When someone files for bankruptcy, an automatic stay is immediately applied to all of their debts, including mortgage debt. This means that creditors may not continue their collection efforts until the bankruptcy is resolved.
For those that fear the bank may soon take action to foreclose on their homes, bankruptcy may provide a way to stay in one's home longer and may prevent the foreclosure from occurring altogether. Typically, banks will start pursuing foreclosure after three months of missed payments.
]]> Chapter 7 Bankruptcy's Effect on ForeclosureChapter 7 bankruptcy is appropriate for someone who can no longer pay their bills. A liquidation of assets occurs and the bankruptcy trustee is able to discharge most debt, meaning that the filer is no longer under obligation to repay what they owe.
However, Chapter 7 bankruptcy does not prevent foreclosure because it does not remove the lien on the home. The lien is what requires the home to be given up as collateral in the event of liquidation. So, although filing for Chapter 7 may keep homeowners in their homes during bankruptcy proceedings, it cannot prevent the loss of the home to the bank since it will be liquidated during the bankruptcy.
Chapter 13 Bankruptcy's Effect on Foreclosure
It is possible, however, to prevent foreclosure through Chapter 13 bankruptcy. Instead of liquidating their assets, Chapter 13 filers have enough funds to repay their debts, but require a reorganization of their repayment plans. An automatic stay through Chapter 13 bankruptcy allows eligible filers to negotiate a realistic repayment plan with their creditors, including their mortgage lender. The payment plan will include late payments and interest, but if paid on-time during the three-to-five year repayment period, mortgage lenders usually allow homeowners to keep their house.
In addition, a bankruptcy trustee is often able to discharge second and third mortgages as unsecured debt under Chapter 13 rules, so homeowners may not need to pay those debts off and could start building equity in their homes.
Homeowners who are behind on mortgage payments and believe the bank may come knocking at any time to start the foreclosure process should consider filing for bankruptcy so they can remain in their homes while their debts are restructured or discharged. If you are considering bankruptcy as an option for preventing foreclosure, please contact an experienced bankruptcy attorney.
Source: San Francisco Chronicle, "Will Bankruptcy Prevent Foreclosure?" M.C. Postins.
]]>Countless debtors in Tampa, Florida, and across the state have suffered through the illegal behavior of debt collectors. Those who are seeking debt relief options, such as bankruptcy, should know their rights and be ready to act if those rights are violated.
]]> Illegal Debt Collector TacticsAfter bankruptcy, most unsecured debts are erased. Credit card debt, for instance, is discharged in a typical Chapter 7 bankruptcy. Debt collection agencies have no right to demand payment for such debts.
It does happen, however. Some debt collectors have been known to seek payment on "phantom debts" - debts that are no longer legally owed. They may seek payment in violation of the Fair Debt Collection Practices Act, which protects consumers' rights to be free from harassment, intimidation and threats.
Florida consumers who are abused by debt collection agencies or are pursued for debts they no longer owe have the right to fight back. While individual consumers should act to protect their individual rights, federal agencies are acting to protect the general populace.
From 2009 to 2010, the Federal Trade Commission (FTC) has received 17 percent more complaints regarding the behavior of debt collectors. The FTC has forced an international debt collection agency to close, citing the threatening calls the company made to victims. The FTC also recently held a press conference in which a target of illegal debt collection practices described the threats and harassment she suffered. In addition, the Consumer Financial Protection Bureau has proposed a plan to oversee the country's largest debt collectors.
With federal law and personalized legal assistance, consumers can protect their rights against illegal debt collection practices.
Source: The Huffington Post, "Debt Collectors Targeted For Heightened Unlawful Harassment," Catherine New, 03/01/2012.
]]>The consumer bureau has proposed a rule that would allow it to closely scrutinize some debt collectors and consumer reporting agencies. The supervision would be similar to that which banks undergo.
