Tag: Chapter 7 Bankruptcy

Bankruptcy Law, Debt Relief, student loan debt, Student Loans

Possible Solutions to the Student Loan Debt Crisis

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With more than $1.5 trillion in student loan debt owed nationwide, it can be safe to say that the student loan crisis has reached a breaking point. For lawmakers, one solution to bring change to this problem is allowing student loan debt to be discharged in bankruptcy court.

Another measure that has received a great deal of public support is Senator Elizabeth Warren’s proposal to completely wipe out the majority of America’s student loan debt through a loan forgiveness program. Her proposal has received support from other presidential hopefuls, including Senators Bernie Sanders, Kamala Harris, and Amy Klobuchar, as well as Representative Eric Swallwell, all of whom are co-sponsoring it.

Recently, the American Bankruptcy Institute’s recommendations to allow student loan debt to be discharged in bankruptcy were published.

The average college student graduates with about $30,000 in student loans. This number does not include those students who pursue a master’s or post-graduate degree. Many of those students end up owing six figures in student loan debt.

The burden these loans present to young graduates is intense and can even follow them into retirement. Outstanding student loan debt can affect a person’s job in 13 states. To keep up with loan payments, many borrowers have accumulated credit card debt, just to be able to afford basic living expenses.

Student loans, while not impossible to discharge in bankruptcy, are extremely difficult to eliminate in a Chapter 7 or Chapter 13 bankruptcy case. Other obligations may be eliminated at the end of the case, but the student loan ones will stay with the borrower even after other obligations are discharged.

Bankruptcy courts use the “undue hardship” test to determine whether a filer should have his or her student loan debt discharged, but no set standard has ever been made on what qualifies as an undue hardship, making it very difficult to ever receive relief. New bi-partisan legislation has been introduced and proposes regulations that ensure student loan debt is treated like other forms of consumer debt in bankruptcy, meaning it can be easier to discharge.

Without the ability to discharge the largest amount of debt many bankruptcy filers are carrying; these individuals will never be able to receive the fresh start bankruptcy is meant to give them. While this change may not completely solve the student loan crisis, many financial experts are hopeful it can be a catalyst for change.

Click here to read more on this story.

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.

 

Credit Card Debt, Debt Relief

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

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

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

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

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

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

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

People living in the Miami metro area, which includes both Fort Lauderdale and West Palm Beach, carry the second-highest credit card debt balances in the country.  As bankruptcy attorneys, we see credit card debt as one of the most common problems facing those with serious financial challenges.  It is not surprising with the high interest rates, unreasonable fees, harassing debt collection calls, penalties and never-ending minimum payments that do not even make a dent in your actual debt. We offer additional tips for eliminating credit card debt on our blog.

Click here to read more on this story.

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

 

Bankruptcy Law, Credit Card Debt, Debt Relief

Debt Consolidation vs. Bankruptcy: The Pros and Cons

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

What is Debt Consolidation?

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

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

Here are some of the disadvantages of debt consolidation.  

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

Choosing Bankruptcy as an Option.

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

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

Related Resources:

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

 

 

 

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

Struggling with Medical Debt? You’re Not Alone.

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When someone is going through a medical crisis, the last thing that person needs is additional stress. However, for millions of Americans, insurmountable medical debt is a reality that accompanies their illness or medical condition.  The Consumer Financial Protections Bureau reports 72 million Americans struggle to pay off medical debt, as of 2018. In fact, it is one of the leading causes of bankruptcy in the U.S.

According to a recent study by Kaiser Family Foundation and the Los Angeles Times, more than 50 percent of consumers have someone in their household who suffers from some type of chronic medical condition. Dealing with continual medical appointments, medication and monitoring of the condition can take its toll, especially on a family’s finances.

Even more staggering are the statistics reported by the American Cancer Society (ACS). According to their figures, more than 137 million Americans are struggling to pay their medical bills. Falling behind due to a medical condition can happen so quickly and easily. With the cost of medical care in our country, many of these patients end up losing everything they have because of their illness. The ACS data shows that 42 percent of cancer patients end up losing their entire life savings within just two years of treatment.

