credit card debt Archives - Page 12 of 24

How To Know If You Are Being Scammed By a Debt Collector

Posted on April 11, 2019by Admin

Scams are everywhere, especially when it comes to debt collection. Many times, a debt collection scam will even try to get you to pay on a debt you do not owe. It helps to know what red flags to look for to avoid becoming the next victim of a debt collection scam.

One of the reasons why debt collection scams are so dangerous is that they take advantage of someone when they are at their weakest. These scammers are aware that the person they are calling is already in a difficult financial situation, and can be easily taken advantage of.

For the most part, these types of scams play out in the same manner. The scammer contacts a person and tells him or her that they are calling on behalf of a collection agency, law firm or other government agency and that they are reaching out to collect on an overdue debt. If the caller refuses to comply, the scammer then makes threats of wage garnishment, telling their friends, family or employer of the outstanding debt, even threatening arrest and jail time. If the person answering the phone is savvy enough to know that no company can legally do these things, the threats will have no effect. However, many times, the person answering the phone plays right into the scammer’s hands.

If you are on the receiving end of one of these calls, you need to know your rights. The first of these is the right to receive written confirmation of the debt. Under U.S. law, debt collectors are required to provide a written validation notice of any debt, when requested. In this notice, the collector must include the amount owed, the name of the original creditor, and a statement of the person’s rights. If a debt collector refuses to provide this information, this refusal is a red flag that the call is a scam.

If you have any suspicions that the caller is not legitimate, do your research. Make sure the caller is real by asking for the company’s name, telephone number and street address. Never provide credit card information or bank account information over the phone. If the collector is legitimate, the company will likely have all this information already. Also, if the collector asks for payment through PayPal or other electronic transfer, this is another red flag that the call involves a scam.

More recent scams have attempted to collect on debt that is past the statute of limitations. You may have owed this debt at one point in time, but after a certain length of time has passed, the debt is no longer legally collectible. However, scammers hope that the caller does not know this fact and will make payment, thereby ‘re-activating’ the debt. For personal loans, the statute of limitations in Florida is five years, while oral contracts and revolving accounts, such as credit cards, the statute of limitations is four years. The written verification provided for the debt should allow you to confirm whether the debt is past the statute of limitations.

If you see any of these red flags, hang up immediately. Do not give the person on the other end of the phone any information and report the call to the Federal Trade Commission or the Florida Attorney General’s Office. It also helps to know your rights under the Fair Debt Collections Practices Act (FDCPA), which makes it illegal for debt collectors to use abusive, deceptive, unfair or threatening practices when collecting on a debt.

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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.

Additional source:

https://www.debt.org/faqs/americans-in-debt/consumer-florida/

Bankruptcy Law, Credit Card Debt, Debt Relief

Americans Will End Up Paying $122 Billion in Credit Card Interest in 2019

Posted on April 4, 2019by Admin

It is a staggering headline, but just last year Americans paid banks $113 billion in credit card interest, according to a recent study from MagnifyMoney. That is up 12% from interest paid in 2017, and up 50% from 5 years ago. And the amount of interest is only set to increase in 2019. Credit card debt plagues consumers from all walks of life. The larger the debt, the more likely that cardholder is accruing interest.

What is causing this increase in interest? Financial analysts believe that now since a decade has passed since the big financial crisis in 2008, consumers are feeling more confident in their abilities to borrow more. As a result, the total amount of credit card debt has reached a record high, since before the recession. However, borrowers are also paying more when it comes to interest on the amounts they borrow, as banks have passed recent Federal Reserve rate hikes onto their customers.

The average APR on credit cards has gone up approximately four percentage points over the past five years. The average APR on a credit card is 16.86 percent, according to the Federal Reserve.

The problem with credit card interest is it can make paying down your debt very difficult. In fact, according to the Federal Reserve’s Survey of Consumer Finances, 40 percent of all active credit card users carry a balance from month to month on their cards.

