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Over 40 Percent of Consumers Plan to Take on More Debt Despite Rising Interest Rates

Posted on August 4, 2022by Admin

Approximately 43 percent of American consumers say they intend to accrue more debt in the next six months. This is despite interest rates increasing, making the cost of borrowing more expensive. This information comes from a recent study published by LendingTree.

LendingTree surveyed more than 1,000 individuals regarding their spending habits. They found that 61 percent of them already carry some level of debt. Approximately 80 percent of consumer debt is linked to expenses that are considered necessary, such as healthcare expenses or other emergencies.

How Much Debt is Too Much? Here are the Warning Signs.

Posted on September 9, 2021by Admin

For many people the word ‘debt’ is a four letter word. A word that resonates a certain fear and anxiety, oftentimes associated with credit card bills and collection calls. However, taking on certain kinds of debt can serve as a means to an end. For example, borrowing money to go to college and earn a degree, starting a business, or purchasing a home or car.

Determining how much debt is too much debt can be tricky. If you have a good job, are in good health, and keep track of your finances, and interest rates, debt can be managed effectively. If used wisely, and for things that grow in value, like a home or education, it can be useful.

Consumer Bankruptcy

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

Posted on July 16, 2021by Admin

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.

Credit Card Debt, Debt Relief

Tips for Conquering High-Interest Debt

Posted on June 3, 2020by Admin

Being saddled with debt is a stressful experience, but paying it down can be even more difficult, especially if that debt has a high interest rate. It helps to identify and prioritize these debts.

Of the types of high-interest debts, credit card debt is arguably the most common and most expensive to pay down. One reason credit card debt can be so hard to escape is the fact that it is revolving. What this means is the consumer has access to a continuing stream of credit, which can make it tempting to continue adding to the outstanding balance owed. In fact, there is nothing preventing the consumer from adding more to the debt until he or she reaches the credit limit.

Bankruptcy Law, Credit Card Debt, Debt Relief, student loan debt

Good Debt vs. Bad Debt: Do You Know the Difference?

Posted on September 6, 2019by Admin

When it comes to debt, not all debt is created equal. If the money being borrowed helps increase the borrower’s net worth or income, that debt is considered “good” debt, while bad debt only worsens a person’s financial situation.

Good Debt

Good debt is any obligation that would increase a person’s net worth or income. While it does involve a financial obligation to repay a debt, it can also be something positive or beneficial to the consumer. Good debt also tends to come with a lower interest rate on the amount owed. Mortgages are one example of good debt because the person who takes out the loan ends up with an asset that will increase his or her net worth. Car loans are also considered good debt since they are attached to an asset, namely a car. Student loans are another type of debt that are considered good debt, especially when it comes to obtaining a desired degree and furthering job prospects and earning power for the borrower. These loans may not be attached directly to an asset, but they tend to have lower interest rates, especially if the loans are federal student loans.

Bankruptcy Law, Timothy Kingcade Posts

How Will Filing for Bankruptcy Affect My Children?

Posted on May 20, 2019by Admin

It is a common concern of parents filing for bankruptcy. In this blog, we will address common bankruptcy concerns involving children, including: What happens to children’s bank accounts and 529 educational savings accounts in bankruptcy? Will I be able to take out student loans for my child after filing for bankruptcy? Will my child lose property? What happens to child support obligations in bankruptcy?

Your Child’s Property

Technically, any property in your home is yours and not your child’s. This includes your child’s furniture, toys and clothing, even though they may have been gifted directly to the child. If the child paid for a piece of property from his or her own money and this fact can be proven, the property is the child’s exclusively.

The good news is this property is an expemption, allowing it to be protected in the bankruptcy. If the filer is proceeding with a Chapter 13 bankruptcy case, the bankruptcy filer will get to keep all personal property. In a Chapter 7 bankruptcy case, the filer can keep up to $1,000 in personal property under Florida’s bankruptcy exemptions, which includes household furnishings and clothing. If the amount exceeds the $1,000 limit, the bankruptcy trustee will normally not look to sell this property to pay off debts unless the property is extremely valuable.

