Credit Card Debt

Credit Card Debt

More Than One-Third of College Students Already Have Credit Card Debt

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A significant number of college students report that they have accumulated credit card debt while attending school. According to a recent report from AIG and EVERFI, 36 percent of all college students have a credit card with a balance of over $1,000 on it. This is on top of the student loan debt they are carrying.

Many of these students are using credit cards to pay for groceries, books, or entertainment expenses. Of students surveyed, some say they choose to use their credit cards over debit cards for the benefits the cards include, such as travel miles. These students are following a nationwide trend when it comes to using credit cards to pay for everyday expenses. A recent survey showed that 23 percent of Americans use their credit cards for necessities, including rent, food, and utilities.

However, problems arise when these cardholders are not able to pay down the balance every month. The situations can get even worse if the cardholder falls behind on payments, pushing the accounts into delinquency. The Federal Reserve Bank of New York reported that more than eight percent of balances held by young cardholders between the age of 18 to 29 were seriously delinquent. Being seriously delinquent means that the accounts are at least 90 days overdue with no payment made.

The EVERFI and AIG survey found that 15 percent of college students took a hit on their credit scores because of being behind on their credit card payments. Missing a credit card payment will not only cause the card’s interest rate to skyrocket, but it will also seriously affect that person’s credit score. The higher the interest rate is, the harder it is for the person to pay off the card over time.

It can be a definite struggle for the student to handle both a credit card and student loan payment after graduation. Students should put together a plan to pay off the credit card debt as quickly as possible by setting a deadline and a goal on how quickly the person can handle paying off the card. The plan only works if the student does not continue spending on the card and makes more than the minimum monthly payment on the card.

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, 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.

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.

 

Credit Card Debt, Debt Relief

25 Percent of Americans Going into Debt Paying for Daily Living Expenses

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More Americans are struggling to pay for their daily expenses and are using credit cards to pay for basic necessities, according to a recent report by Experian. This reliance on credit cards to pay for necessary living expenses puts consumers even deeper into debt. In fact, the report showed that American consumers carry an average of $6,506 in credit card debt.

Approximately 23 percent of those surveyed said that they struggled with paying for their most basic necessities, including rent, food, and utilities, and had to pay for these expenses with their credit cards. Of those consumers surveyed, 12 percent of them reported paying for medical bills with their credit cards.

It has been reported that the middle-class cost of living is now 30 percent more expensive than it was 20 years ago. The costs for essentially everything has increased over the years. According to the Economic Hardship Reporting Project, the cost of tuition at public universities and housing prices have quadrupled between 1996 and 2016.

Not only has the cost of living increased, but the amount of money Americans have in savings has decreased remarkably. A majority of American consumers say they have less than $1,000 in savings. Additionally, 70 percent of them report that they would not be able to get by if their paycheck was delayed by a week, which has many financial experts concerned.

Not all Americans are using their credit cards to pay for daily expenses, however. Many say that their discretionary spending on non-essential items, including entertainment, travel, and clothing, has led to their credit card balances. It is reported that Americans spend an average of $483 a month on eating out, entertainment, and travel, according to Schwab’s 2019 Modern Wealth report.

The average credit card APR is at an all-time high of 17.73 percent, according to CreditCards.com, which makes paying off large credit card balances, very difficult. With an average balance of $6,354, consumers could potentially be paying on these cards for years, if not decades. In fact, if someone has a credit card balance at this national average with a credit card that charges the average APR, he or she could be paying the minimum payment on that card for over 17 years before it is paid off in full. This scenario only works if the consumer stops using the card and does not add any new charges to the outstanding balance.

People living in the Miami metro area, which includes both Fort Lauderdale and West Palm Beach, carry the second-highest credit card debt balances in the country.  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.

Click here to read more on this story.

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, Credit Card Debt, Debt Relief

Debt Consolidation vs. Bankruptcy: The Pros and Cons

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If someone is struggling with large amounts of debt, they may be weighing their options between debt consolidation and bankruptcy. There are positives and negatives to both- but ultimately, it depends on a person’s specific financial situation and life circumstance as to which choice is the right one for him or her.

