Bankruptcy Law Archives - Page 18 of 128 - Kingcade Garcia McMaken, P.A. Bankruptcy Attorneys

The Differences Between Secured Debt and Unsecured Debt

Posted on April 12, 2019by Admin

When it comes to debt and how it is handled in a bankruptcy case, two main categories exist, namely secured and unsecured debt. Even if you are not at the point yet where you will be filing for bankruptcy, knowing the type of debt involved can make a big difference, especially when money is tight, and you are worried about which debt to pay first: the mortgage or the credit card bill.

The main difference between secured and unsecured debt is the fact that one debt is secured by collateral and the other is not. Secured debt is debt that is guaranteed by collateral, which is something of value that the lender can seize for payment in the event the borrower is no longer able to pay on the debt.

Mortgages and auto loans are classic examples of secured debt. If you default on your mortgage or your car loan, the bank can foreclose on your home or repossess your vehicle to satisfy the debt. In comparison, unsecured debt is debt that is issued to someone but is not guaranteed by collateral. The most common types of unsecured debt include payday loans, credit card debt, student loans, and medical bills.

When you are not able to continue paying on your unsecured debt, the lender cannot collect your property to satisfy the debt. However, they can report your account as delinquent, which will hurt your credit score. They can also pursue a legal judgment against you for the debt, resulting in a possible wage garnishment.

For the most part, secured debt tends to carry a lower interest rate on the amount owed. The main reason for this difference is the lender has some type of guarantee that they will receive payment, even if you default later. The lender does not have that same guarantee with unsecured debt. It is for this reason that unsecured debt tends to carry a higher interest rate because the investment is seen as more risk for the lender.

When it comes to a bankruptcy case, secured debt is handled differently than unsecured debt. If you are filing a Chapter 7 bankruptcy case, unsecured debt normally ends up being discharged at the end of the case, while secured debt can stay with the asset. If you are struggling to pay unsecured debt, such as credit cards or medical bills, filing a Chapter 7 bankruptcy case may be a viable option for dealing with the debt. If you are struggling to pay for both secured and unsecured debt, a Chapter 13 bankruptcy case may be a good option to allow you to continue paying on your mortgage and stay in your home while discharging unsecured debt at the end of the payment period. An experienced bankruptcy attorney can evaluate your financial situation, after looking at the different types of debt you are carrying to determine which plan is best for you.

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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.

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

How To Know If You Are Being Scammed By a Debt Collector

Posted on April 11, 2019by Admin

Scams are everywhere, especially when it comes to debt collection. Many times, a debt collection scam will even try to get you to pay on a debt you do not owe. It helps to know what red flags to look for to avoid becoming the next victim of a debt collection scam.

One of the reasons why debt collection scams are so dangerous is that they take advantage of someone when they are at their weakest. These scammers are aware that the person they are calling is already in a difficult financial situation, and can be easily taken advantage of.

For the most part, these types of scams play out in the same manner. The scammer contacts a person and tells him or her that they are calling on behalf of a collection agency, law firm or other government agency and that they are reaching out to collect on an overdue debt. If the caller refuses to comply, the scammer then makes threats of wage garnishment, telling their friends, family or employer of the outstanding debt, even threatening arrest and jail time. If the person answering the phone is savvy enough to know that no company can legally do these things, the threats will have no effect. However, many times, the person answering the phone plays right into the scammer’s hands.

If you are on the receiving end of one of these calls, you need to know your rights. The first of these is the right to receive written confirmation of the debt. Under U.S. law, debt collectors are required to provide a written validation notice of any debt, when requested. In this notice, the collector must include the amount owed, the name of the original creditor, and a statement of the person’s rights. If a debt collector refuses to provide this information, this refusal is a red flag that the call is a scam.

If you have any suspicions that the caller is not legitimate, do your research. Make sure the caller is real by asking for the company’s name, telephone number and street address. Never provide credit card information or bank account information over the phone. If the collector is legitimate, the company will likely have all this information already. Also, if the collector asks for payment through PayPal or other electronic transfer, this is another red flag that the call involves a scam.

More recent scams have attempted to collect on debt that is past the statute of limitations. You may have owed this debt at one point in time, but after a certain length of time has passed, the debt is no longer legally collectible. However, scammers hope that the caller does not know this fact and will make payment, thereby ‘re-activating’ the debt. For personal loans, the statute of limitations in Florida is five years, while oral contracts and revolving accounts, such as credit cards, the statute of limitations is four years. The written verification provided for the debt should allow you to confirm whether the debt is past the statute of limitations.

