Category: ‘Credit’

Tips for Eliminating Credit Card Debt

July 16, 2018 Posted by kingcade

Credit card debt is a problem for many people today. While having a credit card is not necessarily a bad thing, if you are unable to pay off the entire balance each month, the interest, fees and finance charges can accumulate quickly.  This can eventually cause your credit card balance to spiral out of control. It helps to know what steps to take to eliminate credit card debt before it becomes too big of a problem.

  1. Use all your resources.

One tip that helps in attacking credit card debt is to maximize all the resources available to you. It can take a lot of time and dedication, but it does get the job done. To be successful with the method of throwing all your resources at your debt, you need to do the following:

  • Rely on cash-only to pay for expenses. Make sure these expenses are essential in nature and not frivolous, causing you to waste more money rather than make progress.
  • Put together a list of all credit card debt, detailing the interest rate for each card and the minimum payment on each card.
  • Use the debt avalanche method to attack the debt. What this entails is the person chooses the card with the highest interest rate, and he or she uses all extra money that he or she has available at paying off that card. After that card is paid off, the money that was used to pay that card goes to the next one, and so on. The idea is the money that goes towards the card snowballs in size, helping to pay each one down quicker than the person would be able to do with just meeting monthly minimum payments.
  • Find extra money to pay towards credit cards by creating a realistic budget and sticking to it.
  1. Consider a Balance-Transfer Credit Card.

If the person has a good credit rating, it is possible that he or she could open a new credit card with a lower interest rate for the sole purpose of transferring the balance from a current card with a higher interest rate. Many cards offer promotions for zero-percent annual percentage rates (APRs) with no balance transfer fees during that limited time period. This idea may seem like a bad one since it encourages the person to rely on a credit card to pay off another credit card. However, it can be a good idea if the person has good credit and is dedicated to paying off the balance on the new card, once the old balance is transferred. It is also important that the card holder take advantage of the introductory period to make sure the interest rate stays low while the amount is paid off. Once the period is over, the interest rate could jump up, thus bringing the cardholder to square one.

  1. Credit Consolidation Loan

Another method that is possible to pay off credit card debt is through a credit card consolidation loan. These loans are also referred to as debt consolidation or personal loans. Many of them are unsecured, meaning the person does not need to have assets or collateral to cover the obligation. The interest rates on these loans are usually lower than what the credit card interest rates would be, which makes it a little easier for the borrower to pay back the loan and make progress rather than pay the minimum payment owed on the credit card. Another benefit is the loan allows the person to only make one monthly payment rather than several different minimum payments on various credit cards. It is possible the borrower will need a cosigner, depending on his or her credit score, to back up the loan.

  1. Debt Management Plan

Another option that is available to individuals struggling to pay off credit card debt is a debt management plan. Debt management plans line the debtor up with a credit counselor who works with that person to create a budget and a plan to pay back the debt. The counselor will also speak with the person’s creditors on behalf of that individual and can often negotiate down the debt amount or terms of repayment. It is important to find a quality company when choosing a debt management company. Do research before jumping into the first choice and ensure that the company is legitimate and not a scam. An average debt management plan can take anywhere from four to five years for a person to successfully clear his or her debt.

  1. File for Bankruptcy

If none of these options work or if the debt is simply too much, bankruptcy may be the best option. Chapter 7 is the fastest form of consumer bankruptcy and forgives most unsecured debts like credit card debt, medical bills and personal loans.  There are certain qualifications a consumer must meet in regards to income, assets and expenses to file for Chapter 7 bankruptcy, which is determined by the bankruptcy means test.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Related Resources:

https://www.usatoday.com/story/money/personalfinance/2018/06/26/credit-card-debt-5-cost-effective-ways-you-can-erase/714014002/

 

U.S. Consumer Debt Increases in the Month of May

July 10, 2018 Posted by kingcade

Recent data shows that U.S. consumer debt rose in the month of May by the most it had in the last six months, showing that Americans were more confident in their spending habits halfway through the second quarter.  The increase was seen in revolving debt, which includes credit card debt along with non-revolving debt like student loan debt and auto loans.

As of May 2018, Americans owe more than 26 percent of their income on consumer debt, up from 22 percent in 2010. That means Americans are on track to accumulate $4 trillion collectively in consumer debt by the end of this year. Americans have been accumulating more debt, particularly over the last two years, where consumer credit has grown at a rate of 5 to 6 percent annually.