Not all debt collection agencies would be regulated by the Consumer Financial Protection Bureau. The rule would apply only to the largest collection agencies - while those companies are only 4 percent of the industry, they attempt to collect 63 percent of outstanding debt. Smaller agencies would not fall under the stricter rule, although the consumer bureau has the ability to regulate all debt collection agencies.
Credit reporting agencies Transunion, Experian and Equifax would also be covered by the rule.
The consumer bureau has the ability not just to regulate the larger debt collection and credit reporting agencies, but also to enter the business premises and inspect the books.
]]> The Purpose of the Consumer Protection Rule and the Current LawThe intention of the consumer bureau is to restore consumer confidence and bolster the belief that the government will enforce consumer rights. Credit reporting agencies can affect consumers in wide-ranging ways, including their eligibility for employment: more and more employers check credit reports when they make hiring decisions.
Consumers have important rights under the Fair Debt Collection Practices Act. The act prevents harassment, intimidation and abuse. Creditors must not lie about the amount owed or possible consequences of nonpayment. They also must not abuse or intimidate alleged debtors, including using abusive language or threats; nor may they make repeated calls intended to disturb or harass alleged debtors.
After the consumer bureau gathers comments, the rule will be finalized by July 21. The rule may help ease some of the strain that Florida debtors and alleged debtors feel when debt collection agencies and credit reporting agencies seem to be crossing the line.
Source: CNNMoney, "Debt collectors, credit agencies get new scrutiny," Jennifer Liberto, 02/16/2012
]]>Contrary to popular belief, it isn't just the uninsured that can't pay their medical bills. High deductibles and constant co-pays are causing middle class citizens to drown in their debt as well. With endless bills, many Americans turn to credit cards to pay their debt. Then when the amount owed on credit cards gets too high, bankruptcy an option to discharge debt.
]]> Many people have a negative outlook on bankruptcy. However, in some situations, it may be the best option. In Florida, when you file for bankruptcy, you will most likely benefit from automatic stay, which will stop home foreclosure, delay wage garnishment and slow down ongoing lawsuits. You may also be surprised to learn that a bankruptcy only stays on your credit report for ten years, and then you can rebuild and improve your credit score.Don't let the weight of medical bills pull you under; determine your options as soon as possible. Remember that filing bankruptcy doesn't make you an irresponsible person, nor does it forgive you from paying all of your bills. Some debts cannot be discharged. However, relieving yourself of the medical noose around your neck will make it easier to fight for your health and well-being.
Source: NorthJersey, "Medical Debt Puts More at Risk," Lindy Washburn, Jan. 21, 2012.
]]>According to the Center for Responsible Lending, the average interest rate on payday loans is approximately 400 percent. When borrowers can't repay right away, rates rapidly compound, quickly sending the borrower into debt collection.
]]> Payday Lenders Must Follow Fair Debt Collection RulesThe Federal Trade Commission recently ordered one payday lender to pay more than $294,000, after it was determined that the company was engaging in illegal debt collection practices.
The lender required borrowers to agree to loan terms that gave the the lender power to garnish borrower's wages without obtaining a court order. When it came time to pursue garnishment, the lender lied to the borrowers' employers, telling them that the borrower was aware of the garnishment action and that the borrower had been given a chance to contest the proceedings.
In addition, the lender talked to borrowers' employers and co-workers about the debt without first obtaining consent.
All of these practices are illegal under federal law. Only the government has the power to garnish wages without a court order. Private companies must secure the court's permission before garnishing wages, and must give the debtor a chance to contest the action.
Further, the Fair Debt Collection Practices Act prohibits creditors from discussing a debtor's obligation with third parties, unless the debtor has granted permission.
Every debtor is entitled to the protections offered by the Fair Debt Collection Practices Act. Individuals who are being victimized by unfair wage garnishment, creditor harassment or other unfair collections practices can sue their creditors and may be able to recover financial damages.
