Tag: debt

Consumer Debt, Credit Card Debt

The Emotional Burden of Debt on Your Mental Health

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Today, as the U.S. is facing economic uncertainty and high inflation, consumers are feeling an increase in financial pressure.  Everyday costs are on the rise, and struggling to afford the basics is a challenge for many. 

The result? Higher levels of debt are becoming more widespread.

Debt can cause a lot of damage, and not just to your credit score. Carrying any amount of debt can be stressful, but carrying substantial amounts of debt can be debilitating to a consumer’s emotional well-being. Credit card debt can cause stress, which can lead to depression, anxiety, and other health problems. 

Over half of the adults in the U.S. with a debt problem are also living with a mental health issue, according to a study from the Royal College of Psychiatrists. 

High levels of debt can also lead to stress and arguments within marriages. In fact, arguments about money are one of the top causes of divorce in America, after infidelity. Debt and stress often go hand in hand. It’s natural to worry about debt and if you will ever get out of it.   

According to the Stress in America survey conducted by the American Psychological Association, 87 percent of Americans reported the rising cost of living as a significant source of stress. The survey also found an increase in the percentage of Americans stressed about the economy, and finances in general.

Click here to read more. 

If you have 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 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.

Wage Garnishment

Can a Debt Collector Garnish Your Wages Without Telling You?

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If you have fallen behind on credit card payments, you know first-hand the lengths creditors will go to collect on what you owe. One of these methods goes beyond incessant phone calls, letters, and text messages, it’s called wage garnishment. This is when a creditor is given legal permission to collect what is owed by deducting a portion of money from your paycheck before it reaches your bank account.

This can cause big issues with your finances, especially if it comes without warning. So, can debt collectors take your money without telling you, first?

The simple answer is no. The law dictates specific steps a creditor must take to be able to garnish a person’s wages to satisfy a debt. Without these protections, a creditor could simply take money out of the person’s bank account.

The wage garnishment process starts with the creditor or third-party debt collector filing a lawsuit to formally collect the debt. If this lawsuit is successful, the creditor or collector will receive a judgment against the creditor. This legal judgment gives the creditor the authority to then ask the court to issue a wage garnishment order, allowing them to satisfy the debt by garnishing the consumer’s wages. Once signed, this order is sent to the consumer’s employer to start the garnishment.

The good news is certain steps can be taken to stop a wage garnishment.

Filing for bankruptcy in Florida puts an automatic stay on wage garnishment, which immediately stops Florida wage garnishment. The automatic stay lasts for as long as the bankruptcy. With the automatic stay in place, you will be able to take home your entire paycheck.

One important thing to keep in mind is creditors can only garnish a certain percentage of the consumer’s paycheck. Federal law dictates that the amount garnished from a person’s wages cannot be more than 25 percent (25%) of his or her disposable income or the amount taken that by which the person’s take-home pay exceeds 30 times the federal minimum wage, whichever of these two figures is less.

One exception does exist when it comes to wage garnishments. Federal law dictates that the consumer’s wages, as well as his or her social security benefits, can be garnished to pay student loan debt and back taxes owed. The U.S. Department of Education and IRS are given authority under federal law to garnish the consumer’s wages without a court judgment or even filing the lawsuit. No official garnishment order is needed for either entity to garnish a person’s wages.

A person can take certain steps to stop a wage garnishment before it even starts. One thing a consumer can do is to work directly with the creditor to negotiate a payment plan to pay down the debt in lieu of a wage garnishment. Many times, creditors prefer this be done before the collection action is even initiated, saving them the legal fees associated with starting a legal proceeding. Payment plans also allow the consumer to set a reasonable amount for a monthly payment, one that will fit with his or her budget. Negotiating a payment plan once the garnishment order has been issued can be a little harder, so it is recommended this action be taken before that order is issued.

Debt Relief

Consumer Debt by Gender: What’s the Difference?

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Despite attempts at financial equality, men on average earn more than women, which has an impact on personal finance. Women tend to be more cautious with money, when it comes to spending, saving, borrowing, and investing.

In contrast, men feel more social pressure to display wealth and status, going into debt, if necessary to do so.  Also feeling pressure to create financial stability as the breadwinner in their relationships.

On average, women are still responsible for the majority of household duties and child rearing responsibilities, which has a significant impact on their lifetime earning potential. Women also suffer more financial consequence from divorce.

Gender does not affect a person’s ability to manage money, build credit, use debt responsibility, or invest for the future. But external factors like societal pressures assigned to gender roles can have a financial impact.

Following decades of narrowing the gender wage gap, 2023 threw a curve ball. For the first time in 20 years, the gender pay gap widened significantly, according to the Annual Income in the United States Report from the U.S. Census Bureau.

Women who worked full-time were paid about 82.7 percent of a man’s salary in 2023, down from 84 percent in 2022. Full-time male workers made a median salary of $66,790, while full-time female workers made $55,240.  That’s a difference of $11,550 per year, a gap that only widens further for women of color, those with disabilities, and women working part-time.

Average consumer household debt in 2024

Experian compared debt balances among men and women and found that men carry more debt in all categories except student loans.

Studies also report women feeling more stressed by finances than men. A recent nationwide Bankrate study reported more than 2 in 5 women (or 46 percent) say money issues have negatively affected their mental health, prompting feelings of anxiety, depression, sleeplessness and stress. That number compares with 38 percent of men.

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.

Consumer Debt

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

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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.

Credit Card Debt, Debt Collection, Debt Relief

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

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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

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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

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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?

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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?

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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?

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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.

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.

Related Resource:

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