August 2015 - Page 2 of 3 - FREE CONSULTATION

Today’s Student Loan Debt Crisis Examined

Posted on August 17, 2015by Admin

Today’s Student Loan Debt Crisis Examined

Many consumers face financial struggles because of student loan debt and the numbers keep rising. This year’s graduating class held an average student loan debt amount of $35,000 for a bachelor’s degree, making them the most indebted graduating class in history. Many of these students plan on pursuing higher education, which means these numbers will continue to rise.

These figures indicate that a change is needed- now more than ever. “The Real College Debt Crisis: How Student Borrowing Threatens Financial Well-Being and Erodes the American Dream,” addresses this need. Professors William Elliott III and Melinda Lewis, authors of the book, hope to offer useful solutions to the growing problem that is today’s student loan debt crisis.

Elliot and Lewis argue that the significant increase in student debt is attributed to the common belief that it is acceptable to go into debt for the social and financial gains a higher education provides. While experts agree that education is fundamentally important, the resulting student debt raises the question of whether there is a return on investment.

Elliott and Lewis support shifting college financing away from “debt-dependency.” Instead, they suggest working towards an asset-building model that enables anyone willing to put in the effort to grow their wealth over time. They recommend utilizing Children’s Savings Accounts (CSAs), to accumulate assets from birth as a form of financial aid.

Political attempts to address the student debt crisis often fail to acknowledge the lifelong effects on the ‘asset building capacity’ of young borrowers from different racial and economic backgrounds. This oftentimes effects the students who stand to benefit the most from attending college who struggle with debt following graduation. This has been termed the ‘Debt Divide’ – where those with the highest need for student loans are the most susceptible to the negative effects before and after graduation. There is a significant difference in student debt taken on by someone from a low-income background and student debt taken on by someone from a middle- or upper class background, who have the extended family resources to take on that debt. A long-term solution is still needed to the student loan debt crisis. Until there is a change as to how college educations are financed, the problem of student loan debt will remain.

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. It is important you 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.

Source:

http://time.com/3980583/student-debt-crisis/

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

Building Credit after Bankruptcy: A Step-by-Step Guide

Posted on August 14, 2015by Admin

Rebuilding your credit score after bankruptcy can be a challenge, but it’s not impossible. In fact, many of our clients have a credit score between 680-700, just one year after filing for bankruptcy. The key to understanding how to rebuild your credit score is understanding the process.

Below are some helpful tips that have worked for our clients.

Get Your Credit Report. You can and should check your credit report regularly. Credit.com offers two free credit scores, which are updated monthly. You are also entitled to a free annual credit report from each of the three major credit bureaus.

Start Small. Begin with a secured credit card and pay it on-time every month. Eventually, you can get approved for an unsecured credit card with a small credit limit. Continued on-time payments will help improve your credit history and in turn improve your credit score.

Use Lines of Credit Responsibly. Do not obtain a new line of credit and then max out the balance. Experts recommend keeping your credit card utilization below 30%. For example, if you have a credit card with a $1,000 credit limit, you do not want to charge more than $300 each month.

Pay on Time. With continued on-time payments and proper management of your finances, your credit score will begin to improve following a bankruptcy.

Monitor Your Credit. Certain negative reporting may be removed if a creditor cannot validate the debt. By keeping a close eye on your credit report, you can dispute certain negative marks. Equifax offers a user-friendly online dispute tool for this purpose.

Understand Student Loans. If you have student loan debt, it is important to understand that these loans cannot be discharged through bankruptcy. Non-payment on student loans can prevent you from getting a mortgage or future lines of credit. Payment deferments, forbearance and missed payments can cause balances to increase significantly. The best way to tackle student loan debt is to set up a realistic repayment plan with your lender and stick to it.

If you are in a financial crisis and are considering filing 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.

Source:

http://www.cbsnews.com/news/how-i-am-rebuilding-my-credit-after-bankruptcy/

Foreclosures, Timothy Kingcade Posts

NEW Reverse Mortgage Ruling helps Seniors Stay in Their Homes

Posted on August 13, 2015by Admin

The Federal Housing Administration (FHA), which oversees the nation’s most popular reverse mortgage program, has significantly changed the way it will handle reverse mortgages for “non-borrowing spouses” for the second time in 90 days.

Reverse mortgages are available to individuals 62 years of age or older, who own their home. The amount of tax-free funds received is based on the owner’s age, current interest rates and a current home appraisal. However, a major issue has involved surviving spouses. In the past, many surviving spouses were left out of the loan documentation because they were too young to qualify when the reverse mortgage was signed.