Source: ACA International, "Court Orders Payday Lenders to Pay More Than $294,000," Jan. 9, 2012.
]]>Florida bankruptcy filings were part of this national trend, which applied to all of the main types of bankruptcy: Chapter 7, Chapter 11, and Chapter 13.
Keep in mind, however, that the numbers remain very high. Nationally, there were still 1.38 bankruptcy filings last year. This was down from 1.56 million in 2010, according to the American Bankruptcy Institute.
By any measure, many people are still struggling in debt relief issues. A total of 1.38 million bankruptcy filings is still very high compared to pre-Recession levels.
Analysts are trying to interpret the data to understand what factors may have driven the decrease in 2011. One effect of the weak recovery from the Recession may be a pullback in consumer spending.
]]> Samuel J. Gerdano, the executive director of the bankruptcy institute, subscribes to that theory. "As consumers continue to deleverage their debt and access to credit remains tight, bankruptcy filings will continue to decrease," he said.In other words, Americans are revising their strategies about how to deal with debt. For many people, though, bankruptcy may still be a wise step to take toward debt relief.
This is particularly true, for example, for those with large medical bills. Mortgage problems, and the risk of foreclosure, are another common factor that can a bankruptcy filing a sensible decision, no matter what the national numbers say.
Source: "Bankruptcies fall in Florida, U.S. for first time in six years," Tampa Bay Times, 1-4-12
]]>Many of these people are facing the possibility of losing their homes to the foreclosure process in 2012. Indeed, you may be one of those people.
If so, you may be asking yourself what role bankruptcy could play in helping you deal with your debts while keeping a roof over your head.
Filing for bankruptcy may not solve all of your debt relief problems, but it does give you more options. For one thing, it could force the company that owns or services your mortgage to actually negotiate with you about a modification of the terms of the loan.
According to a recent report in Forbes, big banks have massive amounts of housing loans on their books that they are taking into foreclosure. The numbers are breathtakingly large. Bank of America alone has $23 billion in residential loans in foreclosure. That number rises to a staggering $90.6 when loans serviced for other companies are added in.
]]> It's true that, depending on a debtor's circumstances, bankruptcy may not be the only option. For example, the Home Affordable Refinance Program could offer a chance to refinance your entire balance at a lower interest rate.HARP only applies, however, to mortgages held by Fannie Mae and Freddie Mac. And even if your mortgage is with Fannie or Freddie, you will have had to be current on your payments for the past six months.
In short, bankruptcy may be a reasonable response when facing foreclosure. Talk over your options with a Florida debt relief attorney at our firm.
Source: "Going Bankrupt in 2012, but Keeping Your Home," Forbes, 12-8-11
]]>A Florida foreclosure process attorney can help clients deal with the challenges. When you need debt relief, it makes to get help from lawyer experienced with these issues. An attorney will explain your debt relief options to you and help you make a decision about filing for bankruptcy.
Keep in mind, too, that you are among many thousands of people grappling with debt in this tough economy. Indeed, so many people have suffered from foreclosure or the threat of foreclosure that researchers are now saying that the impact of this stress is creating a public health crisis.
A study from the University of Maryland published in the American Journal of Public Health is one of the first attempts by researchers to document the impact on health of the recession and the ongoing housing slump.
The researchers focused on people over the age of 50. Surveys showed that many people in this age group who are behind on their mortgages are also struggling with depression. For some people, debt problems have become so acute that they may tend to forego prescription medicines that they think are too expensive. This, in turn, can have a negative impact on health, as can bad eating habits caused by financial pressure.
Of course, many people under 50 are facing mortgage default or foreclosure too. Research on the impact of the recession should probably be done on them as well. For now, it's clear that emerging evidence shows a negative impact on health for many people over 50 facing foreclosure.
Source: "Knight: Public health threatened by mortgage crisis," 10-31-11
]]>It's about time the feds got tougher. After all, unscrupulous pitches offering to get people out of debt have become a bigger and bigger problem in Florida and across the country amid the down economy of recent years.