While credit card interest can make paying down the overall balance very difficult, certain methods can help in conquering your debt. If a consumer is struggling to pay multiple credit cards, the snowball method can help in paying one card down at a time. Using this method, the consumer tackles the card with highest balance or highest interest rate. The consumer continues to pay the minimum amount owed every month on the other cards while putting all other money on the first card. Once that first card is paid in full, the consumer then takes the second card with the second highest rate or second highest balance. This process continues until all cards are paid off in full. While this method can take some discipline, it is a method with proven success.

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Bankruptcy Law, Credit Card Debt, Debt Relief

Payoff Strategies to Help Lower the Stress of Your Debt

Posted on March 29, 2019by Admin

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.

Related Resources:

https://thriveglobal.com/stories/payoff-methods-to-lower-the-stress-of-your-debt/

Credit Card Debt, Debt Relief

How Late Payments Affect Your Credit Score

Posted on March 28, 2019by Admin

Missing a credit card or loan payment can be an upsetting feeling. The lender may charge you a late fee, but worse your credit score can be negatively affected. The good news is, your payment must be a full 30 days late before a lender can report it to the credit bureaus. This means that if your payment is made a few days later or even a couple of weeks past the due date, it will not harm your credit score.

Once the payment is past the 30-days late point, however, the account holder should expect his or her credit score to take a hit.

According to the FICO branding score model, credit bureaus do consider payment history important. In fact, payment history accounts for 35 percent of a person’s credit score. It is important to understand that not every person is affected in the same manner when it comes to how late payments hurt a credit score. Many different factors are at play when it comes to credit scoring.

For example, not all lenders use the same credit scoring model when reviewing a borrower’s qualifications. Hundreds of different credit scores are available for lenders to use. Many use the FICO score, as well as VantageScore, a credit score that was created by the big three credit-reporting agencies, TransUnion, Equifax and Experian. Ultimately, it is up to the lender to decide which type of credit scoring model to use when reviewing a borrower’s qualifications.

How badly a missed payment can affect a person’s credit depends largely on which credit score model a lender is using. Older FICO models, which are still used by the mortgage industry, consider an isolated 30-day missed payment a bigger deal when it comes to a person’s score, while the newer FICO 8 scoring models give borrowers a little more leeway. With these newer models, one missed payment will not have as serious of an effect as multiple late payments.

The problem is most lenders do not tell the borrower what type of model or version they use when processing a lending application, which means the borrower may have no way of knowing whether a one-time late payment will hurt him or her in the loan process.

Other factors play into how a late payment can hurt a borrower’s credit score. One of these factors involves how severe the late payment is, including how far it is “past due” and how recently the missed payment or late payment occurred. If the late payment occurred several years ago, its effect may be much less severe than a late payment that occurred more recently.

How long negative information stays on a borrower’s credit report is governed by the Fair Credit Reporting Act (FCRA). For most purposes, late payments will stay on a person’s credit report for up to seven years, although exceptions do exist to that rule.

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

70 Percent of Americans with Credit Card Debt Admit They Cannot Afford to Pay it Off in One Year

Posted on March 19, 2019by Admin

Credit card debt is a major problem for many Americans. Almost half of all Americans currently carry a balance on their credit cards, but the problem is, most of them are not able to pay off the balance. In fact, 70 percent of cardholders say they cannot pay off the balance within one year.

These figures come from a survey released by real estate data company, Clever. They surveyed 1,000 credit card users regarding their credit card use. The study found that 47 percent of all Americans carry a monthly balance on their credit cards. On top of that, 70 percent of those surveyed say that their card balance is more than $1,000.

Additionally, 56 percent of those surveyed said that they have had their credit card debt for at least one year. Of those surveyed, 20 percent of them say they believe it will take them over three years to pay off the debt. Eight percent of them admit that they do not know when they will be able to pay off the debt.

Depending on how high the balance is, the interest rate on the card can make it virtually impossible to ever make progress on the debt. The average credit card APR currently is 17.65 percent. If a cardholder is only making the minimum monthly payment, he or she is likely only paying on the interest for the card.

Credit card debt has hit an all-time high, according to data from the Federal Reserve. As of December 2018, U.S. credit card debt was estimated at $870 billion, which is the highest it has ever been. Credit card balances were also said to have increased by $26 billion from the prior quarter, which is another notable increase.

