty. However, fortunately, there is a legal line drawn in the sand to indicate when they’ve gone too far. They cannot lie to you. For example, they can’t pretend they’re from a law enforcement agency or refuse to say anything about who they are.
Additionally, a debt collector may not use profane language or threaten you with violence. They also can’t publicly list your debt for sale or publish your name in relation to your debt. If you experience any of this type of behavior, it’s time to contact the authorities.
Using Unfair Collection Methods
A collection agency may not add any unauthorized fees or interest that they didn’t include in the original credit agreement.
Moreover, they can’t threaten to take your property if they’re not legally allowed to do so or if they actually have no intention of doing so. They’re also required to handle postdated checks in a very specific manner.
Know your rights and debt collectors’ rights, so you understand when is the time to stand up for yourself. Once you know where the line is drawn and whom to contact, you’ll feel much more empowered as you work your way out of debt.
A holographic will is a will that is handwritten and signed by the author (the testator). Holographic wills are not validated by witnesses or notary signatures
. They are not legally valid in every state, and some states only allow them in specific circumstances, such as active military duty.
Holographic wills are free to make and can be written in an emergency, though they’re typically not the most secure option for estate planning. A holographic will can be harder to verify during probate, which is the court-supervised process for validating a person’s will and distributing their assets after death.
You can make a will without a lawyer, for free or inexpensively, using an online template or will-writing software and by following your state’s requirements for validation.
How to create a holographic will
Each state has its own rules about what makes a holographic will, but most require that you follow these steps:
Write the entire will in your own handwriting, with no typed components or other features on the page. Write legibly to ensure that others can easily read the document.
State clearly that it is your will, such as by writing “This is my last will and testament” at the beginning.
Name your executor, who is the person who will administer your estate during probate and distribute your assets. For example, you can write, “I name Sarah Smith as the independent executor of my estate.” In some states, such as Texas, you may need to add that you want your executor to “serve without bond,” which may help avoid certain court fees
.
Include the same basic components as a standard will, such as naming the beneficiaries for your assets and naming a guardian for minor children.
Sign and date the document. Your own signature is the only verification for a holographic will.
What is the purpose of a holographic will?
A holographic will is the simplest way to designate where your property should go after you die. It’s a method to make sure your loved ones know your final wishes without a lawyer, witness or notary signature.
Holographic wills aren’t legally valid in all U.S. states, and they can be difficult to verify in probate. The court will need to verify your handwriting, for example, and without witness signatures, the probate court (or a family member, friend or stranger) might question the circumstances of the will, such as whether you wrote it with undue influence or whether it was your final version.
Price (one-time)
None
Price (one-time)
One-time fee of $159 per individual or $259 for couples.
Price (one-time)
$89 for Basic will plan, $99 for Comprehensive will plan, $249 for Estate Plan Bundle.
Price (annual)
$99 to $209 per year.
Price (annual)
$19 annual membership fee.
Price (annual)
None
Access to attorney support
No
Access to attorney support
No
Access to attorney support
Yes
Where is a holographic will valid?
Pros and cons of a holographic will
Advantages
Doesn’t require a lawyer.
Not legally recognized in some states.
Doesn’t require a witness or notary signature.
May be more likely to be contested during probate.
Can be the only option for estate planning in an emergency situation.
Must be handwritten, which can increase the likelihood of mistakes and make changes difficult.
Buying a home can be a daunting task. However, there are programs in place for first-time homebuyers to make it a little easier.
One of the ways you can get a mortgage, even if you don’t have a big down payment or a perfect credit score, is the Federal Housing Administration (FHA) loan program.
Best FHA Lenders and Online Marketplaces
Here are some of the best FHA loan lenders, as well as marketplaces where you can easily compare your options.
loanDepot
You can live in any state and get access to an FHA mortgage through loanDepot.
This company is known for the fact that loan officers don’t get any sort of incentive to encourage you to take one action over another. This can provide you with peace of mind, knowing that the information you get will be best suited for your needs.
When you use loanDepot, though, you need to watch out for origination fees. You might have to pay between 1% and 5% of the home’s purchase price. Carefully consider terms from other lenders before moving forward.
Read our full review of loanDepot
LendingTree
One of the first places to look for an FHA mortgage is LendingTree, an online marketplace.
Rather than directly offering FHA mortgages to borrowers, LendingTree provides a platform where you can submit your information once, and then have various lenders compete for your business by offering you quotes.