If you see any of these red flags, hang up immediately. Do not give the person on the other end of the phone any information and report the call to the Federal Trade Commission or the Florida Attorney General’s Office. It also helps to know your rights under the Fair Debt Collections Practices Act (FDCPA), which makes it illegal for debt collectors to use abusive, deceptive, unfair or threatening practices when collecting on a debt.

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Additional source:

https://www.debt.org/faqs/americans-in-debt/consumer-florida/

Bankruptcy Law, Credit Card Debt

Can Wage Garnishment Be Stopped on Credit Card Debt?

Posted on April 10, 2019by Admin

Credit card debt is one of the most common problems facing those with serious financial issues. The stress can become compounded with collection calls, the threat of lawsuits and wage garnishment. A wage garnishment can be hard to stop once it begins and can be devastating to those already facing financial hardship. However, certain protections do exist for those who qualify.

Types of Garnishment.

Two different types of garnishment exist: wage garnishment and non-wage garnishment. A wage garnishment means the money to pay the debt is taken directly out of your paycheck. However, with a non-wage garnishment, the money comes out of your bank account. Wage garnishments do not happen automatically. They come from a court order and a judgment on the debt. When it comes to credit card debt, the creditor must first have filed a lawsuit and received a successful judgment against you in court.

Where You Are in the Process.

Many times, you can stop the wage garnishment from happening depending on where you are in the process. If you find yourself at the start of the legal process or if a judgment has not yet been issued, you may be able to work out a plan directly with the creditor. However, if a lawsuit has already been filed, it is recommended you seek out the assistance of an attorney to protect your legal rights. The worst thing a person can do is ignore the lawsuit. Ignoring a lawsuit will result in the creditor winning a judgment against you by default.

Protection from Wage Garnishment.

Once the judgment on the debt is issued, stopping the garnishment can be very difficult. Sometimes, however, it is possible to at least negotiate the amount owed with the creditor to lessen the length of the garnishment. If you tried to work with the creditor before the lawsuit was filed and are able to work with them before the judgment is entered, you may be able to negotiate down the amount owed. Once the judgment is entered, however, many creditors are simply not motivated to settle on the garnishment. After all, they have already incurred legal fees to file a lawsuit and be granted a judgment, so they may have very little motivation to settle on receiving payment for their debt.

Many clients ask if bankruptcy can eliminate wage garnishment. Bankruptcy laws in Florida provide clear protections for individuals and families. By taking proper action, you can quickly stop wage garnishment while building a strategy for a better financial future. If you are struggling to pay off credit card debt, this category of debt can be easily discharged in bankruptcy. If the writing is on the wall that you will be forced to pay this unsecured debt in a garnishment, it may be a good option to explore with a bankruptcy attorney.

Exemptions to Wage Garnishment.

Once a garnishment order has been issued, many clients worry that they will lose all or most of their paycheck due to the garnishment. However, certain wage garnishment exemptions do exist in these situations to protect you. The Department of Labor has rules for how much of a person’s paycheck a creditor can garnish. For most ordinary garnishments, a creditor is only allowed to garnish the lesser of 1) 25 percent of the person’s disposable earnings, or 2) the amount of the person’s disposable earnings that is more than 30 times the federal minimum wage. The purpose of these laws is to protect consumers from not being able to pay for basic, living expenses. Florida offers a “head of family” exemption, which ensures that if a person provides more than half the cost to support another person or child, that individual’s wages will be protected. If your income is based on Social Security, child support, disability benefits or spousal support, this income cannot be garnished, which offers protection to individuals who live on a fixed, limited income.

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Bankruptcy Law, Student Loans, Timothy Kingcade Posts

How the Student Loan Debt Crisis Got So Bad

Posted on April 9, 2019by Admin

Student loan debt is a problem that plagues over 40 million Americans. It is currently estimated that more than $1.5 trillion is owed in student loan debt nationwide. With an outstanding balance this large, many are asking: how did this problem get so out of hand?

Former Consumer Financial Protection Bureau (CFPB) Ombudsman and the current Executive Director of the Student Borrower Protection Center, Seth Frotman, recently gave an interview to Yahoo Finance where he provided his input on the situation. Since he was on the front lines when it came to government protection of student borrowers, Frotman believes that loan balances have gotten out of hand as a result of decades of predatory lending and weak government regulation over the student loan sector.

