Bankruptcy Filings, Bankruptcy Trends

U.S. Corporate Bankruptcy Filings Hit 13-Year Peak

Total bankruptcy filings rose 13 percent, and business bankruptcies rose nearly 30 percent, in the twelve-month period ending Sept. 30, 2023, according to the U.S. Courts. This continues a moderate rebound after more than a decade of sharp decline. Corporate bankruptcy filings in the U.S. rose again in December 2023, ending the year with the most filings since 2010.

S&P Global Market Intelligence recorded 50 bankruptcy filings in the month. The total was an increase from the 33 recorded in November.

There were 642 total filings in 2023, significantly above the previous two years and marginally more than in 2020, which saw an influx of Covid-19 related filings.

Seven industrial companies and seven consumer discretionary companies filed for bankruptcy over the month, followed by six filings among information technology companies and six from the healthcare sector.

Consumer discretionary companies recorded the most bankruptcies in 2023 with 82 filings. Many of the companies attributed their filings to rising interest rates and inflation, which impacted their post-pandemic operations.

There were bankruptcy filings in 19 states and the District of Columbia in December, with the greatest number originating from California, Texas, and Florida.

During the year, 95 California companies sought bankruptcy protection, followed by 75 from Texas and 68 from Florida. New York added 58 filings in 2023, while New Jersey registered 31.

Additional states with 15 or more filings in 2023 included Massachusetts, Georgia, Nevada, Illinois, North Carolina, and Pennsylvania.

Source: U.S. Bankruptcies hit 13-year peak in 2023; 50 new filings in December. (January 9, 2024)

Credit Card Debt

Consumers Add a Record $179.4 Billion in Credit Card Debt

U.S. consumers have hit a record high when it comes to credit card debt. According to a recent WalletHub study, American consumers added a record $179.4 billion in new credit card debt to the already-existing credit card debt in 2022. These numbers are expected to increase as we move into the second half of 2023.

The largest increase was seen in the fourth quarter of 2022 with an increase of $84.9 billion in that quarter alone. A fourth-quarter increase is not unusual, as it is usually followed by a first quarter pay-down. However, once 2023 began, WalletHub found that American consumers only paid down their credit card debt by $24 billion, which is the second smallest first-quarter credit card debt paydown seen in the last decade.

Credit Card Debt

U.S. Cities with the Least-Sustainable Credit Card Debt

High interest rates and high inflation are making it harder than ever to pay down credit card debt. American consumers started the year with over $1 trillion in outstanding credit card debt.

According to a recent study, the average U.S. household has over $8,900 in credit card debt, which is up 4.5 percent (4.5%) from last year. Consumers in certain cities seem to struggle more than others. This fact was recently documented in a study produced by personal finance website, WalletHub, listing which American cities had the least sustainable credit card debt.

Consumer Bankruptcy, Consumer News

DeSantis Vetoes Florida Bankruptcy Relief Bill

Gov. Ron DeSantis vetoed a measure last week that would have provided some much-needed relief for those struggling financially in Florida.  The specific measure, HB 265, was passed unanimously by both the state senate and legislature during the most recent legislative session, where it was quickly vetoed by DeSantis. This bill represents the third bill vetoed by the governor.

This bill would have given Floridians facing bankruptcy relief by providing them credit for any equity they may have had in their vehicle. The law would increase the bankruptcy exemption provided to debtors in their cars from $1,000 to $5,000.

Bankruptcy Law, Lawyers in the News

Bankruptcy Attorney Timothy S. Kingcade Interviewed by The Miami Herald

With about one out of every nine Miami-Dade workers — and nearly one out of every six in Broward — still out of a job due to the coronavirus pandemic, a question lingers in South Florida: How long can the region stave off an even worse economic disaster?

After a rough start, Florida’s unemployment system has come online to furnish tens of thousands of local workers with as much as $875 per week in unemployment insurance — the state’s standard $275, plus an extra $600 through the emergency U.S. CARES Act passed in March. But Florida’s unemployment insurance lasts only 12 weeks. And the extra $600 from Congress is set to expire July 31. Greater Miami ranks as one of the hardest hit metros in the country, thanks to its reliance on a tourism industry that has instantly dried up.

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

How Debt Collectors Trick Consumers into Reviving Old Debts

Creditors can be extremely creative when attempting to collect on a debt. Many of them rely on the fact that most consumers do not truly understand the laws surrounding debt collection. The average consumer may not know creditors only have so long to collect on a debt under the state’s statute of limitations. After that time has passed, the creditor or debt collector is barred from taking legal action to collect on the debt.  But that does not mean they can’t stop trying to collect on it.

The problem is many debt collectors will still attempt to get payment on the debt, even after it is past the legal statute of limitations. This practice is often referred to as “zombie debt collection.” Their hope is that the consumer will pay on the bill, even just a partial amount, reviving the debt, and then giving the debt collector the legal right to sue to collect on the remaining debt.