When you fill out the form, make sure you indicate that you’re looking for an FHA loan. When you do that, you can get as many as five loan offers minutes after submitting your loan application.
With the information you get from LendingTree, you can have a pretty good idea of what you qualify for and what you can expect.
Read our full review of LendingTree
Quicken Loans
Over the years, Quicken Loans has become one of the most trusted lenders in the business.
In addition to offering conventional loans, you can also get an FHA loan through Quicken Loans. In fact, Quicken is the largest FHA lender in the country.
They state that you’ll need a credit score of at least 580, a debt-to-income ratio (DTI) of no more than 50%, and a steady employment history.
Quicken Loans has a completely online application process and uses technology to verify employment and income for the majority of applicants.
Even if you don’t end up with an FHA loan, Quicken Loans is very flexible and can help you find a loan that fits your needs.
New American Funding
Access to FHA loans is a hallmark of New American Funding, which offers several programs. With this company, you can even explore the possibility of an FHA renovation loan.
In addition to offering access to numerous programs, they also use manual underwriting, meaning that alternative credit data can be relied on. This can be useful if you have a lower credit score.
While you still have to meet FHA requirements, other underwriting requirements might be a little more flexible.
Read our full review of New American Funding
Flagstar Bank
In addition to allowing applicants to provide nontraditional trade lines for underwriting consideration, Flagstar Bank is also known for offering loan packages meant for professionals.
In many cases, there are specific needs associated with being a CPA, architect, doctor, or lawyer. This is a bank that offers professional loan packages that can meet those needs.
Flagstar’s flexibility can be a great asset. However, it’s also important to note that you might end up with a steep origination fee. Weigh that against the benefits and compare your Flagstar quote with other options.
Read our full review of Flagstar Bank
CitiMortgage
The mortgage arm of Citibank allows you access to the resources of one of the most recognized nationwide banks.
Not only can you access FHA loans through CitiMortgage, but you can also take advantage of other programs, particularly those that benefit military families.
However, you can’t complete the mortgage application online. It might not be a bad idea to get a few online FHA loan quotes and bring them with you when you meet with a CitiMortgage loan officer.
Read our full review of CitiMortgage
U.S. Bank
Another high-profile national bank, U.S. Bank offers several mortgage products. In addition to getting started online, you can also call a number and speak with a mortgage specialist — including someone near you.
U.S. Bank does not publish a public minimum credit score for FHA loans.
U.S. Bank prides itself on the ability to offer personal service so you can apply for your loan using what’s most comfortable for you.
Read our full review of U.S. Bank
Carrington Mortgage Services
It can be very difficult for borrowers with poor credit to take out a conventional mortgage. If your credit score is low due to financial mistakes in your past, then Carrington Mortgage Services may be a suitable option for you.
This mortgage lender is willing to lend to borrowers with credit scores as low as 500, which makes it a viable option for anyone who is struggling to rebuild their credit.
You will end up paying more money in interest, so if you have good credit, you may be able to find better mortgage rates elsewhere.
Interested FHA borrowers can speak with a Carrington loan officer to get started. The loan officer can walk you through the FHA loan application process and make sure you have everything you need to qualify for an FHA loan.
Read our full review of Carrington Mortgage Services
PennyMac
PennyMac is based in California and does have some brick-and-mortar locations, but the company is known for its superior online services. The company is considered one of the top five mortgage lenders in the U.S.
PennyMac offers various loan options, including FHA loans. You’ll get started by applying online, and then a loan officer will contact you over the phone.
Borrowers need to have a minimum credit score of 580 to qualify, so it’s a suitable option for anyone with less-than-ideal credit.
Read our full review of PennyMac
How do FHA loans work?
Understanding FHA loans can help you buy a home that you can afford. Here’s what you need to know about getting an FHA loan and the best FHA lenders.
FHA loans are backed and guaranteed by the federal government. The government doesn’t actually make the loans, though. Instead, FHA loans are actually originated by individual FHA loan lenders who are approved by the government. The Federal Housing Administration backs the loans, so lenders feel more comfortable with borrowers that might seem to present something of a higher risk.
FHA Loan Requirements
With an FHA loan, you can put down as little as 3.5% for a down payment if you have a minimum credit score of 580. Additionally, there are FHA loans available for those with even lower credit scores, as long as they put down 10% of the purchase price.