The ACS study looked at what they classify as high out-of-pocket (OOP) costs for medical care, not just care for the treatment of cancer, by focusing on patients between the ages of 18 and 64. Their study looked at several criteria, including lifestyle modification because of medical costs, temporary loss of employment because of medical treatment,  the need to refinance or mortgage the home due to medical bills, permanent loss of employment from medical treatment, and the need to sell the patient’s home just to pay medical bills. Other, more severe measures, included stopping necessary treatment because of the cost, and even considering suicide.

The ACS researchers looked at three different “domains” or areas of hardship, including financial hardship, psychological hardship, and coping behaviors. One-third of those surveyed in the category over the age of 65 reported hardship in at least one of the three areas surveyed of hardship. However, of those who were in the “employed” category, meaning between the ages of 18 and 64, over 50 percent of them reported hardship in at least one of the three categories. Women tended to be the group hit the hardest in these three domains.

An even more disturbing statistic showed that while more than half of those surveyed said they were struggling in one of the three hardship areas, one-fourth of those surveyed reported struggling in two of those domains. Unfortunately, as the cost of healthcare continue to rise, as do the prevalence of chronic medical conditions, this problem is only anticipated to get worse, which is why medical care and quality health insurance continue to be an issue on the forefront of politics.

How is Medical Debt Handled in Bankruptcy?

In bankruptcy, medical debt is treated the same as credit card debt. Medical bills are listed as general unsecured debt and can be easily wiped out in a Chapter 7 bankruptcy filing.  Making the decision to file for bankruptcy is never an easy one.  It can be difficult to get past some of the myths associated with filing for bankruptcy. Sometimes by waiting, an individual facing a lot of debt can find himself or herself in an even worse situation. Filing for bankruptcy can help protect valuable assets, including your home, car, IRA and social security.  It will put an end to wage garnishment and any lawsuit being filed to collect on the debt, thanks to the protections of the automatic stay.

Those who have experienced illness or injury and found themselves overwhelmed with medical debt should contact an experienced Miami bankruptcy attorney. In bankruptcy, medical bills are considered general unsecured debts just like credit cards. This means that medical bills do not receive priority treatment and can easily be discharged in bankruptcy. Bankruptcy laws were created to help people resolve overwhelming debt and gain a fresh financial start. Bankruptcy attorney 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 website at www.miamibankruptcy.com.

Related Resources:

https://bigthink.com/politics-current-affairs/health-care

Student Loans

ABI Releases Key Recommendations on Discharging Student Loan Debt in Bankruptcy

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Student loan debt can be particularly challenging to discharge in bankruptcy.  The current undue hardship standard can be difficult for most borrowers to meet.  However, that doesn’t mean student loan debt is any less burdensome than other types of debt that are discharged in bankruptcy.  Borrowers can spend years struggling to make payments on student loans, only to see thousands of dollars in interest and fees added to the total if they default on a payment or have to go into forbearance.  Most borrowers do not see bankruptcy as being a viable option to discharge their student loan debt.

However, this may soon change thanks to the recommendations made by the American Bankruptcy Institute (ABI). How student loan debt is handled in bankruptcy is just one of issues being reviewed by ABI and discussed in the final report made by the Commission on Consumer Bankruptcy.

The ABI Commission on Consumer Bankruptcy was created in 2016 with the mission of researching and recommending improvements to the country’s current bankruptcy system. The changes include amendments to the Bankruptcy Code, as well as administrative rules, recommendations on interpreting the current bankruptcy law, and modifications to the Federal Rules of Bankruptcy Procedure.

When the Commission began its work, they asked for input on what bankruptcy issues should be reviewed. Student loan debt was one of the issues that received the most recommendations. With consumers holding an estimated $1.5 trillion in student debt, the fact that this issue is an area of focus by the ABI Commission on Consumer Bankruptcy is not surprising. It is also estimated that over 40 million American consumers currently carry some amount of student loan debt.

Bankruptcy is intended to serve as a fresh start for consumers struggling financially, but the tests currently used by bankruptcy courts to determine whether the filer’s student loan debt should be partially or completely discharged makes this fresh start an impossibility for many.

The Commission recommended that the current bankruptcy law be re-written so that student loan borrowers who are no longer able to continue paying on their debts and default on their student loans be allowed to receive this fresh start.

Currently, the law requires that the borrower prove an undue hardship before being able to discharge the debt. However, what qualifies as a hardship is not defined legally. Courts have used various tests to determine what qualifies as a hardship, but no uniform test exists. The Commission recommended that a student loan debt be allowed to be discharged unless certain factors exist including: 1) the debt was made, insured or guaranteed by a government agency; 2) the debt was incurred for the borrower’s own education, and 3) the student loan first became payable less than seven years before the bankruptcy petition was filed.