What seems to be making this problem worse is the fact that Americans rely heavily upon debt to cover everyday expenses. Even something as simple as buying groceries or paying for gas for their cars can add up if charged on a credit card. In fact, the Clever survey reported that 28 percent of them say that they rely on credit cards to pay for their essential living expenses.

It is no secret that credit card usage has gone up in recent years. It is estimated that currently 480 million credit cards are in circulation nationwide. 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.

Credit Card Debt, Debt Relief, Timothy Kingcade Posts

Help for Florida Seniors Struggling with Credit Card Debt

Posted on March 7, 2019by Admin

Credit card debt is increasing when it comes to individuals over the age of 65, according to a recent study. Many seniors are carrying this credit card debt into retirement. Medical debt can compound the problem. When seniors face health issues, putting the additional out of pocket costs not covered by their insurance can be tempting. In fact, medical debt is the leading cause behind U.S. bankruptcy filings today.

According to a 2018 report from the Employee Benefit Research Institute, approximately 42 percent of all houses where the head of household is between the ages of 65 and 74 carried credit card debt. This figure is a 10 percent increase from 1992 to 2016. When it comes to individuals over 75 years of age, 26 percent of them carry credit card debt, which is a six percent increase from 1992 to 2016.

According to the research associate who conducted the study, usually the median debt amount decreases when an increase is seen in the percentage of homes carrying credit card debt. For senior citizens, however, the increase is seen both in how many have credit card debt and how much debt they carry, which leads many to question why the increase has occurred.

Many different reasons can be attributed as to why credit card debt is rising amongst seniors. One reason is the fact that seniors are relying on a fixed income following retirement. For many, this income is just enough to pay for necessary living expenses, but if any increase in these expenses occurs or if the senior has a medical or unexpected financial emergency, his or her income may not be enough to meet the expense.

Additionally, many seniors come to the Miami area to retire, but they do not anticipate the higher cost of living. When they are already on a tight budget, they will resort to credit cards to keep up with extra expenses. However, problems arise when they are not able to pay the balance from these expenses from month to month. Health insurance and medical costs can also be an extreme burden for aging Floridians. The result of this is many of these senior citizens are carrying debt into retirement.

This fixed income can be a combination of pension, other retirement funds and Social Security. It is estimated that approximately 21 percent of married couples and 44 percent of single adults currently rely on Social Security for 90 percent or more of their income. With the average Social Security check being $1,413, this does not leave much wiggle room. It only takes one financial crisis for that person’s entire financial situation to implode.

Several different steps can be taken to help a senior who is struggling with credit card debt get out of his or her situation. The worst thing that a person can do is to ignore the debt in hopes that it will go away. Debt collectors are persistent when trying to get payment on a debt, and they do not discriminate based on the age of the debtor. Ignoring the debt will also lead to higher interest rates, fees and penalties that can make the situation even worse.

If a senior citizen finds that he or she is not able to pay on a debt, many of these credit companies will work with the debtor on a payment plan or settlement on the debt. The cardholder is within his or her rights to work directly with the creditor on a mutually-beneficial resolution, including a settlement on the debt or a lower payment.

Of course, bankruptcy is always a viable option depending on the situation. A person can spend years struggling with medical and credit card debt that would otherwise be eliminated in a Chapter 7 bankruptcy case. Someone’s age should not be a deterrent if bankruptcy is the best option for him or her. A bankruptcy attorney can meet with the individual free of charge to discuss his or her financial situation and determine the best path forward.

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Related Resource:

https://www.nerdwallet.com/blog/credit-cards/seniors-credit-card-debt/

Credit Card Debt, Debt Relief

National Credit Card Debt Hits Record High at $870 Billion

Posted on March 6, 2019by Admin

It is no secret that credit card usage has gone up in recent years. It is estimated that currently 480 million credit cards are in circulation nationwide. The increase reported as of December 2018 is to be expected to an extent, given the fact that credit card usage does go up during the holidays. However, it is still significant that this marks the first time that credit card balances have reached the levels they were at during the height of the 2008 recession.

