March 2019 - Page 2 of 2 - FREE CONSULTATION

Bankruptcy Law, Credit, Timothy Kingcade Posts

How Long Do Debt Collections Affect Your Credit Report?

Posted on March 14, 2019by Admin

When you are being pursued by debt collectors, the incessant phone calls can make you feel anxious and stressed. The number one piece of advice we give when dealing with creditors is to be honest with them. Never make a promise to pay if you are unable to do so and do not avoid creditors or collection attempts.

A collections action is essentially any type of collection on a debt. Whenever a creditor submits an account to collections, a notification is submitted to the credit reporting agencies. This notification will almost always result in the consumer’s credit score dropping. The more collections that show up on the person’s credit report, the bigger the drop will be. Any type of collections will show up on a credit report, including credit cards, medical bills, loans and mortgages.

Once a collections action is reported, it will stay on a person’s credit report for seven years. The same time period applies for missed or late payments. To put these figures in comparison, a Chapter 7 bankruptcy case will stay on a person’s credit report for ten years and Chapter 13 bankruptcy for seven years.

Credit reports treat debts all in the same manner, so if the collection is for a secured debt, such as a home or car, it will be treated the same way as credit card debt. However, medical debt is treated somewhat differently than other unsecured debt. New rules regarding medical debt have made it more difficult for it to impact your credit score as quickly. The new rule builds additional time between patients and insurance companies to resolve such matters. Up until this point, there was no grace period and medical debt could appear on your credit report as soon as it was reported as an unpaid debt. The three credit reporting agencies now have to wait 180 days before putting an unpaid medical bill onto your credit report.

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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 Resource:

https://www.myfico.com/credit-education/faq/negative-reasons/how-long-negative-information-remain-on-credit-report

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

President Trump Plans to End Student Loan Debt Forgiveness Program

Posted on March 13, 2019by Admin

The White House has released President Trump’s budget proposal for 2020, and many of the cuts take aim at the student loan debt crisis. Here are some of the specific proposals, which could affect borrowers’ ability to pay off their student loan debt.

The end to public service loan forgiveness. According to Trump’s proposed budget, the Public Service Loan Forgiveness Program would be eliminated. The effects could adversely impact members of the U.S. Armed Forces, police officers, firefighters, first responders, prosecutors, public defenders, and other public servants.
A change to federal student loan repayment. The number of income-driven repayment plans would be reduced to just one. Current plans, such as PAYE and REPAYE, allow borrowers to repay their federal student loans based on income, family size and additional factors, and can result in student loan forgiveness. The changes would favor undergraduate borrowers who typically earn less than graduate school student loan borrowers. Monthly student loan payments would be capped at 12.5% of income and after 15 years of monthly payments, any remaining student loan debt would be forgiven. This is five years earlier then the current income-driven repayment options. Graduate student loan borrowers would see the opposite effect – a five year increase to student loan debt repayment before their loans are forgiven.
The end to subsidized student loans. Subsidized student loans has traditionally meant that the government pays the interest costs on federal student loans while borrowers are enrolled in school. The rationale behind eliminating these type loans is to save the federal government money by collecting additional interest. This could result in the cost of a higher education being that much more expensive due to additional interest costs.

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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.

Bankruptcy Law, Timothy Kingcade Posts

How Do Bankruptcy Courts Handle Income Tax Debt in Chapter 7 Bankruptcy?

Posted on March 12, 2019by Admin

We have all seen or heard the advertisements promising to significantly reduce or even eliminate tax debt. Many of these companies are offering just that – empty promises, while charging clients unethical fees. Of all the types of debts handled in a bankruptcy case, income tax debt tends to be one of the non-dischargeable categories, along with student loan debt and child support obligations.

