Consumer Bankruptcy

Post-COVID Debt Continues to Grow as Bankruptcy Filings Fall in 2021

Financial analysts had predicted a bankruptcy surge following the COVID-19 pandemic. Courts were closed for the majority of 2020, but as they began to reopen, it was believed that a massive wave of bankruptcy filings would follow. Oddly enough, that surge never came, and the number of consumer bankruptcy filings continue to drop.

According to figures from the American Bankruptcy Institute (ABI), 181,000 bankruptcy cases were filed in the U.S. by May 2021, which is 29 percent lower than the number of cases filed by that time in 2020. As many people were forced out of jobs or laid off with businesses temporarily or even permanently closing, consumers are continuing to rely on credit cards to cover expenses.

It is reported that consumers wait an average of 22 months after their first 90-days past-due notice before filing for bankruptcy, accumulating what is called ‘shadow debt.’   

Shadow debt is debt that has not shown up yet on the consumer’s credit report, such as unpaid rent, accruing medical bills, and bounced checks. This shadow debt causes a great deal of stress for consumers as they work through the decision to file for bankruptcy. Many consumers report that they seriously struggle with debt for up to two years before making the decision to file.  

Most of this shadow debt is unsecured debt or debt that is not otherwise secured by collateral. Common forms of unsecured shadow debt are past-due credit card bills and medical bills. An ABI study reports that shadow debt can increase on average by $7,200 for each month the consumer delays filing for bankruptcy.  

According to a National Bureau of Economic Research study, consumers owe an average of $240,000 in total debt by the time they actually file for bankruptcy. Therefore, delaying filing for bankruptcy is not always the best decision. An experienced bankruptcy attorney can help determine if bankruptcy is the right option for that individual.

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.  

Debt Relief

What is Debt Relief and When Should I Seek It?

Debt can seem like an insurmountable burden, impossible to escape once a consumer has gotten too far in. Different options are available for dealing with credit card debt, student loan debt, and other consumer debts.  

Many times, consumers find themselves overwhelmed with several different types of debt in differing amounts.

Debt Collection, Debt Relief

Understanding Zombie Debt and the Statute of Limitations

Consumer debts have what is called a statute of limitations. This is the amount of time the creditor can use the court to force a consumer to pay a debt. After the statute of limitations has expired on a debt, it is no longer legally enforceable. Occasionally, however, a consumer may be contacted regarding an old debt by a collector who hopes the consumer will ‘restart the statute of limitations.’

Zombie debt is debt that the consumer thinks is “dead,” meaning it is past the statute of limitations that the debt collector is now trying to bring back to life. While the debt collector cannot take the consumer to court to collect on the debt, there are no laws saying they cannot continue to contact the consumer to collect what is owed. Many times, debt collection agencies will purchase expired debt to turn a profit. Since the cost to buy expired debt is exceptionally low, even if they collect on a handful of accounts, they are still earning a profit.

Credit Card Debt, Debt Relief

Understanding the Difference Between Good and Bad Debt

Debt can oftentimes come with a negative connotation, but not all consumer debt is created equal. In fact, some types of debt are better than others. It is important for consumers to know the difference between the two types before taking on additional debt.

Good debt, for the most part, is debt that is used to help a consumer pay for goals or purchases that will enhance his or her overall wealth. Debt in this category includes mortgages and student loan debt, as well as small business loans. These types of debt tend to carry low interest rates and are tax deductible. Good debt is associated with a piece of property or collateral to guarantee the debt, although that is not always the case, such as with student loans.

Debt Relief

A Staggering Number of U.S. Borrowers are Underwater on their Auto Loans

Purchasing a vehicle is oftentimes a necessary expenditure. A vehicle is needed to get to and from work or driving to school, but for many Americans, buying a car means taking on a large amount of debt. As they trade in their current vehicles for a newer model, many are resorting to taking the unpaid balance on the car loan and rolling it into a new debt. The result is the person will often have a vehicle that is worth much less than what is owed on it.