Frotman resigned from the CFPB in August 2018 in a letter where he accused the current administration of not protecting student borrowers from predatory lending and other similar practices. In his letter, Frotman accused the administration of not enforcing lending violations and protecting bad lenders in the process.

In the interview, Frotman gave some background as to how student loans have been handled in past decades. For the most part, student loans are issued by banks or federally-backed private lenders. Given the fact that someone asking for a student loan normally does not have an extensive credit history, it is important that these borrowers are protected when taking out money to attend college.

However, over time, the cost of going to college began to skyrocket. It is estimated that the average cost of tuition for a private non-profit four-year university is $35,830, which is twice what a college student would have paid two decades ago. As tuition costs went up, the loans students had to take on to pay for going to college also went up. The result of this increase attracted other less-than-reputable lenders who saw a huge money-making opportunity.

In Frotman’s words “no one was minding the store” when it came to student lending, as more and more companies joined the student lending game. Unfortunately, the 2008 recession caused even more problems. Congress ended up bailing out the banks’ student loan arms hundreds of billion dollars to ensure that students still had access to loans to attend college.

As a result, however, the government ended up owning a great deal of student loan debt. The government ended up entering contracts with banks and loan providers that serviced student loans, including Navient, Nelnet, Great Lakes and FedLoan. These contracts are expected to expire this summer, leaving many, including Frotman, to worry about what will happen next. The current Education Secretary, Betsy DeVos, has mentioned that she would consider an exclusive contract to just one company to service billions of dollars of existing student loans, which has raised a lot of opposition. However, until a decision is made, it is expected that the existing contracts will be extended.

Lenders are required to follow a series of rules and regulations when it comes to providing student loans, but it was discovered recently by a government watchdog that the Department of Education was not holding loan providers accountable under these regulations. Some of these violations included misleading borrowers into putting their loans in forbearance, putting delinquent accounts into forbearance without borrower approval, and generally not holding servicers accountable.

The situation is expected to get even worse. It is estimated, as of February 2019, that 11.5 percent of student loans are at least 90 days delinquent or are in default. It is possible this number underestimates just how many borrowers are behind on their payments, including those in forbearance or loans that are deferred, which means the number of loans that are past-due could be even higher.

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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, Credit Card Debt, Debt Relief

Americans Will End Up Paying $122 Billion in Credit Card Interest in 2019

Posted on April 4, 2019by Admin

It is a staggering headline, but just last year Americans paid banks $113 billion in credit card interest, according to a recent study from MagnifyMoney. That is up 12% from interest paid in 2017, and up 50% from 5 years ago. And the amount of interest is only set to increase in 2019. Credit card debt plagues consumers from all walks of life. The larger the debt, the more likely that cardholder is accruing interest.

What is causing this increase in interest? Financial analysts believe that now since a decade has passed since the big financial crisis in 2008, consumers are feeling more confident in their abilities to borrow more. As a result, the total amount of credit card debt has reached a record high, since before the recession. However, borrowers are also paying more when it comes to interest on the amounts they borrow, as banks have passed recent Federal Reserve rate hikes onto their customers.

The average APR on credit cards has gone up approximately four percentage points over the past five years. The average APR on a credit card is 16.86 percent, according to the Federal Reserve.

The problem with credit card interest is it can make paying down your debt very difficult. In fact, according to the Federal Reserve’s Survey of Consumer Finances, 40 percent of all active credit card users carry a balance from month to month on their cards.

While credit card interest can make paying down the overall balance very difficult, certain methods can help in conquering your debt. If a consumer is struggling to pay multiple credit cards, the snowball method can help in paying one card down at a time. Using this method, the consumer tackles the card with highest balance or highest interest rate. The consumer continues to pay the minimum amount owed every month on the other cards while putting all other money on the first card. Once that first card is paid in full, the consumer then takes the second card with the second highest rate or second highest balance. This process continues until all cards are paid off in full. While this method can take some discipline, it is a method with proven success.

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Bankruptcy Law, Debt Relief

BEWARE: The Dangers of “Do It Yourself” Bankruptcy Kits

Posted on April 2, 2019by Admin

If someone is considering filing for bankruptcy, odds are he or she is already in a tough financial situation. The thought of hiring an attorney to file their case can seem out of reach. It is for this reason many consumers turn to the Internet for alternative solutions. Oftentimes, these come in the form of debt consolidation, credit repair and credit consolidation. All come with their own set of inherent risks and are oftentimes a temporary band-aid to a bigger problem.

