Consumer Bankruptcy, COVID-19

Personal Bankruptcy Filings Drop in Light of COVID-19 Pandemic Relief

Personal bankruptcy filings are down, leaving many financial analysts questioning whether the drop in filings can be attributed to financial relief offered from governmental pandemic relief programs or to other economic factorsThis stimulus relief offered consumers a much-needed financial boost, but the question remains how long this boost will hold off future bankruptcy filings. 

The number of consumers reporting problems with paying their bills decreased between June 2019 and June 2020, according to figures from the Consumer Financial Protection Bureau (CFPB).  The number of personal bankruptcies filed dropped 38 percent over a 12-month period between March 2020 and March 2021. 

Government stimulus checks, decreased consumer spending, and the availability of mortgage forbearance programs could be part of the reason for this decrease in filings. During this periodconsumers have also reported cutting back on discretionary spending on expenses, such as vacations  

Normally, a decrease in bankruptcy filings indicates an overall improvement to consumers’ financially lives, but experts warn against being too optimistic about these figures. Considering the COVID-19 pandemic is entering its second and the number of consumers who have died or become seriously ill during this time, it is unlikely that all consumers are thriving financially. 

The federal bankruptcy court system attributes the decrease in bankruptcy filings to many different factors, including a reduced amount of consumer spending, moratoriums on evictions and foreclosures, as well as the temporary closure of courtrooms for in-person hearings.  

In this study, the CFPB surveyed the financial lives of approximately 1,700 consumers, giving these individuals a series of subjective questions to answer regarding their finances. The number of survey participants reporting that they had money remaining in their accounts at the end of a month increased by 3.9 points to 46.6 percent. The number of consumers reporting that their finances were controlling their daily lives dropped 8 points to 32.7 percent.  

In the four years immediately preceding the COVID-19 pandemic hitting the U.S., consumer bankruptcies never fell below 750,000 annually. However, between April 2020 and April 2021, the number of consumer bankruptcies filed dropped to 473,000. At the same time, the number of business bankruptcies fell by 13.9 percent.  

As the government stimulus programs wind down and the moratoriums on foreclosures and evictions come to an end, this trend could quickly change, which is why many financial experts remain only cautiously optimistic about these figures.  

Please click here to read more.  

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.   

Debt Collection, Debt Relief

Predatory Debt Collectors Barred from PPP Loans Under New Bill

New legislation introduced this week will effectively bar all predatory debt collectors from receiving money from funds received under the federal government’s Paycheck Protection Program (PPP).  

The measure has been introduced by Representatives Suzanne Bonamici (D-Ore.) and Marie Newman (D-Ill.). In announcing the proposed legislation, the lawmakers pointed to an analysis conducted by the Washington Post in January 2021. The Post reported several incidents where debt collection companies had harassed consumers for payment on debts after they had received their own financial assistance from federal PPP loans. It was their hope that this legislation will curb these practices and will effectively block predatory debt collection firms from receiving PPP money themselves.  

Since it’s inception, the $670 billion Paycheck Protection Program (PPP) has provided forgivable loans for amounts up to $10 million for qualifying small businesses. The purpose behind them was to keep struggling small businesses afloat during the COVID-19 pandemic. 

While thousands of businesses have struggled to survive during this time, many debt collection firms have reportedly thrived. Many of them were able to successfully receive aid through the initial set of PPP loans issued, leaving many consumer advocates to question whether debt collection firms should be allowed to receive these funds.    

According to the Washington Post study, over 1,700 debt collection agencies received PPP funds, totaling over $520 million in funds received. Even after receiving this money, many of them continued to pursue collection of debts through harassment or other abusive methods.

Click here to read more.  

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.   

Consumer Bankruptcy, Coronavirus, COVID-19, Small Business Bankruptcy

U.S. Bankruptcy Filings Drop 38 Percent

Bankruptcy filings are on the decline, according to a recent report.  Statistics released by the Administrative Office of the U.S. Courts, reveal bankruptcy filings dropped 38.1 percent for the 12-month period ending March 31, 2021. This dramatic drop in filings coincides with the COVID-19 pandemic, which first disrupted the economy in March 2020.

