Matthew Dunaway December 2018

www.matthewdunaway.com · 205-705-3590

December 2018

A NEW PERSPECTIVE Can We Quit Financial Meth?

Recently, I sat down with a client who reminded me about how terrible the idea of a credit score is. He is a single dad, working as a fireman to raise two boys on his own. This client is a super nice guy who was struggling with miscellaneous debt from credit cards and the like. He was thinking about filing for bankruptcy, but the main reason he came to my office was because he wanted me to help him fix his credit score. When I asked why he wanted to fix his score, he told me it was so he could buy something on credit. I told him that was a bad idea. As a bankruptcy lawyer, I have a big problem with the myth of the credit score our society has been sold. How do you get a “good” credit score? You get a credit card, take on different loans, and keep old lines of credit open.

Basically, you get yourself into debt. In the end, you’re rewarded with a big number that just allows you to get into more debt. Be careful, though; if you cancel all your credit cards and try to live without debt, your credit score will go down! A credit score is basically financial meth — once you start, you can’t stop. Yes, credit scores serve to help us accomplish other goals. Good credit can help you start a business or buy a new house. But how often do you need to do either of these things? Most people never start their own business, and buying a house only comes up two or three times during our lives. Sure, there are ways credit scores impact our insurance rates or job applications, but these aren’t the main reasons people care about improving their credit scores. Ninety-nine percent of the time when someone tells me they want to fix their score, it’s because they want to buy something on credit. This is because, at its core, credit only exists to put people in debt. The credit score is a red herring. It’s an invention to trick us into thinking debt is a good thing. In school, if kids are taught about money at all, they’re told they need to have a good credit score. How do they do this? Why, they just go out and get a credit card, of course! We are telling teenagers they need to be in debt to credit card companies before they’re even out of high school. This is not a good thing.

When you break it down, the problem with the credit score system isn’t that it allows us to buy things. The problem is that if you want to buy those things, you need to stay in debt. Once you’re in debt a little and you have that score, you need to stay in debt in order to keep it. With the credit score system, we are literally punished for wanting to be debt-free. What can we do about this? First, our society needs to change its perspective on the value of a credit score. We need to acknowledge that this number is not a reflection on the quality of a person but rather serves only to put us deeper into debt. Then, we stop using this number to justify getting into more debt. We need to say things like “I don’t want a Target card just to get 20 percent off this purchase and boost my score with a new line of credit,” or “My car is perfectly good. I don’t need to take out a loan for a new one.” Debt is not our natural state of existence. Let’s stop pretending that credit scores make sense and take steps to free ourselves from the cycle.

As a bankruptcy lawyer, I have a big problem with the myth of the credit score our society has been sold.

–Matt Dunaway

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DURING THE OH-SO-SWEET HOLIDAY SEASON 3 Ways to Use Leftover Candy

Sometimes we get a little too much of the sweet stuff. Between Halloween and New Year’s Day, candy is everywhere. It’s at home, at work, and on store shelves. Then, as the year comes to an end, many people start thinking about eating right and losing weight. When those are your New Year’s resolutions, you have to do something about all the leftover candy so it’s not around come Jan. 1.

Here are a few ways to get rid of your leftover candy ASAP.

Donate it. While you may have an abundance of sweets, not everyone does. Consider donating wrapped and packaged candy to your local food bank or other nonprofits, including local homeless or women’s shelters. You can also look into donating candy to nearby schools. Many teachers will gladly take candy off your hands to reward students (or themselves) with treats throughout the rest of the school year. Bake with it. Whether you have an excess of candy corn or candy bars, you can bake with your sweet leftovers. The next time you make chocolate chip cookies, swap out the chocolate chips for candy corn. Or the next time you make brownies, chop up leftover candy bars and add them to the batter. From peanut butter cups to mint patties, there are so many different types of candies that can take traditional baked goods to the next level.

Store it. Although not great for you, candy is fine to eat in moderation. A good way to moderate your holiday treat intake is to store your leftover sweets in the freezer. That way, you can pull a little from your supply each month to make sure you aren’t overdoing it. That said, be sure to check the expiration dates on all candy you save.

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“I’m giving Mr. Dunaway a 5/5 because he was very upfront, honest, and caring about our situation. He made it seem like bankruptcy was not the end of the world, because it is not. He was very helpful in answering questions I had for him. If I had to raise one complaint, it would be that I had a few emails go unanswered, but most of the time they were emails with questions I had asked before or something that we did not need an answer to at the time of asking. Mr. Dunaway was very accurate when it came to providing timelines and I would recommend his services to others.”

Matt H.