The smart thing to do, as a consumer, is to talk your debt problems over with an experienced bankruptcy attorney who can help you weigh all of your debt relief options carefully. This blog post is therefore a cautionary one, warning you to wary of what the Federal Trade Commission calls "last-dollar scams."
These last-dollar scams are of various sorts. Many of them involve real estate, specifically dubious offers to help people catch up on their past-due mortgage debt. Others involve bogus work-from-home offers, fraudulent credit-card relief schemes, or fake government grants.
What all of these practices have in common is that they prey upon vulnerable people. Most people with debt problems try to do the right thing, even if it means paying practically their last dollar in an attempt to make things right. Unfortunately, paying the last dollar can make things even worse, not better, if that dollar is paid into the wrong hands.
That's why the FTC is trying to crack down. So far, the agency has been successful in shutting down several companies that charged upfront fees to distressed homeowners but did not deliver the debt relief that was promised. The FTC is also launching Operation Empty Promises to go after bogus business-opportunity offers.
Source: "Down to your last dollar? Don't Let con artists take it from you," Washington Post, 10-15-11
]]>Over a year after the passage of federal health insurance reform legislation, that number is still not going down. In fact, it's gone up by 13 percent in the last two years, according to data from CredAbility, a nonprofit group that provides credit counseling.
Certainly the high unemployment rate is one of the issues that underlie the problem of medical debt. After all, people who lose their jobs typically lose their employer-provided health insurance as well.
Yes, it's conceivable to get insurance on the private market. But the premiums and deductibles available there are often pretty hefty compared to the terms available through employers.
Another aspect of the problem is the speed with which hospitals and other healthcare providers hand off medical debt to collections agencies. Hospitals and clinics frequently show little patience with slow payments and respond by quickly referring the bills to collection agencies.
Using a credit card to settle your medical debt may be just exchanging one problem for another. It doesn't matter whether the amount is added to an existing card or whether a new card is opened. Either way, it can be a problem.
Don't let healthcare providers push you into just putting everything on a credit card. It makes sense to ask in advance about payment plans. Indeed, you could even ask about getting the bill reduced, based on your circumstances and ability to pay.
Source: "Don't Let Yourself Get Hurt By Medical Debt," Forbes, 9-8-11
]]>Well there could be many reasons why debt collectors will continue to call a number they know is not the debtors phone number. The most common reason is that most debt collectors use an autodialer that is programmed to call certain numbers at certain times. Unless they actually remove your number from the autodialer cue, the autodialer will continue to make that phone call.
By continuing to call a number that they have been told is not the debtor's phone number, a debt collector violates both the Fair Debt Collection Practices Act and Florida law. Florida recognizes a person's right to privacy. Your right of privacy is violated if the Debt Collector intrudes, either physically or electronically, into your private quarters (your home). The Courts have held that when a debt collector repeatedly calls someone who has told them not to call they have violated that persons right to privacy.
If this has happened to your or somoene you know, you can make the phone calls stop. You should consult with one of our attorneys who can file a lawsuit against the debt collector. When a debt collector gets sued for this sort of conduct, they always remove the phone number from the autodialer. You may also be entitled to damages from the debt collector. And best of all, we handle cases like this on a contingency which means you will not owe us a fee unless we recover money from the debt collector. In short, you really have nothing to lose so if this is happening to you, call us today!
]]>A reason that is not as well known, however, is the availability of various forms of consumer credit. In a tight, post-Recession economy in which credit is harder to come by than before, the difficulty of getting credit can push people in bankruptcy.
A law professor who teaches bankruptcy law, Robert M. Lawless of the University of Illinois, puts it this way: "There is a lot of mythology about what drives bankruptcy rates," he said. "But consumer credit appears to be the most significant factor."