You apply for an FHA loan much as you would for any other mortgage loan. The FHA lender will still review your credit history, income information, and other factors. Ultimately, this determines whether you’re approved, how much you can borrow, and your interest rate. You’ll have to pay for private mortgage insurance during your FHA loan, though, so be aware of that added cost.
Before you choose a mortgage lender, though, it’s important to compare your options. Just as you can with any other loan quote, you can shop around and compare offers from different FHA mortgage lenders. Start by looking at the best lenders for FHA home loans. That way you have a better chance of receiving terms that work best for you.
Step-By-Step Guide to Applying for an FHA Loan
Applying for an FHA loan is not as intimidating as it may seem, especially if you break it down into manageable steps. Here’s a clear, concise, and practical guide to walk you through the process:
Identify your budget: It’s crucial to understand what you can afford before you start the loan process. Use online mortgage calculators to determine a comfortable monthly mortgage payment based on your income and current debt.
Check your credit score: Ensure your credit score is in the best shape possible, as it directly affects the interest rate you’ll be offered.
Choose an FHA-approved lender: Not all mortgage lenders are approved to offer FHA loans, so make sure the ones you’re considering are on the FHA’s approved lender list.
Get pre-approved: Pre-approval gives you a clear idea of the loan amount you might qualify for. It involves providing your lender with financial information, like your income, assets, and debts.
Find your home: Once pre-approved, you can start house hunting. Remember to stick to homes within your pre-approved budget.
Apply for the loan: After you’ve found your home and made an offer, you can officially apply for the loan.
Essential Documents for FHA Loan Application
Documentation is key to getting an FHA loan. While the specific documents required may vary slightly by lender, you will typically need the following:
Proof of employment and income: This could be W-2 statements, pay stubs, or tax returns.
Credit information: The lender will pull your credit report, but be prepared to provide any additional documentation they request.
Proof of assets: This includes bank statements, retirement accounts, and any investment accounts.
Residential history: You may need to provide your housing history for the past two years.
Appraisal report: An FHA-approved appraiser must evaluate the property you intend to buy.
Improving Your Credit Score and Debt-to-Income Ratio
While FHA loans are known for their lenient credit requirements, improving your credit score can help you secure better loan terms. Here are some ways to boost your score:
Pay all bills on time.
Reduce your credit card balances.
Avoid applying for new credit just before applying for a loan.
Your debt-to-income (DTI) ratio is another important factor. It’s the percentage of your gross monthly income that goes toward paying debts. A lower DTI is preferable as it indicates you have a good balance between debt and income. Ways to improve your DTI include:
Paying down existing debt.
Avoid taking on new debt.
Increasing your income, if possible.
How to Find the Best FHA Lender
To find the best FHA-approved lender, you will want to compare quotes from multiple lenders. Once you have at least three or four FHA loan quotes, it’s time to compare them. You want to make sure you’re comparing apples to apples, though. Some of the items that you need to watch for in a loan offer include:
Loan origination fees
Interest rate (including whether it’s fixed or adjustable)
FHA mortgage insurance
Required down payment
Length of loan term
Closing costs
Estimates for property tax and home insurance
Make sure the terms are roughly the same so you can make a good comparison. You might also want to see if your potential mortgage lenders are willing to run different scenarios if you’re willing to pay points.
Run the Numbers
You might need to run a few numbers on your own to determine which trade-offs are worth it. For example, one FHA mortgage lender might have no origination fees but charge a higher interest rate.
If interest rates are low enough, you might be better off working with an FHA mortgage lender that charges an origination fee.
Carefully consider these items, and look at the total cost of the loan. In the end, you want a loan that is likely to cost you the least amount of money, while still allowing you to afford your monthly payments.
Common FHA Loan Mistakes and How to Avoid Them
Navigating the world of FHA loans can be tricky, and it’s not uncommon to make a few missteps along the way. Here are some common mistakes borrowers make and tips on how to avoid them:
Mistake 1: Not Understanding the Costs Involved
While FHA loans are a great option for many homebuyers, they come with certain costs like upfront mortgage insurance and annual premiums.
Avoidance Tip: Ensure you fully understand all the costs associated with an FHA loan. Factor these costs into your budget to avoid unpleasant surprises down the line.