Click here to read more on this story.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Miami Residents Carry Second Highest Credit Card Debt Balance in the Country

July 5, 2018 Posted by kingcade

Credit card debt is a problem for many people and breaking the cycle can be even more of a challenge. While no one specific timeline works for every person when it comes to paying off credit card debt, it can take years of dedication and regular payments above the minimum to finally pay off a credit card. According to a recent study, it takes the average Florida resident around two years to get out of credit card debt.

The study published by CreditCards.com reported that people living in the Miami metro area, which includes both Fort Lauderdale and West Palm Beach, carry the second-highest credit card debt balances in the country, second to San Antonio, Texas. Texas was reported as being a state with three of the five cities that reportedly had the highest credit card debt.

According to the study, Florida residents holding this much credit card debt would need an estimated 21 months to pay off the current card balance. Those living in San Antonio were reported as only needing one more month, meaning 22 months, to bring the balance to zero.

The CreditCards.com study reviewed median income across the country to average credit card debt by taking data that was provided through the credit reporting company, Experian. The data looked at high debt burdens when the balance on the card was significantly high as compared to the residents’ income being reported as average or below average.

At the opposite end of the spectrum, San Francisco, a well-known area for residents living with higher-than-average income, was reported as having the lowest-reported credit card debt. The average San Francisco resident can pay off his or her debt in 13 months. The reason that debt can be paid off so quickly is the average San Francisco resident earns enough income to pay off this debt comfortably.

Other cities that reported lower debt burdens included Minneapolis, Boston, Seattle and Washington, D.C.

The report indicated that the size of the debt was not so much the problem in the Miami area but rather the debt-to-income ratio. \South Florida residents are taking on more credit card debt than they have the income to handle.

The CreditCard.com study is not the first one that had reported that many Miami-area residents suffer from low income and high financial obligations. An additional report recently shows that Miami residents paid the highest proportions of their income on rent than any other area in the nation. In fact, it has been reported that the Miami-area is one of the least affordable places to live in the nation.

Click here to read more on this story.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

Private Debt Collectors a ‘Most Serious Problem’ at the IRS – Here’s what you need to Know

June 25, 2018 Posted by kingcade

The IRS reactivated a program previously instituted where private debt collectors are used to collect upon unpaid taxes owed by individuals with delinquent tax debts. This IRS Private Debt Collection (PDC) program, however, has been identified as a serious problem, according to the National Taxpayer Advocate.

According to a recent report, taxpayers who had debts assigned recently from the IRS to these private debt collection agencies ended up entering into repayment agreements they simply could not afford. Approximately 43 percent of them were earning income well below their allowable living expenses.

The PDC program also ends up costing the U.S. Treasury Department more than it is worth. In fact, experts criticize these programs as the private collection companies are allowed to keep 25 percent of what they end up collecting, which means the programs cost the Treasury more than the money that comes in after all is said and done.

This brings the question to many taxpayers of how they know whether they are likely to be contacted by a PDC. The taxpayers who are normally chosen are those who have IRS debts that are considered by the IRS as an inactive tax receivable. A tax debt is declared “inactive” after the IRS removes it from the active case list due to either lack of resources or the inability to find the individual. If more than a year has passed since the taxpayer had any communication with the IRS for the collection of the over-due tax, the debt will be considered “inactive,” as well.

When a PDC contacts a debtor, they will normally request full payment of the debt from the taxpayer first. If the taxpayer is not able to make full payment immediately, the private collection agency will then offer the person an installment agreement. However, many times, the installment agreements that are offered and later accepted by the taxpayer end up being more than that person can handle.

What Agencies Have IRS Authorization?

Currently, four PDC agencies have been selected by the IRS to operate the private debt collection program. Only these four firms should be contacting taxpayers, and they include:

  • CBE Group in Cedar Falls, Iowa;
  • Conserve in Fairport, New York;
  • Performant in Livermore, California; and
  • Pioneer in Horseheads, New York.

Phone Scams

Phone scams have been on the rise after individuals have reported being contacted via phone by a person who claims to be affiliated with the IRS and receiving demands for immediate payment. The IRS will not call taxpayers to collect on a debt. Rather, any demand for payment from the IRS will be by a letter on official IRS letterhead, called a Notice CP40. The letter will tell the taxpayer that the tax debt has been assigned to a PDC. The PDC will then confirm in a separate letter that the tax case has been assigned to them. In both of these letters, the taxpayer should see a 10-digit identifier number in place of the taxpayer’s Social Security number. The purpose of this number is to allow for two-party authentication between the taxpayer and the PDC.

