Guenther Law Group

Did you know that Salinas (yes, Salinas) is one of the most expensive U.S. cities to live in?  According to U.S. News & World Report, Salinas, California, is the seventh most expensive U.S. city to live in, just behind San Francisco, in sixth place, and ahead of New York City, ranked eleventh.  That’s not a “top ten list” you want to see your city on!

Admittedly, the cost of living in Salinas is much lower that San Fracisco, but its inclusion on the list can be explained by comparing “how comfortably the average resident of each metro area can afford to live within their means,” according to U.S. News & World Report.  So, taking into account the lower average income in Salinas, when compared to rents and other expenses, means that Salinas makes the top ten.  Speaking of rents, the median monthly rent in Salinas is $1,718.00.  Even more shocking is the median home price of $925,458.00.

Of course, the real issue is how do you deal with the disparity between income and expenses?  Sometimes, common sense provides the best answer.

For example, how much are you spending each month on “nonessentials?”  While I do not normally recommend using a credit card for everyday purchases, I will say that having a statement each month listing all of your purchases is an easy way to track spending.  The next step is to actually look at your statement each month.  (Don’t get paper statements? . . . maybe you should start.)  Once that statement is sitting in front of you on the dining room table, take a pen and identify each charge as essential, helpful or luxury.  Now I know people think the mocha-frap is essential, but it’s really not.  So be honest with yourself and see how much you are spending on luxury items.

An expense I always allocate to “luxury” is interest.  “Wait a minute!,” you say, “I don’t have a choice.”  But you really do.  I always tell my clients it’s okay to use a credit card, but only when you have the money in the bank (or under your mattress) to make the purchase.  I can’t stress it enough, if you don’t have the money to make the purchase, then don’t.

Sometimes, it’s just too late.  You’re already paying 25% interest on money your borrowed from the credit card companies.  And then an unexpected medical bill or car repair pops up.  What to do?  That’s where I come in.  I help people discharge their debt using the Bankruptcy Code.  I don’t tell people they have to file for bankruptcy.  I just give them the facts and let them decide what’s in their best interests.  My job is to provide options.  It’s up to you to decide.

Like I said, sometimes it’s just too late to catch up on things.  The nice thing about bankruptcy, it gives you a FRESH START.  Then you can arrange things so that you’ll never get behind again.  It’s a great feeling being charge, even when the city you live in is the seventh most expensive U.S. city!

Ralph Guenther

If you are a consumer in the market for a new car or a home, you’ve probably already discovered that the Federal Reserve’s rate increases have taken a huge bite out of what you can afford.  It’s simple math, if more of your payment is going towards interest, then you have less money left to pay for what you really want.  In fact, according to Mark Zandi, the chief economist at Moody’s Analytics, buying a home or car right now is “completely unaffordable for the typical American household because you’re mixing the higher borrowing costs with high prices.”

For example, the typical American household would need to use 42 weeks of income to buy a new car, as of August, up from 33 weeks three years ago.  As bad as that is, it’s even worse for people that carry a credit card balance.  The typical credit card carried a 20.7% interest rate in May, up from 14. 6% in February 2022.  It’s no wonder that credit-card debt just passed the $1 trillion mark for the first time.

And when credit card rates go up, the minimum payment requirements go up as well.  I meet with clients every week with ultra-high credit card payments.  Their payments are so high they can no longer pay their utility bills or put gas in their car.  But adding insult to injury, the payments are being applied to interest and are not reducing their balances!

When you can no longer make ends meet, it helps to meet with a bankruptcy lawyer to discuss your options.  I can provide you with guidance on when bankruptcy is a good option for dealing with high credit card bills, delinquent utility bills or a vehicle repossession or pending foreclosure.  Don’t delay, call today.

Ralph Guenther

Five years ago, there were a dozen models of new cars that sold for less than $20,000.  Today, there’s only one.  If you’re will to spend over $100,000, there are 32 models to choose from.