This left the surviving spouse at the risk of foreclosure or having to immediately move out of the home they shared with their loved one. The FHA’s recent decision will allow surviving spouses to remain in the home and avoid displacement during their lifetime. The ruling specifically pertains to households with reverse mortgages written before Aug. 4, 2014.

FHA guidelines indicate that the lender can assign the reverse mortgage to the U.S. Department of Housing and Urban Development (HUD) under the Mortgagee Optional Election (MOE). In April, the FHA rescinded the MOE and updated it this past June. The amended MOE will allow HUD to eliminate lawsuits brought by non-borrowing spouses.

Surviving spouses will enter what is referred to as an unlimited deferment period where they may remain in their home. Non-borrowing spouses will be required to be added or remain on the title, 90 days after the reverse mortgage becomes due. They also must continue payment of property taxes and insurance, and be married at the time the spouse passed away.

Choosing the right attorney can make the difference between whether or not you can keep your home. A well-qualified Miami foreclosure defense attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Miami foreclosure defense attorney Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Source:

http://www.akron.com/akron-ohio-real-estate.asp?aID=27386

Bankruptcy Law, Timothy Kingcade Posts

Ways to Build Credit Without a Credit Card

Posted on August 12, 2015by Admin

Building good credit is an important part of planning for the future. A high credit score allows you the opportunity to borrow money for a car, a home, or even cover the costs of an unexpected medical bill. For many people, however, using a credit card to build credit may seem intimidating and scary. Fortunately, there are other ways to build your credit score without having to open up a credit card account.

Below are some ways to build your credit score without using a credit card:

Credit-Builder Loans. Credit-builder loans are offered by certain credit unions or banks. You are allowed to borrow a small amount (usually under $1,000) and then make payments for 12 to 24 months. Payments go into an interest-bearing CD or savings account. On-time payments will help build credit.

Passbook or CD Loans. This loan uses the balance you already have in a savings account or CD to secure the loan. Making the agreed payments on time will reflect positively on your credit score.

Personal Loans. These loans are also offered by credit unions and banks; however, do not require collateral and typically have slightly higher interest rates than secured loans.

Peer Lenders. This type of loan will allow you to borrow money in order to establish a credit profile. Certain peer lenders report activity to the credit bureaus, so make sure you are aware of the consequences if payments are not made timely.

Federal Student Loans. These loans can be obtained without a credit check and are reported to the credit bureau, regardless of your activity. That’s why it is important to stay current on your payments. It is recommended that you do not take out these type of loans unless you absolutely need them.

Source:

http://www.cbsnews.com/media/7-ways-to-build-credit-without-a-credit-card/

Bankruptcy Law, Timothy Kingcade Posts

Study Reveals Mortgage Holders Have Highest Non-Mortgage Debt

Posted on August 11, 2015by Admin

According to a June 2015 report by Black Knight Financial Services (BKFS), U.S. mortgage holders possess the highest levels of non-mortgage related debt in ten years. These debts include credit card debt, auto loan debt, and student loan debt.

Four main loan groups were evaluated in the report. These include:

Federal Housing Administration (FHA) and VA loans;
Portfolio loans;
Private loans;
Government-Sponsored Enterprise (GSE) loans.

Utilizing data from Equifax Servicing data and McDash Credit’s database, BKFS was able to examine U.S. mortgage holders’ levels of non-mortgage related debt. The report revealed that Americans with mortgages have an average of $1,400 more non-mortgage related debt this year than in years past. So far for 2015, the total amount of non-mortgage debt reached $24,825. For 2014, it was $23,412. In 2006, it was $22, 817.

The report explains, “Non-mortgage debt is a key component of home affordability–the more total debt and the higher monthly non-mortgage payments borrowers have, the less money is available to put toward a new home purchase, to qualify for refinancing or, potentially, to meet current mortgage obligations.”

The largest category for non-mortgage debt was automobile debt, which accounted for 81% of overall non-mortgage debt. Since 2011, auto debt has been responsible for $2,094 of the nearly $2,600 increase in overall non-mortgage related debt. BKFS also found that student loan debt has skyrocketed to a 15% all-time high, among mortgage holders, with an average loan amount of $35,000. On the other hand, credit card balances for mortgage holders have decreased to below 83%.

Borrowers holding FHA/VA loans were shown to have the highest levels of non-mortgage related debt. FHA borrowers carry the highest student loan and auto debt amounts, as well as highest total non-mortgage related debt. However, GSE borrowers have 24% lower overall non-mortgage debt than FHA loans.

BKFS has discovered a direct correlation between non-mortgage debt, mortgage inquires, and prepayments. Borrowers with a recent mortgage inquiry on their credit report carry nearly 40 percent or $10,000 more debt on average than those who do not. Meanwhile those with a recent inquiry who have paid their mortgages on time have approximately $4,000 less non-mortgage related debt than those without the inquiry.

