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Bankruptcy Law Blog

Decision on time-barred debt collections

Florida residents who are in debt may be interested in an impending decision of the U.S. Supreme Court regarding collection actions against time-barred obligations. Specifically, it will determine whether the act of filing a proof of claim in a bankruptcy case for a debt that is beyond the statute of limitations qualifies as a violation of the Fair Debt Collection Practices Act.

There are many companies that acquire charged-off consumer debt from the original creditors. If the debtor files for a Chapter 13 bankruptcy that pay pennies on the dollar, the debt collector may earn a profit. The claims that are filed in Chapter 13 cases may not be appropriately scrutinized which results in many of the claims being processed and receiving a portion of the bankruptcy settlement.

Debt management plans vs. Chapter 13 bankruptcy

Some Florida residents who are overwhelmed by their financial obligations choose to try debt management plans through local nonprofit credit counseling agencies. It is important for people considering these plans to understand how they work. This may help them to better understand what will be required of them as well as whether the plans are the best option for them.

In a debt management plan, a credit counselor negotiates lower interest rates with the various creditors. The debtor then makes a single monthly payment to the credit counseling agency, which then disburses the payments to the creditors. Through the plans, people pay off all of their debts in four or five years. Being able to stick with the plans is difficult for most people, as they must live on tight budgets and change their lifestyles.

Don't get scammed by a phony loan modification provider

People who are facing foreclosure will do almost anything to save their homes. Sadly, there are numerous companies that prey on distressed homeowners and happily to take their money under the guise of helping them resolve their mortgage problems.

It is important for you to understand that a vast majority of these companies have no interest in helping you. They only want to take your money during a time when funds are already short. They come after people who are desperate to find a fast solution to a complex problem, and they will tell you whatever you want to hear in order to get your money.

How to pay off credit card debt

According to an analysis conducted by WalletHub, consumers in Florida and the rest of the nation accrued $34.4 billion in credit card debt from April to June of 2016. WalletHub and MarketWatch estimate that a total of $1 trillion of credit card debt could be achieved by the year's end. Consumers who are overwhelmed with credit card debt may benefit from learning about methods for paying down balances.

There are certain steps individuals should take before choosing a repayment method. For starters, they should create a budget that will help them avoid a similar debt situation in the future. Keeping an account of what is spent each month and focusing on a particular credit balance will also be necessary.

Debt management plans versus bankruptcy

Some Florida residents who have substantial levels of unsecured debts may wonder how they can pay off their obligations. Others may feel that they are insurmountable. Some may benefit by debt management plans through credit counseling agencies. Others may be better off with filing for bankruptcy.

When people enter into a debt management plan, the credit counselor will work to negotiate lower interest rates with the creditors. People will then pay off their debts over a plan period that lasts between four and five years by making one payment to the credit counseling agency each month. The agency then distributes the payments to the listed creditors.

Debt consolidation loans and credit card debt

Some Florida residents who have high credit card balances consider getting consolidation loans to pay off those obligations. While this may work for some people, others find themselves in much worse financial shape afterwards. The issue is that some people end up running up their credit card balances again, and they are then left with both the loan payments as well as the credit card debts.

People who decide to get debt consolidation loans should understand that they will need to change their spending habits in order to make them work. They might want to consider not carrying their cards and not using them, storing them at home in a safe location instead. In an Indiana survey, 87.5 percent of the respondents who obtained debt consolidation loans had incurred additional credit card debt within a year, placing them in worse financial conditions.

How will a foreclosure impact my credit?

When people are struggling to keep up with their house payments, it doesn't take long for the mortgage company to start threatening foreclosure. One of the first questions people ask is what is going to happen to their credit rating. This is an important question, but there may be larger questions you should be asking, like, "How can I avoid foreclosure completely.?"

So, what about my credit score?

In most cases, your credit score will take an initial hit as soon as your foreclosure is reported. Your credit score could also suffer if some of the missed payments that led to the foreclosure are reported as well. The foreclosure itself will stay on your credit report for seven years. The impact of it will diminish over time as long as you don't have additional credit issues during that time.

Some information about debt negotiation companies

Debt negotiation companies work with creditors to create affordable repayment plans for people who are overwhelmed by their financial obligations. The companies are strictly regulated by the Federal Trade Commission and can only get paid when they get results for their customers. Florida residents who are seeking debt relief may benefit from knowing important facts about these matters.

Using these companies, an individual may be able to get out of debt within two to four years. Excluding fees, the total amount of debt may be reduced by half. Debt negotiation does not take as long as credit counseling, is less expensive and also requires a smaller minimum payment.

Credit counseling and bankruptcy

When Florida residents encounter severe financial difficulty, they may consider bankruptcy as an option. Bankruptcy is a serious step that can have long-term implications on a person's finances. Because of this, the United States government requires anyone who files for bankruptcy to complete a program of credit counseling.

Bankruptcy credit counseling is divided into two parts. The first is a session that takes place before an individual or couple can file their bankruptcy case. The second half of this program takes place before the court orders the discharge of any remaining debt. Not all credit counselors are able to offer this type of counseling. Only those who are employed by a credit counseling agency approved by the government may do so.

Tricks to paying off credit card debt in retirement

One issue that retirees in Florida or elsewhere may encounter is excessive credit card debt. Those who are age 65 or older owe an average of $6,351 with those between the ages of 65 and 69 owing $6,876 on average. To put that number into perspective, it is more than twice as much as the maximum Social Security benefit an individual can receive in a month.

However, there are ways in which retirees can get a handle on their credit card debt. First, it may be a good idea to focus on balances with the highest interest rate. In some cases, an individual can have more than one interest rate on a single card depending on how it was used. For example, there may be one rate for purchases and other rates for getting a cash advance or transferring a balance to that card from another card.

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