Chapter 7 Bankruptcy Archives - Page 20 of 28

Credit, Debt Relief, Student Loans, Timothy Kingcade Posts

What the Navient Lawsuit Means for Your Student Loans

Posted on April 5, 2017by Admin

Navient, a company that derived from Sallie Mae, has more than 12 million customers and services more than $300 billion of government and private student loans. In January, a lawsuit was filed against the student loan lender where the Consumer Financial Protection Bureau (CFPB) alleged that Navient “systematically and illegally failed borrowers at every stage of payment,” in many ways such as:

Creating obstacles to repayment by providing bad information
Processing payments incorrectly
Failing to act when borrowers complained
Illegally cheating many struggling borrowers out of their rights to lower payments, which caused them to overpay for their student loans
Deceiving private student loan borrowers about requirements to release their co-signer from the loan
Harming the credit of disabled borrowers, including severely injured veterans

According to the CFPB, Navient also improperly directed borrowers into forbearance when these borrowers otherwise might have qualified for income-based repayment plans. The lender also failed to keep borrowers in income-based repayment plans informed of deadlines to maintain their eligibility under such plans.

Navient later denied all allegations and claimed the lawsuit was politically motivated. The company filed a motion to dismiss the lawsuit on March 24^th, claiming there have been no violations of actual servicing rules.

Does your student loan servicer owe you a fiduciary duty?

According to Navient, it is not a fiduciary financial advisor. The student loan lender claims that courts “routinely hold that servicers and lenders do not owe borrowers any specific fiduciary duties based upon their servicer/borrower relationship.”

This means that if you need guidance in choosing a repayment plan, Navient maintains that the lender is not responsible for counseling borrowers on alternative repayment plans. Navient further notes that the U.S. Department of Education does not pay Navient enough to provide sufficient customer service that the CFPB would like Navient to provide.

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. 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, Credit, Debt Relief, Timothy Kingcade Posts

When a Tax Refund Means Bankruptcy

Posted on April 4, 2017by Admin

A review of the past four years shows that Chapter 7 bankruptcy filings, the most common form for individuals, have spiked during tax season or just after tax season. This suggests that taxpayers are using their refunds to file for bankruptcy and wipe out their debt, rather than funding a vacation or splurging on a big purchase.

Filings in March were 26 to 34 percent higher than the monthly average from 2013 to 2016, according to NerdWallet. Additionally, April’s bankruptcy filings were also 15 to 25 percent higher than other months.

Filing for Chapter 7 bankruptcy costs the average consumer approximately $1,500 to discharge their debts. Attorney fees typically cost $1,200 and other court fees total approximately $335. Due to a 2005 law change that made bankruptcy filing more complicated, fees have increased in recent years.

According to the IRS, the average tax refund in 2016 was $2,860, which is enough to cover the average bankruptcy costs.

When Bankruptcy Makes Sense

You should consider Chapter 7 bankruptcy if the following applies to you.

Your problem debt is greater than 50 percent of your annual income. This usually means medical bills, credit card debt or high-interest loans.
You see no way of paying off your debt within five years.
Debt is interfering with other parts of your life, such as hampering your ability to buy a car or save for retirement.

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, Debt Relief, Student Loans, Timothy Kingcade Posts

How Student Loan Debt Can Affect Your Tax Return

Posted on April 3, 2017by Admin

The average college student who graduated in 2016 will have approximately $37,00 in student loan debt, according to Forbes. Most college grads spend their time and energy on finding a job. However, another concern for new grads is how their debt will affect their 2017 tax filings. Here are a few tips on deductions and credits grads will be entitled to, and also what to do if you are filing as a dependent.

Student Loan Interest Deduction

If you paid interest on student loans in 2016, you most likely qualify for the Student Loan Interest Deduction. Also, if your student loan was not given to you by a family member or your employer, you were enrolled at last half-time in an accredited institution of higher learning and your modified adjusted gross income (MAGI) was less than $80,000, you can claim interest you paid on your loans as a deduction.

American Opportunity Tax Credit

You might also be able to claim a few education tax breaks if you meet the criteria. The American Opportunity Tax Credit allows undergraduate college students to claim the first $2,000 and 25 percent of the next $2,000 they spend on tuition, school fees, books, equipment and other non-living expenses.

Lifetime Learning Credit

The Lifetime Learning Credit can be claimed by college and vocational students. It allows eligible students to claim up to 20 percent of the first $10,000 they paid toward tuition and school fees. Eligible students can also claim 100 percent of the Lifetime Learning Credit if their MAGI is less than $55,000.

If You Are a Dependent

Your parents can claim you as a dependent if you are 19 years old or younger, live with your parents for at least half the year and they provided for at least half of your financial needs. You can also be claimed as a dependent if you are 24 years old or younger and you are a full-time college student. If you earned at least $6,300 in 2016, you have to file a return, even if you are being claimed as a dependent by your parents.

Click here to read more on this story.

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

Americans are Dying with an Average of $62K of Debt

Posted on March 29, 2017by Admin

According to data released in December 2016 by Credit.com, approximately 73 percent of consumers have outstanding debt when they die. On average, those consumers carried a total of $61,554, including mortgage debt. Excluding mortgages, the average balance was $12,875.