Mistake 2: Skipping the Pre-Approval Process
Some borrowers jump straight into the house hunting process without getting pre-approved for a loan, which can lead to disappointment if they can’t secure the necessary financing.
Avoidance Tip: Always get pre-approved before you start your home search. This will give you a clear understanding of what you can afford and make you a more attractive buyer to sellers.
Mistake 3: Not Shopping Around for Lenders
Many borrowers stick with their existing bank or the first lender they come across without comparing options.
Avoidance Tip: Take time to shop around. Different mortgage lenders may offer different interest rates, closing costs, and service levels. Comparing lenders can potentially save you thousands of dollars over the life of your loan.
Mistake 4: Overlooking FHA Loan Limits
FHA loan limits can vary by location and property type, and overlooking these limits can complicate the home buying process.
Avoidance Tip: Be sure to check the FHA loan limit for your specific location and the type of property you’re considering. Stay within these limits to ensure a smoother loan application process.
Mistake 5: Neglecting Your Credit Score
Even though FHA loans are known for lenient credit requirements, neglecting your credit score can lead to unfavorable loan terms.
Avoidance Tip: Regularly monitor your credit score. If possible, take steps to improve it before applying for a loan. A higher score can lead to better interest rates and more favorable terms.
Conclusion: Choosing the Right FHA Lender and Final Thoughts
Throughout the journey of homeownership, choosing the right FHA lender can make a significant difference. Your lender plays a pivotal role, not only in terms of offering competitive rates and costs but also providing guidance and support throughout the home buying process. It’s crucial to find a lender that is not only FHA-approved but also aligns with your financial needs and goals.
Keep in mind, FHA loans are an excellent tool for many aspiring homeowners, particularly first-time buyers and those with lower credit scores or a smaller down payment. However, it’s important to understand all aspects of these loans, from the costs involved to the loan limits and the application process.
Before you embark on your home buying journey, equip yourself with the right knowledge. Do your research, consider your options, and don’t hesitate to seek professional advice if you need it. Remember, it’s about finding the right fit for your situation – what works best for you may not work as well for someone else.
While the road to homeownership may seem daunting, it is one filled with opportunities. By avoiding common mistakes, improving your credit score, and choosing the right lender, you can navigate the process with confidence. Homeownership could be closer than you think. Here’s to your successful journey on the road to owning your dream home!
Selling a house amid a divorce can make an already-complicated situation even more complex. The need to manage a real estate transaction while also managing your interpersonal conflict is stressful, but sometimes financially necessary. Every couple’s situation will be a little bit different, of course, but if you need to sell the marital house due to a divorce, here are answers to some common questions and other things to consider during this difficult process.
Should I sell the house before getting divorced?
You can sell a property before, after or during a divorce, and the best option may be different for each couple. A number of factors can impact the best timing, including housing market conditions, how amicable your split is and the financial needs of each spouse.
One thing that can be useful is to work with a real estate agent who has experience in divorce transactions. “The common denominator for a divorce sale is that the divorcing parties must mutually agree to sell the marital property,” says Lou Rodriguez, an agent with United Realty Consultants in South Florida and author of “Selling Your Home During Divorce: How Everyone Can Win.”
An additional consideration for the timeline of your home sale is the potential profit you stand to make. If the value of the property has gone up significantly since you purchased it, you may have to pay capital gains tax, and the amount is very different depending on whether your taxes are filed jointly or as single individuals. For single tax filing status, you must pay taxes on anything over $250,000 in capital gains. That number doubles to anything over $500,000 if you file jointly as a married couple.
If you sell before the divorce is finalized, be sure you have a plan for what will happen with the earnings. “You’ll want to be careful how you handle the proceeds of the sale so that those proceeds are divided fairly during the divorce process,” says Randi Dukes, an agent with Repeat Realty in Dallas–Fort Worth and a divorce real estate specialist who has earned the RCS-D (Real Estate Collaboration Specialist–Divorce) designation. “It’s often recommended that those proceeds go into a separate account that can be divided upon divorce, rather than mixing the proceeds into other joint accounts.”
What are the options?
When you are going through a divorce, there are several different ways you could decide to sell the family home. Here are some common options.
Sell the house outright
“Often, selling the house makes the most sense because it provides both parties with a lump sum of money to establish a new home and a fresh start,” says Dukes. Selling the property outright means the proceeds can be more easily divided between two people. It also gives both partners the opportunity to establish the next phase of their lives.