When it comes to national consumer debt, credit cards come in fourth, behind mortgages, student loan debt and car loans. However, when compared to these other categories of debt, credit card usage has increased significantly more.

The number of credit card delinquencies has also increased. At the end of 2018, 37 million credit card accounts were more than 90 days delinquent. These numbers are up two million from the end of 2017. It was reported by the Federal Reserve that these 37 million credit card accounts add up to over $68 billion of debt that is more than 90-days past due.

Americans over the age of 60 hold a significant portion of this credit card debt. This group accounts for approximately 30 percent of the total credit card debt reported. It is a problem that is becoming more widespread, especially in the Miami area, as more of these seniors are struggling to keep up with daily expenses while living on a fixed income.

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.

Please click here to read more.

Related Resources:

https://www.bloomberg.com/news/articles/2019-03-05/u-s-credit-card-debt-closed-2018-at-a-record-870-billion

Credit Card Debt, Debt Relief, Timothy Kingcade Posts

Millennials Are Struggling the Most to Pay Off Credit Card Debt

Posted on March 1, 2019by Admin

Credit cards can be an excellent way to establish credit and pay for expenses, so long as the balance stays low and bills remain paid. However, if the balance gets out of hand, it can be very difficult to keep up with even a minimum monthly payment. According to CreditCards.com, Millennials, individuals between the ages of 23 and 38, are running into this exact problem when it comes to their credit card debt.

According to a new poll published by CreditCards.com, one in four millennials say that they have been carrying a credit card balance for at least one year. One in ten of millennials surveyed said they have been carrying a credit card balance for over five years with no end in sight.

Depending on how high the balance is, it can be very difficult to pay off the total amount due. Most monthly minimum payments only end up paying the interest owed from month-to-month. With the average credit card APR at 17.57 percent, it is easy to see how making progress on paying down the principal on the card can be an uphill battle. No matter how hard the person tries, the only progress he or she will make by paying the minimum payment or a small amount above that set payment will be on interest and possibly very little part of the principal.

The average American household has $5,700 in credit card debt. For individuals under the age of 35, that amount is $5,808. It can be very difficult to ever see an end to that balance when only making the minimum monthly payments. When all is said and done, you can end up paying double that balance in interest alone.

Of those millennials surveyed, most said that their credit card debt was from day-to-day expenses, including food, gas, utilities and child care. Others reported that their large balances were a result unexpected car repairs or medical expenses. Unlike previous generations, these young consumers are already struggling in paying other debt, mainly student loans. With the average student graduating from college with $37,000 in student loan debt, most of their paycheck goes to paying for housing and their student loan payments. With less money to put towards other expenses, they may rely heavily on credit cards, but when those balances get too high, they simply do not have the income left to pay off the large balance.

One positive piece of news is the fact that many millennials are already aware of the fact that credit card debt is a big problem. Many are choosing to not take on a credit cards or are spending less on extraneous expenses

While it requires discipline on the part of the consumer, financial experts recommend that an emergency savings fund be built up for these types of situations. Most recommend that you have at least three months of living expenses set aside in a savings account for emergencies. These accounts can be built up over time by you taking a small percentage of your paycheck monthly and depositing it directly into a savings account. That way, the money comes out immediately and the account is able to grow.

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

Credit Cards Are a Way of Life for Most Americans

Posted on February 28, 2019by Admin

For many Americans, credit card debt has become a way of life. According to CreditCards.com, more than 39 million Americans have carried some form of credit card debt for at least the last two years. While using a credit card responsibly can help establish credit, it can become problematic when the debt accumulates.

Credit card companies camp out at universities, promoting their cards to students at colleges and offering free gifts for those who sign up that day. The problem is, many of these students have no idea how to pay off debt and see these cards as a way to buy products without any consequence. Before they know it, these cardholders are carrying a balance they have no way of paying. According to the survey from CreditCards.com, eight million of those surveyed say they do not remember a time when they were not in debt.

The CreditCards.com survey was conducted by YouGov, who surveyed over 2,500 adults. Of those surveyed, 1,780 were credit cardholders and 1,040 of them carry debt on these cards. These cardholders are not charging unnecessary expenses, however. In fact, most of the individuals surveyed said that they used their credit cards to pay for daily spending on necessary expenses, such as groceries or utilities, or on emergency expenses, including medical bills and car repairs.