And if you think the answer is to buy a used car, think again: the average listing price for a used car on a used car lot is about $27,000.  That up more than 30% from pre-pandemic prices.

The average monthly payment for a new car loan is over $750 and the average interest rate for a used car loan is above 13.7%!

We know why interest rates are so high.  That’s because the Federal Reserve has been hiking interest rates over the last year or so.  But why are car prices so high?  That can be partially be explained by the “supply chain” disruptions during the pandemic.  The other reason: car manufacturers focused on producing more expensive, higher profit margin cars.  So it’s not your imagination.  Car prices really are higher!

What to do?  If you can get by with your current ride, hold tight.  Prices will start coming down soon.  Inventory is increasing and the more cars there are for sale, the lower the prices will go.

If you’re having trouble making those sky-high payments, we can help.  A bankruptcy can allow you to re-write your car loan, often with a lower interest rate and a lower payment.  We can also cancel those expensive add-on contracts and, under certain circumstances, we can even reduce the amount that has to be paid back based on the current value of your car.

Don’t wait until your car is repossessed.  Call us today to schedule an appointment to discuss your options.

Ralph Guenther

Remember when you used cash to make your purchases?  People today have more ways than ever:  Apple Pay, Venmo, credit cards, debit cards and dozens of other ways.  And yes, there are important differences.  What you choose might matter as much as the purchase itself.

Each of the different payment methods provides various conveniences, perks and protections from fraud. Credit cards have long been the “go to” method of payment, but outrageous interest rates have now raised the cost of carrying a credit card balance.

Money transfer apps like Venmo and Zelle provide easy instant payments, usually for free.  The downside is that they offer fewer protections from scams and unfilled orders, and they have access to your spending habits.  (Remember, if the app is free, you are the product!)  Payment apps are the fastest growing sources of fraud reports and losses, according the Federal Trade Commission.

Here are some simple tips on how to weigh the convenience, security and benefits of each payment method:

Credit and debit cards

When you use a credit or debit card, the merchant’s bank communicates with your bank through a card network such as Mastercard or Visa ask permission to withdraw a certain amount. Your bank then decides whether to approve the transaction based on your available funds or credit and the likelihood the transaction is fraudulent. If approved, your bank puts a hold on the funds until they are sent to the merchant’s account, usually within a business day.

Credit cards can be the most rewarding way to pay online. Card issuers use the revenue from transaction fees to provide cash back or other perks for customers and fraud protection.

But a credit card can be expensive if you don’t pay your balance in full each month.  And higher interest rates have now raised the cost of carrying a credit card balance.  An annual percentage rate of 25% to 30% is not unusual these days.

Debit cards don’t offer the same rewards as credit cards since their issuers make less money from each transaction. They do come with similar fraud and payment protections as credit cards.

Digital wallets

Digital wallets such as PayPal or Apple Pay are among the safest and easiest ways to pay online. Checking out with a wallet is typically faster than paying with a credit card directly since you don’t have to re-enter your billing information and shipping address.

All of the protections and benefits associated with the underlying card are still in effect for wallet transactions, so it’s a good idea to connect these wallets to a credit card directly to maximize your protection.

If a digital wallet gives you the option to link a bank account directly, you should read the policy agreement to make sure you understand what is protected. For example, PayPal offers an extra level of purchase protection, but Apple Pay and Google Pay don’t.

Peer-to-peer payment apps

Apps like Venmo, Cash App and Zelle were designed to help people send money to friends and family, but they are now used for paying contractors or for purchases on Craigslist. They move money quicker than card payments because they don’t wait for the bank to approve the transaction.  But that means it’s almost impossible to get money back once it has been sent.

These payment methods aren’t regulated as heavily as cards, so you might still be on the hook for unauthorized payments if a swindler gets control of their accounts.

Bank transfers

People should be selective in sharing their bank information with merchants since wire transfers don’t have the same protection guarantees as cards. If a business requests a direct bank transfer instead of a card payment, choosing a slower option over the newer instant methods such as Zelle might be best. ACH transfers typically take a few days to settle, giving you a few more days to try to stop the transaction before the money leaves your account.

