SmartCredit.com’s president of consumer education says the three main credit reporting bureaus haven’t always been good in the past at changing credit reports to reflect a bankruptcy. A class-action lawsuit against the major credit bureaus--Experian, Equifax, and TransUnion--has inspired a settlement agreement that’s changing how these groups report bankruptcy discharges. This can mean a great deal to people seeking debt relief, who might not have considered filing for personal bankruptcy over fears of their credit reports being permanently damaged.
]]> Multiple lawsuits filed against the bureaus in 2005 and 2006 stated that people’s credit reports often listed people as delinquent on their bankruptcy debts, even after successfully completing bankruptcy. The agencies had also been accused of not investigating credit reporting errors after being informed of inaccuracies. The bureaus have agreed to utilize procedures to accurately report bankruptcy discharges.Filing for Chapter 7 or Chapter 13 bankruptcy will stay on a person’s credit for up to ten years, but if a bankruptcy is accurately recorded on a credit report, a person can begin repairing his or her credit soon after bankruptcy. However, if the discharged debs haven’t been correctly recorded and are shown as due and payable, it will further damage credit. It’s important for anyone going through a bankruptcy to order copies of credit reports to be sure everything is current and correct.
Source: The New York Times, “Credit Reports More Accurately Reflect Debts Discharged in Bankruptcy,” Ann Carrns, April 30, 2013
]]>Recently an appeals court said that inherited IRA accounts weren’t exempt in bankruptcy. According to a decision of three federal appeals judges, a woman who had inherited $300,000 from her late mother’s IRA won’t be able protect the funds from creditors. The woman and her husband had disputed the IRA’s bankruptcy exemption with the trustee in charge of administering her bankruptcy estate.
]]> The issue is a matter that has received differing opinions in the past. In 2011, a judge in Wisconsin said creditors could seek IRA funds to pay debts, but a district court later reversed the judge’s decision. Bankruptcy laws exempt retirement funds from being claimed by creditors, but some courts maintain that IRAs are no longer retirement funds when they’re passed on to a new owner when the original owner has died.Judges in the 5th and 8th Circuits disagree, saying IRAs should continue to be considered as retirement funds, even when they’ve been inherited by new owners. The 5th Circuit ruled in 2012 that an asset set apart for retirement at any time should be exempt from creditors.
A lawyer for the case involving the $300,000 IRA says it may go to the U.S. Supreme Court. Because future decisions can make a big difference for people filing for bankruptcy, it will be interesting to see the outcome of a Supreme Court decision.
Source: Reuters, “In circuit split, court says inherited IRA fair game in bankruptcy,” Nick Brown, April 24, 2013
]]>HB 87 aims to push foreclosures through the court system more smoothly, while creating tight standards for banks to prevent the types of foreclosure abuse that had caused many Floridians to lose their homes in recent years. However, some consumer advocates say the expedited process will make it harder for those facing foreclosure to regain their footing and stop repossession, while favoring banks that may want to repossess property quickly. The bill will also keep homeowners from regaining their property in a fraudulent foreclosure if someone else has bought the property from the lender.
]]> In addition, opponents claim the bill’s “show cause” option for condo associations is an unfair hit on homeowners’ due process rights. A “show cause” hearing would allow condo associations to expedite foreclosures on families who are behind on their condo dues.Supporters claim the bill will help Florida’s real estate market return to normal, and also protects homeowners by restricting them from lenders going after them for debts after foreclosure, and requiring them to prove they have necessary documents before attempting repossession.
There’s no doubt that the issue remains a touchy one. With many people struggling and facing financial challenges, foreclosure can be just one problem in a long list of worries. It may help to consult with a bankruptcy attorney to find out ways to relieve debt and stop foreclosure.
Source: Bradenton Herald, “Faster foreclosures bill clears Florida House in 87-26 vote,” April 29, 2013
]]>A financial planner from Plantation has advised that keeping a credit card balance is a sign that you're living beyond your means, and credit card debt should only be reserved for emergencies. Reducing your consumer debt is an important step toward financial freedom, and also allows you to save more for retirement--which is something everyone should be thinking about.