Mr. Lawless points out that, in last year or two, access to credit has become somewhat less difficult than it was immediately after the Recession ended. That helps to explain why the overall number of bankruptcy filings is down somewhat nationally. The number is expected to be down as much as 10 percent this year, from 1.56 million filings in 2010 to about 1.45 million this year.
That's still a lot of bankruptcies. The majority of these filings are for Chapter 7 bankruptcy; they account for nearly 70 percent of the total.
Chapter 13 bankruptcy is also a valid option, especially for those seeking to protect their homes from foreclosure. Debtors to come up with a payment plan under which they agree to pay off a portion of their debts over a three-to-five year period.
If you have questions about bankruptcy, contact us to discuss your specific case.
Source: "Fewer Americans File for Bankruptcy, "New York Times, 7-6-11
]]>The effects of cancer also go far beyond mortality tables. For one thing, the data show that the financial costs of coping with cancer are also a common cause of bankruptcy.
A recent research study has shown that cancer patients have significantly higher rates of bankruptcy than the population at large. The bankruptcy rate for cancer patients, one year after being diagnosed with the disease, is nearly twice that of the general population.
The lead author of the research study, Dr. Scott Ramsey, pointed out that people who are battling cancer "may face significant financial stress, owing to income loss and out-of-pocket costs associated with their treatment." According to Dr. Ramsey, bankruptcy rates for people diagnosed with cancer increase by a factor of four in the five years after the diagnosis.
This elevated risk of bankruptcy is an overall figure; for individuals, the chances vary considerably depending on the type of cancer, how advanced the cancer is, and other factors.
Still, the study's findings call attention to the link between medical bills and bankruptcy. This link tends is often closer for younger people, because older people tend to have more assets. But it is still a link that should be better known.
If you are battling both cancer and financial problems, talk with an attorney at our firm to discuss your debt relief options.
Source: "Bankruptcy Rates High Among Cancer Patients," Medscape Today, 6-16-11
]]>It used to be that debt collectors hounded people by phone and letter. Today, in the age of social media, those unwanted contacts are increasingly occurring online.
More and more debt collectors are going after people on social networking sites, particularly Facebook and Twitter. Collectors are also using e-mail and text messages more often.
The lack of explicit restrictions on using electronic media for debt collection purposes is a limitation in the current law. But the federal Fair Debt Collection Practices Act (FDCPA) does contain limitations on what debt collectors can legally do. And the most important of those limitations apply online just as much as off it.
After all, FDCPA prohibits debt collectors from engaging in deceptive practices when trying to collect a debt. That doesn't change, just because you're online.
Let's say you're on Facebook and a debt collector sends you a message. If you send that collector a cease and desist letter, they cannot continue to contact you through Facebook.
It's true that FDCPA could use some updating for today's social-media times. And courts will be called upon to clarify certain issues. But that doesn't necessarily mean that a collector can get away with posting a collection notice on your Facebook wall or contacting your Facebook friends.
After all, FDCPA applies not only to telephone collections, but to all written communications. And social media messages require writing.
If you have questions about debt collection and social media, talk with an experienced debt relief and bankruptcy lawyer at our firm.
Source: http://atlantapost.com/2011/05/10/how-fighting-pushy-debt-collectors-can-get-you-1000/
]]>Paying credit card debt instead of mortgage payments is a radical change. One explaination could be that consumers are discouraged by decreasing property values. Many homeowners believe that it will be years before they have equity in their home again and they simply now feel that the home is a bad investment. Moreover, when people are stuggling financially they come to rely on their credit cards to pay for everyday needs such as food, cloths and gas for the cars. By making the minimum payments on their credit card debts they continue to have access to the remaining credit limits of the cards.
When a consumer defaults on the mortgage but keeps paying their credit cards they are only delaying the inevitable. At some point the financial house of cards will crash and the consumer will need to consider bankruptcy as an option. If you find yourself in this situation, schedule a free consultation with a one of our experienced bankruptcy attorneys.
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