The survey also reported that the millennial generation was the group that was the most concerned about credit card debt. Due to their high level of student loan debt, many of these younger consumers are not able to cover their daily living expenses on top of their student loan payments.

While the consumers surveyed who were in older generations who use credit cards to pay off medical expenses, millennials say they have no choice but to resort to credit cards to pay for food and living expenses. When the bill arrives, they are not able to pay off the balance in full.

The key to handling credit cards successfully is to not let the balance get out of hand. If possible, pay the balance down monthly after using the card for required expenses. Since the average interest rate is at 17.55 percent, carrying a balance from month to month can make it nearly impossible to pay down the debt. Minimum monthly payments will only allow the cardholder to pay off any interest accrued during that monthly billing cycle.

If you are struggling to pay off credit card debt, certain tips can be helpful in dealing with the debt. One tip is to not fall victim to companies promising rewards for spending on their cards. If you are paying the balance off in full every month, the rewards offered can be beneficial, but if you are carrying a balance and still using the card to earn rewards on top of the balance owed, you are only making the situation worse. If your credit card has a high interest rate, consider a balance transfer to a new card with a lower interest rate. However, be sure that you know what the promotional period is for that card so that you pay off the balance before the promotional time expires. Otherwise, you may end up with an even higher interest rate when all is said and done.

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, second to San Antonio, Texas.

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Common Mistakes People Make When Paying Down Debt

Posted on February 22, 2019by Admin

Credit card debt is one of the biggest problems facing those with serious financial challenges. While using a credit card responsibly can be a good way to establish credit, things can quickly get out of control when a person relies too heavily on credit cards and does not have the ability to pay off the balance every month. Paying down credit card debt can be a struggle, but many common mistakes people make when trying to pay down their debt can make that process even more difficult.

Not Addressing the Cause of the Debt

Credit card debt can add up quickly if you run into an unexpected situation, such as a job loss or medical crisis. Credit card debt can also accumulate quickly if you rely on your credit cards too much for every day, smaller expenses. If you spend more than you are making each month, and cover the overage with a credit card, these expenses can add up quickly. It pays to thoroughly review your financial situation and spending habits to see what is causing the debt and establish a spending budget that fits your income.

Adding to the Balance While Paying on the Card

If you truly want to pay down credit card debt, it is important to stop adding to the balance. Many times, people will think that they can pay off the debt while continuing to use the card. However, all this does is add new charges to an old balance that is already accruing monthly interest. No matter how disciplined you may be with paying off your new expenses every month, you may find yourself never truly making progress on the outstanding principal until you stop using the card completely. It is advisable to cut up the credit card (so you are never tempted to use it) and still pay off the debt each month. Do not call and close out the card. Depending on your total available credit, closing a credit card account with a high credit limit could hurt your credit score, particularly if you have high balances on other loans or credit cards.

Not Effectively Utilizing 0% Interest Balance Transfers

Many times, consumers will utilize promotional balance transfer offers to pay off debt by transferring credit card debt on a higher-interest card to a zero-interest card. However, if the person continues using the card and accruing a balance, he or she may never be able to successfully pay down the amount due before the promotional period ends. Once that period does end, the cardholder will be stuck with an even larger interest rate than he or she had previously.

Not Having a Plan

If you want to be successful in paying off your credit cards, you need to have a plan. One mistake many cardholders make is to make payments without any real plan when an unexpected windfall, such as a bonus or tax refund, is received. If you receive a large sum of money, it can be tempting to put all of that money towards a large balance, but it can also be helpful for the future to put that money towards a savings so that an emergency fund exists in the event it is ever needed.

It also helps to put together a plan that will actually work when paying off credit cards. If you have more than one, it helps to take one card, focus your effort on that card and then put the money that you are putting on the first card once it is paid in full to go to the next one and so on. This method is often known as the “snowball method,” and many debtors have had a great deal of success with this debt payoff plan. However, make sure to keep paying the minimum payment on the other cards while paying off the first one to avoid falling into default.

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