“Do It Yourself” Bankruptcy kits are also flooding the Internet and promote a cheap alternative to eliminate your debt. One such software program, Upsolve, created by two Harvard graduates, promotes itself as a non-profit organization committed to helping low-income Americans get a fresh financial start through Chapter 7 bankruptcy.

Sounds great, right? Well it is obvious the creators of the software (and others like it) overlooked one very important detail. The importance of the bankruptcy Means Test. To qualify for Chapter 7 bankruptcy, a filer must first pass the bankruptcy means test. This test is basically a formula that takes into account various factors, such as income, living expenses and family size, to determine if the filer can afford to repay his or her debts through a Chapter 13 reorganization bankruptcy in lieu of Chapter 7 bankruptcy. It is not a one size fits all type of test and can be very subjective, depending on the filer’s life circumstances.

It is important that people are aware of the risks of using this type of “do it yourself” bankruptcy software and filing Bankruptcy Pro Se. Changes to bankruptcy law enacted in 2005 added some complicated requirements to the field of bankruptcy. While most bankruptcy documents are form-based, this does not mean that they are easy to fill out.

When filing for bankruptcy, you will have to fill out much more than a standard bankruptcy petition. You will be expected to submit dozens of supporting documentation, listing every single debt, all of your creditors and all of your assets. If you make a mistake or miss something, costly delays can result. Not to mention, you run the risk of losing valuable property and possessions and your case being completely thrown out altogether.

An experienced bankruptcy attorney can also discuss the pros and cons of proceeding with a Chapter 7 or Chapter 13 bankruptcy. The best piece of advice for these types of situations is “if it seems too good to be true, it likely is.”

While “do it yourself” projects may be a good idea around the house, let a professional handle your bankruptcy filing. Most bankruptcy attorneys offer free initial consultations to assess your financial situation to determine if bankruptcy is right for you. In addition, our firm offers affordable payment plans and Saturday appointments.

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

Bankruptcy Checklist: What to Bring to Your First Meeting with Your Attorney

Posted on April 1, 2019by Admin

Deciding to file for bankruptcy is never an easy decision, but those who emerge from it are often thankful for a fresh financial start and the opportunity to rebuild their finances.

Before you sit down with an experienced Miami bankruptcy attorney, there are several important documents you need to bring with you.

Outstanding Debts and a List of Assets. The most important documents to bring to your initial bankruptcy consultation are a list of your outstanding debts and a list of your assets (i.e. – major assets, such as homes, cars, boats, trailers, time shares, etc.)
Financial Documentation. Wage statements, a recent pay stub, tax returns, bank account statements and any large purchase receipts.
Budget. A rough budget of your household’s income and expenses.
Creditor Information. A list of credit accounts, account numbers, the amounts you owe and their contact information.
Loan documentation. Any mortgages and outstanding loans you may have, such as: car loans, personal loans, etc.
Real Estate documentation. Forms and information pertaining to any property you may own or rent.
Personal Property Documentation. Any major personal property items like vehicles, boats, valuable jewelry, electronic items, appliances or other items that could be repossessed.
Questions. A list of any personal questions you may have for your attorney.

While it is best to be as prepared as possible, if you are unable to obtain all of these documents, do not worry. You will be provided with adequate time to contact your banks, lenders and creditors to obtain the necessary documentation for your bankruptcy proceeding. It is important to be open and honest with your bankruptcy attorney to prevent possible bankruptcy fraud or being accused of “hiding” assets. By providing all necessary documentation and working closely with your attorney, you will help ensure the bankruptcy process runs smoothly.

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 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 Card Debt, Debt Relief

Payoff Strategies to Help Lower the Stress of Your Debt

Posted on March 29, 2019by Admin

Money problems are arguably one of the biggest stressors Americans face today. When someone is dealing with a large amount of debt, the stress can compound quickly. Whatever type of financial issue someone may be facing, whether it be credit card debt, the possibility of foreclosure, or student loan debt, this added stress can adversely affect a person’s overall well-being, their personal relationships, even their health.

The following methods are just a few ways consumers can get that financial burden and added stress under control.