Bank Accounts

Many parents open up bank accounts and hold them in trust for their children. The good news is these accounts are protected in bankruptcy. Under the Uniform Gifts to Minors Act, money in a child’s bank account is not considered your money, meaning you, as the parent, are holding this money in trust for your child. Therefore, neither the bankruptcy trustee nor the creditors will be able to access this money. However, filers should be cautious when transferring large amount of money into the child’s account right before filing for bankruptcy.

529 College Accounts

Many parents also put money away into education savings accounts under section 529 of the Internal Revenue Code (IRC) to help give their children a head start in saving for college. This section of the IRC also offers tax advantages, as well as creditor protection, which is another reason why so many parents take advantage of it. The federal bankruptcy code specifically excludes 529 funds from being lumped as part of the bankruptcy estate. However, for this money to be protected, the beneficiary must be the filer’s child, stepchild, grandchild or step-grandchild. Also, the court will look at the timing of when deposits were made into the account. Deposits that are made within 365 days before filing for bankruptcy are not protected. If a deposit is made anywhere between 365 and 720 days before filing for bankruptcy, the filer can exempt up to $6,225 per beneficiary. Anything that was deposited more than 720 days before filing for bankruptcy is exempt and protected from bankruptcy creditors.

Financial Aid

Another piece of good news is the fact that filing for bankruptcy will not hurt your child’s ability to qualify for financial aid for college, including Pell Grants and Stafford Loans. The parent, however, will be disqualified from receiving any credit-based financial aid, including a Parental Loan for Undergraduate Students (PLUS) loan if the parent declared bankruptcy within the past five years. If that does happen, the filer’s child will qualify for an increased amount of unsubsidized Stafford loans.

Child Support Payments

One important fact to know about child support and bankruptcy is that child support obligations are non-dischargeable in a bankruptcy case. Therefore, if the filer owes a large amount in back child support, this debt is considered priority debt and is paid first from the liquidated assets in a bankruptcy case. Child support payments must also be paid during a Chapter 13 bankruptcy repayment plan. In fact, a bankruptcy court will not grant a discharge in a Chapter 13 case if the person is not current on his or her post-filing child support payments. Child support income is also protected in a bankruptcy case, if the filer is the parent receiving the child support, since that money is meant for the support and well-being of the child.

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.thebankruptcysite.org/resources/bankruptcy/filing-bankruptcy/how-does-filing-personal-bankruptcy-affect-my-children

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

Bankruptcy Law, Credit, Timothy Kingcade Posts

How Long Do Debt Collections Affect Your Credit Report?

Posted on March 14, 2019by Admin

When you are being pursued by debt collectors, the incessant phone calls can make you feel anxious and stressed. The number one piece of advice we give when dealing with creditors is to be honest with them. Never make a promise to pay if you are unable to do so and do not avoid creditors or collection attempts.

A collections action is essentially any type of collection on a debt. Whenever a creditor submits an account to collections, a notification is submitted to the credit reporting agencies. This notification will almost always result in the consumer’s credit score dropping. The more collections that show up on the person’s credit report, the bigger the drop will be. Any type of collections will show up on a credit report, including credit cards, medical bills, loans and mortgages.

Once a collections action is reported, it will stay on a person’s credit report for seven years. The same time period applies for missed or late payments. To put these figures in comparison, a Chapter 7 bankruptcy case will stay on a person’s credit report for ten years and Chapter 13 bankruptcy for seven years.

Credit reports treat debts all in the same manner, so if the collection is for a secured debt, such as a home or car, it will be treated the same way as credit card debt. However, medical debt is treated somewhat differently than other unsecured debt. New rules regarding medical debt have made it more difficult for it to impact your credit score as quickly. The new rule builds additional time between patients and insurance companies to resolve such matters. Up until this point, there was no grace period and medical debt could appear on your credit report as soon as it was reported as an unpaid debt. The three credit reporting agencies now have to wait 180 days before putting an unpaid medical bill onto your credit report.

