Personal bankruptcy filings are down, leaving many financial analysts questioning whether the drop in filings can be attributed to financial relief offered from governmental pandemic relief programs or to other economic factors. This stimulus relief offered consumers a much-needed financial boost, but the question remains how long this boost will hold off future bankruptcy filings.
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Predatory Debt Collectors Barred from PPP Loans Under New Bill
New legislation introduced this week will effectively bar all predatory debt collectors from receiving money from funds received under the federal government’s Paycheck Protection Program (PPP).
The measure has been introduced by Representatives Suzanne Bonamici (D-Ore.) and Marie Newman (D-Ill.). In announcing the proposed legislation, the lawmakers pointed to an analysis conducted by the Washington Post in January 2021. The Post reported several incidents where debt collection companies had harassed consumers for payment on debts after they had received their own financial assistance from federal PPP loans. It was their hope that this legislation will curb these practices and will effectively block predatory debt collection firms from receiving PPP money themselves.
U.S. Bankruptcy Filings Drop 38 Percent
Bankruptcy filings are on the decline, according to a recent report. Statistics released by the Administrative Office of the U.S. Courts, reveal bankruptcy filings dropped 38.1 percent for the 12-month period ending March 31, 2021. This dramatic drop in filings coincides with the COVID-19 pandemic, which first disrupted the economy in March 2020.
Bankruptcy filings fell for both personal and business bankruptcies. Non-business filings fell by a total of 38.8 percent, while business filings fell 13.9 percent.
What $10,000 in Student Loan Cancellation Would Look Like
Lawmakers have been calling upon President Biden to move forward with an executive order that would cancel up to $50,000 in federally backed student loan debt. Other amounts have been considered, the lowest amount being $10,000. How this cancellation would look across the country would vary, however, depending on the state and the borrower.
According to the Student Loan Hero, $10,000 in student loan forgiveness would cost approximately $315 billion. This amount of loan forgiveness would erase outstanding student loan balances for 34 percent of all student loan borrowers, according to their review of Department of Education data.
Debt Collection Lawsuits Pause While One Debt Collector Continues to Pursue Collections
At the start of the COVID-19 pandemic, most debt collectors hit the pause button on collection lawsuits due to widespread national lockdowns. However, one of the largest debt collectors, Sherman Financial Group, continued to pursue its collection efforts.
According to a study conducted by the Wall Street Journal, Sherman Financial Group had the largest increase of any debt collection firm between March 15, 2020 and December 31, 2020. The study analyzed filings from five state-court districts from the start of the pandemic to the end of 2020. The number of filings went up by 52 percent from the previous year. In comparison, debt collection filings went down by 24 percent with respect to the industry overall.
Knowing When to File for Bankruptcy
Making the decision to file for bankruptcy is never an easy one. Many times, it can be difficult to know when the time is right or when it is better to wait.
A bankruptcy case allows a consumer to receive a much-needed financial fresh start by discharging his or her outstanding consumer debts. The types of debts that are discharged in a bankruptcy case include credit card debt, mortgages, car loans, medical debt, and other unsecured loans.
What is a ‘No Asset’ Chapter 7 Bankruptcy Case?
In a no-asset Chapter 7 bankruptcy case, the person filing for bankruptcy keeps all of their property because it falls within the exemptions provided under federal law or the law in their state.
With a Chapter 7 liquidation bankruptcy, a filer surrenders their assets to the bankruptcy estate, which uses them to pay off creditors. But in reality, this is only true of non-exempt property. Many of our cases, are in fact, ‘no asset’ cases. Bankruptcy law recognizes that filers need to retain some property so they can survive the process with something on which to build a future after bankruptcy.
The Pre-Bankruptcy Credit Counseling Requirement and What Filers Need to Know
All bankruptcy filers are required to take and complete two educational courses before receiving a final bankruptcy discharge. These courses are required for both Chapter 7 and Chapter 13 filers. It is important that individuals considering bankruptcy be aware of these requirements for their cases to be successful.
At the start of a bankruptcy case, the individual filing must meet certain requirements. The filer must disclose his or her complete financial picture by submitting required bankruptcy financial declarations. He or she must also pay a filing fee, request a fee waiver, or request an installment payment for the fee. Lastly, the individual must submit proof that he or she received credit counseling from an agency approved by the U.S. Trustee’s office. This proof of completion must show that the course was taken within 180 days prior to filing.
Which Type of Bankruptcy Should I File to Keep My Home?
One of the biggest fears people have when filing for bankruptcy is losing their home, car, and other important assets. However, with Florida bankruptcy exemptions and depending on the type of bankruptcy being filed, it is possible for consumers to keep their home and other property. It ultimately depends on the filer’s financial circumstances.
Protecting Home Equity
How much equity the filer has in his or her home plays a big part in whether he or she can keep it. Equity plays an important part in both Chapter 7 and Chapter 13 bankruptcies. The equity a person has in his or her home is protected through the state’s homestead exemption, and fortunately for Florida filers, the state’s homestead exemption is quite generous.
Debt Cancellation for Disabled Borrowers Reinstated by the Department of Education
The U.S. Department of Education announced recently that they will cancel federal student loan debt for borrowers who are no longer able to work due to disabilities. This announcement affects tens of thousands of borrowers currently paying on outstanding federal student loan balances.
Student loan advocates say that this small step is the first of many to help reform the student lending system, including opening debt forgiveness to groups who are legally entitled to receive it but have not yet received debt forgiveness.