Debt Relief Archives - Page 79 of 85

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

The Jury is still out on the New Student Loan Repayment Solution REPAYE

Posted on December 28, 2015by Admin

The new federal student loan pay-off solution known as REPAYE (Revised Pay As You Earn) is supposed to fix the shortcomings its predecessor, PAYE (Pay As You Earn) failed to do. The new program allows borrowers to cap their monthly payments at 10% their discretionary income regardless of when they borrowed or how much they owe. Another benefit is that after making 20 years of payment- 25 years for graduate students- any outstanding loan balance will be forgiven under the program.

The goal is to ease financial stress and subsequent loan default. The effect of defaulting on student loans can last long after graduation. It can impact a borrower’s credit history; make qualifying for any new loan (for example, a mortgage or car loan) more expensive or flat out impossible.

But like all new plans, just because it’s new does not mean it’s a perfect fit for all borrowers. The downside to this repayment option is that for some borrowers, the monthly payment may not cover both interest and principal payments, which mean the loan balance, could keep growing. That makes it harder to obtain other personal credit (i.e. – credit cards, mortgages, etc.) because the borrower’s credit capacity is exhausted.

Another risk is that the lower monthly payments will lead the borrower to pay substantially more over the life of the loan when compared to a standard repayment plan. Borrowers must also be aware of the consequences of REPAYE if their salary eventually increases. With REPAYE, payment will always be 10% of your monthly discretionary income, even if it amounts to more than the original payment under the ten-year plan as income rises.

There are now a total of eight income driven repayment plans to choose from. The key is to select the one that’s best for your situation and know the pros and cons of each.

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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. 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, 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 website at www.miamibankruptcy.com.

Bankruptcy Law, Debt Relief, Student Loans

Three Questions to Ask about the New Student Loan Repayment Program

Posted on December 24, 2015by Admin

Some financial counselors are advising caution when it comes to the federal government’s new income-based student loan repayment program. If you do not plan ahead, the lower monthly payments under this option could have long-term financial consequences.

The REPAYE program (Revised Pay As You Earn), which launched December 16, gives those Americans with Federal student loans the option of capping monthly payments at 10% of disposable income. For example, someone earning $30,000 a year would see payment capped at around $103 a month. It also includes a forgiveness feature- Any loan balance remaining after 20 years of payments will be wiped away for undergraduate loans. If you have loans from graduate school, the forgiveness comes after 25 years.

To make sure you weigh all the costs and benefits of the new plan, here are three questions to ask before you sign up for REPAYE:

Will your monthly payment reduce your balance? Check to see whether your monthly payment will cover both the principal and interest due on the loan. If it does not, your balance will keep growing, which can mean financial trouble in the long run.

How much more in interest will you pay? By stretching out your loan, you inevitably pay more in interest, which is money that could have been saved for your financial goals. This can also hurt your credit score if the loan balance keeps growing.

Will you be able to handle a large tax bill? Under current law the loan amount that is wiped out will be treated as taxable income. If the forgiven debt is a large amount, wiping it out may push you into a higher tax bracket, so you could end up paying the tax at an increased rate.

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Bankruptcy Law, Debt Relief, Student Loans

Student Loan Debt: The Next Crisis Facing Elderly Americans

Posted on December 23, 2015by Admin

The number of student loan borrowers age 60 and up has increased to 2.2 million, from 700,000 in 2005, according to the Federal Reserve Bank of New York. Twenty-seven percent of education loans held by people age 65-74 were in default in 2013, which means they have not made a payment in 270 days or more. In fact, more than half of education loans held by people 75 and older were in default.

The government has the ability to garnish wages for non-payment of student loans- even take your tax refund, but with seniors they have added leverage- their social security. In 2013, 155,000 seniors lost part of their retirement benefit to repay education debt, up from 31,000 in 2002, according to the GAO.

This has left many seniors helpless, as most forms of consumer debt can be discharged in bankruptcy- student loan debt cannot. Congress said in the 1970s that such debt can go away only if a debtor can prove repaying it would impose an “undue hardship.”

However, Congress never defined undue hardship, so it has been left to the courts discretion to determine just how desperate someone needs to be to qualify for relief. Bankruptcy judges have said that to get education loans discharged, borrowers must show their entire lives would otherwise be characterized by a “certainty of hopelessness” or that repaying the debt “strips [the debtor] of all that makes life worth living.”

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Bankruptcy Law, Credit, Debt Relief

Tips to Avoid Medical Debt- While You Are Still Healthy

Posted on December 22, 2015by Admin

Financial experts are advising Americans to save for a rainy day when it comes to their healthcare costs. The last thing you want to deal with when you are battling a serious illness is financial stress. Consider getting insurance for your credit cards and mortgage. Understand your insurance; know what it covers and what it does not cover.

Prepare a budget while you are still healthy. Know what it costs to run your household and the expenses that are coming out every month. If you spend $1,500 a month on living expenses, experts say you should put six to nine months worth of that money away in the bank.