]]> It seems that many people in South Florida have been paying attention to advice like this. New data from consumer site CreditKarma.com shows a reduction in overall debt in our area, especially with credit card debt. The average credit card balance in South Florida dropped about 12 percent from last year. Overall mortgage, credit card, student loan, and car loan debt is 2 percent lower than it was in March 2012.Reducing debt is a wise choice. It's not always easy to cut expenses, and sometimes paying down debt can be very difficult for a family facing unemployment or other financial challenges. Speaking with a bankruptcy attorney can help people with limited options find out the steps they can take to help with their unmanageable credit card debt.
Source: Sun Sentinel, "South Florida debt drops, especially credit card balances," Donna Gehrke-White, April 19, 2013
]]>Federal student loan interest rates are being heavily focused on now, as they are scheduled to rise as much as double in July. Student groups would like to see this interest jump delayed or stopped, while Governor Scott gave Florida State University a challenge to set "$10,000 Bachelors Degree" to make college attendance easier for many students.
]]> Since the laws were enacted that exempted student loans from bankruptcy, many students have found themselves struggling with debt, from unforeseen changes in employment or other life challenges. Federal student lenders have also been accused of taking advantage of this exemption by participating in unfair practices that put bigger burdens on students, including collection abuses. The recession has seen even more people with student loans suffering, after they've been unable to pay their loans or find debt relief through bankruptcy.Almost nobody enters into a loan agreement expecting to have problems paying the loan back in the future. Financial difficulties are, unfortunately, a common part of life today. Dealing with student debt is hard enough without the added worry of collection agency harassment and wage garnishment. It will be interesting to see how much lawmakers pay attention to the requests of student groups and consumer advocates, and whether their attempts will be able to bring changes to the current bankruptcy laws.
Source: Examiner.com, "Congress listening more to student outcry over loan rates and crushing debt," John Guzzardo, Mar. 31, 2013
]]>Many Floridians seeking debt relief have considered consolidating their loans. Loan consolidation has the potential to let those with financial challenges get back on their feet, by combining all of their debt into a single monthly payment with one interest rate. Depending on the type of debt - such as credit card debt, a second mortgage, and vehicle loans - this can be very convenient for overwhelmed consumers. But with student loans, especially if you have more than one, it's important to consider several factors before consolidating them.
]]> For example, if you decide to take advantage of federal student loan consolidation, all the interest from multiple student loans will most likely be averaged and rounded up. This can end up costing you more in interest than your loans would have been separately. Additionally, having one combined loan doesn't give you the opportunity to more quickly pay down the loan with the higher interest rate.Before deciding to sign up for student loan consolidation, it may be helpful to consult with a bankruptcy attorney. Ordinarily, student loans can't be discharged through Chapter 7 bankruptcy, but an experienced bankruptcy attorney may know of other options or programs to help people with unmanageable student loan debt.
Source: Deseret News, "Beware of the student loan consolidation temptation," Jan Miller, April 11, 2013
]]>A debt advisor has clarified some of the questions regarding wage garnishment exemptions. Before May 2011, banks would automatically freeze the bank accounts of people with a wage garnishment order, effectively cutting off their access to the money they needed for basic living expenses. A new rule regarding federal exemptions from wage garnishment is meant to keep consumers' bank accounts from being frozen if the customer receives Social Security, government benefits, and most retirement income. Now banks are required to protect two months' worth of direct-deposited exempt income without requiring customers to prove their exempt status immediately.
]]> Consumers with exempt funds must still fill out a garnishment exemption claim form within a certain time period. Some debts, such as child support, spousal support, and government debts are not exempt from garnishment.It may be necessary to prove exemption in front of a judge. The debt advisor recommends that if this is the case, it would be helpful to have an attorney. The laws regarding wage garnishments and exemptions have been changed to protect struggling consumers, but they can still be confusing and require professional help to sort through.
Source: Bankrate.com, "How to protect money from garnishment," Steve Bucci, April 1, 2013
]]>A Florida bankruptcy lawyer says judges are starting to get fed up with some banks' refusal to honor court rulings in foreclosures and bankruptcies. An Orlando judge hit Bank of America with a $220,000 sanction for ignoring the court-approved loan modification for an Orange County couple. After the homeowners filed for Chapter 13 in 2010, the bank at first appeared willing to lower their monthly payments to $550, but then they continued billing the couple the higher mortgage amount throughout 2011 and 2012. Bank of America also failed to appear to multiple hearings to resolve the issue.