Bankruptcy filings fell for both personal and business bankruptcies. Non-business filings fell by a total of 38.8 percent, while business filings fell 13.9 percent.

Unemployment and layoffs initially soared at the beginning of the pandemic. However, several factors may have contributed to the sharp decline in bankruptcy filings. These include, but are not limited to: federal court closings, state lockdown orders that caused a decline in spending, increased government benefits, and eviction moratoriums have eased financial pressures on households.

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.

Source: U.S. Courts.gov

student loan debt, Student Loans

What $10,000 in Student Loan Cancellation Would Look Like

Lawmakers have been calling upon President Biden to move forward with an executive order that would cancel up to $50,000 in federally backed student loan debtOther amounts have been considered, the lowest amount being $10,000. How this cancellation would look across the country would vary, however, depending on the state and the borrower.  

According to the Student Loan Hero, $10,000 in student loan forgiveness would cost approximately $315 billion. This amount of loan forgiveness would erase outstanding student loan balances for 34 percent of all student loan borrowers, according to their review of Department of Education data.  

Student Loan Hero found that, of the $1.7 trillion in federal student loan debt held by borrowers nationwide, $1.3 trillion of it would be eligible for cancellation under the proposed orders.  

The data showed that cancelling $10,000 in student loan debt would make the biggest impact in states with smaller populations of student loan borrowers. For example, in a state with sparser population, such as Wyoming, 38 percent (38%) of borrowers would have their entire balance forgiven. Similarly, 37 percent (37%) would have all their loans forgiven in Utah, while 36 percent (36%) of Nevada borrowers would see their entire balances erased.  

On the other end of the spectrum, only 29 percent (29%) of Maryland or Virginia borrowers would see their loans forgiven. 

In Florida, 31.5 percent (31.5%) would see their loans completely forgiven with a $10,000 cancellation. This cancellation would affect 2,313,800 Florida borrowers. 

A study from the foundation for Research and Economic Opportunity found that states where blue-collar industries were widespread were more likely to have taken on smaller loans to obtain either a certificate or associate’s degree, meaning the average student loan borrower would be holding less debt. However, states where more individuals pursued a college degree in general would benefit more from the $10,000 in loan cancellation.  

Democratic lawmakers insist that $10,000 is not enough to make a significant contribution to the nation’s total student loan debt. Senators Chuck Schumer (D-NY) and Elizabeth Warren (D-MA) are urging the President to consider cancelling $50,000 in student loan debt through an executive order. 

President Biden is currently considering his options and has asked the White House Chief of Staff to prepare a memorandum discussing his legal authority to issue such an executive order. Congress is also concurrently holding hearings to discuss the current national student loan debt crisis.  

Please click here to read more.  

For borrowers who are struggling with student loan debt, relief options are available.  Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt.  It is important you contact an experienced Miami bankruptcy attorney who can advise you of all 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. 

COVID-19, Debt Collection

Debt Collection Lawsuits Pause While One Debt Collector Continues to Pursue Collections

At the start of the COVID-19 pandemic, most debt collectors hit the pause button on collection lawsuits due to widespread national lockdowns. However, one of the largest debt collectors, Sherman Financial Group, continued to pursue its collection efforts. 

According to a study conducted by the Wall Street Journal, Sherman Financial Group had the largest increase of any debt collection firm between March 15, 2020 and December 31, 2020. The study analyzed filings from five state-court districts from the start of the pandemic to the end of 2020. The number of filings went up by 52 percent from the previous year. In comparison, debt collection filings went down by 24 percent with respect to the industry overall. 

Sherman subsidiaries filed 15,420 more debt collection lawsuits in 2020 than they did in 2019 in these five districts aloneThe districts surveyed serve approximately 13 percent of the nation’s population.   

In previous years, Sherman has been a smaller debt collection company. However, financial analysts believe that the company has established its reputation as a nonconformist in the debt collection industry. This is not the first time where Sherman has chosen to take advantage of a financial crisis to expand their reach in the industry. They behaved similarly during the 2008 financial crisis. 