However, there are certain tax obligations that can be discharged in a Chapter 7 bankruptcy case depending on the following factors:

When You Can Have Your Tax Debt Discharged in Bankruptcy:

You must have filed a tax return. This must have occurred at least two years prior to the bankruptcy filing;
The taxes must be income taxes. Taxes other than income tax, including payroll taxes and fraud penalties are non-dischargeable in bankruptcy;
You must not have committed fraud or willful evasion. If you filed a fraudulent tax return or attempted to evade paying taxes (i.e. – using a false social security number on your tax return) your tax debt cannot be discharged in bankruptcy;
The debt must be at least three years old. For the tax debt to be eliminated in bankruptcy, the debt must have been originally due at least three years before filing for bankruptcy;
The tax debt must have been assessed by the IRS at least 240 days before you file for bankruptcy.

A Chapter 7 bankruptcy can wipe out your personal obligation to pay the debt and prevent the IRS from garnishing your wages. Whether you should file for bankruptcy may be a matter of timing, depending on the age of the income tax debt. An experienced bankruptcy attorney who specializes in this area of law can best advise you on the next steps to take.

Related Resources:

https://www.nolo.com/legal-encyclopedia/bankruptcy-tax-debts-eliminating-29550.html

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Student Loan Changes on the Horizon

Posted on March 11, 2019by Admin

An estimated $1.5 trillion is owed in student loan debt nationwide, which makes it a pressing issue in the current political arena. In fact, student loan debt is expected to be a major issue in the upcoming election given the fact that more than 40 million American consumers carry student loan debt. The following are some potential changes that borrowers may see in the future.

One of these proposed changes has been to radically modify the costs of attending a public university. Currently, the average student graduates from a state public university with somewhere near $35,000 in student loan debt, which stays with the borrower for quite some time following graduation. This balance goes up even more if the college is out-of-state or private. The House Democrats have recently proposed the Aim Higher Act, legislation which would increase the amount of grant-based federal aid and would also offer financial incentives to states to either reduce tuition or eliminate it altogether at state universities. The latter may seem like a pipedream, but some states, such as New York, have recently proposed laws that would offer free tuition at state universities for students who qualified under income guidelines, so long as the student commits to staying and working in New York upon graduation.

These proposals only deal with students who are getting ready to attend college. What about the others who already have student loans and are struggling to pay them? Proposals have been made to create a federal program that allows borrowers to refinance both their federal and private student loans at a lower interest rate. This possibility could make payments more reasonable for borrowers by lowering interest rates on outstanding loans. However, opponents to this idea argue that a refinancing program would only benefit higher-income earners as opposed to those groups who could benefit from them most.

Another potential change to student loans could come in the form of caps on how much interest can accrue on a loan. Borrowers normally end up paying essentially double what they took out originally by the time interest is fully paid. Many state legislators have proposed capping the amount of interest at a certain percentage of the total original principal balance, making the repayment process more feasible.

At some point, many financial experts advocate that all of the programs in the world will do nothing without addressing the total debt owed already. Student loan forgiveness or cancellation could be seen as a way of not only stimulating the economy but also freeing many from the burden of debt. Programs, such as the Public Service Loan Forgiveness program, already exist, but those only apply for graduates working in specific industries. Other programs could potentially appear with the same goal in mind in the future.

Student loan advocates have been arguing for years that more oversight needs to occur for lending. States, including New York and Massachusetts, have bills that are currently pending which involve this issue, and it is highly possible more states will propose similar legislation.

Reform may also come in the bankruptcy court. Traditionally, student loans have been next to impossible to discharge in bankruptcy. The courts apply an “undue hardship” test when determining if a borrower’s loan obligations should be discharged, but no uniform test exists, leaving courts to vary in their interpretation of the law. The fact that these loans are so hard to discharge in bankruptcy is a leading reason why many people decide not to file for bankruptcy and continue struggling financially. If student loans were able to be discharged in bankruptcy, this change could open the doors to financial freedom for countless borrowers struggling with student loan debt.

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

Understanding the Benefits and Disadvantages of Utilizing Balance Transfers

Posted on March 8, 2019by Admin

Credit card debt can be difficult to manage, especially if a card carries a particularly high interest rate. If someone is only paying the minimum monthly payment, it is likely he or she is only paying on the interest accrued that month and never making progress on the principal. One possible option to pay down a high credit card balance is to transfer the balance to a credit card with a zero or lower interest rate. However, balance transfers come with their own set of risks, as well as benefits, which should be explored before someone chooses to pursue this option.