What is Debt Consolidation?

Debt consolidation involves combining a person’s older debt from various sources into one new debt. This consolidation could be done by taking an unsecured personal loan to pay for the total amount owed or by transferring balances from multiple credit cards into one credit card.

Debt consolidation involves making payment to one lender, oftentimes at a lower interest rate.  These are two of its appealing factors.  However, we can tell you that debt consolidation rarely provides a long-term solution.  Our attorneys have helped many clients who were promised one result from a debt consolidation company only to receive far less, and stuck with the remaining debt.

Here are some of the disadvantages of debt consolidation.  

  • The debt cycle continues: While this option allows the consumer to consolidate multiple sources of debt, it only pays off that debt to combine it into one larger balance. Many consumers make the mistake of utilizing debt consolidation only to continue the cycle of debt.
  • Delaying the inevitable: Debt consolidation is oftentimes used as a ‘temporary’ fix, only delaying the inevitable. If a person is struggling to pay off various forms of debt, particularly if that debt is medical debt, credit card debt or personal loans- bankruptcy might be a better option, as the consumer would receive a complete discharge of these debts.

Choosing Bankruptcy as an Option.

Depending on an individual’s income and amount of debt, pursuing a Chapter 7 bankruptcy case may be the wisest option to discharge the debt or a Chapter 13 bankruptcy case to reorganize and pay down qualifying debt. One factor to keep in mind is debt consolidation is a big business. It can be successful for some people, but for others, it may not provide the long-term solution the consumer needs.  The attorneys at Kingcade Garcia McMaken have helped thousands of people restart, rebuilt and recover through bankruptcy.

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 Resources:

https://studentloanhero.com/featured/debt-consolidation-vs-bankruptcy/

 

 

 

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

Predatory Payday Loans Still Exploiting American Consumers

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The payday loan cycle is a well-known one for many. A person needs money for an unexpected expense, an extra couple hundred dollars to cover them until their next paycheck.  With a payday loan, they get their money on the spot.  The trouble comes later when payment is due on the loan.  If a borrower defaults on the loan, the loan is rolled over and the fees start to rack up.

Approximately 25% of Americans live paycheck to paycheck, according to a survey by Bankrate.  About 19 million American households (nearly one out of every six in the country) have taken out a payday loan at some point.

You see the signs everywhere with storefronts offering ‘FAST CASH,’ even online lenders offering access to cash next day, with only a signature as a promise to pay. A payday loan is also referred to as a paycheck advance or cash advance. These loans are short-term ones that are to be repaid by the time someone receives their next paycheck. In exchange for the loan, the payday lender will charge a fee on top of any interest on the amount borrowed. Normally, payday lenders do not run a full credit check on the borrower, and due to the riskier nature of the loan, they tend to come with significantly high interest rates.

Because of the risk involved and the disadvantage to the borrowers taking on these loans, many states do not allow payday loans at all, while others will limit how high the annual percentage rate (APR) can be. Others prefer to not restrict lenders, which means the APRs can be anywhere from 300 percent to 900 percent!

If you are not able to pay your loan off at the end of your loan period, it will often roll over to the following payday, which means your debt will just continue to grow until it is an amount you can no longer handle.

The problem with payday lenders is they tend to target lower-income borrowers. The Consumer Financial Protection Bureau (CFPB) has fought hard in the past to protect borrowers from the predatory lending tactics of payday lenders, but this fact has changed since the start of the Trump administration. In fact, after Mick Mulvaney took over for the CFPB after the 2016 election, the restrictions on payday lenders have decreased significantly.

Efforts were made recently in the U.S. House of Representatives to protect borrowers from this type of predatory lending when the “For the People Act” was passed. However, Senate Majority Leader, Mitch McConnell, has refused to allow this measure to be brought up in the Senate.

One of the last regulations published under President Obama’s director of the Consumer Financial Protection Bureau (CFPB), Richard Cordray, was a 2017 rule that would have curbed the most-predatory forms of payday lending. The Trump administration has proposed to revise that rule—aiming to eliminate a powerful provision designed to protect borrowers.