]]> Last year, a bankruptcy judge fined Bank of America $11,500 for harassing an elderly woman for back mortgage payments, despite having had her mortgage debt discharged through Chapter 7 bankruptcy. She says she surrendered her home after repeated attempts to get the bank to approve a loan modification went nowhere.The financial-services lawyer for the publisher of Consumer Reports magazine says the federal settlement with major lenders hasn't been enough, and that more needs to be done to help homeowners stop foreclosure.
Source: Orlando Sentinel, "Bank of America fined for repeated violations in Orange homeowners' bankruptcy case," Ric hard Burnett, Mar. 19, 2013
]]>According to the report, about 12 million consumers take out payday loans each year in the U.S. The average 2-week loan is around $375. If most people could afford repaying the loan after that 2-week period, then the service fee might not seem so bad. However, payday loans usually trap the consumer into a debt cycle that takes an average of five months to repay. This results in an annual interest rate of around 400 percent for these types of loans.
]]> About half of those surveyed by Pew who borrowed from online payday lenders reported their bank accounts being overdrawn when the lender automatically withdrew the loan. Many consumers will then turn around and borrow more money to repay the previous loan and cover their upcoming expenses, thus feeding the cycle of debt.Some financial advisors say credit card debt is preferable to the payday loan debt cycle. It would be better in most cases to view payday loans as a last resort, and borrow money from family or cut expenses in an attempt to make ends meet. Other options are available that can keep people from going further into debt, including filing for bankruptcy.
Source: US News, "4 Payday Loan Myths," JP, Mar. 8, 2013
]]>Financial experts say many Florida residents may already be taking advantage of their tax returns for this purpose. The average consumer credit card balance dropped 12 percent in January, compared to this time last year. The recession, which has caused lingering financial challenges for millions of people, may be a major motivator in getting people to make wiser choices with their tax returns and other forms of large income.
]]> A Plantation certified financial planner says in order to avoid continued problems with consumer debt and creditor harassment, it's vital for Americans to know exactly where their household money is going. Finding new ways to cut back expenses is always a smart way to end up with additional monthly income, as well as secure your emergency savings or retirement plans.The U.S. Census Bureau reports Broward, Miami-Dade and Palm Beach counties spent an average of $6,138 in 2010 and 2011; the financial planner has offered a tip to try to cut that spending in half to result in even more savings. These are still difficult times for millions of people. Saving money and cutting back on spending are good ways to get out of financial pitfalls. It may also help to speak with a bankruptcy attorney about other options.
Source: Sun Sentinel, "How average South Florida folks can cut $3,000 more from budgets," Donna Gehrke-White, Mar. 6, 2013
]]>Chapter 7 bankruptcy is also known as the fresh-start bankruptcy. It lets most people wipe out their debt, and can still allow them to keep their home, car, and some other assets. There are a few factors a bankruptcy court needs to consider before deciding if a homeowner can qualify for Chapter 7. If you don't have very much home equity, you stand a better chance of being able to file for Chapter 7.
]]> Having a sizable amount in equity means the profit from selling a home can be used to pay off debts. In this case, consumers may wish to consider Chapter 13 instead if they want to keep their home. Chapter 13 reorganizes debt and allows consumers to repay it within three to five years. This protects homeowners against foreclosure and gives them a chance to catch up on overdue mortgage payments or property taxes while still retaining their assets.Before deciding if bankruptcy can help you make a fresh financial start, it's important to weigh the differences between Chapter 7 and Chapter 13 carefully and speak with a bankruptcy attorney about your options.
Source: Bankrate.com, "Can you file Ch. 13 bankruptcy if you own a home?" Justin Harelik, Mar. 5, 2013
]]>This could give them time to put together more options before losing their homes - such as short selling their property or restructuring their debt through Chapter 13 bankruptcy. 24 states, including Florida, require a court process before a foreclosure is finalized. This ensures mortgage lenders have the necessary documents in order and can prove to a judge they have the right to foreclose before turning families out of their homes.
