Consumer Bankruptcy

Fear Holds Many People Back from Ever Filing Bankruptcy

There are many people who can benefit from bankruptcy, but put off filing due to fear and the myths surrounding bankruptcy. Bankruptcy offers consumers a fresh financial start and relief from the burden of debt, but for many, it is the fear of the unknown that holds them back from ever taking the first step. Every year, only a small portion of consumers who could benefit from bankruptcy actually move forward with starting a case.

According to the Federal Reserve Bank of New York, approximately 14 percent (14%) of U.S. households or nearly 17 million consumers owe more than they own. While most of these individuals could benefit from bankruptcy, less than one percent (1%) of them file for bankruptcy annually. In 2020, there were only 752,160 personal bankruptcies filed. 

Bankruptcy experts refer to this gap in filings as “missing bankruptcies” or otherwise known as bankruptcy filings that should theoretically be happening, but are not. However, an even wider gap has been made in the past few months with bankruptcy filings dropping significantly in the second quarter of 2021. Figures are at about 60 percent (60%) of what they were for the previous five years.  

During the COVID-19 pandemic, courthouses were forced to close, making it hard for creditors to pursue legal collection actions against consumers, including foreclosures and wage garnishments. For the most part, foreclosures and wage garnishments are the biggest driving forces behind bankruptcy filings. Without these moving forward in the court system, bankruptcies have also been affected.  

This decrease in bankruptcy filings is only temporary, as courts begin to reopen and business getting back to normal. One fear many have is that people will wait too long to file, relying on the temporary benefits they have received during the pandemic to get by.

Many times, consumers delay filing due to the fear of losing everything they own, including cars, homes, or personal property. This fear is rooted in misconceptions regarding the protections that bankruptcy exemptions offer consumers.  In fact, the great majority of people who file for bankruptcy never have to give up any of their possessions. 

Other individuals hold off on filing for bankruptcy for fear of what the filing will do to his or her credit. While, yes, a bankruptcy filing leads to a drop in the person’s credit score, this credit can be rebuilt as soon as the filing is complete.  It is possible to be approved for financing in the future with proper financial habits and good spending behavior. A bankruptcy case does not mean the person is forever barred from ever taking out a loan or mortgage in the future.  

Whatever the reasons may be for the delay in filing for bankruptcy, a consultation with a bankruptcy attorney can quickly clear up many of the fears and misconceptions that may be holding a person back in taking that first step towards a fresh financial start.  

Please click here to read more.  

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.   

Consumer Bankruptcy

Post-COVID Debt Continues to Grow as Bankruptcy Filings Fall in 2021

Financial analysts had predicted a bankruptcy surge following the COVID-19 pandemic. Courts were closed for the majority of 2020, but as they began to reopen, it was believed that a massive wave of bankruptcy filings would follow. Oddly enough, that surge never came, and the number of consumer bankruptcy filings continue to drop.

According to figures from the American Bankruptcy Institute (ABI), 181,000 bankruptcy cases were filed in the U.S. by May 2021, which is 29 percent lower than the number of cases filed by that time in 2020. As many people were forced out of jobs or laid off with businesses temporarily or even permanently closing, consumers are continuing to rely on credit cards to cover expenses.

It is reported that consumers wait an average of 22 months after their first 90-days past-due notice before filing for bankruptcy, accumulating what is called ‘shadow debt.’   

Shadow debt is debt that has not shown up yet on the consumer’s credit report, such as unpaid rent, accruing medical bills, and bounced checks. This shadow debt causes a great deal of stress for consumers as they work through the decision to file for bankruptcy. Many consumers report that they seriously struggle with debt for up to two years before making the decision to file.  

Most of this shadow debt is unsecured debt or debt that is not otherwise secured by collateral. Common forms of unsecured shadow debt are past-due credit card bills and medical bills. An ABI study reports that shadow debt can increase on average by $7,200 for each month the consumer delays filing for bankruptcy.  

According to a National Bureau of Economic Research study, consumers owe an average of $240,000 in total debt by the time they actually file for bankruptcy. Therefore, delaying filing for bankruptcy is not always the best decision. An experienced bankruptcy attorney can help determine if bankruptcy is the right option for that individual.

