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Bankruptcy Law Blog

The benefits of dealing with debt now

It is common for Florida residents to have personal loans, credit card debt or student loans. Therefore, there may be less urgency to pay it down as soon as possible. However, it is still a good idea to eliminate debt as quickly as possible. One of the best reasons to pay off debt quickly is that it reduces the amount of interest paid on the balance.

Paying down debt as quickly as possible may also work to improve an individual's credit score. The amount that a person owes contributes 30 percent to the credit score, which means that those who have less debt may have a higher score overall. Another benefit to paying down debt is the financial security it provides. Instead of giving money to a lender, it can be used instead to save for an emergency or for the future.

Credit card debt after death

One of the many financial issues that may have to be addressed after a loved one's death is his or her remaining credit card debt. Florida residents should be aware of how to handle this type of a liability.

Surviving family members may be liable for a deceased person's debt if they applied for the account with the decedent. As a joint account holder or co-signer, the survivors are responsible for repaying the debt. Typically, authorized users are not. An individual who resides in a community property state and who was the decedent's spouse could also be liable. However, this does not apply to separate debts, or credit card debts that the decedent acquired before the marriage.

Do you have an unpaid hospital lien in Florida?

A hospital claim of lien arises after you visit an ER at a hospital following your accident, and one of the following is true:

  • You did not have health insurance or were unable to pay at the time services were rendered.
  • Your health insurance only covered part of your hospital bill.
  • The hospital became aware that a third-party is responsible and has decided not to submit the bill to your insurance company.

Unsettled hospital liens - or any kind of medical debt - can be problematic for many reasons. Here are five tips that may help you:

U.S. credit card debt exceeds $1 trillion

Credit card debt in Florida and around the country has reached levels last seen in the aftermath of the 2008 financial crisis as more and more families turn to plastic to make ends meet. The amount owed by Americans to credit card companies exceeded $1 trillion as 2016 drew to a close, and $650 billion of this debt was subject to finance charges. The average interest rate on these types of revolving accounts in the United States exceeds 19 percent, and the average American family pays more than $100 in credit card interest each month.

A senior figure at one of the nation's leading credit monitoring firms said that consumers were taking advantage of promotions that offered rewards for signing up and cash back on purchases. He also pointed out that credit card companies must continue to open accounts in order to grow, and giving their customers a modest incentive to use their new cards makes good business sense.

Chapter 13 and tax deed sales

Florida is one of many states that allow homes to be sold in order to collect back property taxes. There are strict notice and other requirements, and sometimes the former owners are able to successfully challenge the sale or obtain other benefits in that regard. Another such state is Pennsylvania, and in 2016, the U.S. Bankruptcy Court for the Eastern District of Pennsylvania was confronted with a relatively unusual issue.

In the case, a property owner's home was sold to a private purchaser at a tax sale conducted by the city of Philadelphia after she was four years in arrears on her property taxes. The purchaser took care of the deficiency. Pennsylvania law allows a seller in such a situation to redeem the property within nine months after the deed is recorded, and the seller in this case filed a Chapter 13 petition within the statutory period. She proposed that the redemption amount be treated as a secured claim under the required 36-month repayment plan.

Debts to pay off before retirement

Florida residents might want to consider paying off as many debts as possible before they retire so they will not be saddled with these obligations on a fixed income. Paying off a mortgage can be particularly significant in allowing a person more disposable income after retirement, and it may be possible to refinance and get a shorter term mortgage.

Almost 80 percent of baby boomers who had student loan debt reported that paying it off interfered with retirement savings, so this is another debt that it might be best to pay as quickly as possible. Individuals should also make an effort to reduce their credit card debt.

Will your lender truly help you with your loan modification?

The threat of foreclosure is unsettling. Unfortunately, if your family has fallen on hard times, it can be difficult to meet your monthly obligations. You are not alone.

Over 63,000 Florida homes were repossessed by the banks in 2016. This was the highest number of repossessions in the nation. In an attempt to save their homes, many people have turned to loan modification programs offered by their lenders.

How does a loan modification program work?

Debt relief options when falling behind on car payments

Florida motorists who have fallen behind on their car payments might consider filing for bankruptcy. This could be an alternative to having the car repossessed or surrendering it voluntarily because both of these outcomes might still leave them in debt. If the car has already been repossessed or surrendered, the consumer might be liable for the amount lost by the seller in an auction.

In most cases, if there is a car loan deficiency, that debt can be discharged in bankruptcy. If the person is facing a lawsuit, this will be dismissed as well. However, it is necessary to file a special motion to remove a judgment that has already gone through.

Don't use your retirement savings to pay off your debts

Are you dealing with financial difficulties right now? Are you buried by credit card or medical debt? Are you behind on your mortgage payments?

If you are struggling with debt and trying to decide how to pay it off, the last thing you want to do is pay it off with your savings or retirement accounts.

Why you shouldn't pay your debts with your retirement savings

You have worked hard to save for your retirement. If you have amassed a nice sum, it can be very tempting to pay off nagging debts with that money. Do not give into temptation. It is just not worth the price you will pay.

Getting an auto loan while in Chapter 13 Bankruptcy

Individuals in Florida who are considering filing for Chapter 13 bankruptcy and need new vehicles may be interested to know that getting approved for an auto loan is possible while in a Chapter 13. However, it requires the approval of a bankruptcy court and involves a number of steps.

The first step that someone shopping for a new car should take is to locate a lender that provides financing despite an individual's credit background. Subprime lenders with whom special finance car dealerships partner tend to work with consumers with credit issues or who may be going through bankruptcies.

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