A balance transfer occurs when the outstanding credit card balance from one card is transferred to another one. This transfer is normally done because the new card offers a lower interest rate. Many cards even offer promotional periods of zero percent interest. The purpose of transferring the balance is this period with no interest accruing should give the debtor time to pay down or even completely pay off the balance. It is a simple solution to a complicated problem.

Many cardholders choose to utilize balance transfers if they hold several balances on multiple credit cards. They feel like they are juggling the minimum monthly payments on each card without ever truly making progress. By taking all these balances and transferring them into one card, it can be a way to consolidate debt and make payments easier. After the transfer, the debtor will only have one card to pay rather than multiple cards.

Balance transfers come with their own set of disadvantages and risks, however. Many times, the costs grossly outweigh the benefits of the transfer. Any of these promotional low rates come with a set time limit before the interest spikes back to a rate that may be even higher than the original card. Some of the cards also come with fees and penalties if the balance is not paid before the promotional period expires. If the consumer is not careful, he or she may end up not only with a rate higher than previously held but also zero progress made on the balance.

Some consumers make the mistake of transferring a balance to a new card and making payments while still using the card. If any progress is going to be made on the balance, it helps to not use the card and add to the balance. However, if the person relies on a credit card for daily expenses, it may be wise to use a different card while paying on the card with the balance transfer.

When a consumer applies for a new credit card, the cardholder should expect a hit to his or her credit score, as well. It may not be a significant drop, but it could be if the cardholder already has a poor credit rating. If the balance is not paid off at the end of the promotional period, the cardholder could end up with a card with a high balance and a bad credit score, thus negating the whole point of the balance transfer. It is for this reason the consumer should be sure that he or she can handle making large payments on the balance after the transfer is made. Do not apply for a balance transfer if you do not believe you are up for the challenge of paying down the debt.

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Credit Card Debt, Debt Relief, Timothy Kingcade Posts

Help for Florida Seniors Struggling with Credit Card Debt

Posted on March 7, 2019by Admin

Credit card debt is increasing when it comes to individuals over the age of 65, according to a recent study. Many seniors are carrying this credit card debt into retirement. Medical debt can compound the problem. When seniors face health issues, putting the additional out of pocket costs not covered by their insurance can be tempting. In fact, medical debt is the leading cause behind U.S. bankruptcy filings today.

According to a 2018 report from the Employee Benefit Research Institute, approximately 42 percent of all houses where the head of household is between the ages of 65 and 74 carried credit card debt. This figure is a 10 percent increase from 1992 to 2016. When it comes to individuals over 75 years of age, 26 percent of them carry credit card debt, which is a six percent increase from 1992 to 2016.

According to the research associate who conducted the study, usually the median debt amount decreases when an increase is seen in the percentage of homes carrying credit card debt. For senior citizens, however, the increase is seen both in how many have credit card debt and how much debt they carry, which leads many to question why the increase has occurred.

Many different reasons can be attributed as to why credit card debt is rising amongst seniors. One reason is the fact that seniors are relying on a fixed income following retirement. For many, this income is just enough to pay for necessary living expenses, but if any increase in these expenses occurs or if the senior has a medical or unexpected financial emergency, his or her income may not be enough to meet the expense.

Additionally, many seniors come to the Miami area to retire, but they do not anticipate the higher cost of living. When they are already on a tight budget, they will resort to credit cards to keep up with extra expenses. However, problems arise when they are not able to pay the balance from these expenses from month to month. Health insurance and medical costs can also be an extreme burden for aging Floridians. The result of this is many of these senior citizens are carrying debt into retirement.

This fixed income can be a combination of pension, other retirement funds and Social Security. It is estimated that approximately 21 percent of married couples and 44 percent of single adults currently rely on Social Security for 90 percent or more of their income. With the average Social Security check being $1,413, this does not leave much wiggle room. It only takes one financial crisis for that person’s entire financial situation to implode.

