Credit Card Debt

Credit Card Debt Among Retirees Jumps

While credit card interest rates are at an all-time high, the amount of retirees with credit card debt has increased substantially.

About 68% of retirees had outstanding credit card debt in 2024, up from 40% in 2022 and 43% in 2020, according to a new poll by the Employee Benefit Research Institute.

This is a worrisome financial trend, since many retirees are on a fixed income. About 2 in 5 cardholders have maxed out or nearly hit their card limit since early 2022, resulting from inflation and higher interest rates, according to a recent Bankrate poll.

There are a few ways retirees can get their credit card debt under control.

  1. Reduce expenses
  2. Boost income
  3. Reduce your interest rate

As bankruptcy attorneys, we see credit card debt as one of the most common problems facing those with serious financial challenges.

Filing for bankruptcy is a viable option for those struggling with insurmountable credit card debt. Chapter 7 is the fastest form of consumer bankruptcy and forgives most unsecured debts like credit card debt, medical bills, and personal loans.  There are certain qualifications a consumer must meet in regard to income, assets, and expenses to file for Chapter 7 bankruptcy, which is determined by the bankruptcy means test.

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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.

Car Repossession, Florida Bankruptcy Exemptions

Do I Have to Surrender My Car in Bankruptcy?

Filing for Chapter 7 bankruptcy can clear most unsecured debts, but it may also require selling or giving up some assets to pay debts. A fair question and one many people have is: “Will I be able to keep my vehicle if I file for bankruptcy?”

The answer is yes. Most filers will be able to keep their vehicle after filing for bankruptcy. Florida bankruptcy laws offer generous exemptions which allow individuals to keep various types of property, including their vehicle.  Vehicles are often exempt if they are necessary for you to maintain a job and household.

In a Chapter 7 bankruptcy, if your car is financed, you can surrender it by returning it to the lender. With that, the loan will be discharged in bankruptcy but will leave you without a car.

If you file Chapter 7 bankruptcy and are current on payments, you can keep the car if your equity is protected under state law. Under the Florida Motor Vehicle Exemption, bankruptcy filers can exempt up to $1,000 in motor vehicle equity. This amount can be even more if a married couple is filing for bankruptcy jointly. In cases where you are keeping a car with a loan on it, make sure you continue to stay current on your payments. The lender can still assert its lien rights if you get behind on payments and you could lose your car.

Secured Loans

It helps to understand the nature of a car loan as compared to other debt in a bankruptcy case. Since a car loan is attached to an asset, this debt is labeled as a secured debt, which means the asset can be used to pay off the amount owed if the consumer cannot continue paying. This debt is not liquidated in a Chapter 7 case if the consumer wishes to keep the car after everything is over. Therefore, the filer must file Form 108 at the start of the case, which is known as a statement of intention. This form tells the court whether the consumer wishes to reaffirm the car loan, redeem the car, or surrender it. This statement of intention must be filed within 30 days of the bankruptcy case being filed, or the car loan is not considered part of the bankruptcy proceeding.

Status of Vehicle

Determining the status of the filer’s vehicle is important before determining if he or she can keep the car. The status can be either the person owns it free and clear, he or she is leasing the car, or the person is still paying a loan on the car. If the filer is still making monthly payments on a loan, the lender holds the title to the car as collateral. Once the car loan is paid in full, the title then shifts to the vehicle owner. If, during the loan payments, the filer cannot keep up with payments, the lender will then take the car back, which is also known as repossession.

Being current on the car loan’s payments is key in both Chapter 7 and Chapter 13 in terms of the ability to keep the filer’s car. It makes it more likely that the filer will be able to continue paying on the car even after the bankruptcy case is over.

Value of the Car

The value of the vehicle is also important in how it is treated in bankruptcy. In a bankruptcy case, the value of the car is determined by the actual cash value of the vehicle. This value is usually the retail replacement value of the car. The car’s make and model, mileage, and condition determine the actual cash value of the car. Equity is important, as well, which is determined by subtracting what the filer owes on the car from its current value.

Bankruptcy Exemptions

Equity is key when it comes to determining the exemption that allows the filer to keep the car. Florida has one of the most generous bankruptcy exemptions in the country. To use Florida’s exemptions, the filer must have resided in Florida for at least 730 days before filing his or her bankruptcy petition. To claim the full value of the homestead exemption in Florida, the filer must have owned the property for at least 1,215 days before the bankruptcy filing. Under Florida bankruptcy exemptions, the filer can exempt up to $1,000 in motor vehicle equity or more if the person is married and filing for bankruptcy jointly.

Redeeming the Car

In a Chapter 7 case, the filer may be able to keep the car by redeeming its current replacement value. To do this, the filer pays to the lender what is owed on the car, minus the car’s current replacement value to own the car outright. Unfortunately, not many filers are able to do this since most do not have this kind of money available, which is why fewer than two percent (2%) of all filers redeem their car.

Reaffirmation Agreement

The filer can also keep the car by reaffirming the debt. This means he or she will agree to a new payment plan with the lender. To reaffirm the debt, the filer must submit Form 108, which is a statement of intent. Approximately two-thirds of all filers take this route.