The recommendations made by the Commission would have the effect of eliminating the protection private student lenders have previously enjoyed. Additionally, it would make it possible for individuals who took loans out on behalf of someone else to get out of the debt, including parents who co-signed loans for their children. These recommendations are being submitted to Congress, and it is hoped that lawmakers will take this report and use it to propel change to the current bankruptcy system.

Click here to read more on this story.

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.

Related Resource:

https://consumercommission.abi.org/

 

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

Protecting Bank Accounts During Bankruptcy with Pre-Bankruptcy Planning

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One of the most important assets someone going through a bankruptcy case wants to protect, aside from retirement accounts or their home, are their bank accounts. After all, no one wants to lose all the cash they have available to pay for daily expenses. How money in a bank account can be protected depends heavily, however, on the type of bankruptcy exemptions used and what planning was done pre-bankruptcy to protect that money.

One of the benefits of filing for bankruptcy involves the automatic stay, a measure that goes into effect as soon as the bankruptcy case is filed. This automatic stay puts a halt to any collection proceedings or efforts, giving the filer reprieve from the continuous calls and communications from creditors seeking to receive payment on their debts.

Are the Funds Exempt?

In any bankruptcy case, certain property is protected from being liquidated and used to pay off qualifying debts. This practice is done through bankruptcy exemptions. In a Chapter 7 bankruptcy case, the bankruptcy trustee cannot take this exempt property to pay off debts. While the bank account itself is not necessarily exempt, the money in that account could be protected if it qualifies under one of Florida’s bankruptcy exemptions. After all, Florida has quite generous bankruptcy exemptions, when compared to other states.

If you own a home, you will likely find Florida’s bankruptcy exemptions quite favorable. You can exempt all the equity in a residential property that meets Florida’s guidelines. In addition, Florida has unlimited exemptions for annuities and the cash surrender value of a life insurance policy.

Money in the account that is from wages from the head of family is exempt up to $750 per week or the greater of 75 percent or 30 times the federal minimum wage. Under Florida Statute §222.11, this money includes paid or unpaid wages during the last six months. Additionally, any money that is income for a person other than the head of family is also protected up to 75 percent or 30 times the federal minimum wage, whichever is the greatest of the two. Additionally, if you are a federal government employee, pension payments that are needed for support and were received for up to three months before the bankruptcy filing are exempt.

Pre-Bankruptcy Planning

If any funds are not otherwise covered by a bankruptcy exemption, they could be protected through pre-bankruptcy planning. However, this planning must be done with caution and properly so a bankruptcy attorney should be consulted before any actions are taken. Bankruptcy laws allow you to take property that would not be exempt and convert it into exempt property, so long as you are acting in “good faith.” The key here is to act in good faith. Bankruptcy filers who conceal or hide their assets in hopes of fooling the bankruptcy court, will result in the case being thrown out due to bankruptcy fraud. It is for this reason that you should proceed with caution when doing any pre-bankruptcy planning.

One possible method of converting nonexempt cash into an exempt asset before filing is to pay your mortgage down, especially considering Florida’s generous homestead exemption. You may also make an annual contribution to your retirement account or other retirement funds with any nonexempt cash to ensure that it goes to an asset that is protected. Money can also be used to pay down debts that would not be discharged in bankruptcy, including child support, spousal support, taxes, and student loan debt.  Ensure your balance is low by using your funds to pay necessary bills before you file.

If you use any money that would be nonexempt to buy assets that would be considered luxury items or unnecessary or extravagant expenses, you could face civil and criminal penalties for your actions. The bankruptcy court will look carefully at whether you misrepresented your asset values, whether the investment or property purchased was worth less than the money you used to purchase it, whether the assets were given to a family member or friend with whom you have a close relationship, and whether your lifestyle radically changed as a result of the purchase.

When filing for bankruptcy, you will be required to disclose all asset transfers made outside of the ordinary course of business within 90 days before filing the petition. Any transfers made to a friend or relative within one year of filing must also be disclosed.

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.

Source:

https://www.nolo.com/legal-encyclopedia/florida-bankruptcy-exemptions-property-assets-bankruptcy.html

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

How Much Debt Is Required To Qualify for Chapter 7 Bankruptcy?

