Debt Relief

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

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

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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

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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/

 

Bankruptcy Law, Debt Relief

6 Tips to Get Back on Your Feet After Bankruptcy

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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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

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/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

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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.

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, Debt Relief, Timothy Kingcade Posts

Understanding the Bankruptcy Process in Florida

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Making the decision to file for bankruptcy is never an easy one. The steps taken during a bankruptcy case vary depending on the type of person or entity filing for bankruptcy. Once you decide to file for bankruptcy, it is important that you avoid mistakes that could impact your case or jeopardize your debts from being discharged.

Business filers are limited normally to a Chapter 11 bankruptcy, unless the business is a sole proprietorship. In this situation, the business may be able to proceed with a Chapter 7 or Chapter 13 bankruptcy. If the filer is an individual, depending on qualifications, he or she may be able to do either a Chapter 7 or Chapter 13 bankruptcy.

To qualify for a Chapter 7 bankruptcy case in Florida, the debtor needs to pass the means test. The means test takes into account your income, expenses and family size to determine whether you have enough disposable income to repay your debts. If the debtor does not pass the means test, the next option is a Chapter 13 bankruptcy, which is also known as a repayment or reorganization bankruptcy. In Chapter 13, the debtor works with the bankruptcy trustee on a three-to-five-year-long repayment plan whereby the debtor’s debts are negotiated down and consolidated into one single monthly payment. The debtor will normally get to keep all of his or her assets in this type of bankruptcy.

Many people fear that filing for bankruptcy will result in them losing everything they own. Do not believe this myth.  Many Chapter 7 cases are “no-asset” cases, which means that the debtor gives up no possessions due to the allotted bankruptcy exemptions.  Florida has one of the most generous homestead exemptions in the country. To use Florida’s exemptions, you must have resided in Florida for at least 730 days before filing your bankruptcy petition. To claim the full value of the homestead exemption in Florida, you must have owned the property for at least 1,215 days before the bankruptcy filing.

The state also allows the filer to exempt personal property up to $1,000, education savings and health savings, tax credits and refunds, and up to $1,000 in motor vehicle equity if the filers are married and filing jointly. Additionally, Florida allows for wages of the head of family to be exempt for up to $750 weekly or the greater of 75 percent or 30 times the minimum wage. Florida exemptions also cover different types of pensions and retirement funds, as well as annuities and insurance policies.

If a debtor passes the means test and is able to file a Chapter 7 bankruptcy case, the next question is whether the filer’s debt is dischargeable. For the most part, bankruptcy involves debt that is unsecured and not connected to collateral, such as medical bills or consumer credit card debt. Other debt, such as child support payments, tax debt and spousal support are not dischargeable. If the filer’s debt is mainly unsecured, Chapter 7 bankruptcy can be the better option for him or her to discharge the debt. If the filer’s debt is connected to another asset that the filer wishes to keep, a Chapter 13 filing may be the better option.

It helps to have the assistance of an experienced bankruptcy attorney to guide you through the process. A bankruptcy attorney can review the debtor’s situation, advise him or her on the best route to take with respect to bankruptcy and can ensure that all paperwork is completed correctly to avoid any unnecessary delays.

Please click here for more information.

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

Tips for Negotiating with Debt Collectors

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Working with a debt collector is normally not a pleasant experience. Debt collectors are persistent when trying to reach a debtor, and many will stop at nothing until they are successful at getting payment. Any time someone is late on or has missed a payment, that person should expect some type of communication from a collector, whether it be in written form or through phone calls. Many times, it is a combination of both. It helps to know your rights when dealing with a debt collector and know how to work with them on negotiating your debt.

Get Verification of the Amount Owed

Never assume that the information the debt collector is providing is completely accurate. Believe it or not, many scams are out there where debt collectors attempt to collect on debt that belongs to another person or is entirely past the statute of limitations. As soon as the debt collector makes contact, ask them to provide written verification of the amount owed.

Also, verify the credibility of the debt collector. Ask for the person’s name, the name of the company, a business address and a phone number. It pays to do some research into the company to see if they are, in fact, a legitimate debt collector. Also, review the amount they say is owed against your own records to ensure that the amount is accurate. Collection agencies are bound by law to send a validation letter within five days of contacting a debtor, listing the debt amount, the original creditor, and what the debtor should do in the event an error is discovered. It could be possible that a debtor owes on a specific debt but in a smaller amount than the collector is arguing they owe. Always verify before making payment.

Debtor Rights

One big mistake many debtors make is assuming that they have no rights when speaking with a debt collector, which is very far from the truth. Because many times, a debt collector’s actions will border on the edge of harassment or threats, the Fair Debt Collection Practices Act, or FDCPA, was enacted, which prohibits a debt collector from deceiving, threatening or harassing a debtor while collecting on a debt. The FDCPA prohibits any type of communication that threatens the debtor, includes profane language, or makes the debtor feel harassed. The collector can also not lie to the debtor, threaten to arrest or deport him or her, or threaten to take the person to court without any intention of doing so. A debt collector is also prohibited in the times that he or she can contact a debtor. Calls cannot be made before 8 a.m. or after 9 p.m. If a debt collector is violating the FDCPA, inform them of the violation and demand that no more communication be made. The collector can be reported to the Consumer Financial Protection Bureau, as well as the Better Business Bureau and the Florida Attorney General.

Look at the Type of Debt

It also helps to know what type of debt is involved when dealing with a collector. Many times, different options exist for payment plans based on the type of debt, whether it be credit card, medical debt, or something secured with collateral, like a car or home. Medical debt creditors tend to be more willing to work out a payment plan than credit card creditors. Also, if the debt involved is a medical debt, double check to make sure that the debt was processed by insurance first. Student loan service providers may also be more likely to work with a debtor on an income-based repayment plan or even may offer a deferment option to allow the debtor to get back on his or her feet first before continuing payment.