It is important that consumers be aware of what the statute of limitations is for their given state. In Florida, debt collectors may not collect on a debt that is more than five years past due for written contracts, such as personal loans. For other debts, including those with revolving accounts, such as credit cards, the statute of limitations is four years.

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

Tips for Buying a Home Post Bankruptcy

Many people assume that filing for bankruptcy means that they will never be able to qualify for a home loan or take out credit again.  This is one of the many bankruptcy myths out there. The following steps can help you achieve the goal of purchasing a home post-bankruptcy.

  1. Review Your Financial Situation

After receiving your fresh start from bankruptcy, you should review your financial situation. Ensure that all of the debts that would have qualified for discharge in a bankruptcy case have, in fact, been discharged. It also helps to get a clear picture of where you are financially by reviewing your credit report.  Most financial experts recommend you review your credit report every year to ensure that no mistakes exist on the report and to ensure that progress is being made in rebuilding your credit.

  1. Establish a Budget

Not only is it helpful to get a good idea of your financial situation by reviewing your credit report and keeping tabs on your progress in rebuilding your credit, it is also important to establish and stick to a budget. Review your monthly household expenses, as well as your monthly income. Lay out any upcoming annual expenses, including taxes or vehicle registration, and make sure enough money is available to pay for all of these necessary expenses. If any additional funds are available after all needed expenses are met, use this money to help build up a savings for a down payment, as well as unexpected emergency expenses. Stick to this budget throughout the year, as much as possible to help build up savings for a down payment on a home.

One practical way to grow your savings is to follow the adage of paying yourself first. When creating a budget, make sure that putting money into savings is a priority by doing it before you use any extra money on unnecessary expenses. While the more you are able to put away into savings is better, also be realistic in how much you set aside for savings. Do not stretch yourself too thin to the point where you have nothing left for any other costs and expenditures.

  1. Rebuild Your Credit

Building up savings is important, but it is equally important to rebuild your credit after bankruptcy. One important tool used by bankruptcy filers to rebuild credit is a secured credit card. These types of cards carry lower spending limits and higher interest rates but using a secured credit card for a short period of time can help rebuild credit. After a set period of time, you can begin using a conventional credit card, so long as the balance is kept low and paid in full every month. It also helps to continue paying all bills on time and not missing payments, which will improve your credit score over time.

  1. Formulate a Plan

You should go into the home purchasing process with a plan in mind. Calculate what type of down payment you can afford, but also keep in mind what type of monthly mortgage payment your budget can handle. Financial experts recommend that you not spend more than 28 percent of your income on housing costs.  Also ensure that your budget allows for additional expenses, such as regular maintenance and costs that come along with home ownership. If you have a house you are interested in, make sure you schedule a thorough inspection to ensure that no additional, unidentified problems come along with the purchase.

  1. Get Organized

Before applying for a mortgage, it is recommended that you get yourself organized and prepared with all of the financial information that will be required for a mortgage application. If you have just completed a bankruptcy case, odds are you are familiar with compiling important financial documentation, including paystubs, tax returns, list of assets and other financial documentation.  Common documentation that is required includes bank, credit card and other loan statements, tax records, insurance documents, employment records, paystubs, and investment records. If you have recently gone through a bankruptcy, you may also need to provide legal documentation, such as your bankruptcy petition.

  1. Research Your Mortgage Options

It pays to do the research to determine the best available lending options. Conventional mortgages are available through private lenders, mortgage companies, commercial banks and credit unions. These types of mortgages tend to be more rigid in their criteria. The Federal Housing Administration (FHA) also offers loans that are backed by the government. These loans are a little more flexible in their criteria but come with other restrictions on the person’s ability to flip the property or rent it out later. FHA loans, however, are beneficial for first-time or lower-income homeowners.  Be sure to research the different interest rate options available before signing on the dotted line. Financing can be done through a fixed-rate mortgage, which locks the purchaser into an interest rate at the time he or she signs loan documents, or an adjustable rate mortgage, which can mean rates can fluctuate with the market.

How smoothly purchasing a home after bankruptcy goes can depend heavily on the type of consumer bankruptcy that was filed, whether it be Chapter 7 or Chapter 13 bankruptcy, and the type of loan being sought. Mortgage lenders have different “seasoning periods” that determine when someone is ready to receive a mortgage following a bankruptcy or foreclosure. For a Chapter 7 bankruptcy, the period usually is four-years after discharge for a conventional mortgage or two years for a VA or FHA loan. However, for a Chapter 13 bankruptcy, a borrower may be able to get a conventional mortgage just two years after receiving a discharge or even less than two years if the borrower is seeking a VA or FHA mortgage.

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://blog.credit.com/2017/11/5-steps-to-buying-a-home-after-bankruptcy-115998/

https://blog.credit.com/2014/10/how-soon-can-i-buy-a-house-after-bankruptcy-or-foreclosure-98939/

 

 

Bankruptcy Law, Credit, Credit Card Debt, Debt Relief, Timothy Kingcade Posts

Floridians Hold Some of the Highest Amounts of Credit Card Debt in the Nation

Credit card debt is a problem for many Americans, but according to a recent study, it seems to be a more significant problem in Florida.  In fact, the Sunshine State has been ranked among the top three states where residents hold the highest amount of credit card debt.