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Related Resource:

https://www.myfico.com/credit-education/faq/negative-reasons/how-long-negative-information-remain-on-credit-report

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

What Happens to Your Debt during Bankruptcy?

Posted on March 4, 2019by Admin

Eliminating debt is one of the biggest reasons people file for bankruptcy. Although bankruptcy can eliminate many types of debt, not all debt can be discharged in a bankruptcy case. Debts are treated differently depending on the type of debt and the type of bankruptcy case being filed.

Type of Bankruptcy

How your debt is handled depends largely on what type of bankruptcy is filed. A Chapter 7 bankruptcy case is known as a liquidation bankruptcy, where assets that are not otherwise protected under a bankruptcy exemptions are liquidated and used to pay off qualifying debts, and all other debts that are allowed under law to be discharged are otherwise eliminated. Under a Chapter 13 bankruptcy case, the debtor works closely with the bankruptcy trustee to restructure the debt and pay back qualifying debt through a three-to-five-year repayment plan. At the end of the repayment period, all other unsecured debt is discharged.

Understanding a Bankruptcy Discharge

To understand what happens to debts in a bankruptcy case, you must first grasp the concept of a bankruptcy discharge. A bankruptcy discharge is the final court order that officially releases the debtor from liability for qualifying debts. The discharge means the creditors can no longer pursue collection on that debt. If the debt is connected to a certain piece of property, like a car or a home, the creditor can still repossess the property to secure the debt, but the debtor is not personally liable for the debt itself. The creditor simply has the right to take the property back in payment for the debt. The discharge occurs at the end of the bankruptcy case. In a Chapter 7 case, this discharge happens after a few months while it can take up to five years under a Chapter 13 bankruptcy case.

Are All Debts Discharged?

The bankruptcy discharge is the ultimate goal for a bankruptcy case, but not all debts are discharged. The great majority of those debts that are discharged in a bankruptcy case include those that are unsecured debts, meaning they are not connected to a specific asset. Credit card debt, personal loans or medical bills fall under this category. Some debts are not allowed to be discharged under the law, normally for public policy reasons. These debts include spousal and child support, debt that was incurred due to bad behavior on the part of the debtor, such as drunk driving, and certain types of tax claims.

In a Chapter 7 or Chapter 13 bankruptcy case, credit card debts, medical bills, legal judgments against the debtor, most debts coming from a car accident, personal loans or promissory notes are discharged at the end of the case. Many people struggle with these debts for years before reaching out to a bankruptcy attorney for assistance in handling them. If you find yourself struggling to pay your credit card bills or medical bills, bankruptcy may be a viable option for you, resulting in these debts being discharged.

In a Chapter 13 bankruptcy case, certain debts may be allowed to be discharged that otherwise would not be discharged in a Chapter 7 bankruptcy case. These debts include those included in a divorce or settlement agreement, not including support payments, court fees, homeowner’s association or condo fees, and debts incurred to pay a non-dischargeable tax debt.

Debts Not Discharged in Bankruptcy

Why certain debts are not discharged in bankruptcy rests largely on public policy. For example, supporting your child or spouse is considered paramount and a matter of important public policy.

As a result, Congress enacted protections keeping these payments from being classified as a dischargeable debt. Likewise, if you face criminal fines, penalties or restitution orders from a criminal case, that debt cannot be discharged. Additionally, if you caused injury to someone or killed another person because of your drunk driving, any restitution you were ordered to pay in that case cannot be discharged. Certain types of tax debts are also excluded.

For the most part, student loan debt is another category of debt that is very hard to discharge. Bankruptcy courts will only allow it if the debtor can prove to the court that the debt should be discharged. The test for determining whether this debt should be discharged is the undue hardship test. No uniform measure exists for determining what exactly constitutes an “undue hardship.” For the most part, bankruptcy courts vary on what qualifies as an undue hardship, although over recent years, the government has looked for official public comment on what that test should be. As of today, however, no uniform test is in place, making proving undue hardship both difficult and unpredictable.