For example, the treatment for what you have been diagnosed with or a family member has been diagnosed with- you will need to have cash on hand to travel for treatment, get a hotel, see doctors while still covering your monthly bills and expenses.

If you or a family member have been diagnosed with a serious illness, call your creditors and let them know immediately if you are having difficulty paying your bills. There are programs offered that can give you time to make those payments and if you find yourself falling too far behind, reach out to a reputable bankruptcy attorney in your area.

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If you 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, 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 website at www.miamibankruptcy.com.

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

Former NFL Running Back Clinton Portis Files for Bankruptcy

Posted on December 21, 2015by Admin

Clinton Portis, former Washington Redskins and Denver Broncos running back, who made more than $40 million during his NFL career, has filed for bankruptcy. With that amount, most of us would be set for life, but Portis is flat broke. This shouldn’t come as a huge surprise, since studies have shown that a high percentage of NFL players declare bankruptcy after their game days are over. A Sports Illustrated (SI) article from 2009 indicated that after two years of retirement, a whopping 78 percent of former NFL players went bankrupt or suffered financial stress due to joblessness or divorce. Taken in total, almost 16 percent of the players studied declared bankruptcy during the first twelve years of retirement.

The federal bankruptcy filing showed Portis owes nearly $5 million to creditors, including $500,000 to his own mother. Portis, 34, also lists debts of $500,000 to Entertainment Tonight correspondent and former sideline reporter Nischelle Turner, $412,000 in “domestic support obligations” to four different women, and $175,000 in car loans, according to court records.

But Portis’ biggest debt is owed to a mortgage company. The debt is listed as a “mortgage deficiency” of $1,023,020. Portis also owes the IRS $390,000, an amount he is disputing. The MGM Grand Hotel and Casino has also won a judgment of $287,178 against Portis.

Some of the running back’s failed business ventures attributed to his bankruptcy filing, which included sinking $8 million into a casino that went belly-up, and putting $2 million into a ‘wealth management’ firm that was later termed a Ponzi scheme.

Portis rushed more than 1,200 yards during his nine-season NFL career. He finished with 9,923 rushing yards and 80 total touchdowns. Portis’ final NFL game was with the Redskins in November 2010. A hearing is scheduled for Portis’ bankruptcy case on February 4, 2016 at the U.S. Courthouse in Gainesville, FL.

Click here to read more on this story.

If you are in financial crisis and considering filing for bankruptcy, 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, 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 website at www.miamibankruptcy.com.

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

Make Managing Your Student Loan Debt an Objective this New Year

Posted on December 17, 2015by Admin

It’s almost the New Year and if managing your student loan debt is one of your resolutions in 2016- this post is for you. Student loan debt is the only form of consumer debt that has grown since the peak of consumer debt in 2008. Balances of student loans have surpassed both auto loans and credit cards, making student loan debt the largest form of consumer debt outside of mortgages, according to the Federal Reserve Bank of NY.

Below are some actionable items that can help you start off on the right foot when it comes to managing your student loan debt in 2016.

Take Inventory of your Debt. Create a detailed list of all of your liabilities starting with the highest cost debt, first. Private loans are often more costly than federal loans, due to their higher interest rates and less flexible repayment terms. Begin to pay down the highest cost obligations more aggressively.

Alert your Lender and Prepay your Loans. Even if it is a small amount each month, a prepayment will reduce the amount of interest you pay and the length of time you have the loans outstanding. You may need to let your lender know that you want to pre-pay your loan with the extra payments.

Check and See if your Loans are Tax Deductible. In certain cases, student loan debt is tax deductible. Your deduction can reduce the amount of your income subject to tax by up to $2,500 subject to income limitations. Remember, the student loan interest deduction is claimed as an adjustment to income.

Consider Consolidation. If your goal is to purchase a home this year, you may want to lower your monthly student loan payment to qualify for better mortgage terms. Consolidating your loans and lengthening your repayment schedule can help improve your mortgage approval prospects.

Live Below your Means. A sound financial plan begins with spending less than you make. This can be difficult to do- but once you are free of debt imagine the possibilities of what you can do with the extra cash- savings, vacations, etc.

Consider Borrowing against Home Equity while Creating a Repayment Plan. If you own your home, you should consider a “cash out refinance” to benefit from potentially lower cost debt that may be tax deductible. You should also consider a home equity line of credit as you may qualify for a lower interest rate and tax deduction.

Whatever you decide, make sure the approach you take is a methodical one. Write down a list of your financial obligations and think measurable objectives. You have options and help is here.

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

How a Rise in the Federal Funds Rate Could Hurt Your Credit Card Debt

Posted on December 16, 2015by Admin

As many consumers turn to credit cards this holiday season to fund gifts, vacations and dinners out- a Federal rate hike could be the essential “anti-holiday” gift. The annual percentage rate is expected to increase on most credit cards and if it does, it will affect many card holders on their next bill.

That’s because the hook for most variable-rate consumer borrowing, whether credit cards, adjustable-rate mortgages, or home equity lines of credit, is the prime rate. And that rate moves with the federal funds rate. Today, prime is 3.25 percent, and card issuers add a certain percent on top of it to set the annual percentage rate (APR).