Surrendering the Vehicle

If the filer cannot pay the debt in full or is not able to feasibly reaffirm the debt, he or she may surrender the car. Filers normally surrender their vehicles when they are significantly behind on payments. When a surrender happens, the lender gets the car back and the debt owed on it is forgiven. Unlike a repossession, the consumer is no longer liable for the deficiency balance owed on the car, which is what occurs in a repossession when the lender resells the car for less than what is still owed on it.

Chapter 13 Bankruptcy

The above options are normally the choices available to consumers in a Chapter 7 bankruptcy case. However, if the consumer wishes to keep his or her car, Chapter 13 bankruptcy is usually the best route for him or her. In a Chapter 13 case, the consumer works with the bankruptcy trustee to create a repayment plan that takes three to five years to complete where he or she pays down debts over the course of the case, liquidating whatever is left at the end of this period.

If the consumer has a lot of equity in the vehicle and if he or she can pay past due payments while remaining current on all other payments, it is likely he or she will be able to keep the car in a Chapter 13 case.

Many times, the bankruptcy court can also get the lender to reduce the interest rate on a vehicle loan under Chapter 13. This reduction will lower the person’s monthly payments and will make it easier for him or her to make payments.

Additionally, in a Chapter 13 case, if the consumer has owned the car for more than 910 days, which is roughly about two and a half years, the bankruptcy court can rule that the loan balance owed will be based on what the car is worth now as opposed to what the balance of the original loan is.

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.

Sources:

If I File Bankruptcy, Can I Keep My Car? (debt.org)

What Happens to My Car During Bankruptcy? – Experian

Bankruptcy Law, Consumer Bankruptcy

The Bling Factor: Jewelry An Issue in Shilo Sanders Bankruptcy Case

Colorado defensive back Shilo Sanders filed for bankruptcy in October, hoping to discharge a $11.8 million court judgment against him in Texas.

The son of Football Hall of Famer and Buffaloes head coach, Deion Sanders, is now facing questions about his income. It will be up to the court whether to discharge that debt. If the discharge is denied that judgment is owed to a man who has been closely monitoring Sanders’ possessions that could be sold to collect on it, including Shilo’s many necklaces and the business deals that bring him income from his name, image, and likeness (NIL).

The court judgement is a result of the 2015 assault of John Darjean, a high school security guard at Focus Academies in Dallas, Texas. Shilo Sanders allegedly assaulted Darjean after Darjean tried to confiscate his phone at school when Sanders was 15 years old. Darjean said Shilo Sanders hit him so hard near his neck with his elbow that it left him with permanent injuries, nerve damage and incontinence.

“Flashing bling” is part of the Sanders family brand. According to Darjean’s attorneys, it was hard to miss after Shilo’s ‘displays of wealth on social media.”

But because of the bankruptcy, Shilo now has reason to tone down his image, while still being truthful in disclosing all that he owns in court, as required by law.

It is important to disclose all your assets in court, but do not give any potential debt collector more reasons to question where you are getting the money to buy new things or whether certain necklaces you are wearing were properly included in your court disclosures.

Jewelry has been an issue in Shilo’s bankruptcy case from the beginning. In his initial Chapter 7 bankruptcy filing in October, he listed $478,000 in assets, including necklaces he valued at $75,000. His attorney then amended the value of his assets in December down to about $320,000 and removed the necklaces from the list of assets he owned, changing it to say he had $75,000 in necklaces that were on loan pursuant to an NIL deal with Saki Diamonds.

Bankruptcy trustees are experts at finding undisclosed property, vehicles, boats, jewelry, antiques, and collectibles. If you are caught trying to hide assets, the consequences are big. Your discharge will be denied, and you will be unable to discharge the debts you listed in a subsequent bankruptcy filing. In addition, the potential penalty for bankruptcy crimes includes fines and imprisonment of up to five years.

If you have any 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, 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.

SOURCE:

Bankruptcy case of Deion Sanders’ son Shilo has a bling factor (usatoday.com)

Florida Super Lawyers, Legal Awards

Miami Bankruptcy Attorney Timothy S. Kingcade Named a Florida Super Lawyer 11 Consecutive Years

Super Lawyer 11 Years

MIAMI (June 24, 2024) – Managing Shareholder, Timothy S. Kingcade of the Miami-based bankruptcy and foreclosure defense law firm of Kingcade Garcia McMaken has been selected to the 2024 Florida Super Lawyers list. This is the eleventh consecutive year Kingcade has been selected to the Florida Super Lawyers list (2013-2024) in the practice area of consumer bankruptcy. The recognition is awarded to the top 5% of attorneys in the state.

Attorney Kingcade practices exclusively in the field of bankruptcy law, handling Chapter 7 and Chapter 13 filings for the Southern District of Florida.  As an experienced CPA and proven bankruptcy attorney, Kingcade knows how to help his clients take full advantage of their rights under the bankruptcy laws to restart, rebuild and recover.

