Consumer Bankruptcy, COVID-19

Consumer Bankruptcy Filings Level Off in August 2021

Bankruptcy filings leveled off last month, according to figures from technology company, Epiq. The company compiled filings through their AACER bankruptcy program which showed that in the month of August, 32,225 new bankruptcy cases were filed, including Chapter 7 and Chapter 13 consumer bankruptcy cases. This figure is down slightly from the 32,391 reported in July 2021.

Despite the fact that consumer bankruptcy filings have decreased, commercial bankruptcy filings have increased approximately one percent from July 2021 with 1,724 cases filed.

Credit Card Debt, Debt Collection, Debt Relief

How Much Debt is Too Much? Here are the Warning Signs.

For many people the word ‘debt’ is a four letter word. A word that resonates a certain fear and anxiety, oftentimes associated with credit card bills and collection calls. However, taking on certain kinds of debt can serve as a means to an end. For example, borrowing money to go to college and earn a degree, starting a business, or purchasing a home or car.

Determining how much debt is too much debt can be tricky. If you have a good job, are in good health, and keep track of your finances, and interest rates, debt can be managed effectively. If used wisely, and for things that grow in value, like a home or education, it can be useful.

student loan debt, Student Loans

What Is Next for Student Loans in the Covid Era?

Student loans have been at the forefront of the COVID-19 relief offered through the federal government. The biggest source of relief came in the moratorium on federal student loan repayments issued by the Biden administration and was extended through the end of 2021. However, this moratorium is expected to end January 31, 2022, leaving many student loan borrowers left to wonder what is next.

It is estimated that $1.5 trillion in student loan debt is now owed collectively by U.S. student borrowers. Therefore, these measures have widespread effects for many American consumers.

COVID-19, Foreclosure Defense, Foreclosures

Supreme Court Ends Eviction Moratorium

The U.S. Supreme Court ended the pandemic-related federal moratorium on residential evictions imposed by President Biden’s administration. This eight-page decision effectively ends a debate that has divided party lines for months now during the COVID-19 pandemic. The ruling came down in a 6-3 decision, the court similarly divided along party and ideological lines.

The eviction moratorium was declared by Congress at the start of the pandemic. However, Congress’s moratorium expired in July 2020. The CDC then extended it by issuing a series of moratoriums under a 1944 law. The moratorium has consistently been extended, giving tenants and homeowners an opportunity to remain in their homes.

Landlords have consistently fought the moratorium, arguing that the longer it has been extended, the more they have suffered financially without any legal recourse.

The majority opinion stated that they believe the Centers for Disease Control and Prevention (CDC) exceeded their authority. They claim the CDC has relied on a statute that is decades-old that authorizes the CDC to implement emergency measures, such as fumigation and pest extermination, not a nationwide months-long moratorium on evictions.

student loan debt, Student Loans

Biden Administration Cancels Almost $10 Billion in Student Loan Debt. Who Got Relief?

In total, the Department of Education has approved discharging $8.7 billion in student loan debt for more than 450,000 borrowers.

Click here to see if you are eligible.

That amount has included:

  • $7.1 billion for borrowers who were eligible for relief because of “total and permanent disability.”
  • $55.6 million in loan discharges for students who attended three trade schools that officials said misrepresented themselves to students.
  • Another $1 billion for other students defrauded by their schools.

The Biden Administration has cancelled nearly $10 billion in student loan debt since January 2021, according to the U.S. Department of Education. The Department reported they have approved $9.5 billion in student loan discharges since January 2021, affecting approximately 563,000 borrowers.  This has given borrowers the ability to tackle other debts, invest and increase savings.

Consumer Bankruptcy

Bankruptcy Filings Fall to Levels Not Seen Since 1985

Bankruptcy filings have fallen to levels not seen since the mid-1980’s. The low number of filings are credited to the government aid and stimulus checks issued since the COVID-19 pandemic.

According to statistics from the Administrative Office of the U.S. Courts, 462,309 individuals and companies filed for bankruptcy in the fiscal year ending June 30, 2021, which is a 32 percent decrease from the previous year. The office also noted that this figure was the lowest one reported for a 12-month period since 1985.

Personal bankruptcy filings decreased 33 percent to approximately 444,000 over the course of a year. Business filings similarly declined, although by a lower percentage. Business bankruptcy cases dropped by 17 percent to approximately 22,500 filings.

Bankruptcy Law, Consumer Bankruptcy

Understanding the Ins and Outs of Bankruptcy

The thought of filing for bankruptcy can conjure up all kinds of emotions. For many, all they know of bankruptcy is what they have heard from others or seen on television advertisements. However, the following information can be helpful in terms of understanding the ins and outs of consumer bankruptcy.

Types of Consumer Bankruptcy.

If a consumer is considering filing for bankruptcy, he or she has two options available. These options are based on the specific chapters within the U.S. Bankruptcy Code. The first option is called Chapter 7 bankruptcy, often referred to as a liquidation bankruptcy. A Chapter 7 case tends to take only several months to complete and involve the filer working with the bankruptcy trustee to sell nonexempt assets and pay off qualifying debts. At the end of the case, the remaining consumer debts held by the filer are discharged. However, to qualify for filing for Chapter 7 bankruptcy, the filer needs to be below a certain income threshold per the bankruptcy court’s means test.

The other option is Chapter 13 bankruptcy, which takes three-to-five years to complete and involves the filer working with the bankruptcy trustee to complete a structured repayment plan on the consumer’s debts. Chapter 13 cases, since they take longer, do cost more in terms of legal fees.

Credit Card Debt

Three Credit Card Mistakes To Avoid

A credit card can be a useful tool when it comes to improving a consumer’s credit score or financing large purchases. However, when credit card spending gets out of hand, it can be easy for that balance to grow out of control. The following tips can be helpful for consumers using credit cards to pay for daily expenses.

Avoid Maxing Out Credit Cards

Most credit cards come with a maximum spending limit, and while it can be tempting to rely on that figure when making credit card purchases, it is important that consumers avoid reaching that maximum amount. One reason for avoiding this is a maxed-out credit card can reflect negatively on a consumer’s credit score. If a consumer uses more than 30 percent of his or her available credit, his or her credit score will be reduced. This reduction occurs because credit utilization ratios are considered by credit reporting agencies when calculating a person’s credit score. Many credit cards also tack on fees to the person’s balance if he or she goes over the card’s limit.

student loan debt, Student Loans

Student Loan Payment Pause Extended to 2022

The Biden administration has announced that the moratorium on federal student loan payments would be extended through January 31, 2022. This announcement came just over a month before the pause was set to expire at the end of September. According to the Department of Education, this extension is the final one that will be issued.

The moratorium was first put in place in March 2020 after Congress passed the CARES Act. The moratorium paused payments through the end of September 2020, keeping all federal student loan interest rates at zero percent, affecting approximately 42 million federal borrowers. President Trump then issued an executive order to extend the student loan payment pause through January 2021. As soon as President Biden took office, he issued another executive order extending the pause through September 30, 2021.

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