Credit Card Debt, Debt Relief

How Much of Your Monthly Income Should go Towards Paying Down Debt?

Consumer debt. It seems to be an inevitable part of life for many Americans. In fact, most American consumers carry some level of debt. Getting out of it, however, is not so easy, which is why so many Americans use at least some portion of their income to pay towards their debt. Determining how much is appropriate can be complicated, depending on the consumer’s individual circumstances.

Generally speaking, it is important to pay more than the monthly minimum payment. A good rule of thumb is to follow the 50/30/20 rule. What this budgeting rule entails is the consumer spends 50 percent of monthly after-tax income or net income towards essential living expenses, such as mortgage payments, utility bills, food, and transportation costs. After that 50 percent is paid, the consumer allots the next 30 percent to his or her “wants,” meaning eating out, going on vacation, and other non-essential expenses. The remaining 20 percent is left for paying off debt or saving for the future.

Not all debt is lumped into that 20 percent. Since a home and a car is considered a “need” instead of a “want,” mortgages and car payments are lumped into the “need” category or the initial 50 percent.

For mortgage debt, financial experts recommend that the consumer’s mortgage payments should be no more than 28 percent of his or her monthly income.  This amount allows the consumer enough room in their budget to allocate to other expenses or debts.

Financial experts also recommend that consumers put their credit card debts in the “needs” category of spending. Since credit card debt carries higher interest rates, making it significantly harder to pay off over time, which is why it is important that it be paid off as quickly as possible.

If the consumer is not able to pay off the credit card balance in full, it is advisable to put no more than 10 percent of the consumer’s income each month towards paying off credit card debt. However, putting any more than 10 percent of monthly income towards credit card debt can put him or her in a difficult financial position to pay the remainder of his or her other necessary expenses.

It is important that debt does not take up more than 36 percent of the consumer’s income. The consumer’s debt-to-income ratio is important which compares how much the consumer owns versus how much he or she owes.  Debt-to-income ratio is important when it comes to being approved for financing in the future. The higher the ratio, the harder it can be to obtain financing.

While these rules apply in many situations, every consumer’s individual circumstance is unique. These guidelines are meant to help consumers get on the right track. If the amount of debt the consumer is struggling with becomes to be too much, a consumer bankruptcy case may be the best option for him or her. An experienced bankruptcy attorney will be able to meet with the consumer and determine what would be the best course of action to help that person.

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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. Visit www.miamibankruptcy.com to learn more.

Credit Card Debt

How Credit Card Debt Affects Your Health

Credit card debt can cause a lot of damage, and not just to your credit score. Credit card debt can cause stress and wreak havoc on relationships. It can also lead to depression, anxiety, and other health problems. Once you are in debt, reaching your financial goals becomes much harder. Spending money paying debt leaves you with less money for retirement savings, purchasing a home, and achieving other financial milestones.

According to a recent study, carrying significant debt can lead to more than just a bad day. Researchers followed a group of baby boomers, starting when they were between the ages of 28 and 40 and then checking in with them again in their 50’s and older. The group was then separated into subgroups based on how much unsecured debt they had. According to the data, the more unsecured debt a person had, the higher level of physical pain he or she lived with when compared to individuals in the other groups.

This study is not the first one conducted on the effects of debt on consumers’ overall health. This research, however, does show that a link exists between physical pain and how much debt a person is carrying.

The study evaluated the financial and health situations of 7,850 people within the Baby Boomer generation, originally starting with their responses the 1979 National Longitudinal Study of Youth. The researchers found that individuals who consistently carried high debt levels had a 76 percent greater chance of reporting daily chronic pain in their lives as compared to consumers who reportedly had very little to no debt.

Even individuals who had taken steps to reduce their overall debt load reported higher levels of physical pain with a 50 percent higher chance of individuals within this group feeling chronic pain.

Several different factors can play into why debt has such a negative impact on a person’s health. If a person has a significant amount of debt, he or she likely has fewer resources to use towards other areas of his or her life that would help prevent any medical issue, including adequate healthcare and preventive medicine.

Additionally, debt can lead to extra stress on that person, which can result in higher blood pressure, depression, anxiety, and other serious health issues.

It is for this reason that experts recommend consumers rid themselves of their debt load as much as possible, whether this be through payment plans with the creditors, debt consolidation or filing for bankruptcy.

When it comes to filing bankruptcy, secured debt is handled differently than unsecured debt. If you are filing a Chapter 7 bankruptcy case, unsecured debt normally ends up being discharged at the end of the case, while secured debt can stay with the asset. If you are struggling to pay unsecured debt, such as credit cards or medical bills, filing a Chapter 7 bankruptcy case may be a viable option for dealing with the debt. If you are struggling to pay for both secured and unsecured debt, a Chapter 13 bankruptcy case may be a good option to allow you to continue paying on your mortgage and stay in your home while discharging unsecured debt at the end of the payment period. An experienced bankruptcy attorney can evaluate your financial situation, after looking at the different types of debt you are carrying to determine which plan is best for you.

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.

Bankruptcy Trends

Latest Bankruptcy Filings Mixed

August and September 2021 bankruptcy filings have been mixed. While certain types of bankruptcy cases have increased, others have gone down, according to data from Epiq’s AACER bankruptcy information services.

According to Epiq, overall bankruptcy filings for all chapters have declined by four percent, with 32,263 new filings made in August 2021 to 30,907 new filings reported in September 2021. Additionally, individual Chapter 7 filings decreased by nine percent between August and September.