]]> However, others claim that slower foreclosures are actually hurting the housing market. Abandoned homes lose their value the longer they sit vacant, ultimately costing more to repair before going back up for sale.Zillow, an internet-based real estate tracker, has released an analysis that showed more home price increases in many of the states with faster foreclosure processes. Some lawmakers believe home prices will recover faster if the foreclosure process weren't so stalled in the courts.
It isn't only the process of repossession that sets the trend for home prices nationwide; financial experts say a combination of factors, such as job growth and unemployment, also have an impact. For now, Florida's home prices continue to be affected by the state's slow foreclosure process. Consulting with a bankruptcy attorney could benefit homeowners no matter how fast or slow the foreclosure process is, especially if they would prefer to stop foreclosure and work out alternate forms of debt relief that will allow them to keep their homes.
Source: FloridaToday.com, "Is Fla. policy hurting home prices?," Patrick Peterson and Wayne T. Price, Feb. 22, 2013
]]>One man claims he receives calls from bill collectors as many as 20 times a day for debts that aren't even his but belong to the person who previously lived in his house. Despite three lawsuits to make them stop calling, the calls continue. A Federal Trade Commission spokesman says some collection agencies frequently use profanity or violent or abusive threats in their attempts to collect debts. Some will threaten to issue arrest warrants to intimidate consumers into paying.
]]> The FTC says collection agencies receive more complaints than any other business, with more than 150,000 complaints last year. But there may be hope for some people struggling with consumer debt and creditor harassment problems. A new federal agency, which started in January, will be policing some of the nation's largest collection agencies to prevent consumer abuse. The Consumer Financial Protection Bureau will work to be sure that only accurate data is used with firms that attempt to collect debts -- and harassing and threatening behavior will not be allowed.It's good that consumers with outstanding credit card debt may soon find relief from collection agencies' bullying tactics. This new agency, along with options such as filing for bankruptcy, may make it easier for people to get back on their feet after suffering financial challenges.
Source: WFLX-TV, "Help with debt collection harassment," Rachel Leigh, Feb. 20, 2013
]]>There are multiple reasons for this. For one, the federal government sets the interest rates for most student loans; private lenders don't want to run afoul of regulators or Congress if they were to attempt to undercut the federal rate.
]]> Another reason is that the government does quite well by being in the student loan business. One estimate is that the government will make a profit of more than $30 billion on student loans -- something that would be tough to give up given the state of the economy.Student loans are a huge business in this country. Cumulative student loan debt is now more than $1 trillion, and the government is involved with backing more than 85 percent of it.
Even if student loan rates are not good candidates for refinancing, there may be other ways for people to improve their financial situations -- including, depending on the circumstances, Chapter 7 or Chapter 13 bankruptcy. An experienced bankruptcy attorney can help people experiencing financial difficulty to decide what would work best for them.
Source: Time, "Why Can't People with Student Loans Refinance at Better Rates?" Dan Kadlec, Feb. 20, 2013
]]>An official from Equifax says that identity fraud in the country went up 13 percent from 2010 to 2011. They expect the numbers for 2012 to be even higher. This can be scary news for Floridians, where identity theft is the highest per capita in the nation. From credit cards and Social Security numbers to addresses and driver's licenses, millions of Americans find themselves unwitting victims of this crime.
]]> Besides thieves becoming more sophisticated, what are some of the reasons identity fraud is becoming more prevalent? One of the main answers is that as technology becomes more sophisticated, yet more easily accessible, it's easier for anyone to assume someone's identity. The vast amount of personal information many consumers put online can make them easy targets; so can customer databases, which store customers' financial information.Criminals can hurt a person's credit by opening false credit card accounts, using fake IDs or filing fraudulent tax refunds with Social Security numbers and other personal information they can find online. People who want to protect themselves from identity theft can take such steps as protecting their smart phones with passwords and wiping software, putting their names on do-not-mail lists, and refusing to give out their Social Security numbers without good reason.
Those who have found themselves the victims of identity fraud face serious problems that can result in creditor harassment and other issues. They may wish to consult with a bankruptcy attorney to find out how they can clear their names.
Source: The Atlanta-Journal Constitution, "Identity theft a growing problem," Christopher Quinn, Feb. 6, 2013
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