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Bankruptcy Law Blog

Does notice of a garnishment hearing put an end to your options?

As you struggle with the ever mounting debt that has accumulated in your financial life, it may seem at times as if you can physically feel the pull of your debts. Outstanding balances may lead to considerable stress, and though you undoubtedly want to get your financial affairs in order, you may have little money to spare when it comes to paying off those balances.

If your debt becomes too much, the possibility exists that creditors could begin wage garnishment. The idea of losing even more of your limited income may send you reeling, and you could potentially find yourself in dire financial straits. Luckily, garnishment laws do provide certain protections, and you have options for stopping garnishment.

Debt settlement companies shut down by authorities

The attorney general for Florida and the Federal Trade Commission obtained a court order compelling 11 debt settlement companies owned by three people to stop marketing their services. Authorities say that the companies would tell people that they would resolve their credit card debt in exchange for a monthly payment. However, authorities said that those who paid the debt settlement companies were victims of a scam.

Instead of working to resolve their credit card debt, the victims found that their accounts went into default and their credit scores were ruined. In most cases, victims sent payments of thousands of dollars each month. According to the complaint against the companies, they would call customers using other debt settlement companies to claim that they were taking over the accounts. Furthermore, they presented themselves as non-profit entities when that was not the case.

American household debt surpasses financial crisis peak

Many Florida residents struggle with overwhelming debt, and figures released by the Federal Reserve Bank of New York on May 17 suggest that Americans now owe more to credit card companies and banks than they did at the outset of the 2008 recession. Total U.S. household debt peaked at $12.68 trillion in the months following the 2008 financial crisis, but Americans now owe a worrying $12.73 trillion according to the report.

Fears of another banking crisis run deep, and a research officer at the FRBNY acted quickly to calm markets and play down the contents of the report. He said that the household debt figures were not something for investors to be particularly concerned about, and he pointed out that banks have tightened their lending practices considerably since 2008. Lenders generally consider older Americans to be less risky, and the percentage of loans held by individuals aged 60 or older has increased from 16 percent in 2008 to 22.5 percent today.

Rapper files his third Chapter 13 bankruptcy in 3 years

Media reports suggest that Florida rapper Maurice Young, who is better known by his stage name Trick Daddy, has filed his third Chapter 13 bankruptcy petition in as many years. Young is said to have sought debt relief for the third time on the same day that his Miami residence was scheduled to be auctioned under the state's foreclosure laws. The rapper's previous two Chapter 13 filings were dismissed because he failed to make the required plan payments according to a number of media sources.

Young's latest Chapter 13 petition is said to disclose assets of between $100,000 and $500,000 and debts of up to $1 million. The most significant asset is the rapper's home, which is believed to be worth about $400,000. Young's other assets include furniture worth $2,500 and jewelry valued at $400. While the singer claims to have no cash or liquid investments, he does admit to owning a $10,000 stake in a music publishing company.

Younger people being more responsible with credit cards

Overall, Americans have $779 billion in credit card debt, which may make it seem like people haven't learned the lessons of the Great Recession. However, there are some signs that millennials in Florida and elsewhere are actually doing a better job of managing their credit card debt. Currently, the credit utilization rate is 23 percent, which means that there is less reliance on credit and that people may be doing a better job sticking to their budget.

Another positive sign is the drop in 90-day delinquency rate. If borrowers are delinquent, it means that they may have borrowed more than they can afford to repay. The current rate is about half of what it was during the 2008 financial crisis. Those who study the issue believe that the credit card delinquency rate is unlikely to drop to zero because of how many people use credit cards.

Supreme Court rules for creditors in debt claims case

Florida residents may be interested to hear about a recent Supreme Court ruling regarding old debt. In a 5-3 decision, the court ruled that creditors can use bankruptcy proceedings to collect balances that may otherwise be out of their reach because of the statute of limitations. The court said that companies were not violating the U.S. Fair Debt Collection Practices Act by pursuing bankruptcy claims on older debts.

The ruling was considered a victory for creditors such as Midland Bank. It had tried to collect a $1,900 credit card debt, but the claim was thrown out by a judge. The debtor in the case sued Midland, but it said that federal law gave it the right to file a bankruptcy claim even it couldn't be collected as part of a lawsuit. Legal counsel for the debtor suggested that allowing the claim implied that the debt was valid and enforceable.

The high price of a payday loan

After a difficult week, you may find yourself short of cash a day or two before payday. Maybe this has happened before, and you have solved the problem by driving to a nearby storefront for a payday loan. Only this time, you haven't paid back the loan from the previous week, and now you have to roll it over.

Are you certain that your paycheck will cover it? What if it doesn't? Although a payday loan may put cash in your pocket this week, is there a light at the end of the tunnel? Can you see yourself juggling payday loans for the rest of your life?

How to rebuild credit after declaring bankruptcy

Florida consumers who file for bankruptcy might know that a Chapter 13 bankruptcy remains on a credit record for seven years while a Chapter 7 bankruptcy stays for 10 years. However, people can start rebuilding their credit as soon as a bankruptcy is discharged. They can also start to build spending and saving habits that may prevent them from having to file for bankruptcy again in the future.

The first step is to make a budget. Payment history accounts for 35 percent of a FICO score, so paying bills on time will be important. A budget should also allow room for savings. If there is no money left over for savings, a person should begin looking at ways to spend less or make more money. An emergency savings fund can help keep a person from spiraling into serious debt again by having to use a credit card or services such as payday loans.

Nonprofit hospitals, trade associations can lower medical bills

Thousands of Florida residents are struggling with medical debt, but few of them know that there are organizations that may negotiate on their behalf to lower their bills. Groups such as the Alliance of Claim Assistant Professionals scrutinize itemized hospital and doctor bills to identify errors and overcharging, and they are sometimes able to slash medical debts significantly when consumers are willing to settle quickly.

Medical services are generally provided before payment is made, and it is often difficult for doctors and hospitals to accurately predict the ultimate cost of providing treatment. Insurance companies know that medical bills often contain errors, and they have experts on staff who pore over the documentation submitted by health care providers and look for mistakes. However, consumers who are used to receiving credit card statements and car payment notices that can rarely be disputed may not be aware that medical bills could be negotiable.

Medical debt responsible for many bankruptcies

According to the Kaiser Family Foundation, more than 25 of adults throughout the United States have trouble paying their medical bills. In many cases, this results in Florida residents filing for bankruptcy even if they have insurance. In 2014, it was estimated that 40 percent of Americans had medical debt of some kind.

A 2016 report from the New York Times found that 20 percent of Americans under age 65 with health insurance struggled to pay medical bills. Of those, 42 percent said that they had to take a second job to keep up with medical debt while 63 percent said that they used up most or all of their savings to pay itt. One reason why Americans may have trouble paying medical debt is because of a lack of money in the bank. A survey from GoBankingRates found that 34 percent of those surveyed had no money saved while 69 percent had $1,000 or less.

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