Individual consumer bankruptcy cases were not the only forms of bankruptcy on the decline. Epiq also reported the total number of commercial Chapter 11 bankruptcy filings were down by six percent with just 247 new cases filed.

While Chapter 7 filings may have decreased, the total number of Chapter 13 filings increased by six percent with 9,930 cases reported. These figures continue the trend reported with new Chapter 7 filings decreasing every month since March 2021 with new Chapter 13 filings increasing monthly since May 2021.

In addition to new filings, the total number of open bankruptcy cases also continued to decline since the start of 2021. As of September 2021, total open cases went down 11 percent, ending with 773,652 total open cases as of the end of the month. Overall, the number of bankruptcy cases has decreased by 98,556 since January 2021.

With COVID relief programs, such as the eviction moratorium, expiring at the end of September, financial experts do not anticipate the downward trend to continue. In fact, they predict that these trends will quickly change with new filings increasing over the course of the next several months.

It all depends, however, on whether states continue with the various financial relief programs. States, such as California, have extended their own rent reimbursement programs to stave off new bankruptcy filings. Other states, however, have chosen to simply let their programs expire with the federal relief ones.

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.

student loan debt, Student Loans

Navient Will No Longer Service Federal Student Loans- What This Means for Borrowers

Navient has announced that it will no longer service federal student loans. The company is one of the largest servicers for the U.S. Department of Education. Navient has a massive $1.7 trillion oustanding in its student loan portfolio.

The decision leaves around 6 million borrowers waiting to be matched with a new lender.  With a transition of this magnititude, problems are likely to occur. Here are a few things borrowers should do now if their student loans are getting reassigned to another lender.

1. As soon as possible, log into your current loan servicer’s website and save or print a copy of your loan information. Get a list of all of your student loans, including your payment history, current loan balances, interest rates and monthly loan payment amount. Having this documentation can make sure your loan information is accurate after it is transferred to a new servicer.

2. Double-check that your servicer has your current contact information, so you receive all notifications about the upcoming change.

3. The payment pause and interest waiver for federal student loan debt is scheduled to end in February 2022. If you are still unemployed or dealing with other financial issues, make sure and request an economic hardship or unemployment deferment.

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For borrowers who are struggling with student loan debt, relief options are available.  Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt.  It is important you 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 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.

Foreclosure Defense, Foreclosures

Foreclosure Moratorium Expires, Leaving 1.45 Million Homeowners in Serious Delinquency

Even though mortgage delinquency rates have fallen by five percent since May, a record 1.45 million homeowners are seriously delinquent on their mortgages, according to figures from Black Knight.

The number of delinquencies has improved for 12 of the last 14 months, with only two increases in delinquencies reported. However, delinquency volumes have continued to increase to the point of pre-pandemic levels. According to Black Knight, around 1.45 million borrowers are at least 90 days delinquent on their mortgages as of the end of July. This stage of the process is known as a late-stage delinquency, meaning the borrower is not in foreclosure but is dangerously close. Black Knight reported that this figure was one million more than at the beginning of the COVID-19 pandemic. Many of these borrowers are still working with their lenders on forbearance plans.

Bankruptcy Law, Consumer Bankruptcy

Is It Possible to Refinance a Mortgage after Bankruptcy?

One of the biggest fears expressed by bankruptcy filers is how a bankruptcy case will affect their ability to receive financing in the future.  While having a bankruptcy on a person’s credit report can make it more difficult to qualify for a mortgage, it is possible for someone who has completed bankruptcy to refinance his or her mortgage after the case is successfully closed.

A number of factors can influence how easy it is to refinance after bankruptcy, including the type of bankruptcy, whether it be a Chapter 7 or Chapter 13 bankruptcy. The type of mortgage loan that the borrower is looking to refinance can also heavily influence this.

Foreclosure Defense, Foreclosures

Foreclosure Filings Increase First Month After Moratorium Is Lifted

Foreclosure filings have increased, just one month after the moratorium on foreclosures and evictions was lifted, according to data from ATTOM. Foreclosure filings have increased 27 percent nationwide. When compared to where these numbers were in August 2020, foreclosure filings in August 2021 were 60 percent higher.

ATTOM estimates that a total of 15,838 properties received a foreclosure filing during August 2021, whether it be through a notice of default, a bank repossession, or a scheduled auction.

Bankruptcy Law, Consumer Bankruptcy

When Is Filing for Bankruptcy the Best Option?

Making the decision to file for bankruptcy is never an easy one. Many individuals hold off on filing for fear of what it will do to their credit or worse, fear of the unknown. For many consumers, taking that first step and initiating a bankruptcy case can be the best option for them. The key is deciding when to take that step.

The longer a person stays in debt, struggling to pay bills, defaulting on liabililities, the worse the financial damage will be.  Not to mention the emotional toll it takes.  By not taking action, a person can risk being sued by thier creditors or having their wages garnished. Credit card companies, creditors and even the IRS can take legal action to garnish your wages to pay off outstanding debt.

Consumer Bankruptcy, COVID-19

Consumer Bankruptcy Filings Level Off in August 2021

Bankruptcy filings leveled off last month, according to figures from technology company, Epiq. The company compiled filings through their AACER bankruptcy program which showed that in the month of August, 32,225 new bankruptcy cases were filed, including Chapter 7 and Chapter 13 consumer bankruptcy cases. This figure is down slightly from the 32,391 reported in July 2021.

Despite the fact that consumer bankruptcy filings have decreased, commercial bankruptcy filings have increased approximately one percent from July 2021 with 1,724 cases filed.

Credit Card Debt, Debt Collection, Debt Relief

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

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.