Consumer Bankruptcy

Debunking the Biggest Bankruptcy Myths

One of the biggest reasons consumers hold off on filing for bankruptcy has to do with the myths surrounding the process. Misconceptions are often the reason behind these myths. Debunking these bankruptcy myths can shed light on the legal process that can help (and has helped) so many people, including an estimated 885,000 American consumers last year.

Myth 1: Bankruptcy Irreversibly Damages a Consumer’s Credit Score

While, yes, a bankruptcy case will almost certainly hurt a consumer’s credit score, this damage is far from permanent. In fact, many consumers have successfully rebuilt their credit scores after successfully completing a bankruptcy case.

Bankruptcy Trends

Consumer Bankruptcy Filings Increase in August

Bankruptcy filings increased in the month of August for all chapters of consumer bankruptcy cases, according to a new study conducted by Epiq. A total of 35,355 bankruptcy filings were reported in August, which represents a 10 percent increase from the total of 32,276 reported in August 2021.

Commercial bankruptcy filings also increased by six percent in August. A total of 1,861 filings were made in August 2022, as compared to the 1,753 cases filed in August 2021. Individual bankruptcy filings increased by 10 percent. A total of 33,494 filings were made in August 2022 and 30,523 were filed in August 2021.

Consumer Debt, Credit Card Debt

How to Pay Down Credit Card Balances with High Interest Rates

Credit card debt has traditionally been one of the more difficult consumer debts to conquer. This is in large part because most credit card balances come with significantly high interest rates. The larger a consumer’s balance gets, the more difficult it can be to tackle the debt. While paying down credit card debt can be a challenge, however, it is not impossible. It takes proper planning and discipline but paying down a credit card balance on a card with high interest rates is possible.

According to LendingTree, the average annual percentage rate on a new credit card is over 20 percent, and rates only seem to be increasing over time, especially as the cost of living continues to rise.  This trend presents a major problem for American consumers with high credit card balances. In fact, according to reports from the Federal Reserve Bank of New York, credit card balances reached a high of $841 billion in the first quarter of 2022.

Consumer News, Credit, Credit Card Debt

The Best Ways to Handle Your Credit During Inflation

The cost of living has continued to rise throughout the first half of 2022, leaving many consumers struggling to make ends meet. It seems the cost of everything has skyrocketed, from groceries to gas. As a result, three in five American consumers say they are living paycheck to paycheck. Many of these individuals are relying on credit cards to pay for necessary expenses, but unfortunately, adding to their credit card debt only complicates financial problems.

Bankruptcy Law

What Debts Are Not Erased in Bankruptcy?

Not all debts can be discharged in a consumer bankruptcy case under the U.S. Bankruptcy Code. These debts will remain with the consumer even at the successful close of the Chapter 7 bankruptcy case.  While these debts may remain with the consumer, many of his or her other consumer debts will not. The goal is that with the discharge of other debts, the consumer will have extra money to be able to pay down these non-dischargeable debts.

For the most part, the consumer debts that are discharged include credit card debt, medical bills, past utility bills, personal loans and in some cases student loan debt. Many of these non-dischargeable debts cannot be eliminated due to public policy interests, such as child support.

COVID-19, Credit Card Debt

Seventy-Five Percent of Americans Have Missed Credit Card Payments Due to COVID-19 Pandemic

The COVID-19 pandemic has pushed many Americans into financial struggles. The disruption to employment, childcare, and school routines crippled the economy and forced millions of women and families to the financial brink. While many have bounced back, others continue to struggle.

According to a new survey from Forbes Advisor, 75 percent of American consumers have reported missing payments or making a late payment at least once on their credit cards due to the COVID-19 pandemic.

Bankruptcy Law, Consumer Bankruptcy

How Much Debt Do You Have to Have to File Bankruptcy?

When it comes to filing Chapter 7 bankruptcy, the filer must meet a certain threshold when it comes to his or her debt-to-income ratio and qualify under the means test. However, there is no requirement that the filer carry a certain amount of debt to file Chapter 7 bankruptcy.

Federal bankruptcy law dictates the eligibility requirements to file Chapter 7 bankruptcy. The biggest of these requirements is the means test which compares the filer’s income to his or her debt. The means test is a two-step process. The first step requires looking at the consumer’s income as compared to Florida’s average income. If the filer’s income is higher than the median income for a household in Florida, the filer will need to then take the second part of the means test.