This negative equity and is also referred to as being underwater on the vehicle. It is reported that during the first nine months of 2019, approximately 33 percent of consumers who traded their vehicles in to buy new ones had negative equity. Five years ago, this percentage was 28 percent, and it was only at 19 percent ten years ago. The average debt owed on these cars as they were being traded in is around $5,000 while the average amount was $4,000 five years ago.

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

U.S. Consumer Debt Increases in the Month of May

Recent data shows that U.S. consumer debt rose in the month of May by the most it had in the last six months, showing that Americans were more confident in their spending habits halfway through the second quarter.  The increase was seen in revolving debt, which includes credit card debt along with non-revolving debt like student loan debt and auto loans.

As of May 2018, Americans owe more than 26 percent of their income on consumer debt, up from 22 percent in 2010. That means Americans are on track to accumulate $4 trillion collectively in consumer debt by the end of this year. Americans have been accumulating more debt, particularly over the last two years, where consumer credit has grown at a rate of 5 to 6 percent annually.

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, Debt Relief

Pompano Beach “Debt Relief” Companies Scammed Victims out of $70 Million

A debt relief scheme headquarted in Pompano Beach has scammed nearly 15,000 people across the country, according the Florida Attorney General’s Office and the Federal Trade Commission (FTC).

A civil complaint filed in federal court in Fort Lauderdale alleged that telemarketers at several of the companies managed from the Pompano Beach office building offered to pay off personal debts for customers, settle or obtain dismissals for these obligations and loan consolidation- all while improving their credit scores.

The defendants in the case were Jeremy Lee Marcus, who was described by the receiver as the CEO and an owner of the group of companies in the debt relief operation; Craig Davis Smith, the COO and also an owner; and Yisbet Segrea, an executive who ran the office in Panama, plus dozens of corporate defendants. These included 321Loans Inc., Financial Freedom National Inc., Helping America Group, Marine Career Institute Sea Frontiers Inc., Instahelp America Inc. and Breeze Financial Solutions.

Customers were convinced to pay a few hundred to more than a thousand dollars per month to the “so-called” debt-relief companies and their operators who orchestrated the scheme.

After numerous customer complaints, it was discovered that in most cases no payments were ever made towards the customers' debts. Customers ended up becoming victims.  As a result of the scam they incurred even more debt.  Some customers were sued by their old creditors or were forced into bankruptcy.

The scheme used Internet advertising and websites, direct mail and unsolicited phone calls to market itself. The company bought presumably legitimate debt-relief firms and used their clients’ names as well as personal and financial information.

Here is how the scam worked:

  • Companies in the scam used ads on their website and sent out personal letters to the victims’ home addresses. These companies would go so far as to falsely identify themselves as nonprofits, offering low-interest loans so a consumer could combine all debts and make one payment at a lower interest rate;
  • Consumers would have to agree to have their bank accounts debited immediately for their first loan “repayment” or for a processing fee. Then monthly “repayments” were automatically taken from their accounts, ranging from $200 to over $1,000;
  • Few or no payments were ever made to creditors;
  • When consumers were told by original creditors that none of their bills had been paid, dismissed or settled, the scammers strung them along with false explanations, such as more time was needed to validate the consumers’ debts or to confirm payoff amounts. Clients who called to complain were given excuses and treated poorly.  The only contact number available was disconnected.

Click here to read more on the scam.

The following website (www.321loansreceivership.com) has been set up to inform victims and the public about developments in the receivership process.

If you have any questions on this topic or are in a 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.

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

How a debt avalanche strategy can eliminate your debt

One of the smartest and fastest ways to eliminate your debt is a strategy known as a debt avalanche.  To start, you must first take inventory of your debt- meaning you need to write down all outstanding debts- including credit card balances, student loan payments, car payments, etc. and determine the interest rates you are paying on each of the balances.