Several different steps can be taken to help a senior who is struggling with credit card debt get out of his or her situation. The worst thing that a person can do is to ignore the debt in hopes that it will go away. Debt collectors are persistent when trying to get payment on a debt, and they do not discriminate based on the age of the debtor. Ignoring the debt will also lead to higher interest rates, fees and penalties that can make the situation even worse.

Of course, bankruptcy is always a viable option depending on the situation. A person can spend years struggling with medical and credit card debt that would otherwise be eliminated in a Chapter 7 bankruptcy case. Someone’s age should not be a deterrent if bankruptcy is the best option for him or her. A bankruptcy attorney can meet with the individual free of charge to discuss his or her financial situation and determine the best path forward.

Click here to read more on this story.

Related Resource:

https://www.nerdwallet.com/blog/credit-cards/seniors-credit-card-debt/

Credit Card Debt, Debt Relief

National Credit Card Debt Hits Record High at $870 Billion

Posted on March 6, 2019by Admin

Credit card debt has hit an all-time high, according to data from the Federal Reserve. As of December 2018, U.S. credit card debt was estimated at $870 billion, which is the highest it has ever been. Credit card balances were also said to have increased by $26 billion from the prior quarter, which is another notable increase.

It is no secret that credit card usage has gone up in recent years. It is estimated that currently 480 million credit cards are in circulation nationwide. The increase reported as of December 2018 is to be expected to an extent, given the fact that credit card usage does go up during the holidays. However, it is still significant that this marks the first time that credit card balances have reached the levels they were at during the height of the 2008 recession.

When it comes to national consumer debt, credit cards come in fourth, behind mortgages, student loan debt and car loans. However, when compared to these other categories of debt, credit card usage has increased significantly more.

The number of credit card delinquencies has also increased. At the end of 2018, 37 million credit card accounts were more than 90 days delinquent. These numbers are up two million from the end of 2017. It was reported by the Federal Reserve that these 37 million credit card accounts add up to over $68 billion of debt that is more than 90-days past due.

Americans over the age of 60 hold a significant portion of this credit card debt. This group accounts for approximately 30 percent of the total credit card debt reported. It is a problem that is becoming more widespread, especially in the Miami area, as more of these seniors are struggling to keep up with daily expenses while living on a fixed income.

As bankruptcy attorneys, we see credit card debt as one of the most common problems facing those with serious financial challenges. It is not surprising with the high interest rates, unreasonable fees, harassing debt collection calls, penalties and never-ending minimum payments that do not even make a dent in your actual debt. We offer additional tips for eliminating credit card debt on our blog.

Please click here to read more.

Related Resources:

https://www.bloomberg.com/news/articles/2019-03-05/u-s-credit-card-debt-closed-2018-at-a-record-870-billion

Uncategorized

How Seniors Who Are Drowning in Credit Card Debt Can Find Help

Posted on March 5, 2019by Admin

Credit card debt is increasing among individuals over the age of 65. According to a 2018 report from the Employee Benefit Research Institute, approximately 42 percent of all houses where the head of household is between the ages of 65 and 74 carried credit card debt. This figure is a 10 percent increase from 1992 to 2016. When it comes persons over the age of 75 years old, 26 percent of households carry credit card debt, which is a six percent increase from 1992 to 2016.

Not only are more of these individuals carrying credit card debt, but the amount of debt they carry has also increased. For cardholders between the ages of 65 and 74, the average debt on these cards went from $1,174 to $2,500 while the average debt has gone up from $838 to $2,100, which is the highest jump measured to date.

Many different reasons can be attributed as to why credit card debt is rising amongst seniors. One reason is the fact that these seniors are relying on a fixed income following retirement. This income is just enough to pay for necessary living expenses, but if any increase in these expenses occurs or if the senior has a medical or unexpected financial emergency, his or her income may not be enough to meet this expense.