Please click here to read more.  

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.  

Bankruptcy Law, Consumer Bankruptcy

The Three Most Common Fears People Have When Filing for Bankruptcy

The fear of losing everything is a very real concern for those contemplating bankruptcy. However, this is one of the most common bankruptcy myths, and can keep individuals who are drowning in debt from obtaining a fresh financial start.

To make the bankruptcy process a little easier to understand, we have dispelled the top three fears people have when filing for bankruptcy.

Consumer Bankruptcy, Legal Awards

Miami Bankruptcy Attorney Timothy S. Kingcade Named a Florida Super Lawyer 8 Consecutive Years

Managing Shareholder, Timothy S. Kingcade of the Miami-based bankruptcy and foreclosure defense law firm of Kingcade Garcia McMaken has been selected for inclusion in Florida Super Lawyers 2021, in the practice area of consumer bankruptcy. This is the eighth consecutive year Kingcade has been selected to the Florida Super Lawyers list (2014-2021). The prestigious honor is awarded to only five percent of lawyers in the state.

After receiving one of the highest point totals, Kingcade was also selected to be on the Florida Super Lawyers Blue Ribbon Panel. Only those in each practice area with the highest point totals are asked to be part of the panel to evaluate the candidacy of fellow lawyers to enter the prestigious Super Lawyer rankings.

Consumer Bankruptcy, Debt Relief

Defaulting on Debt v. Filing Bankruptcy

It can be tempting to want to walk away from debt in lieu of filing for bankruptcy. But doing so will not provide the consumer with the clean slate that a bankruptcy discharge offers. It is often better to face these debts in a Chapter 7 or Chapter 13 bankruptcy case instead of choosing to default on them.

Whenever a consumer fails to make payments on a loan or financial obligation, this failure to pay is otherwise known as a default. Lenders all have their own requirements on what exactly qualifies as a “default,” including how many payments have been missed before the account is officially considered in default.

Bankruptcy Law, Consumer Bankruptcy

Steps to File for Bankruptcy in 2021

Bankruptcy is an important tool, that allows consumers to obtain a fresh financial start. For many, the concept of bankruptcy is unfamiliar, and understanding the steps needed to file for bankruptcy is important in fully understanding the process.  

Choosing a Chapter 

The first step is determining which type of bankruptcy to pursue. Bankruptcy is not a one-size-fits-all type of situation. Choosing the right type of bankruptcy hinges a great deal on the individual’s specific circumstances. The most common two categories used by consumers are Chapter 7 and Chapter 13 bankruptcy. For filers who fall under a certain level of income and can pass the mean test, meaning they earn less than Florida’s median income, Chapter 7 bankruptcy is the best selection for them.  Alternatively, if a consumer earns too much to qualify for Chapter 7, a Chapter 13 reorganization bankruptcy may be the best avenue for him or her.  

Bankruptcy Law, Consumer Bankruptcy

Will Filing Chapter 7 Bankruptcy Prevent Vehicle Repossession?

When someone is behind on his or her car payments, a Chapter 7 bankruptcy case may allow him or her to catch up on these missed car payments, saving the vehicle from repossession. The ability to do this depends on how far behind the borrower is on his or her payments and whether the loan is already in default.   

While a Chapter 7 bankruptcy case will not permanently prevent the person’s vehicle from ever being repossessed, it can provide the borrower a chance to catch up on missed payments or negotiate with the lender before the loan goes into default.  

Bankruptcy Law, Consumer Bankruptcy

The Cost of Filing Bankruptcy in 2021

Filing for bankruptcy comes with its own set of costs. It may seem counterintuitive that a person who is having difficulty paying his or her bills can pay extra costs to receive relief from his or her financial obligations. However, just because someone is not able to pay his or her bills should not prevent them from hiring an attorney to file their bankruptcy case. While “do it yourself” projects may be a good idea around the house, there are reasons to let a professional handle your bankruptcy filing.

Consumer Bankruptcy, COVID-19

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

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

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

U.S. Bankruptcy Filings Drop 38 Percent

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

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