Some collectors will work with a debtor on a lump sum payment that is lower than the amount owed in exchange for releasing the debt. Ask if that is a possibility on the balance, and if it is, see if the collector will settle for a partial repayment over receiving nothing.

Be Aware of the Statute of Limitations

As mentioned previously, debt collectors will also try to get a person to pay on a debt that is past the state’s statute of limitations. It is highly possible that a phone call from a debt collector is on a debt that is past the time frame in which they have a legal right to pursue payment. The statute of limitations for Florida is five years for written contracts and four years for oral contracts or revolving accounts, such as credit cards.

Use the “Bankruptcy” Word

Sometimes it does benefit the debtor to mention that he or she is considering filing for bankruptcy. The collector wants to receive payment, and if the debt is something that is unsecured, such as a credit card or medical debt, it could easily be discharged through bankruptcy. If this happens, the creditor will end up receiving nothing. Tell the collector that bankruptcy is being considered not as a threat necessarily but more as a push to motivate them to negotiate. However, only do this if repayment in any form is an actual possibility. Otherwise you could be making empty threats.

Always Get It in Writing

When dealing with debt collectors, any time someone works out an agreement with the collector, it is imperative that he or she memorialize the agreement in writing. This rule of thumb applies for whatever type of agreement is reached, whether it be a debt repayment plan, a change in payment terms, or a lower interest rate. Request that the agreement be sent via mail, and always review the terms very carefully before signing on the dotted line. Make sure nothing has changed from what was originally discussed. Many times, a debt collector may add some additional language that was not agreed upon, and once the contract is signed, the debtor is bound by that agreement. Always review before signing.

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, Credit Card Debt, Debt Relief, Timothy Kingcade Posts

70 Percent of Americans with Credit Card Debt Admit They Cannot Afford to Pay it Off in One Year

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Credit card debt is a major problem for many Americans. Almost half of all Americans currently carry a balance on their credit cards, but the problem is, most of them are not able to pay off the balance. In fact, 70 percent of cardholders say they cannot pay off the balance within one year.

These figures come from a survey released by real estate data company, Clever. They surveyed 1,000 credit card users regarding their credit card use. The study found that 47 percent of all Americans carry a monthly balance on their credit cards. On top of that, 70 percent of those surveyed say that their card balance is more than $1,000.

Additionally, 56 percent of those surveyed said that they have had their credit card debt for at least one year. Of those surveyed, 20 percent of them say they believe it will take them over three years to pay off the debt. Eight percent of them admit that they do not know when they will be able to pay off the debt.

Depending on how high the balance is, the interest rate on the card can make it virtually impossible to ever make progress on the debt. The average credit card APR currently is 17.65 percent. If a cardholder is only making the minimum monthly payment, he or she is likely only paying on the interest for the card.

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.

What seems to be making this problem worse is the fact that Americans rely heavily upon debt to cover everyday expenses. Even something as simple as buying groceries or paying for gas for their cars can add up if charged on a credit card. In fact, the Clever survey reported that 28 percent of them say that they rely on credit cards to pay for their essential living expenses.

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. 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.

 

Debt Relief, Timothy Kingcade Posts

How to Avoid the Most Common Debt Consolidation Traps

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The debt consolidation industry is filled with pitfalls for consumers. Many of these for-profit companies prey on those struggling with insurmountable debt. Debt consolidation refinances your debt and rolls multiple debts into a single, lower monthly payment. You can use either a personal loan or a credit card to consolidate the debt.

However, this option doesn’t come without risk. What you may not know is that some debt consolidation companies charge high interest rates to go along with the new monthly payment plans they set up for clients. It is important that consumers do their research through the Consumer Financial Protection Bureau (CFPB) to make sure the debt consolidation company is not a scam, as many do exist.

Some of the biggest pitfalls in debt consolidation occur when a consumer falls prey to one of the many scams out there. The Internet is full of scam artists who pretend to be online lenders offering deals that are simply too good to be true to people who are struggling financially. Many of these individuals have been turned down for credit and loans in the past, so they may jump at the chance when someone offers them the opportunity of a reduction in debt.  Debt consolidation is oftentimes a temporary fix to a bigger problem.

Before agreeing to any deal found online, the consumer needs to conduct a thorough background check on the company before going any further. If the company is asking for a large fee upfront or requires the person to make several months of payments before starting, these statements may raise some red flags that it is a scam. The Better Business Bureau is another good resource to see if the company has complaints filed against them.

Another mistake many consumers make is to apply for multiple loans at the same time in hopes that one will be approved. However, what they are not aware of is the fact that every loan application triggers a look into the person’s credit history. Every time a lender pulls someone’s credit history, this causes that person’s credit score to drop.

One helpful tip before making any decisions on a consolidation loan is to know where the consumer’s credit score stands before making any applications. That way the consumer can ask the lender what minimum credit score they require before applying.

Additionally, many consumers make the mistake of assuming that they do not need to keep making payments on their current credit cards while waiting for the debt consolidation process to finalize. Even if the consumer is approved for a balance transfer, he or she will still need to pay at least the minimum payments on the multiple credit cards since balance transfers can take a couple of weeks to process. Check the balance on each card even after the transfer goes through or loan payment is made to ensure that no balance is left on the card. If the card does still show a small balance, be sure to make payment by the due date to avoid a late fee and negative hit to your credit score.

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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, Student Loans, Timothy Kingcade Posts

President Trump Plans to End Student Loan Debt Forgiveness Program

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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.