Source:

https://themreport.com/news/data/08-02-2015/report-finds-mortgage-holders-have-highest-non-mortgage-debt

Bankruptcy Law, Timothy Kingcade Posts

Study Takes a Closer Look at Personal Bankruptcy after Obamacare

Posted on August 10, 2015by Admin

The U.S. Supreme Court has officially approved the Obama administration’s health-care reform. Boston Law Professor Daniel Austin conducted a study into personal bankruptcy filings in an effort to shed some light on how the mandatory health insurance law of 2005 has made an impact.

Among a sample of Massachusetts residents, Austin evaluated 5,400 bankruptcy cases filed between 2005 and 2013. He discovered that those who filed for bankruptcy protection had far less medical debt, compared with the rest of the country. Massachusetts is the only state where medical debt is not the leading cause of personal bankruptcy.

Austin speculates that mandatory health care among all 50 states could lead to affordable health insurance, which should serve to keep families out of bankruptcy. Multiple studies have revealed that medical debt is the number one reason why people file for bankruptcy. During his 2009 State of the Union address, President Barack Obama pointed out that 62.1% of consumer bankruptcies were the result of medical debt.

Professor Austin’s study shows only 18% to 25% of personal bankruptcies were filed in the U.S. because of medical debt. Massachusetts residents had only 3% to 9% of bankruptcy cases filed due to medical debt. Based on this information, Austin says that the Massachusetts health-care reform may be the main reason why less residents are filing for bankruptcy.

Source:

http://blogs.wsj.com/bankruptcy/2015/07/01/the-future-of-personal-bankruptcy-in-a-post-obamacare-world/

Foreclosures, Timothy Kingcade Posts

South Florida Foreclosure Rates Decrease

Posted on August 7, 2015by Admin

As the local housing market continues to recover from the economic downturn of 2008, foreclosure rates have decreased in two South Florida counties.

According to a recent report by the property analytics firm CoreLogic, the percentage of Miami-Dade homes in foreclosure for May 2015 was 3.68%. This is positive news, since the percentage had been 3.88% in April 2015. Looking back one year, we see an even bigger decrease from 6.61% in May 2014.

Also, according to CoreLogic’s report Broward County foreclosures have decreased as well. This past May, we saw 3.35%, down from 3.54% in April. Similar to Miami-Dade, there was a significant drop from 6.14% recorded in May 2014.

Although the numbers of Miami-Dade and Broward County foreclosures have dropped, both counties still hold a higher percentage of foreclosed homes than Florida’s statewide numbers. As a whole, Florida’s foreclosure rate is at 2.89%. The U.S. national rate is 1.29%.

Earlier this month, another report revealed that Miami-Dade, Broward and Palm Beach combined hold the sixth highest foreclosure rate in the nation. While the numbers are still considered high, experts remain positive that the amount of foreclosed homes in South Florida will continue to decrease.

Source:

http://www.miamiherald.com/news/business/real-estate-news/article29094796.html

Foreclosures, Timothy Kingcade Posts

Chapter 13 Bankruptcy Buys Time for Borrowers Struggling with Student Loan Debt

Posted on August 6, 2015by Admin

For many, student loan debt is a burden that can wreak havoc on a borrower’s financial situation. Reports show that recent graduates with a bachelor’s degree accumulate an average of $35,000 in both federal and private student loan debt. In an effort to get a better handle on their financial predicament, some are turning to bankruptcy.

After obtaining a master’s degree in intelligence and global security, a Leetsdale man struggled to make ends meet. With $80,000 worth of student loan debt, the 29-year-old decided to file for bankruptcy to help manage his financial situation. In a similar case, a Bradenton, FL woman accumulated $223,000 in student loan debt after obtaining her bachelor’s degree in dental hygiene. With interest rates and fees, the 43- year-old calculated that she would be paying the loan back for the rest of her life.

College funding expert, Mark Kantrowitz explains a simple rule of thumb: your total student loan debt at graduation should be less than your annual starting salary. If it is more, you can expect to encounter serious financial problems as you try to pay down the debt. Filing for Chapter 13 bankruptcy can help.

While a Chapter 13 bankruptcy cannot discharge student loan debt, the debt can be reorganized and placed on an income based repayment plan, which can reduce the monthly payments substantially. After filing for Chapter 13 bankruptcy, the Leetsdale man’s student loan payments went from $1,000 to $200 a month, while the woman in Bradenton was able to consolidate her debts into a smaller single payment.

However, with a Chapter 13 bankruptcy, the reorganization only lasts for five years. After that, all payments revert back to their normal amounts. Chapter 13 serves to force an income-based repayment plan for five years, which in many cases allows borrowers enough time to get back on their feet. It seems that private student loans are causing borrowers to turn to Chapter 13 bankruptcy as an option because of higher interest rates and limited flexibility.

