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Bankruptcy Law Blog

Not all debts dischargeable in Chapter 13

When Florida residents are overwhelmed by their financial obligations, bankruptcy may be a good option. The two major forms of consumer bankruptcy are Chapter 7 and Chapter 13. However, it's important to realize that federal laws impose some limits on the amount and type of debt that can be discharged by a bankruptcy court.

Most types of consumer debt, such as credit card debt and bank loans, can be subject to discharge in both Chapter 7 and Chapter 13 bankruptcies. However, other kinds of debts remain. These include spousal and child support payments as well as other obligations deemed to be in the nature of domestic support. While an individual in Chapter 13 bankruptcy can include these payments in the court-supervised repayment plan, the obligation to make them remain, and they are deemed to be priority obligations.

What chapter should I file under if I am facing foreclosure?

If you determine that bankruptcy is the best path for you to save your home. The next step is to figure out which Chapter makes the most sense for your needs. Every homeowner's circumstances are so unique. It really is a conversation that needs to be had with a qualified Florida bankruptcy attorney.

As with most financial decisions, the bankruptcy path you choose is mainly dependent on your situation. As we mentioned earlier in this series, most homeowners find Chapter 13 to be a better option because it allows you to repay your mortgage arrearages as part of your court-approved repayment plan. In addition, Chapter 13 gives you the opportunity to eliminate second and third mortgages, which Chapter 7 does not. (We will discuss lien stripping in more detail in the next post.)

Darius Miles asks for protection from creditors

Miami Heat fans may be interested to know that former NBA player Darius Miles filed for Chapter 7 bankruptcy after saying a string of bad investments led to financial problems. At the time of his filing, he reported $460,385 in assets and $1.57 million in liabilities including $20,000 in child support.

Miles was the number three overall pick in the 2000 NBA draft and played for the Clippers, Cavaliers and Grizzlies. He also spent time with the Portland Trail Blazers, and the former NBA star earned roughly $62 million during his seven seasons in the league. In addition to basketball, Miles also had endorsement deals with shoe companies and appeared in two movies. According to a representative from the National Basketball Players Association, 60 percent of former NBA players file for bankruptcy within five years of retirement.

How elderly people can truly avoid debt collectors

There are many elderly people in Florida who struggle with money. Those that live mainly off of Social Security benefits may be forced to use credit cards to cover emergency expenses or just make ends meet every month. When credit card bills start to add up, an elderly person who has no prospect of earning additional income could end up being harassed by debt collectors.

Calls and letters from credit card issuers and debt collectors can cause an elderly person a lot of stress. Simply hanging up or not answering the phone from unknown numbers doesn't usually do very much to relieve it. However, an elderly person may be able to get some relief from collection attempts by seeking legal help.

It may be time to get help for out-of-control debt

Florida residents who struggle to pay their bills each month and have no extra money left over are not alone. In fact, 62 percent of people around the country do not have even $1,000 in a savings account, and one-third of Americans have no money saved for retirement. One of the reasons some people have such a hard time saving money is that they must make payments on multiple lines of credit each month.

A person who has overwhelming debt from credit card balances, student loans and home equity lines of credit may need to work with a credit counselor to get a handle on finances. One of the signs that it is time to speak to a credit counselor is when a person starts living paycheck to paycheck. When the money that is coming in just barely covers the money that needs to go out, an unexpected emergency expense could be a disaster.

Tips for eradicating credit card debts

With the high cost of living nowadays in Florida and throughout the country, a great deal of people may find it difficult to get by without using credit cards. In fact, because most credit cards carry interest rates of up to 30 percent and steep penalties for missed payments, credit card debt ranks as one of the most expensive types of debt.

One solution is for paying off the debt is through a low-interest personal loan from a credit union or bank. However, this may not work for cardholders who have poor credit and thus may not be able to qualify. Another way to quickly eliminate a credit card debt is to transfer it to a low or no-interest credit card. In many cases, a credit card company will offer a low introductory or zero percent APR rate on balance transfers to attract customers. Some credit card companies even offer no fees on balance transfers, but many of them will charge at least 3 percent interest on the transferred amount.

Why Florida residents are turning to credit cards

According to WalletHub, Americans accumulated $34.4 billion in credit card debt during the second quarter of 2016. That is thought to be the highest amount of debt accumulated in a second quarter since at least 1986. That was the first year such data was collected, and consumers may go over $1 trillion in outstanding debt balances by the end of 2016.

While some may assume that debt has risen because of irresponsibility, the true reason may be because of economic and social inequalities. A 2014 study found that households that have credit card debt are no more likely to be irresponsible with their money compared to those who have no such debt. Typically, a household was more likely to have this type of debt if it lacked health care or a member of that household lost his or her job.

What if I am underwater on my mortgage? Shouldn't I just walk away?

While the values of many Florida homes have recovered since the real estate crash, several homeowners still find themselves in a situation where they owe more on the mortgage than the property is worth. As recently as a few years ago, many homeowners simply walked away and allowed the bank to foreclose; a practice commonly referred to as a strategic default.

It seems like a simple enough concept: I can keep overpaying for my home, or just give it back to the bank and let them deal with it. While choosing this path may get you out from under a financially unfavorable situation, giving up your home to the lender may not be the end of the story.

Reality TV star files for Chapter 13 bankruptcy

Chapter 13 bankruptcy is the latest development in the life of reality TV star Dawn Heflin that might interest Florida fans. Documents say that she owes over $263,000 and has assets worth $235,719. This includes $320 in checking and $100 in savings. She also has a house with a value of $172,000, households goods and clothing worth $1,000 each and two vehicles that are worth about $60,000 in total.

Heflin appears on the reality TV show "Love & Hip Hop Atlanta" as the former manager of Joseline Hernandez. Reportedly, she makes a total of $4,004 per month in income. She says that she has just over $1,100 after expenses monthly, and she has been on SNAP assistance in the past.

Most credit card holders do not pay off their balances

It is not uncommon for Florida consumers to have a lot of credit card debt. In fact, the majority of revolving debt in the United States comes from credit cards. Around 38 percent of households in the U.S. have credit card debt with an average unpaid balance of $15,310. Credit card debt tends to grow with time, and 65 percent of card holders do not pay their balance in full each month.

Credit card holders who do not pay their balances in full at the end of every month wind up paying an average of about $2,600 in interest annually. When people take out several credit cards and maxes them all out, this activity can damage their credit score. Many financial advisers tell consumers that there is no good reason to even have a credit card unless it is being used simply to improve credit history.

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