Credit Card Balance Transfer

If a person is dealing with a lot of credit card debt on multiple cards or balances on cards with high interest rates, a balance transfer may be a helpful tool to not only consolidate that debt, but also transfer it to a card with a zero or low interest rate. Having a lower interest rate or even none at all can make paying off the card that much easier. It can also help to have all debts consolidated into one payment rather than scattered throughout multiple credit card payments. However, it is extremely important that the cardholder be aware of the timeline for how long that low or zero percent interest rate will last. These promotional rates will not last forever, and if the debt is still there after the promotional period expires, the cardholder can be stuck with an even higher balance with an even higher interest rate.

Pay Off Credit Cards Through the Debt Avalanche Method

If someone is facing large balances on multiple cards, the thought of ever paying off all of the cards can seem like an impossibility. The best rule of thumb to keep in mind when attacking credit card debt is to tackle one credit card at a time. This process is best done through what is known as the debt avalanche method. How this method works is the debtor lists all of his or her debts from highest interest rate to lowest. The consumer should take the card with the highest balance or the highest interest rate first and pay as much as he or she is able to comfortably pay on that one card, while continuing minimum monthly payments on all others. Keep paying on the first card until it is paid in full. Once the first card is paid, take the payment that was going towards the first card and snowball it into the second card’s payment and so on until all cards are completely paid off. While this method may take some time and discipline, many people have had great success in conquering their debt through this process.

Pay Biweekly

Just because the bill comes once a month does not mean the cardholder is restricted to only paying on the card once a month. One good way of paying down debt is to make multiple payments on the debt throughout the month. It helps to at least pay on them on a biweekly basis, especially if the cardholder is paid every two weeks. As soon as the paycheck is deposited and before the money can be spent, put what can be paid towards the card first before anything else. This method will allow the cardholder to reduce the balance owed quickly and make progress before interest can accrue every month.

Consider filing for bankruptcy.

Many people feel an obligation to pay what they owe, even if they will never be able to pay off the debt. Bankruptcy laws allow individuals to gain a fresh start, so they can take care of themselves and their families. It wipes out all unsecured debts including credit cards, medical bills, personal loans, and more. If you are behind on your mortgage payments, filing for Chapter 7 bankruptcy can allow you to stay in your home and catch up on your payments or negotiate with your lender. This is all thanks to the automatic stay which immediately goes into effect and prohibits your mortgage lender from foreclosing on your home. Not sure if bankruptcy is right for you, review our 5-Point Checklist.

Related Resources:

https://thriveglobal.com/stories/payoff-methods-to-lower-the-stress-of-your-debt/

Bankruptcy Law, Debt Relief

6 Tips to Get Back on Your Feet After Bankruptcy

Posted on March 26, 2019by Admin

Chapter 7 bankruptcy allows you to get a fresh start financially and erase past debts, but a legitimate concern people have is the effects it will have on their credit score and their ability to take out credit again. One of the biggest misconceptions about filing for bankruptcy is that it will ruin your credit score and your financial future. To the contrary, after filing for bankruptcy you can begin restoring your credit immediately.

It is possible to rebuild your credit after bankruptcy, so long as you exercise discipline and stay on track financially. The following tips will help you get back on your feet and stay there after filing for bankruptcy.

Put Together a Budget.

Budgeting is not fun for most people, but it is necessary. Preparing a budget and keeping to it is an excellent way to track how much money is coming in and how it is being spent. If you are overspending beyond your means, a budget will be able to track this issue and help keep you in line. Many people have success with online programs for budgeting, while others use a simple spreadsheet. To start, enter in how much income is received on a monthly basis. Next, enter in all fixed expenses, including mortgage payments or rent, utility bills, insurance and other monthly expenses. The first step is to make sure that your income covers all of these expenses. Then put together a list of other expenses that are more discretionary. These discretionary expenses are often where most people overspend. If the budget does not cover these discretionary expenses, then do not spend on those items.

Pay Bills on Time.

After bankruptcy, you can immediately begin rebuilding your credit – but one surefire way to not achieve this goal is by not paying your bills on time. In fact, paying bills on time can account for approximately 35 percent of your credit score. Anytime someone is late on a payment, this signals to lenders that the consumer is not good with his or her money and is thus a lending risk. Once a budget is put together, stick to that budget and make sure all bills are paid on time and in full. If someone struggles with making payments on time, auto-pay could be a good option to ensure that payments are taken out immediately and are not late.

Pay Discretionary Expenses with Cash.