Additionally, many seniors come to the Miami area to retire, but they do not anticipate the higher living expenses that they may incur by living in the area. When they are already on a tight budget, they will resort to credit cards to keep up with extra expenses. However, problems arise when they are not able to pay the balance from these expenses from month to month. Health insurance and medical costs can also be an extreme burden for these aging Floridians. The result of this is many of these senior citizens are carrying debt into retirement.

This fixed income can be a combination of a pension, other retirement funds and Social Security. It is estimated that approximately 21 percent of married couples and 44 percent of single adults currently rely on Social Security for 90 percent or more of their income. With the average Social Security check being $1,413, this does not leave much wiggle room. It only takes one financial crisis for that person’s entire financial situation to implode.

Several different steps can be taken to help a senior who is struggling with credit card debt get out of his or her situation. The worst thing that person can do is to ignore the debt in hopes that it will go away. Debt collectors are persistent when trying to get payment on a debt, and they do not discriminate based on the age of the debtor. Ignoring the debt will also lead to higher interest rates, fees and penalties that can make the situation even worse.

If a senior citizen finds that he or she is not able to pay on a debt, many of these credit companies will work with the debtor on a payment plan or settlement on the debt. The cardholder is within his or her rights to work directly with the creditor on a mutually-beneficial resolution, including a settlement on the debt or a lower payment. Many seniors find credit counseling beneficial, as well, in that a third-party will work with the person, review his or her financial situation, and will work with the creditors directly to negotiate the debt. Both of these options come with risk and should be researched thoroughly.

Of course, bankruptcy is always a viable option depending on the situation. A person can spend years struggling with medical and credit debt that would otherwise be eliminated in a Chapter 7 or Chapter 13 bankruptcy case. Someone’s age should not be a deterrent if bankruptcy is the best option for him or her. A bankruptcy attorney should be able to meet with the individual free of charge to discuss his or her financial situation and determine the best path forward.

Click here to read more.

Related Resource:

https://www.nerdwallet.com/blog/credit-cards/seniors-credit-card-debt/

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

What Happens to Your Debt during Bankruptcy?

Posted on March 4, 2019by Admin

Eliminating debt is one of the biggest reasons people file for bankruptcy. Although bankruptcy can eliminate many types of debt, not all debt can be discharged in a bankruptcy case. Debts are treated differently depending on the type of debt and the type of bankruptcy case being filed.

Type of Bankruptcy

How your debt is handled depends largely on what type of bankruptcy is filed. A Chapter 7 bankruptcy case is known as a liquidation bankruptcy, where assets that are not otherwise protected under a bankruptcy exemptions are liquidated and used to pay off qualifying debts, and all other debts that are allowed under law to be discharged are otherwise eliminated. Under a Chapter 13 bankruptcy case, the debtor works closely with the bankruptcy trustee to restructure the debt and pay back qualifying debt through a three-to-five-year repayment plan. At the end of the repayment period, all other unsecured debt is discharged.

Understanding a Bankruptcy Discharge

To understand what happens to debts in a bankruptcy case, you must first grasp the concept of a bankruptcy discharge. A bankruptcy discharge is the final court order that officially releases the debtor from liability for qualifying debts. The discharge means the creditors can no longer pursue collection on that debt. If the debt is connected to a certain piece of property, like a car or a home, the creditor can still repossess the property to secure the debt, but the debtor is not personally liable for the debt itself. The creditor simply has the right to take the property back in payment for the debt. The discharge occurs at the end of the bankruptcy case. In a Chapter 7 case, this discharge happens after a few months while it can take up to five years under a Chapter 13 bankruptcy case.

Are All Debts Discharged?

The bankruptcy discharge is the ultimate goal for a bankruptcy case, but not all debts are discharged. The great majority of those debts that are discharged in a bankruptcy case include those that are unsecured debts, meaning they are not connected to a specific asset. Credit card debt, personal loans or medical bills fall under this category. Some debts are not allowed to be discharged under the law, normally for public policy reasons. These debts include spousal and child support, debt that was incurred due to bad behavior on the part of the debtor, such as drunk driving, and certain types of tax claims.