The State of Florida does allow payday loans, but certain restrictions are enforced, including the following:

  • The borrower can only take out up to $500 per loan and can only have one outstanding loan at a time;
  • The maximum fee that a lender can charge is 10 percent of the total amount borrowed, as well as a $5.00 verification fee;
  • The loan contract cannot be for more than 31 days and cannot be for less than seven days;
  • Contract terms that would limit your rights as a borrower are not allowed;
  • The borrower must pay a previous loan off in full and wait a full 24 hours before being granted another loan; and
  • If the borrower cannot pay the loan in full at the end of the term, the lender must give the borrower a 60-day grace period without additional charge.

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.

Related Resource:

https://prospect.org/article/thanks-trump-payday-lenders-will-keep-on-merrily-bilking-poor

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

Debt Collectors May Soon Be Able to Text and Email Consumers

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Debt collectors may soon have even more ways to reach consumers who are past-due on their debts. A new proposed rule from the Consumer Financial Protection Bureau (CFPB) may make it possible for debt collectors to contact consumers via email or text communications as they attempt to receive payment on overdue debts.

This news does not come as a pleasant surprise for many. After all, debt collectors do not have a good reputation for this very reason. They can be persistent, if not relentless, when it comes to debt collection.

It is reported that the CFPB received a record 84,500 complaints from consumers about debt collectors in 2017. The industry earns $10.9 billion annually and does whatever it takes to receive payment on a debt.  The industry does not seem to be slowing down either. Since the end of the recession, American consumers have taken on more debt, including car loans, mortgages and credit card debt.

This news follows recent revelations that are now coming out about the direction the CFPB has taken since the start of the Trump administration. Many critics argue that this move is further evidence that the agency is no longer going after corporations for financial abuses as hard as they have in the past. After all, this latest move does not seem to protect consumers as much as it protects the companies seeking to reach these consumers.

Arguably, the number of communications from collectors will increase, if and when this rule takes effect. However, the law does limit the frequency and content of communication being received. The Fair Debt Collection Practices Act (FDCPA) provides rules that collectors must follow. However, this law was originally written in 1977, which means it has not been updated to include email and texting technology. It is unclear at this point whether the law will be modified to reflect the updates in technology.

Without having any strict regulations to guide debt collectors on how often they can communicate with a person via text or email, collectors are essentially free to do what they want when contacting someone. The number one piece of advice we give to people dealing with creditors is to be honest. If you are unable to make a payment, do not make a promise to do so and never hide from creditors.

If you are ready to put an end to creditor harassment and make a fresh start, consult an experienced Miami bankruptcy attorney at Kingcade Garcia McMaken. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Source: https://www.cbsnews.com/news/text-me-debt-collectors-may-soon-be-able-to-text-and-email-consumers/

 

 

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

The Best Ways to Pay Off Credit Card Debt In Retirement

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When someone is entering retirement, the last thing that person wants to deal with is mounds of credit card debt. For the most part, retirees are living on a fixed or limited income, which means they have very few financial resources to pay off any lingering debt they may be carrying.

A fixed income also means there is little ability to handle any unexpected financial crises, which can include a costly home repair or medical expense.  In the event the unexpected happens, some retirees are forced to rely on credit cards or personal loans to cover the costs.  The interest on a personal loan or a single missed credit card payment, can cause the debt to spiral out of control quickly.

Here are some debt payoff tips for seniors struggling with credit card debt.

Refinance your debt.

One possible way to pay off a large amount of credit card debt is through refinancing or consolidation of the credit card debt. This payment could be made through a home equity line of credit (HELOC) if you own your home and hold a good amount of equity in it. A HELOC carries a lower interest rate than other methods of consolidating or refinancing debt since it is attached to collateral and is a secured loan.

Credit card debt can also be paid by consolidating all cards into one card through a balance transfer. By doing a transfer, the cardholder can attack one, larger debt, rather than pay minimum payments on multiple cards every month. However, these transfers normally come with a promotional period which means the cardholder can only benefit from the zero or low interest rate for a set period. After that time period expires, the cardholder will soon find his or her rates increase significantly.

Examine your budget.

