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Bankruptcy Law Blog

Conquering the feelings of shame over bankruptcy

If you struggled each month to pay your bills and often postponed one or more payments until your next paycheck, you didn't need anyone to tell you that you were in financial trouble. In fact, you may have lived in fear that today would be the day it all fell apart. Then one day, the car broke down, someone in the family got sick or the refrigerator stopped working, and the delicate house of cards you had built to keep your creditors at bay may have come crashing down around you.

Have you stopped answering your phone or hurrying to the mailbox? Do you go to bed at night with a knot in your stomach and wake up with a headache from worrying about the bills, the foreclosure notice, the warnings from collection agencies? Do you resist the idea of filing for bankruptcy protection because you worry about the stigma and the damage it will do to your credit rating?

What happens to debt when a person dies

Some Florida residents who are struggling with debt might wonder what would happen if they died while still owing money. This is the case for most people. On average, according to the credit bureau Experian, the average debt without including home mortgages is $12,875. Including mortgage debt, the average is $61,544. While debt generally does not pass to a person's heirs, there are other ways in which the debt can affect them.

Debt belongs to an estate. If the estate is not worth enough to pay off the debt, the creditors simply go unpaid. However, if a home is in the name of the deceased person and other family members live in the home, they could lose that home. Joint accounts might also be vulnerable.

Foreclosure trustee not bound by FDCPA

Florida residents considering filing for bankruptcy may be interested in learning about a recent ruling the Ninth Circuit Court of Appeals handed down. A foreclosure trustee and others were sued by a borrower who asserted that recording a notice of default and other documents required by law was a violation of the FDCPA, or Fair Debt Collection Practices Act, because it misrepresented the amount she owed on the mortgage loan. The Ninth Circuit affirmed the ruling the district court made that granted the trustee's petition to dismiss the suit.

According to the FDCPA, a debt refers to a consumer's obligation or supposed liability to pay money resulting from a transaction in which the property, money, services or insurance that are the subject of the transaction are mainly for family, household or personal uses. The Ninth Circuit determined that notices of default and sale from trustees are not demands for payment of money. Instead, they are documents that are required by law to be recorded before a trustee is able to exercise the power of sale.

Court rules incarcerated man's income too low for Chapter 13

Incarcerated people in Florida who are in debt might be interested in learning that a felon in jail in Illinois was not permitted to file for chapter 13 bankruptcy because his income was insufficient to work out a payment plan. However, the man still had the option of filing for a chapter 7 bankruptcy. Chapter 13 permits individuals to keep some of their assets and work out a payment plan over a period of three to five years.

An Illinois court ruled that an individual must be able to make the payments out of their own income and not that of another person. In this case, the man makes $14 per month in prison, and his parents had pledged an additional $25 per month.

I cannot pay my student loans. Can bankruptcy help?

Millions of Americans pay significant amounts of money to invest in their education in the form of student loans. After graduation, many of these individuals find that they are not able to make payments and keep up with the exorbitant amount of debt that they accumulated over their years in college. For many graduates, post-college life is dominated by debt.

If you find yourself in a similar position and you are currently unable to make payments on your student loans, you could be searching for a way out. Student loan debt is a major problem, but there may be a way to deal with this debt and salvage your financial future.

Appellate ruling favors lenders in Chapter 13 case

Florida residents may be interested in an appellate court ruling in March 2017 that serves as a reminder to both debtors and lenders about the importance of legal wording and the limits on modifying a loan in a Chapter 13 case.

A debtor attempted to argue that $137,000 should be turned into an unsecured claim due to a recent appraisal on his residence. The argument claimed that the loan was not secured only by the residence because the debtor had been forced to place money in escrow accounts for taxes and insurance. This would have allowed that value to be repaid only in part. The initial ruling favored the lenders, as did the appellate rulings. The debtor was ultimately barred from modifying the loan in his repayment plan.

Court rules dog barking claim not dischargeable

Florida residents may be interested in a March ruling that set an important precedent for discharges in Chapter 13 bankruptcy cases. The ruling is an example of how certain judgments and debts may not be dischargeable in bankruptcy if they are pursued in court.

The case involved a nuisance lawsuit due to the excessive barking of dogs. The plaintiffs in the case argued that they suffered serious mental and emotional harm as a result of the dog barking, and they were essentially prisoners in their own home. The plaintiffs dealt with this situation for 14 years, and the defendants made no or insufficient effort to control the barking or lessen the impact on neighbors. The court awarded the plaintiffs $238,000 in damages for the case.

Chapter 13 bankruptcy and a car loan cramdown

Florida residents who have filed for Chapter 13 bankruptcy might qualify for what is known as a loan cramdown on their car. The owners needs to be upside down on the loas. This means that they owe more on the car than the car is worth.

There are two other requirements for a cramdown. People must have owned the car for at least 910 days. Furthermore, the court-approved repayment plan must include future payments and any back payments. It is then necessary to renegotiate the loan and the financing agreement.

Debt is growing once again

As Florida residents and Americans in general are feeling hopeful about the economy again after the Great Recession of a few years ago, they're starting to rack up significant amounts of debt again. While the job market is fairly strong right now, there's nothing that guarantees that there won't be another economic downturn in the future. This is concerning since people have more debt than at any time since the last recession.

According to NerdWallet, U.S. households with credit card debt have balances exceeding $16,000. When mortgage debt is included, the average household that owes money to any type of lender owes $132,529.

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