If you’ve been scammed and can’t get your money back, sometimes the only option is a bankruptcy filing.  I have helped many people deal with these kind of situations.  I can help you too!

Ralph Guenther

Okay, so maybe the title is a stretch, but here’s what’s going on.  A recent Wall Street Journal article highlighted a recent trend: homeowners are receiving notices from lenders that loans they thought were written off years ago are still there and need to be paid.  After the great recession, many lender charged off loans secured by a deed of trust against the borrowers’ house.  Now, you would think that “charging off” a loan would mean that the lender is walking away and will not come back.  Not so fast.

What actually happens is that the “charge off” allows the lender to take a charge against its taxes, but it doesn’t nullify the loan.  Instead, most of those loans were sold off to investors for pennies on the dollar.  I like to call them “bottom feeders.”

In California, with limited exceptions, a deed of trust doesn’t go away.  It’s still on the title to your home.  So now that real estate values have rebounded, these loans are coming back from the dead!

But don’t worry, a competent bankruptcy attorney can provide you with options.  I had a case recently where a client was contacted by a lender threatening foreclosure.  We looked at the numbers and advised the client to file a chapter 13 bankruptcy.  We provided for zero dollars to the lender because the deed of trust was still unsecured.  That doesn’t always happen, but you won’t know what your options are unless you contact a competent bankruptcy attorney.

So give us a call and let us deal with those zombie mortgages!

Ralph Guenther

Student loans seem like a great idea, until the bill comes due.  Do you know what’s even more distressing for a lot of families?  When the Government comes after the parents for their son or daughter’s student loan that they co-signed.

Even with all the recent talk about student loan forgiveness, it’s unlikely that the U.S. will allow student loans to be forgiven.  There’s just too much money at stake. . . as in $1.78 trillion!

You might ask: well didn’t the Government allow us to defer payment on student loans?  The answer: yes, but the interest on those loans continued to accrue.  That means that the loan balance keeps increasing. . . and increasing. . . and increasing!

In addition, what many parents don’t realize is that the student loan they co-signed for years ago is non-dischargeable.  That means that even a bankruptcy will not allow you to get out of paying a student loan.  You were just there to guaranty that the loan would be paid if your son or daughter could not make the payments.

So here’s the moral to this story:  Don’t do it!  If your son or daughter need a loan, let them sign.  But don’t mortgage your future if you don’t have to.

Ralph Guenther

Helped by government stimulus, flush savings accounts and cheap credit, Americans began an unprecedented spending spree in the second half of 2020.

But today the forces that helped keep spending high are unwinding, while inflation remains elevated and interest rates keep climbing. The share of monthly income Americans set aside for savings has also declined.

All of these factors point to a recession — and a precarious financial climate for millions of Americans who may need to explore the option of bankruptcy.
U.S. bankruptcy laws offer a fresh start to overwhelmed debtors by stopping creditor calls, halting repossessions, terminating foreclosures, canceling unsecured debts, and more. But finding sound legal advice is the key to successfully maneuvering through the complicated process.

Guenther Law Group in Salinas offers free bankruptcy consultations through appointments on weekdays from 8:30 a.m. to 5 p.m. A bankruptcy specialist for more than 35 years, attorney Ralph Guenther is able to answer any questions in the following specialized areas of practice:

• Chapters 7, 11, and 13 Bankruptcy
• Commercial Litigation
• Debtor’s rights
• Creditor’s rights
• Enforcement of judgments
• Repossessions
• Foreclosures
• Wage garnishment
• Judgment liens
• Tax liens and collections

Guenther Law Group

Serving Salinas, Hollister, and all of Monterey and San Benito County, since 1986

Appointments: 8:30 a.m. to 5:00 p.m.

Telephone: (831) 783-3440

Address: 1000 Pajaro St., Suite C, Salinas, CA, 93901