Florida residents carry a total balance of $59.2 billion in credit card debt, as of the end of 2017. The State of California tops the list with its residents holding $106.8 billion in credit card debt, followed by Texas at $67.3 billion.

Interestingly enough, California has traditionally been known to be a state where individuals need to earn the most income to be considered “wealthy” by most standards. Considering the high level of credit card debt residents in California carry, this leads one to conclude that this “income” involves resorting to the use of credit cards, instead of solely relying on earnings.

According to the report, the states with the highest amounts of credit card debt in 2017 were:

  1. California $106.8 billion
  2. Texas $67.3 billion
  3. Florida 59.2 billion
  4. New York $58.1 billion
  5. Pennsylvania $33.2 billion
  6. Illinois $32.2 billion
  7. New Jersey $29.6 billion
  8. Ohio $26.7 billion
  9. Virginia $26.5 billion
  10. Georgia $26.3 billion

Florida residents were also in the top ten for credit card delinquency rates, meaning balances were left unpaid for 90 or more days. Nationally, approximately 7.5 percent of credit card debt was delinquent by these standards. Florida was above this average figure and ranked third in terms of delinquency reported.

The report stated that credit card balances on a national level declined between the years 2008 and 2013 but began to rise again in 2014. As of 2017, more than 470 million credit card accounts were open, totaling $3.5 trillion. The total debt figures were compiled by the Federal Reserve Bank of New York.  The full report can be viewed here.

If you are struggling with credit card debt 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://patch.com/florida/southtampa/florida-among-states-highest-credit-card-debt

 

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

Florida Ranks in the Top 5 States for Invalid and Illegal Debt Collection

Invalid and illegal debt collection practices are at an all-time high across the country, and Florida is no exception.  Data was analyzed from the Consumer Finance Protection Bureau (CFPB) to identify the states that engaged in these deceptive and illegal practices.  ‘Zombie’ debt collections are rampant in South Florida and involve attempts to collect debts not owed, those that were already paid or discharged in bankruptcy, debts owed by someone else, or are a result of identity theft. Typically, this debt collection practice is done by third-parties, who have collected these debts written off by the original creditor.

The five states in which zombie debt collection is most prevalent are:

  1. Delaware– Delaware leads the nation when it comes to the likelihood of having to deal with a collection agency trying to collect a debt you do not owe.  With a total of 422 complaints in the Consumer Complaint Database, Delaware has a per-capita rate of 44.72 complaints per 100,000 residents.
  2. Florida– Florida comes in at number two with 42.43 complaints per 100,000 residents (a total of 8,314 complaints in all).
  3. Georgia– Georgia trails Florida by two hundredths in its per capita incidence rate of reports of zombie debt collection attempts, with 4,258 complaints registered and a population of almost exactly 10 million residents.
  4. Nevada– Like Florida, Nevada has incidence rates of illegal debt collection attempts well above the national average of 25.84 per 100,000.
  5. Maryland– Maryland has 38.65 complaints per 100,000 residents. The affluent and suburban Prince George’s County has an incidence rate of 66.6 per 100,000 residents.

Knowing which debt collection agencies have a history of practicing zombie debt collection in your state can help you avoid being a victim.  The three debt collection agencies most likely to engage in invalid and illegal debt collection practices in the country are:

  1. Encore Capital Group
  2. Enhanced Recovery Company (ERC)
  3. Portfolio Recovery Associates

Click here to read more on this story.

If you 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, P.A. 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.

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

How to Pay for Bankruptcy When You’re Broke

Filing for Chapter 7 bankruptcy costs anywhere from between $500 to $3,500. If you are already in financial distress, it may be difficult to come up with the fees you will need to file. Follow these three strategies to pay for bankruptcy.

Raise the money

First, minimize your outgoing cash. For example, if you are still making credit card payments, stop making them. Chapter 7 bankruptcy discharges unsecured debts such as credit card balances. Next, try to find some additional income. This can be done by selling old electronics or taking on part-time work. You can also use your tax refund to pay attorney and bankruptcy filing fees.

Work out a payment plan

If you find the right attorney, you may be able to make payments for the services and filing fees. Ask about setting up a payment plan in the initial meeting with any bankruptcy attorney you are considering. Your attorney can also with work the court on a payment plan for your bankruptcy filing fee.

Go pro bono

If your income is less than 150% of the official poverty line for your family size, you might qualify for free legal services or waived fees. If you are not sure how to find out if you qualify, your local bankruptcy court will have information on free legal clinics and local free legal aid resources. Also, the American Bankruptcy Institute has a bankruptcy attorney directory that can help you find pro bono attorneys in your area.

Click here to read more on this story.

If you 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, P.A. 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 website at www.miamibankruptcy.com.