Super Lawyers is a listing of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement, representing the top 5 percent of Florida lawyers. The annual selections are made using a patented multiphase process which results in a credible, comprehensive, and diverse listing of exceptional attorneys. Attorneys are nominated by their peers, evaluated by a research team, and reviewed by a blue-ribbon panel before being selected for the final list. The Super Lawyers list is published nationwide in Super Lawyers Magazines and in leading city and regional magazines and newspapers across the country.

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Miami-based Kingcade Garcia McMaken, P.A. was established by managing partner and bankruptcy attorney, Timothy S. Kingcade in 1996. The firm represents clients throughout the State of Florida in Chapter 7 bankruptcy and foreclosure defense cases. The firm is committed to providing personalized service to every client, clearly explaining the options according to the unique circumstances of his or her life. The office environment and the service provided are centered on a culture of superior client care for the financially disenfranchised. All partners and associates at Kingcade Garcia McMaken, P.A. specialize in consumer bankruptcy and foreclosure and have dedicated their practices to this area of the law. Additionally, all attorneys and staff members at the firm are bilingual speaking Spanish.

Credit Card Debt, Debt Settlement

Why Debt Settlement Is the Wrong Way to Go When Dealing with High Credit Card Debt

When someone is struggling with high credit card debt, it can be easy to take any offer that promises to eliminate that debt. This is why so many debt settlement companies exist. These companies are often referred to as “debt relief” or “debt adjusting” companies, and their claim is they can negotiate directly with the consumer’s creditors to reduce the amount he or she owes. However, when it comes to dealing with high credit card debt, working with a debt settlement company is not always the best plan.

During the debt settlement process, the consumer will stop making payments on his or her credit card debt in hopes that his or her creditors will settle for less than what is owed and will negotiate with the debt settlement company. The problem is, creditors are not bound to work with the debt settlement company, and this process can often take years to complete.

Bankruptcy Trends, Business Bankruptcy, Consumer Bankruptcy

Bankruptcy Filings Increase by 13 Percent Despite Historic Low Level of Filings

According to statistics from the Administrative Offices of the U.S. Courts, the total number of bankruptcy filings increased by 13 percent in the 12 months ending on September 30, 2023. Business bankruptcies during this time increased by approximately 30 percent.

Annual bankruptcy filings were 433,650 as of September 30, 2023, as compared to the 383,810 in September 30, 2022.

Factors contributing to the uptick in filings include rising interest rates and inflation.

Credit Card Debt

U.S. Debt Levels Are on the Rise as More Americans Fall Behind on Their Credit Cards

American consumers are adding more to their credit card balances and falling behind on current payments, according to data from the Federal Reserve Bank of New York’s latest Quarterly Report on Household Debt and Credit.

According to this report, credit card balances hit a high of $1.08 trillion, increasing $48 billion from the previous quarter and increasing a record $154 billion from the previous year. This year-over-year increase is the largest one seen since the New York Fed began tracking this data back in 1999.

Credit Card Debt

Four Ways to Get out of Credit Card Debt

Credit cards are among the most expensive ways to borrow- especially these days. The Federal Reserve’s war on inflation, marked by interest rate hikes, has lifted credit card rates to record highs. According to a recent NerdWallet American Household Credit Card Debt Study, the average amount of revolving credit card debt owed per American household is $7,486. Getting out of this debt can be difficult, but it is not impossible with proper planning. The following strategies are proven to be successful when getting out of credit card debt.

Determine a Payment Strategy

The first step to paying down credit card debt is to determine what type of payment strategy would work best for the consumer.  Paying more than the minimum monthly payment posted is always the best place to start since the monthly minimum payment is normally only two percent of the balance and pays more for interest accrued every month than the principal owed.

Bankruptcy Law

Can a Debt that was Discharged in Bankruptcy Still Be Collected?

One of the biggest benefits of bankruptcy is the discharge of debt that comes with the successful close of a case. These debts are erased and wiped clean in bankruptcy, and the filer can walk away with a fresh financial start. However, what happens if a debt collector continues to try and collect on a debt that has otherwise been discharged?

The good news is the consumer has several defenses to help him or her in the event this does occur. For one, the consumer can report the debt collector to the bankruptcy court for violation of the order to not collect on the discharged debt. If the collector is found to have violated the court’s order, they may pay assessed fines, as well as the consumer’s damages and attorney’s fees for having to defend the claim.

Bankruptcy Law, Credit, Credit Score

The Impact Bankruptcy Has On Applying for Loans and Credit Cards

While not all bankruptcies cause a huge drop in a person’s credit score, it is possible a person’s score could rise after bankruptcy.

A consumer’s FICO score is one of the biggest determining factors in whether a person will receive approval for credit or financing. The FICO score will also help determine the interest rate a person receives on a credit card. Some lenders are willing to accept credit applications even with lower scores. However, if this happens, it is unlikely that the terms of the credit application will be favorable to the consumer.

The bankruptcy filing may or may not have a significant impact on the consumer’s credit score, depending on what the score was before the filing. The consumer’s payment history makes up approximately 35% of the person’s credit score. If the person had a poor payment history to begin with, the bankruptcy filing will not have as much of a noticeable impact on the score. If the person had an excellent credit score previously, the effect the bankruptcy will have on the credit score will be more significant.