Other Red Flags 

The IRS has also provided other red flags taxpayers should be aware of when receiving any questionable communication from someone claiming to be from the IRS. These red flags include the following: 

  • PDCs will not ask the taxpayer to pay them for any fees or owed taxes, and they will not accept payments from the taxpayer. Rather, these companies will inform the taxpayer that any payments for these tax debts should be paid by check directly to the IRS or paid online through the IRS website.
  • If a payment is made by check, it should be written payable to the “United States Treasury.” The IRS nor the PDC will take payment in the form of a gift card, prepaid debit card or iTunes gift cards. Scammers have been known to regularly request payment in these forms.
  • If a taxpayer is contacted by a tax collector, the taxpayer should call the IRS to confirm first that the debt has been assigned to a PDC before working with that company.
  • The PDC cannot enforce collection actions against the taxpayer, including issuing a levy or filing a notice of federal tax lien. Instead, they must follow all IRS rules per the Fair Debt Collection Practices Act (FDCPA).

Tax Debts That Cannot Be Assigned

Lastly, the IRS cannot legally assign a tax debt to a PDC in cases where the taxpayer is deceased; the person is under the age of 18-years-old, or to a person in the military who is in a designated combat zone. If someone is the victim of tax-related identity theft, is classified as an innocent spouse and is currently involved in an exam, installment agreement or offer in compromise, he or she is exempt.

Click here to read more on this story.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

Why Waiting to File Bankruptcy Can Hurt You

June 21, 2018 Posted by kingcade

The decision to file for bankruptcy is never an easy one to make. There are a number of myths surrounding filing for bankruptcy, which can oftentimes lead people to wait.  It often can seem like an admission of personal or financial failure, and for this reason, many filers will hold off on filing for bankruptcy for years, allowing their financial issues to only worsen. In fact, the longer people wait to file for bankruptcy, the more likely they will end up struggling, according to a law review study recently published. By the time the individual files for bankruptcy, their personal life and well-being, as well as their financial situation will be damaged to the point where getting a fresh start can be extremely difficult.

Waiting Can Be Draining

The period of time before an individual files for bankruptcy is often referred to as a “financial sweatbox.” The filers are already under an immense amount of stress, are facing debt collector phone calls and lawsuits and are going without basic necessities to avoid the inevitable: having to file for bankruptcy. This “sweat it out” period can end up lasting for years before the person finally comes to the decision that bankruptcy is best for him or her. A recent Notre Dame Law Review piece titled “Life in the Sweatbox” focused on this period of time, showing how waiting it out can be more damaging than making the leap to file for bankruptcy sooner rather than later.

The study used data from the Consumer Bankruptcy Project, which is a long-term academic research project that focus on people who end up filing for bankruptcy, reviewing the reasons why they file, as well as the consequences. The data includes information from approximately 3,200 bankruptcy cases between the years 2013 and 2016. “Life in the Sweatbox” focuses on 910 of the 3,200 filers.

Of those surveyed, over 66 percent of them were determined to be “long strugglers,” meaning they had been in the sweatbox for over two years. Approximately one-third of them waited five years or more to file for bankruptcy. They reviewed statistics from 2007 which showed that the number of people who were “long strugglers” doubled in numbers.

The problem is the longer the people waited, the worse their financial situation became. Those who waited had half the median assets compared to other debtors who did not wait or did not wait as long. In addition, the median debt-to-income ratio of these long strugglers was over 40 percent higher than other debtors. Approximately 50 percent of the long-term strugglers were facing debt collection lawsuits while only 35 percent of the others were facing them.

It was discussed that the stigma that exists around filing is what keeps people from making that decision to file for bankruptcy. However, bankruptcy laws provide the ability for debtors to get a fresh start. Prolonging the decision to file only allows for assets to be depleted making it even more difficult for the person to get a true fresh start.

When to File for Bankruptcy

If a person’s debts are more than 40 percent of his or her income, it is recommended that he or she reaches out for financial guidance. Also, if the person is using debt to pay for basic necessities or other debts, this is another red flag that perhaps that person is in over his or her head.

A bankruptcy attorney can review what debts are crippling the individual. If they are unsecured consumer debts, including credit cards, personal loans or medical bills, these can all be wiped out in bankruptcy.  Lastly, if the individual is forgoing basic necessities such as food or medical care, it is highly recommended that he or she discuss options with a consumer bankruptcy attorney.

Click here to read more on this story.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.