According to the Consumer Financial Protection Bureau, the cost of both private and public college degrees has skyrocketed and national student loan debt has ballooned to $1.2 trillion. Unfortunately, college graduate salaries have barely increased by comparison. Oftentimes, college graduates are stuck with high monthly payments, low wages, and the agonizing decision of whether to pay their student loans or buy groceries. Despite the tough circumstances that tend to hinder graduates from qualifying for home mortgages, or properly saving for retirement, many are still fighting to conquer the student loan debt crisis.

Source:

http://www.post-gazette.com/business/money/2015/08/02/Student-loan-debtors-using-Chapter-13-bankruptcy-to-buy-time-on-payments/stories/201508020047

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

Policy Changes Help Surviving Spouses Handle Reverse Mortgages

Posted on August 5, 2015by Admin

Numerous horror stories regarding reverse mortgages have forced the Department of Housing and Urban Development (HUD) to take another look at its current policy. Changes have been made, allowing reverse mortgage lenders to transfer certain loans to HUD when a borrower dies and is survived by a non-borrowing spouse.

Prior to this change, the surviving spouse who was not listed as a borrower had to leave the home. Now, loan servicers have a new option. For many couples, it is risky to own a residence where only one spouse in on the mortgage. If that spouse dies and they have taken out a reverse mortgage, strict guidelines come into play.

A recent widow faced loosing her home after her husband took out a reverse mortgage and then passed away shortly thereafter. The reverse mortgage was only in the deceased spouse’s name, despite the couple jointly owning the property. Reverse mortgages are only available to those 62 years of age and older. At the time of the reverse mortgage, only the woman’s husband met the age requirement.

Such dealings can become complex but with the policy change, the government hopes to alleviate this. Under the revised policy, lenders will be allowed to proceed with reverse mortgage claims, known as home equity conversion mortgages (HECM). This can only be done with eligible surviving non-borrowing spouses and case numbers assigned before August 4, 2014. It is recommended that a reverse mortgage not be taken out unless both spouses can be on the loan agreement.

Source:

http://www.miamiherald.com/living/home-garden/article25519939.html
http://www.consumeraffairs.com/news/feds-ease-reverse-mortgage-policy-for-non-borrowing-spouse-again-061515.html

Bankruptcy Law, Debt Relief, Foreclosures, Timothy Kingcade Posts

Banks to Blame for Failed Loan Modifications

Posted on August 4, 2015by Admin

In 2009, the Obama administration launched the Home Affordable Modification Program (HAMP), as a proposed “lifeline” for nearly 4 million struggling homeowners. Borrowers were promised much needed loan modifications to help with their financial situation. Unfortunately, a recent report has revealed some disturbing details about the program.

Over the past six years, Special Inspector General Christy L. Romero of the Troubled Asset Relief Program has been closely monitoring HAMP. According to her report, only 887,001 borrowers received loan modifications, which reduced their mortgages. Romero’s report showed that approximately 4 million borrowers’ requests for help were denied, accounting for about 72% of applications submitted since the program began. It appeared that the big banks repeatedly avoided helping borrowers, without regard for their situation.

Unable to work because of her disability, a Vermont woman applied for a mortgage loan modification through Bank of America. The process began in 2012 but dragged on for more than two years as the bank repeatedly requested copies of documents she had already provided. Several errors were made on her file, including the bank’s request for proof that she was no longer married to a man she did not even know, and incorrect information about whether she wanted to keep her property.

Cases like this are all too common, and many believe it is because of the way HAMP was designed. Since the program is voluntary for the banks, it appears the banks have chosen to not help the borrowers who need it the most. The numbers of rejected applicants is a testament to the flaws within the program.

Romero’s report detailed how CitiMortgage, a unit of Citibank, rejected 87% of borrowers who applied for a loan modification. JPMorgan Chase also had a similar denial rate of 84%. Bank of America rejected 80%, while Wells Fargo turned away 60% of applicants. It seems that delaying a borrower’s loan modification request is profitable for the banks, leading to more interest and fees being charged to the borrower.

According to Ms. Romero, the Treasury was supposed to ensure that the banks involved in the program were not wrongfully rejecting homeowners for a modification. Unfortunately, this appears to be exactly what has been happening. Fortunately, in the Vermont woman’s case, she was able to finally receive her loan modification after seeking help from a qualified and experienced attorney. Still, many homeowners see the government program as false hope since millions of borrowers did not get the help they needed.

Source:

http://www.nytimes.com/2015/08/02/business/pulling-down-underwater-borrowers.html?_r=0