Most debt collection companies have filed fewer lawsuits during the pandemic due to borrower hardship. For example, two of Sherman’s competitors, including PRA Group and Encore Capital Group filed fewer lawsuits in 2020 than in 2019 and limited new collection efforts. Another debt collection company, Oportun Financial Corp, suspended all new debt collection lawsuit filings, dismissed many of their pending cases, and capped interest rates on its outstanding loans. 

Of the lawsuits filed in the five districts surveyed by the Wall Street Journal, Sherman-owned subsidiaries accounted for 12 percent of the debt lawsuits filed, which was a six percent increase from the previous year.  

Facing debt collection is stressful and there are laws in place to protect consumers.  Debt collectors can be persistent, even to the point of becoming harassing and threatening at times. However, it is vital that consumers facing collections actions realize that they do, in fact, have rights, and these rights fall largely under the Fair Debt Collection Practices Act (FDCPA). 

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.   

Source: The Wall Street Journal

Lawyers in the News, Legal Awards

Kingcade Garcia McMaken Awarded ‘Best Bankruptcy Lawyers in Miami’ for 2021

The Miami-based bankruptcy law firm of Kingcade Garcia McMaken has been awarded one of the ‘Best Bankruptcy Lawyers in Miami’ for 2021, by Expertise for obtaining the highest scores in consistency, qualifications, reputation, experience & professionalism.

“We are extremely honored to have received this award,” says Founding Partner and Managing Shareholder, Timothy S. Kingcade. “In today’s competitive legal environment, clients have an increasing number of options when choosing an attorney. It is important that clients and potential clients know how serious we take quality customer service and business ethics. This is a true testament to the commitment we have to our clients and the standards we uphold as a law firm.”

COVID-19, Foreclosure Defense, Foreclosures

Emergency Mortgage Relief Could Extend Through 2022

Since the start of the COVID-19 pandemic, millions of homeowners have benefited from the mortgage relief programs offered by the federal government, and some private lenders.  Now that a year has passed, approximately 2.5 million homeowners are still enrolled in some sort of mortgage relief program, whether it be payment suspension or mortgage forbearance, according to the Mortgage Bankers Association (MBA) 

It is for this reason that the Consumer Financial Protection Bureau (CFPB) wants to extend these provisions and programs further into the future to ensure that these homeowners are not forced into foreclosure.  

Bankruptcy Law

Knowing When to File for Bankruptcy

Making the decision to file for bankruptcy is never an easy one. Many times, it can be difficult to know when the time is right or when it is better to wait.  

A bankruptcy case allows a consumer to receive a much-needed financial fresh start by discharging his or her outstanding consumer debts. The types of debts that are discharged in a bankruptcy case include credit card debt, mortgages, car loans, medical debt, and other unsecured loans.  

Bankruptcy Law

What is a ‘No Asset’ Chapter 7 Bankruptcy Case?

In a no-asset Chapter 7 bankruptcy case, the person filing for bankruptcy keeps all of their property because it falls within the exemptions provided under federal law or the law in their state.

With a Chapter 7 liquidation bankruptcy, a filer surrenders their assets to the bankruptcy estate, which uses them to pay off creditors. But in reality, this is only true of non-exempt property. Many of our cases, are in fact, ‘no asset’ cases. Bankruptcy law recognizes that filers need to retain some property so they can survive the process with something on which to build a future after bankruptcy.

Bankruptcy Law

The Pre-Bankruptcy Credit Counseling Requirement and What Filers Need to Know

All bankruptcy filers are required to take and complete two educational courses before receiving a final bankruptcy discharge. These courses are required for both Chapter 7 and Chapter 13 filers. It is important that individuals considering bankruptcy be aware of these requirements for their cases to be successful.  

At the start of a bankruptcy case, the individual filing must meet certain requirements. The filer must disclose his or her complete financial picture by submitting required bankruptcy financial declarations. He or she must also pay a filing fee, request a fee waiver, or request an installment payment for the fee. Lastly, the individual must submit proof that he or she received credit counseling from an agency approved by the U.S. Trustee’s office. This proof of completion must show that the course was taken within 180 days prior to filing.