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One of the common misconceptions surrounding bankruptcy has to do with how much debt you must have to qualify for bankruptcy. Bankruptcy laws do not have a set minimum debt requirement for someone to be able to file for bankruptcy. Ultimately, it depends largely on the person’s financial circumstances, including the type of debt he or she has, as well as the person’s ability to pay back the debt, along with other factors.

When it comes to debt levels, how much debt you have is only one consideration made when determining whether you should proceed with a bankruptcy filing.  Unlike a Chapter 7 bankruptcy case, a Chapter 13 bankruptcy does have a maximum debt amount for debtors considering this form of bankruptcy. While there is no minimum debt amount required to file for bankruptcy, you cannot have more than $1,257,850 in secured debt or $419,275 in unsecured debt if you want to file for Chapter 13 bankruptcy (these amounts, which are adjusted periodically to account for inflation, are valid as of April 2019).

Filers are limited in how many times they can receive a bankruptcy discharge within a set amount of time. For example, if you filed for Chapter 7 bankruptcy and received a discharge, you must wait eight years before being able to file for Chapter 7 again. Therefore, if you do not have a significant amount of debt, you may want to consider whether you will anticipate needing to file in the future. Is it worth it to file for bankruptcy now on a smaller amount of debt and be barred from filing again, if needed? A bankruptcy attorney can talk through these options with you to help you make the best choice.

Bankruptcy looks at the different types of debts you carry and whether these debts can be discharged. Certain debts are considered non-dischargeable, including priority tax debts, student loans in most cases, child support, spousal support, and any obligations arising from a personal injury case caused by wrong actions, which can include drunk driving. For instance, if most of your debt is in student loans, a bankruptcy may not be your best option, while a person who carries mostly credit card and medical debt will find bankruptcy beneficial.

If you are filing for Chapter 7 bankruptcy in Florida, you can use Florida bankruptcy exemptions to protect your property. In addition, residents are provided unlimited exemptions for homestead, annuities, and the cash surrender value of a life insurance policy. Florida has one of the most generous homestead exemptions in the country.

Even if you do not have a large amount of debt, if you are being sued or the matter is being referred to collections, it may be best to file for bankruptcy now instead of later. As soon as you file for bankruptcy, an automatic stay will be issued, putting a stop to all collection actions. If you wait too long, and a judgment is issued on the debt, resulting in wage garnishment, it may be too little too late. It is for this reason that it is important you meet with an experienced bankruptcy attorney to talk about your financial situation and whether bankruptcy is right for you.

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

Source: AllLaw.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/

 

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, Timothy Kingcade Posts

How Do Bankruptcy Courts Handle Income Tax Debt in Chapter 7 Bankruptcy?

Posted on by Admin

We have all seen or heard the advertisements promising to significantly reduce or even eliminate tax debt. Many of these companies are offering just that – empty promises, while charging clients unethical fees. Of all the types of debts handled in a bankruptcy case, income tax debt tends to be one of the non-dischargeable categories, along with student loan debt and child support obligations.

However, there are certain tax obligations that can be discharged in a Chapter 7 bankruptcy case depending on the following factors:

When You Can Have Your Tax Debt Discharged in Bankruptcy:

  • You must have filed a tax return. This must have occurred at least two years prior to the bankruptcy filing;
  • The taxes must be income taxes. Taxes other than income tax, including payroll taxes and fraud penalties are non-dischargeable in bankruptcy;
  • You must not have committed fraud or willful evasion. If you filed a fraudulent tax return or attempted to evade paying taxes (i.e. – using a false social security number on your tax return) your tax debt cannot be discharged in bankruptcy;
  • The debt must be at least three years old. For the tax debt to be eliminated in bankruptcy, the debt must have been originally due at least three years before filing for bankruptcy;
  • The tax debt must have been assessed by the IRS at least 240 days before you file for bankruptcy.

A Chapter 7 bankruptcy can wipe out your personal obligation to pay the debt and prevent the IRS from garnishing your wages. Whether you should file for bankruptcy may be a matter of timing, depending on the age of the income tax debt.  An experienced bankruptcy attorney who specializes in this area of law can best advise you on the next steps to take.

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.nolo.com/legal-encyclopedia/bankruptcy-tax-debts-eliminating-29550.html