Sell it to your spouse
Sometimes it makes more sense for one partner to continue owning the house. This can happen when one partner will have primary custody of the children, for example, as it eliminates the need for the children to move out of their home and be uprooted.
However, this option only works if the partner buying the home can make it work financially. “The spouse keeping the house needs to do their due diligence to make sure keeping it is a sound decision,” Dukes says. “A real estate agent can look at the title to see if there are any liens or second mortgages that one spouse may not know about, and the spouse can talk to a lender or financial advisor to see if they can actually afford to keep the house.”
If this is your plan, make sure you get all your legal ducks in a row. The partner selling the house will likely need to sign a quitclaim deed giving up their rights to the property and transferring them to the other partner — have a real estate attorney manage this process.
Co-own it
You could decide to hang on to the property and continue to own it together. Co-owning might allow you to rent out the property and both gain rental income, for example. Or, you could make the property work for both of you to live there with a renovation that divides it into two units. This can be a viable option for parents who both want to stay near the children.
Give it to your kids or family members
If you’d rather keep the home in the family than sell it, you could consider gifting the property to your adult children or another relative. This option eliminates the need to prepare the property for a sale and could be a way for both partners to put the property in the hands of someone they love. Again, be sure to have a real estate attorney handle the deal for you to ensure that ownership is properly transferred — and it’s a good idea to talk to a tax professional as well, to understand any tax or estate planning implications.
Community property states vs. equitable distribution states
There are two main legal approaches to how property is divided after a divorce. It all depends on whether you’re in a community property state or an equitable distribution state.
The majority of states fall into the category of equitable distribution, which means if one party earns or purchases certain assets, those assets are considered theirs individually. The assets don’t become shared property unless both parties agree to share them. “I live and work in Florida, an equitable distribution state, which simply means Florida courts will divide marital property in a manner which it considers fair, but not necessarily equal,” says Rodriguez.
Community property states, on the other hand, consider all assets acquired during a marriage to be jointly owned by both parties, and they are divided equally in the event of a divorce. Only nine of the 50 states are community property states, according to the IRS: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
How to sell a house during a divorce
Selling a house can be stressful and time-intensive no matter what. Follow these steps if you decide to sell your house during your divorce proceedings.
1. Hire an experienced real estate agent and lawyer
Not every real estate agent or attorney knows how to navigate the conflict and tension that can come with selling a house during a divorce. It’s important to work with someone who has experience in sales like this, or even specializes in them.
“I would recommend that you work with someone who knows how to work in high-conflict situations and has experience in getting people moving in one direction to accomplish shared goals,” says Rodriguez. “Because whatever happens during the sale — accepting an offer, countering an offer, all the way to signing closing documents — requires that both parties agree each step of the way. It makes a difference having a transactionally experienced listing agent who has worked with other divorcing clients.”
2. Get a home estimate and agree on a sale price
It’s important that both parties come together on pricing. There are various ways to determine how much your home is worth, from online estimators to a thorough analysis of your local market prepared by a real estate agent. But a professional home appraisal, which will cost several hundred dollars, is probably the most accurate assessment of a home’s market value.
3. Sell the home and split up the net proceeds
Once you agree on the terms and price for selling the home, your agent will guide you through the home-selling process. This will involve preparing the home for the market, taking professional photos for the listing, listing and marketing the property, coordinating showings, reviewing offers and preparing all the closing paperwork. Once the sale is closed and complete, the proceeds will be shared as required by your state and established by your attorney.
Next steps
Ready to sell? It’s important to find a local real estate agent both of you feel you can trust. “Look for someone with additional training in divorce real estate, and ask them about their experience,” says Dukes. This type of agent will be skilled in handling not only the home sale but also any interpersonal conflict that may arise.
FAQs
The best time to sell a house will be different for different couples. “If both spouses agree, then selling your house before filing for divorce is an option — if you’re trying to take advantage of a strong seller’s market, this might be a good idea,” says Randi Dukes, a Dallas–Fort Worth Realtor who specializes in divorce real estate. However, selling the house after the divorce may be the right choice for other couples. Whichever timeline you choose, it’s important that both partners agree on the process.
In some cases, if both parties can’t come to an agreement on how to sell the property, yes, a court may intervene to force the sale. The laws will differ depending on your state and your specific circumstances, so be sure to consult both your divorce lawyer and a real estate attorney in your area.