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

The Top Ways To Get Out Of Debt

Posted on February 25, 2019by Admin

Debt is a weight that can drag you down and make you feel like you are drowning without any way out. Having extreme debt can affect your health, happiness and personal relationships. Getting out of debt can be an even bigger struggle, if you do not devise a plan that works for your specific situation.

Debt Consolidation

One popular method of paying off debt is through debt consolidation. What consolidation means is the consumer’s debt is combined into one, single debt amount owed. Debt consolidation can be done through many different methods. A consumer can apply for a personal loan or consolidation loan to pay off all of the debts with the monies from the loan. This method allows you to only make one payment to one creditor rather than multiple creditors. With this method, we strongly advise that you do your research. Not all debt consolidation companies are reputable, and it is important you understand the terms of the loan before signing on the dotted line. For most debt consolidation loans, you need good credit to be approved. If you are already struggling financially, many lenders will see you as a risky bet and will avoid lending to you without a co-signer or at least some collateral to secure the debt.

Credit Counseling

Many different credit counseling resources exist, and they usually involve a professional counselor who will work with the debtor on understanding his or her financial situation and researching possible options to get out of debt. Credit counselors often will work with the individual to organize and manage their debt, and the counselor will also contact the debtor’s creditors on payment arrangements, including creating payment plans or negotiating lower interest rates. Credit counselors can also put together a debt management plan that allows the debtor to make lower monthly payments through the debt counselor who, in turn, pays the individual’s creditors.

Like debt consolidation companies, it is important that you do your due diligence in choosing a credit counselor. Less-than-reputable agencies do exist, so make sure you choose someone who has your best interests in mind. Know that a credit counselor cannot make certain promises, such as guaranteeing that your creditors will work with them or that they will be able to directly reduce your debt. While they can certainly work towards that goal, lenders are not obligated to work with credit counselors. If a ‘credit counselor’ is promising you this or telling you that they can completely eliminate your debt by having you pay a low monthly payment to them, this is a BIG red flag.

Debt Settlement

Another potential option for paying off debt is through debt settlement. This process normally involves a third-party company that works with a debtor’s creditors to allow the debtor to pay a lower amount than what is owed. However, with this option the likelihood of scams is very high. Many of these companies have been reported for taking the debtor’s money and never negotiating on the debt. Additionally, debt settlement can result in a person’s credit taking a rather serious hit due to the fact that the debtor will normally have to stop making payments to the creditor, pushing the accounts into default. Unless the creditor agrees to work with the debt settlement company, a judgment can easily be issued against the debtor, resulting in wage garnishment to satisfy the debt.

Filing for bankruptcy

Debt can be complex and oftentimes frightening to deal with. Many times, people are hesitant or feel ashamed to ask for help. However, not properly dealing with debt can only make problems worse. Rather than run the risk of being sued by a creditor or have your wages garnished, it is best to deal with your debt head on. There are a number of debt relief options available, including filing for bankruptcy, which can completely wipe out unsecured debts like credit cards, medical bills, personal loans and more- and give you a fresh financial start. Exploring these options with the guidance and support of an experienced attorney can help you make the right decision.

Do not let your debt cost you another sleepless night. Here are some of the signs that bankruptcy is right for you. 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. The consultation is free, the relief is real! You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Bankruptcy Law

Famous Celebrities Who Went Bankrupt before Becoming Rich

Posted on February 19, 2019by Admin

Sometimes you have to go through hard times before you make it big. In fact, many famous people did just that before they became successful. They represent your typical rags to riches stories, and these life stories go to show that even the most successful people struggle on their way to the top. For individuals thinking of filing for bankruptcy, these stories often give them hope that filing for bankruptcy will be the beginning of greater things to come.