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What Everyone Needs to Know About the Right to Set-Off UNAUTHORIZED TRANSFER

A lot of people take out loans at the same bank where they save their money. It’s just easier to keep track of your finances when all your money is coming and going from the same place. Unfortunately, few people realize that if they fall behind on those credit card, loan, or mortgage payments, their other accounts may be up for grabs. In order to pay off your debts, most banks have the right to transfer money out of your checking or savings account without your permission. This is called “setting-off,” and if you are already in financial trouble, this unexpected blow can cause a world of nightmares. Let’s say you set up direct deposit to your checking account at Bank of America, and you also have a Bank of America credit card. If you fall behind on your payments and end up owing $500 on that credit card, without warning, Bank of America can reach over and pull money out of your checking account to cover the costs. The bank can use any money Good News Romans 12:1-2 “I beseech you therefore, brethren, by the mercies of God, that ye present your bodies a living sacrifice, holy, acceptable unto God, which is your reasonable service. And be not conformed to this world: but be ye transformed by the renewing of your mind, that ye may prove what is that good, and acceptable, and perfect, will of God.”

you have deposited with them — either in checking or savings accounts — to pay off your debts. Banks don’t often use their right to set-off, except in extreme circumstances. If you are just one month behind on your credit card payments, you probably don’t have to worry about money suddenly disappearing from your checking account. However, if you’re already in financial trouble, having the bank unexpectedly take your money can be devastating. For example, let’s say you have $800 in your checking account to make your mortgage payment, and the bank takes $300 to cover your credit card bill. When the automatic mortgage payment attempts to take the money out of your account, there’s not enough and your payment bounces. Now you have to pay fines for the bounced payment, you’re in mortgage arrears, and your house is in jeopardy.

The most obvious way to avoid suffering from having your account set-off is to stay on top of your payments, but changes in circumstances don’t always make that a possibility. If you are worried about your accounts being set-off, you can also keep your debts and your checking/savings accounts in separate institutions. That said, if you are in such a stressful financial situation that your accounts could be set-off, it’s time to seek professional help.

Holiday Roast Prime Rib Recipe of the Month

Looking for an easy holiday roast that still feels elegant enough for the occasion? Look no further than this delicious prime rib flavored with garlic, thyme, and red wine.

Ingredients • 1 bone-in prime rib (6–7 pounds) • 8 cloves garlic, thinly sliced • 2 cups red wine Directions 1. 30 minutes before cooking, remove roast from fridge and let sit until it reaches room temperature. 2. Heat oven to 350 F. 3. Make small slits in prime rib and stuff with slices of garlic. Liberally season with salt and pepper. 4. Place a rack inside a roasting pan and roast prime rib for 2 hours, until medium-rare.

• 4 cups beef stock • 1 tablespoon fresh thyme, chopped • Salt and freshly ground pepper, to taste

5. To make au jus, place roasting pan with drippings from roast over 2 burners on high. Add wine and scrape pan as liquid reduces. Add beef stock and cook until reduced by half. Finally, sprinkle in thyme. 6. Slice roast and serve topped with au jus.

Inspired by Food Network

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NSIDE The Scam of the Credit Score ...................... page 1 The Best Ways to Use Leftover Candy .......... page 2 Our Clients Say It Best .................................. page 2 Can the Bank Take My Paycheck? ............... page 3 Holiday Roast Prime Rib ............................. page 3 A Quaint Fable .............................................. page 4

‘Animal Farm’ by George Orwell A Page FromMatt’s Bookshelf

Once upon a time, a group of farm animals banded together and rebelled against their lazy, good-for-nothing farmer. Under the rule that all animals are equal, the animals work to ensure all citizens of their farm are treated well. But soon,

and the Soviet Union led to the British people celebrating Joseph Stalin. This infuriated Orwell, who saw the Stalin-era Soviet Russia as a brutal dictatorship. A lot of people will just go on a tirade when they’re angry about politics, which is what makes Orwell’s response so genius. By writing “Animal Farm,” Orwell put the historical events of early Soviet Russia into a new context. His “quaint fable” about farm animals outlined what went down with Lenin, Stalin, and communism, showing how terrible the situation truly was. Orwell’s allegory is incredible, but I don’t think the political satire is the only reason “Animal Farm” is so popular over 70 years later. Next to the allegory, Orwell lays bare the darker sides

of human nature. The book starts out with animals being good and humans being bad. However, thanks to greed and lust for power, many of the animals become as terrible as the human farmers they overthrew. But the moral of the story isn’t that humans are bad. Orwell was warning readers to be skeptical when someone claims, “I have your best interests in mind. Don’t worry about anything. We’ll handle this for you.” “Animal Farm” is a well-written example of political satire, but it’s also a powerful lesson in the dangers of blindly following our leaders. We must always hold ourselves and our leaders accountable. Though we may start off with good intentions, over time, we can so easily become the thing we hated most in the beginning.

greed and corruption infect their leaders, and a new law is established: All animals are equal, but some animals are more equal than others . This is the plot of George Orwell’s 1945 novel, “Animal Farm,” one of the greatest political satires of all time. Orwell started writing “Animal Farm” during World War II, after the alliance between the United Kingdom

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