The data was collected by Experian’s FileOne database, which includes 220 consumers. Out of the 73 percent of consumers who had debt when they died, approximately 68 percent had credit card balances. The second most common kind of debt was mortgage debt at 37 percent, followed by auto loans at 25 percent, personal loans at 12 percent and student loans at six percent.

Most debt is eligible for cancellation after the borrower dies, such as federal student loan debt. However, the deceased person’s estate becomes responsible for most debt. If someone has enough assets to cover their debts, the creditors get paid and beneficiaries receive whatever remains. If there are not enough assets to satisfy debts, creditors lose out. In most cases, family members do not become responsible for the debt.

Click here to read more on this story.

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

Beware of a New Scam Involving Cash Advances

Posted on March 15, 2017by Admin

The Better Business Bureau (BBB) recently warned consumers to beware of a new debt collection con where scammers pose as debt collectors who claim to be collecting on cash advances.

Here is how the scam works:

You receive an automated call from a company claiming to be collecting a payment for a cash advance. Next, the recording will prompt you to stay on the line and speak with an agent.

If you stay on the line, the agent will request that you pay your debt immediately using a wire transfer or a prepaid debt card. If you refuse, the agent will use threats of arrest, lawsuits or garnished wages to intimidate you.

Keep in mind that the use of threats in debt collection is in violation of your rights as a consumer under the Fair Debt Collection Practices Act.

If you receive one of these calls, the BBB suggests you do the following:

Just hang up. If you don’t have any outstanding loans, hang up.
Get an official notice. Ask the debt collector to provide an official “validation notice” of the debt. In the US and most of Canada, debt collectors are required by law to provide the information in writing. The notice must include the amount of the debt, the name of the creditor and a statement of your rights.
Confirm the agency is real. Ask the caller for his/her name, company, street address and telephone number.
Do not provide any information they do not have. Until you have verified the call, do not provide or confirm a bank account, credit card number or any other personal information.
Check your credit report. If you are unsure if you have outstanding debt, check your credit report with one of the three national credit reporting companies: Equifax, TransUnion or Experian.
Place a fraud alert on your credit report. If the scammer has personal information, alert the three credit reporting companies that you have been contacted.

Click here for more on this story.

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

New Survey Finds Medical Debt is the No. 1 Reason Collection Agencies Contact Consumers

Posted on February 3, 2017by Admin

Medical debt is the most common reason consumers receive calls from debt collectors, according to a first of its kind nationwide survey.

“The study by the federal Consumer Financial Protection Bureau found that 59 percent of people who reported they had been contacted by a debt collector said it was for medical services,” NPR reported. “Telecommunications bills were the second most common type of overdue bill for which debt collectors pursued payment, at 37 percent, and utilities were third, reported by 28 percent.”

The study, which examined consumer experiences with debt collectors, included more than 2,000 people and was performed between December 2014 and March 2015. The survey also found that more than one in four consumers felt threatened when a debt collector contacted them.

The study’s authors said medical debt is unique compared to other types of debt collection examined in the survey, as it was widespread across various demographic and credit-score groups.

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, 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:

http://lancasteronline.com/news/local/medical-bills-are-the-most-common-reason-for-debt-collector/article_384da034-e33e-11e6-a5e0-17c0fcdce41b.html

http://www.beckershospitalreview.com/finance/medical-debt-is-no-1-reason-collection-agencies-contact-consumers.html

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

What Happens to Tax Debt in Bankruptcy?

Posted on January 26, 2017by Admin

If you are considering filing for bankruptcy, you may be wondering if your tax debts can be discharged in bankruptcy court. Although the automatic stay will delay the IRS from contacting you about your debts, there are some taxes that cannot be eliminated in bankruptcy court. Here are three basic rules that will tell you if your tax debts are eligible for discharge.

The Three Year Rule. Your tax debts must be three years old from the date they were due, not from the date that you filed. Tax returns are due on April 15^th each year. This means that your 2010 taxes are not eligible for discharge until April 15^th of 2014. This is because your 2010 taxes were technically due in April 2011. Calculate three years from the time the taxes were due.
Your Tax Returns Must Have Been Filed for Two Years Before Bankruptcy. Taxes must be filed for two years prior to the bankruptcy filing to prevent delinquent taxpayers from filing late returns one day and bankruptcy the next.
The Taxes Must Have Been Assessed More Than 240 Days Ago. The IRS must formally determine that you owe the taxes you are trying to eliminate in bankruptcy more than 240 days before you file the paperwork with the court. Note that an offer in compromise will delay the 240-day rule while it is pending plus an additional 30 days.

Related Resources:

http://www.natlbankruptcy.com/bankruptcy-and-tax-debt-what-happens-to-tax-debt-in-bankruptcy/

http://www.thebankruptcysite.org/resources/bankruptcy/stop-irs-collecting-tax-debts.htm#

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

Student Victims Seek to Become Creditors in ITT’s Bankruptcy

Posted on January 9, 2017by Admin

Five former ITT students have taken matters into their own hands by petitioning a federal bankruptcy court to consider student loan forgiveness as part of the school’s liquidation. The now defunct Corinthian Colleges or ITT Educational Services left students with worthless degrees and mountains of student loan debt. Because tax payers backed most of these loans, the Department of Education has been reluctant to forgive them.