In a Chapter 7 or Chapter 13 bankruptcy case, credit card debts, medical bills, legal judgments against the debtor, most debts coming from a car accident, personal loans or promissory notes are discharged at the end of the case. Many people struggle with these debts for years before reaching out to a bankruptcy attorney for assistance in handling them. If you find yourself struggling to pay your credit card bills or medical bills, bankruptcy may be a viable option for you, resulting in these debts being discharged.

In a Chapter 13 bankruptcy case, certain debts may be allowed to be discharged that otherwise would not be discharged in a Chapter 7 bankruptcy case. These debts include those included in a divorce or settlement agreement, not including support payments, court fees, homeowner’s association or condo fees, and debts incurred to pay a non-dischargeable tax debt.

Debts Not Discharged in Bankruptcy

Why certain debts are not discharged in bankruptcy rests largely on public policy. For example, supporting your child or spouse is considered paramount and a matter of important public policy.

As a result, Congress enacted protections keeping these payments from being classified as a dischargeable debt. Likewise, if you face criminal fines, penalties or restitution orders from a criminal case, that debt cannot be discharged. Additionally, if you caused injury to someone or killed another person because of your drunk driving, any restitution you were ordered to pay in that case cannot be discharged. Certain types of tax debts are also excluded.

For the most part, student loan debt is another category of debt that is very hard to discharge. Bankruptcy courts will only allow it if the debtor can prove to the court that the debt should be discharged. The test for determining whether this debt should be discharged is the undue hardship test. No uniform measure exists for determining what exactly constitutes an “undue hardship.” For the most part, bankruptcy courts vary on what qualifies as an undue hardship, although over recent years, the government has looked for official public comment on what that test should be. As of today, however, no uniform test is in place, making proving undue hardship both difficult and unpredictable.

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Credit Card Debt, Debt Relief, Timothy Kingcade Posts

Millennials Are Struggling the Most to Pay Off Credit Card Debt

Posted on March 1, 2019by Admin

Credit cards can be an excellent way to establish credit and pay for expenses, so long as the balance stays low and bills remain paid. However, if the balance gets out of hand, it can be very difficult to keep up with even a minimum monthly payment. According to CreditCards.com, Millennials, individuals between the ages of 23 and 38, are running into this exact problem when it comes to their credit card debt.

According to a new poll published by CreditCards.com, one in four millennials say that they have been carrying a credit card balance for at least one year. One in ten of millennials surveyed said they have been carrying a credit card balance for over five years with no end in sight.

Depending on how high the balance is, it can be very difficult to pay off the total amount due. Most monthly minimum payments only end up paying the interest owed from month-to-month. With the average credit card APR at 17.57 percent, it is easy to see how making progress on paying down the principal on the card can be an uphill battle. No matter how hard the person tries, the only progress he or she will make by paying the minimum payment or a small amount above that set payment will be on interest and possibly very little part of the principal.

The average American household has $5,700 in credit card debt. For individuals under the age of 35, that amount is $5,808. It can be very difficult to ever see an end to that balance when only making the minimum monthly payments. When all is said and done, you can end up paying double that balance in interest alone.

Of those millennials surveyed, most said that their credit card debt was from day-to-day expenses, including food, gas, utilities and child care. Others reported that their large balances were a result unexpected car repairs or medical expenses. Unlike previous generations, these young consumers are already struggling in paying other debt, mainly student loans. With the average student graduating from college with $37,000 in student loan debt, most of their paycheck goes to paying for housing and their student loan payments. With less money to put towards other expenses, they may rely heavily on credit cards, but when those balances get too high, they simply do not have the income left to pay off the large balance.

One positive piece of news is the fact that many millennials are already aware of the fact that credit card debt is a big problem. Many are choosing to not take on a credit cards or are spending less on extraneous expenses

While it requires discipline on the part of the consumer, financial experts recommend that an emergency savings fund be built up for these types of situations. Most recommend that you have at least three months of living expenses set aside in a savings account for emergencies. These accounts can be built up over time by you taking a small percentage of your paycheck monthly and depositing it directly into a savings account. That way, the money comes out immediately and the account is able to grow.

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