The debt avalanche strategy begins by ranking each of your debts by interest rate, from highest to lowest.  No matter the size of the loan balance, it will always be less expensive (and faster) to pay off your debts in order from highest to lowest interest rates.

For example, your interest rate on a credit card is probably going to run much higher than the interest rate on your vehicle.  Tackle those debts with the highest interest rates, first and save as much money on interest payments as possible.

Finally, if the debt inventory process reveals an overwhelming or confusing amount of debt, consider meeting with a financial expert who can discuss your options in greater detail.  Sometimes a simple debt consolidation can reduce your payments by thousands, just by reducing the interest amount.  If you fear you might be at risk of personal bankruptcy, it is best to meet with a professional as soon as possible to know exactly where you stand.  Many bankruptcy attorneys offer free consultations and have appointments available on the weekend.

Click here to read more on this story.

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.

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

Delinquencies on Timeshare Rentals Reveal Another Sign of Consumer Debt Weakness

Americans are getting more behind on their timeshare rental payments, according to Fitch Ratings. Approximately 3.75 percent of timeshare borrowers were behind on their bills in the fourth quarter, up from 3.37 percent in the same period a year earlier, and the highest level since the end of 2011, according to the report.

According to Fitch, the defaults are evidence that loan companies are becoming less strict when financing to customers. These companies are also writing off more loans. The default rate rose to 0.70 percent in the fourth quarter from 0.61 percent in the same period a year earlier.

Other pockets of weakness include online consumer loans and subprime auto loans, which we have touched on in previous blogs.  These rising delinquencies come as Americans have increased their debt at the fastest pace in three years.

U.S. household debt increased by $226 billion in the last three months of 2016, bringing total consumer debt to $12.58 trillion.  The numbers, which include mortgages, student loans, auto loans and credit card debt, are dangerously close to the $12.68 trillion high-water mark in 2008.

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, Credit, Debt Relief, Timothy Kingcade Posts

The Effects Debt Has On Your Emotions

The average U.S. household carries debt- more than $132,000 in fact, including mortgages.  Approximately 40 percent of households have credit card debt.  The interest on credit cards alone is costing as much as $1,300 per household per year.

If you are struggling with debt, understanding the common emotions and actions surrounding debt can help you take positive steps moving forward to help improve your financial and mental health.

Powerlessness. If you have a large amount of debt, it can make you feel powerless.  The best way to fight back is to take control.  Get on a budget and stick to it.  Knowing that you are taking control and have a plan in place will help you regain a sense of power.

PTSD-like symptoms. A recent survey found that one in four people who are in debt have symptoms similar to post-traumatic stress disorder, or PTSD. That number is even higher for millennials. Among people age 18-34 who are in debt, 36 percent suffer. Symptoms can include denial, avoidance (such as not paying bills), and not being able to sleep.

Fear & Anxiety.  Debt can make us anxious.  Be proactive and set up auto-pays on recurring bills you have.  It will give you one less thing to think about.  Put credit cards away (only temporarily, remember not to close out the accounts).

Retail Cravings. Nearly two-thirds of women and 40 percent of men have spent money to improve their mood, according to research. If you overspend, any euphoria you experience will surely diminish once the bills arrive in the mail.  When you feel yourself wanting to spend, ask yourself what’s really going on. Think of the HALT acronym: Are you hungry, angry, lonely or tired?   Address these feelings head-on without the use of a credit card.

Lowered defenses.  Lowered defenses might be caused by anything from having a couple of glasses of wine to a break-up, to battling a cold. Be smart about your spending.  To resist online impulse buys, delete credit card information stored on your computer and mobile devices.

Celebration. Did you recently receive a bonus or land a big account?  When it comes to the risk of debt, feeling overly happy can be just as dangerous as feeling overly sad, which can oftentimes cause a financial splurge. Put any financial gain toward your debt or into savings.

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.

Related Resources:

http://www.wbrc.com/story/34555906/6-ways-debt-can-wreak-havoc-with-your-emotions