For years federal regulators allowed ITT schools to keep operating, even though they were well aware of the company’s questionable practices. For example, ITT had been under investigation by the Education Department since 2014, and state regulators had accused it of misleading students about the quality of its programs and their job potential upon graduation.

The Consumer Financial Protection Bureau filed a lawsuit against ITT nearly three years ago, accusing the chain of predatory student lending. But even with all of this evidence it hasn’t helped former students of the college discharge their student loan debt.

ITT filed for bankruptcy last year after the Education Department cut off the school’s access to federal student aid. At the time, the company operated 137 campuses in 39 states. The company was successful for years, thanks to the revenues from federal student aid. Over the past 10 years, ITT students took on over $7 billion in debt; roughly $1 billion were private loans.

In a first of its kind approach, student loan borrowers will be at the table, not just banks and regulatory agencies fighting over ITT’s assets. They in fact contributed to the creation of assets at ITT. The five former ITT students involved in the suit are seeking to establish themselves and other former ITT students as creditors in the company’s bankruptcy. Typically a company’s creditors are people or entities to whom it owes money.

ITT reported assets of $389 million and liabilities of $1.1 billion to the bankruptcy court. The company had also deposited $94 million in escrowed funds with the Education Department before it collapsed. That money could go toward some loan forgiveness.

The company’s assets include almost $80 million owed by ITT students who were enrolled at the time of the bankruptcy filing or who had withdrawn funds within the previous 90 days. Some of the $80 million is likely from students who never even had the opportunity to attend a class because of the school’s collapse.

The lawyers fighting on behalf of the students hope the judge will make a legal finding that ITT violated state consumer protection laws. This would make it easier for the students to get their loans canceled by the Department of Education. The lawyers in the case are also requesting that the five students’ claims be asserted on behalf of all former ITT students.

Click here to read more on this story.

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

A WIN for Bankruptcy Filers on Means Test Expense Issue

Posted on January 5, 2017by Admin

In the case Lynch v. Jackson, No. 16-1358 (4th Cir. Jan. 4, 2017), the two debtors filing for Chapter 7 bankruptcy complied with Form 22A’s instructions to list their expenses using the IRS National and Local Standard amounts rather than their actual expenses, which were less.

The bankruptcy administrator moved to dismiss their case as “abusive” under section 707(b)(2)(A)(i). Section 707(b)(2) permits a debtor to take the full National and Local Standard amounts for expenses even though the debtor’s actual expenses are less. The bankruptcy court denied the motion to dismiss.

The administrator argued that Form 22A’s instructions were erroneous and that the expense deduction amounts listed in the IRS Standards represent a cap on how high an expense amount may be claimed for certain expenses, but that if the actual amount is less, the debtor must use the lesser amount.

The Fourth Circuit found the answer in the plain language of the statute: “[t]he debtor’s monthly expenses shall be the debtor’s applicable monthly expense amounts specified under the National Standards and Local Standards. 11 U.S.C. § 707(b)(2)(A)(ii)(I).”

The fact that Congress used the word “actual” elsewhere in the same statute indicates that it made a distinction between applicable and actual. The court also recognized how outlandish it was to punish a frugal debtor should the bankruptcy administrator’s interpretation of the statute be accepted.

Click here to read more on this case.

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

The U.S. States that Struggle the Most with Credit Card Debt

Posted on January 4, 2017by Admin

When it comes to managing debt, the Sun Belt states are struggling more than others: Florida, Georgia, Texas and New Mexico have the heaviest credit card debt burdens in the nation, according to CreditCards.com.

The Southern states struggled more with low incomes than high debts. For example, Florida’s average credit card debt per bank cardholder ranks 18 among 50 states, but its median income ranks 41. It would take a typical Florida cardholder nearly 13 years to pay off the state’s average credit card debt of $5,603 and they would pay more than $3,600 in interest.

Here are the states with the highest amount of credit card debt burdens, ranked by the number of months it would take to pay off the debt if 15 percent of their gross monthly income went towards payments.

Florida

Average credit card balance: $5,603

Median earnings: $28,381

Months to pay off: 18

Interest to pay off: $678

Texas

Average credit card balance: $6,009

Median earnings: $31,038

Months to pay off: 18

Interest to pay off: $712

Georgia

Average credit card balance: $5,953

Median earnings: $30,284

Months to pay off: 18

Interest to pay off: $716

New Mexico

Average credit card balance: $5,615

Median earnings: $26,244

Months to pay off: 20

Interest to pay off: $743

Alaska

Average credit card balance: $7,552

Median earnings: $35,552

Months to pay off: 20

Interest to pay off: $992

Related Resources:

http://www.cnbc.com/2016/12/22/the-us-states-that-carry-the-heaviest-card-debt-burdens.html