This is a non-issue for consumers who pay off their balances. However, for those who carry a balance month-to-month, it will affect the entire balance, not just new purchases. If this turns into a series of rate hikes, it could make paying off a big balance take longer and cost more.

In a recent report, a quarter point-rise in the federal funds rate would cost cardholders $1 billion annually, and a full percentage-point hike almost $6 billion, according to the Consumer Financial Protection Bureau.

The good news? In most cases, if you got a promotional rate on a balance transfer, that rate is fixed. So anyone who has taken advantage of such offers would not see their transferred balance affected by rate increases until the promotional period ends.

If you are carrying a large balance on a card with a double-digit APR, there are still opportunities to transfer balances at a zero percent rate, fixed, for a year or more.

Consumers are advised to call their credit card company to see if they qualify for a lower rate. But make sure your credit is the same or better than it has been in the past. If issuers find your financial situation has changed for the worse when they check your record, they can cut your credit limit, or even decide they do not want you as a customer anymore.

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Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

This County wants to ease the burden of student loan debt for its residents

Posted on December 15, 2015by Admin

Lawmakers in Montgomery, Maryland are in the process of developing legislation that would allow them to “establish a loan authority,” a move that would give the county the ability to leverage its municipal borrowing power to extend the lowest interest rates to its residents. It’s also a way the county hopes to attract young, college-educated workers and entrepreneurs.

If the bill succeeds in the next legislative session, Montgomery would join a growing list of states entering the student loan market to ease the burden of student loan debt for its residents. Minnesota, Maine, North Dakota, California and Connecticut have passed legislation that allows them to refinance student loans, while politicians in Virginia and Wisconsin are fighting for the same. Proponents say student loan debt has become a significant economic barrier, keeping people from full participation in the local economy.

However, refinancing federal student loans through state authorities could mean forfeiting consumer benefits like income-driven repayment plans and public-service loan forgiveness. At this time, there are few options for lowering interest rates on student loans. Consolidating federal loans will bring down the rate by only a small percentage, because the interest is calculated by taking an average of those rates. Consumers who are considering these programs need to evaluate what they might be giving up. If the interest rate difference is not that much, it may not be worth it.

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Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

What is “good debt” and how to make it work for you?

Posted on December 14, 2015by Admin

The word “debt” predominately carries a negative connotation. However, some debts are good for you as all financing is not created equal. So what is good debt? Good debt is “any debt that offers a return on investment.” For example, a mortgage is often considered good debt. Other examples of good debt include: federal student loans (which offer greater protections for borrowers and come with the potential return of a higher salary and improved job prospects), and low interest lines of credit taken in order to invest in stocks or retirement funds.

Bad debt is any credit that you are taking out and using without a clear-cut plan of paying it back. Think of using a high-interest credit card to fund a shopping trip or taking out a payday loan to cover extra holiday spending.

Most credit score models reward consumers for having a diverse portfolio of accounts and revolving debt, like credit cards, depending on how much of the credit you are going to use and pay off each month. Making on-time payments and keeping your balances low on these cards is important when it comes to keeping a healthy credit score.

So how can consumers avoid taking on bad debt? First, remember that you do not have to take every credit card that comes your way. Ask yourself if you will be able to pay off the debt. If you do not have a plan to pay off the debt, it is probably a bad debt.

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Bankruptcy Law, Credit, Debt Relief

RushCard Disruption Reveals Flaws in Prepaid Debit Cards

Posted on December 8, 2015by Admin

Thousands of account holders of one of the most popular prepaid debt cards, the RushCard, found themselves unable to access their funds for the better part of two weeks. Essentially, they could not purchase groceries, pay rent or purchase gas using their cards because of a so-called “technology transition,” the company said. Hip-hop mogul, Russell Simmons who is the founder of the card simply said he was “praying” for those affected, in a since-deleted tweet.

It’s a sad reality that the poorer you are the more you pay for banking in America- but it can also be dangerous to live outside the mainstream banking system as this type of problem is not limited to RushCard. The Pew Charitable Trusts reported in June that about 23 million Americans use prepaid cards such as RushCard regularly, up about 50% between 2012 and 2014, with many treating them like bank accounts and having their pay checks directly deposited to the card.

It’s not the first time that a prepaid debit card backed by a celebrity and marketed directly at the financially most vulnerable segment disappointed consumers. Last year, Suze Orman and Bancorp Bank shut down their approved card project. Part of the card’s marketing pitch was that this might be a way for Americans with poor credit to rebuild their damaged FICO scores. However, the minimum annual cost to use Orman’s product for a typical “unbanked” consumer came closer to $81 in fees.

For many individuals, using these type cards seem like a rational choice, as a number of banks are beginning to charge fees for smaller accounts. The banking industry has stopped serving those who are “too poor to bank”, pushing them into the arms of non-bank service providers to provide the most basic services: to cash pay checks, pay bills or transfer money. But in reality, consumers are forking over approximately 10% of their income for these services when they use these type cards.

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