Dave Ramsey

Dave Ramsey is known for his financial advice, so it may seem hard to believe that even he struggled financially at one point in time. However, even his rise to the top had its peaks and valleys. He started with a great deal of real estate holdings through his brokerage firm, Ramsey Investments, but his real estate success was not long-lasting. His holdings ended up being leveraged, resulting in creditors calling in their debts. Ramsey eventually filed for bankruptcy. After bankruptcy, he went a different direction and focused his efforts on financial counseling for his local church. He attended workshops on consumer financial issues and used this knowledge to build his own seminars. Now he is known for his first book and subsequent programs titled Financial Peace. His net worth is over $55 million, and individuals all over the world swear by his program in their own financial success.

Abraham Lincoln

You would not assume that one of our nation’s most famous presidents would have filed for bankruptcy, but it is true. In his 20s, before he entered politics, Lincoln and a partner opened a general store in Illinois, buying their store’s inventory on credit. However, as business did not sore, their debts were not paid off. He ended up selling his sake in the store, but after his business partner died, Lincoln was on the hook for over $1,000 in debt. While technically bankruptcy did not exist at that time, he worked out a payment plan to repay his creditors successfully over the span of 17 years.

Walt Disney

Orlando, Florida is well-known for one specific name, and that name is “Walt Disney.” Like the others mentioned, you would not think that Disney would have gone through something like bankruptcy, but it is, in fact, true. He was barely out of his teen years when he filed for bankruptcy. Disney formed a company called Laugh-O-Gram Studio in 1920 where he made animated fairytales. He formed the company on the assistance of a financial backer, but after that source went broke, Disney was not able to pay off his debts, let alone his animators, forcing the company to file for bankruptcy one year later. He obtained a family loan in 1923 when he started a new company. Five years later, Disney created Mickey Mouse, and his career and the company took off. Disney almost had to file for bankruptcy in 1937 upon the release of Snow White and the Seven Dwarfs, but he was able to get a bank loan to finance the movie. The company took off even further from that point, resulting in the rest of the classic movies we all know and love.

P.T. Barnum

Even the creator of one of the greatest shows on earth went through his fair share of financial struggles. P.T. Barnum is one of the founders of Ringling Brothers and Barnum & Bailey Circus, a show that lasted from 1871 to 2017. Barnum began his career at 25 when he purchased the Scudder’s American Museum in New York City, one of the most popular attractions in the city at that time. However, the building burned down five times, resulting in Barnum to continually put out money to refurbish the building. The cost of keeping up with building expenses was not supported by the museum’s revenue, forcing him into eventual bankruptcy. He ended up conducting lectures on “The Art of Money Getting,” which allowed him to repay his past debts. It was not until he was 64 when he joined forces to create one of the most famous circus attractions of all time.

Willie Nelson

Willie Nelson is one of the most well-known country singers of all time, but even Nelson struggled financially. Growing up during the Great Depression, his family struggled to pay their living expenses, and Nelson even had to pick cotton to earn money for his family. Oddly enough, his cotton picking sparked his desire to perform. At age 13, he chose to sing in local dance halls to earn money. He became a disc jockey at a local radio station in Texas, which allowed him to do his own recordings, thus sparking his career. While he never formally filed for bankruptcy, he went through extreme financial difficulties after the IRS claimed he owed over $32 million, resulting in them seizing his assets in 1990. He was able to eventually settle the debt, but it was definitely a defining experience for him. He even released an album called The IRS Tapes: Who’ll Buy My Memories. All profits from the sale of that album went directly to the IRS.

Elton John

Another famous singer, Sir Elton John, went through his own financial struggles. He first came onto the music scene with the release of the single Your Song in 1970. After that, he released hit after hit, resulting in enormous fame and wealth. He lived quite the lavish lifestyle, and eventually in 2002, that lifestyle caught up with him. He declared bankruptcy after properties he owned incurred a large amount of debts. It is estimated that he spent somewhere near 1.5 million British pounds monthly around that time, which definitely led to his financial issues. However, he has managed to bounce back after he entered into a contract to perform in Las Vegas at Caesars Palace in 2003. He also contributed on several Walt Disney movies, including The Lion King, resulting in a steady cash flow, bringing his wealth currently to approximately $450 million.

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