Once a consumer has filed for bankruptcy, he or she will almost certainly notice a drop in their credit score. This drop is to be expected, and while it does temporarily affect a person’s credit, it is by no means permanent. In fact, with good financial habits a consumer can rebuild his or her credit to better than it was before filing for bankruptcy.
Following the closure of the bankruptcy case, certain steps can be taken to bring that credit score back to where it once was or even higher.
Bankruptcy filers often fear losing everything they own when going through a Chapter 7 or Chapter 13 bankruptcy case. You may think that filing for bankruptcy means you have to give up your home, your car, and other important assets. This is simply not true. The vast majority of Chapter 7 cases are no-asset cases, meaning the debtor gives up no possessions. This happens for two reasons. First, you can allot for basic assets, called exemptions that are necessary for day-to-day living. What you can exempt varies from state to state, so be sure to discuss exemptions with an experienced bankruptcy attorney. For possessions that are not part of the exemption, creditors likely don’t want them. Under Chapter 13, you keep all of your assets, but the value of them figures into your repayment plan.
The U.S. Bankruptcy Code and Florida bankruptcy laws protect a great deal of a consumer’s property, if used appropriately.
Filing for bankruptcy yourself, or without an attorney, is known as filing bankruptcy “pro se”. Representing yourself throughout the bankruptcy process is a risky decision and there are a number of pitfalls associated with the same. Filing for bankruptcy has a complex set of rules, forms, statutes, and judicial decisions.
Some people choose to represent themselves because they think they cannot afford to hire a bankruptcy attorney, or they may think they have a simple case. Whatever the reasoning, it is not a wise decision. Even the simplest bankruptcy case could soon become complicated, resulting in the filer’s case being dismissed or thrown out. Often it is worth the extra cost to hire a professional to assist the consumer in filing for a Chapter 7 or Chapter 13 consumer bankruptcy as it saves a lot of hassle in the long run.
MIAMI (June 27, 2023)– Managing Shareholder, Timothy S. Kingcade of the Miami-based bankruptcy and foreclosure defense law firm of Kingcade Garcia McMaken has been selected to the 2023 Florida Super Lawyers list. This is the tenth consecutive year Kingcade has been selected to the Florida Super Lawyers list (2014-2023) in the practice area of consumer bankruptcy. The recognition is awarded to only the top 5% of attorneys in the state.
Attorney Kingcade practices exclusively in the field of bankruptcy law, handling Chapter 7 and Chapter 13 filings for the Southern District of Florida. As an experienced CPA and proven bankruptcy attorney, Kingcade knows how to help his clients take full advantage of their rights under the bankruptcy laws to restart, rebuild and recover.
The fear of losing everything is a very real fear for many bankruptcy filers. However, this is one of the most common bankruptcy myths, and can keep individuals who are drowning financially from filing for bankruptcy. One concern many filers have is, what will happen to my property during bankruptcy?
The good news is Florida bankruptcy laws offer generous exemptions which allow individuals to keep various types of property. If an item of property falls under one of these exemptions, this means that the person can keep the property after filing for bankruptcy. Property that does not fall under one of these exemptions is considered nonexempt and can be sold by the bankruptcy trustee and used to pay down qualifying debts.
U.S. consumers have hit a record high when it comes to credit card debt. According to a recent WalletHub study, American consumers added a record $179.4 billion in new credit card debt to the already-existing credit card debt in 2022. These numbers are expected to increase as we move into the second half of 2023.
The largest increase was seen in the fourth quarter of 2022 with an increase of $84.9 billion in that quarter alone. A fourth-quarter increase is not unusual, as it is usually followed by a first quarter pay-down. However, once 2023 began, WalletHub found that American consumers only paid down their credit card debt by $24 billion, which is the second smallest first-quarter credit card debt paydown seen in the last decade.
The Biden administration and Congressional leaders reached a deal last week regarding the debt ceiling, one that will now have significant consequences for student loan borrowers. Once the agreement is signed into law, payments on all federal student loans that have been on pause since the start of the COVID-19 pandemic will be reinstated as of August 2023.
This deal affects approximately 43 million student loan borrowers who must now figure out how to make these payments after receiving relief for years since 2020.
The Federal Reserve increased its key rate by another quarter of a point, recently. This increase brought the rate to the highest level in 15 years. The increase was made in an effort to stave off inflation by making borrowing more expensive. However, this fed rate increase will affect consumer’s credit card bills.
Borrowers waiting to see if they could receive student loan forgiveness through the stalled Borrower Defense to Repayment settlement recently received a victory. A federal court of appeals has issued a ruling saying that student loan forgiveness and other debt relief under this program could proceed while the appeal is pending. This ruling affects over 200,000 borrowers.
The case in question is Sweet vs. Carolina. A federal district court ruled in February that the settlement relief involved in this case could proceed. The case involves a class action lawsuit led by thousands of student loan borrowers who were seeking relief from the Education Department. In the lawsuit, the borrowers alleged that the Department had illegally delayed or arbitrarily rejected hundreds of thousands of Borrower Defense to Repayment applications, unfairly blocking borrowers from receiving relief.
The road to having student loans forgiven in a bankruptcy case is certainly not an easy one, which is why so many borrowers forgo pursuing bankruptcy for fear that they will never be able to receive relief from their largest source of stress: their student loan debt. However, all of this could change very soon due to new guidelines issued by the Biden Administration.
In January 2023, the Justice Department updated the required attestation form that borrowers pursuing bankruptcy must complete before being able to seek a bankruptcy discharge of their federal student loan debt. The changes to the form include several modifications, including small changes as to how monthly household income is reported, instructions clarifying when a borrower needs to provide the court with additional information, and new questions looking for information on whether a school closure impacted the borrower’s ability to pay his or her student loans. The changes to guidelines also include more detailed information regarding the borrower’s student loan repayment history, including any consolidations made, deferments, or forbearances.