Paying off your credit card debt can be nearly impossible, if you do not establish a set budget. By putting together a list of necessary expenses and reviewing what purchasing habits put you into debt, you cannot cut unnecessary expenses and free up money to go towards your credit card debt. It is also recommended that you avoid using your credit cards during this time period when you are working on paying off outstanding balances.

Target the card with the highest interest rate.

If debt consolidation is not a possibility and you are struggling to pay multiple credit cards, one method that is recommended is to focus on paying one card at a time. This method does take time and patience, but it can be successful. Look at what credit cards you have and list what interest rate is on each card. Take the card that has the highest interest rate and throw whatever extra money you may have towards that card first, while continuing the minimum monthly payments on the other cards. Once that card is paid, then focus on the credit card with the next highest interest rate and so on, until all cards are paid in full.

Work a part-time job.

Retirement does not always mean that you will never hold another job. In fact, many retired individuals choose to take a part-time job not only to earn some extra money, but to socialize and be out with people. Many retirees find a great deal of success in part-time consulting or freelance work after retiring from a long-term professional career.

For seniors struggling with insurmountable debt, help is here. Do spend your golden years being hounded by creditors.  Credit card debt is one of the most common problems we see facing those with serious financial issues. The stress can become compounded with collection calls and the threat of lawsuits.  Bankruptcy not only gives people a financial fresh start, but it is a powerful tool that can be used to protect valuable assets, including property, vehicles and retirement savings.

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

Source:  https://www.theladders.com/career-advice/5-ways-retirees-can-tackle-their-credit-card-debt

 

Bankruptcy Law, Credit Card Debt

Can Wage Garnishment Be Stopped on Credit Card Debt?

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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.

Click here to learn 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, Credit Card Debt, Debt Relief

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

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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.

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, Credit Card Debt, Debt Relief

Payoff Strategies to Help Lower the Stress of Your Debt

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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.

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 Resources:

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

 

Credit Card Debt, Debt Relief

How Late Payments Affect Your Credit Score

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Missing a credit card or loan payment can be an upsetting feeling. The lender may charge you a late fee, but worse your credit score can be negatively affected.  The good news is, your payment must be a full 30 days late before a lender can report it to the credit bureaus.  This means that if your payment is made a few days later or even a couple of weeks past the due date, it will not harm your credit score.

Once the payment is past the 30-days late point, however, the account holder should expect his or her credit score to take a hit.

According to the FICO branding score model, credit bureaus do consider payment history important. In fact, payment history accounts for 35 percent of a person’s credit score. It is important to understand that not every person is affected in the same manner when it comes to how late payments hurt a credit score. Many different factors are at play when it comes to credit scoring.

For example, not all lenders use the same credit scoring model when reviewing a borrower’s qualifications. Hundreds of different credit scores are available for lenders to use. Many use the FICO score, as well as VantageScore, a credit score that was created by the big three credit-reporting agencies, TransUnion, Equifax and Experian. Ultimately, it is up to the lender to decide which type of credit scoring model to use when reviewing a borrower’s qualifications.

How badly a missed payment can affect a person’s credit depends largely on which credit score model a lender is using. Older FICO models, which are still used by the mortgage industry, consider an isolated 30-day missed payment a bigger deal when it comes to a person’s score, while the newer FICO 8 scoring models give borrowers a little more leeway. With these newer models, one missed payment will not have as serious of an effect as multiple late payments.

The problem is most lenders do not tell the borrower what type of model or version they use when processing a lending application, which means the borrower may have no way of knowing whether a one-time late payment will hurt him or her in the loan process.

Other factors play into how a late payment can hurt a borrower’s credit score. One of these factors involves how severe the late payment is, including how far it is “past due” and how recently the missed payment or late payment occurred. If the late payment occurred several years ago, its effect may be much less severe than a late payment that occurred more recently.

How long negative information stays on a borrower’s credit report is governed by the Fair Credit Reporting Act (FCRA). For most purposes, late payments will stay on a person’s credit report for up to seven years, although exceptions do exist to that rule.

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 Resources: https://www.bankrate.com/personal-finance/credit/how-late-payments-affect-credit-score/