If you wish to spend on extra expenses, such as entertainment or clothing, and worry about keeping to a strict budget, one method that can keep you in line is to only spend using cash on hand. Being restricted to what you have in your wallet, makes you prioritize what you spend. Once the money is gone, the spending stops. Make sure that a credit card is not also in your wallet so that the temptation is not there for when the money runs out.

Use a Secured Credit Card to Rebuild Credit.

Credit cards often bring people into a bad financial situation, but they can also be extremely helpful, especially for when it comes to building up credit. A secured credit card can be an excellent resource for someone with poor credit to help rebuild their credit. Secured cards often require the borrower to put down an amount of money to secure the card, limiting that person on how much money he or she can spend on the card based on how much cash was deposited as collateral. Secured cards are not meant to be used for the long-term but rather for temporary purposes until that person rebuilds his or her credit score enough to take out a regular credit card.

Report Positive Accounts to Your Credit History.

To further help a consumer’s chances of being approved later for a line of credit or mortgage, it can help to add positive accounts to your credit history. Certain expenses, such as utility bills, can be added through major credit reporting companies, such as TransUnion, Equifax and Experian. By adding these positive accounts to the person’s credit history, he or she can demonstrate positive financial behavior through regular, on-time payments on these bills.

Be Wary of Scams.

One very important thing to keep in mind is the fact that not everyone out there has your best interest in mind- particularly if they know you are trying to rebuild your credit. If a company is requiring you pay an upfront fee before they will help you with your credit score, this is a huge red flag that a scam is involved.

Related Resources:

https://www.bankrate.com/personal-finance/debt/bankruptcy-ways-to-bounce-back/

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

Personal Loan Debt Reported as the Fastest Growing Category of Consumer Debt

Posted on March 22, 2019by Admin

A new trend is being observed when it comes to consumer debt across the country. More often than before personal loans are being utilized by consumers looking to pay for unexpected or needed expenses. In fact, personal loan debt was reported as being the fastest growing category of consumer debt in 2018. Personal loans reached a record high of $291 billion as of the last quarter of 2018, according to a new study from credit reporting agency, Experian.

Experian compared lending figures from 2017 to 2018 and found an 11.9 increase in personal lending in the course of one year. In fact, the increase of consumers taking out personal loans was nearly double the growth rate of consumers taking out new credit cards. Between 2017 and 2018, an increase of 5.9 percent was seen in credit card applications while personal loans grew at the reported 11.9 percent. In comparison, car loans saw an increase of 4.3 percent while student loans saw a jump of only 5.8 percent and mortgages at 2.8 percent.

One reason for the increase of personal lending has been attributed to the similar increase of online lenders and other financial technology that makes it easier for someone to get these type of loans. These loans require only a signature as a promise to pay. High interest personal loans are oftentimes a last resort for borrowers who are in financial trouble and lenders know it. The terms and conditions are not favorable to the borrower. If the borrower wishes to pay off the loan early, there often exit fees and penalties that come as a result.

According to the study, currently 36.8 million outstanding personal loans exist in the United States. These loans vary depending on whether they are secured by collateral or were issued unsecured. Many consumers utilize personal loans as a means of consolidating debt, while others use personal loans to finance larger purchases. Regardless of their reasons, it is estimated that 10.8 percent of adults have at least one personal loan debt.

It is estimated that the average personal loan balance, as of the end of 2018, is $15,143 with an average monthly payment of $353. Personal loans tend to carry a higher interest rate, especially those that are unsecured, and the average annual percentage rate on a personal loan is currently 9.37 percent.

Of all the age categories surveyed, the Baby Boomer generation had the highest average personal loan balance owed of $19,403. Millennials carried an average balance of $12,574, while Generation Z held the lowest balance of $5,941.

The survey found that Washington had the highest average personal loan balance in the amount of $27,295. Washington was followed by South Dakota who had an average loan balance of $26,597, Oregon with a balance of $26,527, North Dakota with a balance of $26,281, and Montana who had an average balance of $24,725. Of all the states surveyed, New Mexico was the state that had the highest number of personal loans taken out per person in the state, with a rate of 1.7. Other states with similar rates included Louisiana, Oklahoma, and Texas.

Of all the states surveyed, Hawaii was found to have the lowest average personal loan balance of $12,638. Other states with lower average balances included Kentucky, Illinois, and Georgia, as well as the District of Columbia.

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