Consumer Bankruptcy

Fear Holds Many People Back from Ever Filing Bankruptcy

There are many people who can benefit from bankruptcy, but put off filing due to fear and the myths surrounding bankruptcy. Bankruptcy offers consumers a fresh financial start and relief from the burden of debt, but for many, it is the fear of the unknown that holds them back from ever taking the first step. Every year, only a small portion of consumers who could benefit from bankruptcy actually move forward with starting a case.

According to the Federal Reserve Bank of New York, approximately 14 percent (14%) of U.S. households or nearly 17 million consumers owe more than they own. While most of these individuals could benefit from bankruptcy, less than one percent (1%) of them file for bankruptcy annually. In 2020, there were only 752,160 personal bankruptcies filed. 

Bankruptcy experts refer to this gap in filings as “missing bankruptcies” or otherwise known as bankruptcy filings that should theoretically be happening, but are not. However, an even wider gap has been made in the past few months with bankruptcy filings dropping significantly in the second quarter of 2021. Figures are at about 60 percent (60%) of what they were for the previous five years.  

During the COVID-19 pandemic, courthouses were forced to close, making it hard for creditors to pursue legal collection actions against consumers, including foreclosures and wage garnishments. For the most part, foreclosures and wage garnishments are the biggest driving forces behind bankruptcy filings. Without these moving forward in the court system, bankruptcies have also been affected.  

This decrease in bankruptcy filings is only temporary, as courts begin to reopen and business getting back to normal. One fear many have is that people will wait too long to file, relying on the temporary benefits they have received during the pandemic to get by.

Many times, consumers delay filing due to the fear of losing everything they own, including cars, homes, or personal property. This fear is rooted in misconceptions regarding the protections that bankruptcy exemptions offer consumers.  In fact, the great majority of people who file for bankruptcy never have to give up any of their possessions. 

Other individuals hold off on filing for bankruptcy for fear of what the filing will do to his or her credit. While, yes, a bankruptcy filing leads to a drop in the person’s credit score, this credit can be rebuilt as soon as the filing is complete.  It is possible to be approved for financing in the future with proper financial habits and good spending behavior. A bankruptcy case does not mean the person is forever barred from ever taking out a loan or mortgage in the future.  

Whatever the reasons may be for the delay in filing for bankruptcy, a consultation with a bankruptcy attorney can quickly clear up many of the fears and misconceptions that may be holding a person back in taking that first step towards a fresh financial start.  

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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. You can also find useful consumer information on the Kingcade Garcia McMaken website at   

Debt Collection, Debt Relief

Stopping a Wage Garnishment Once It Has Started

When dealing with a collection on a debt, the last thing a consumer wants is to face a garnishment of his or her wages to satisfy the debt. Many times, once the wage garnishment process has started, consumers fear that it is too late to do anything to stop it. It can be stopped, however, with quick action and the right steps taken.

Contact an Attorney.

The laws surrounding how to properly object to a wage garnishment can be complicated, and unless the individual is savvy with the legal system, costly mistakes can be made. Even if the person’s wages have already been garnished, consulting with an attorney is still advisable. The key is to act quickly since the law only allows a short window of time for a person to object to a legal proceeding.

Coronavirus, COVID-19, Debt Relief

5 Ways to Protect Your Stimulus Check from Creditors

As Americans begin receiving their stimulus checks from the $2.2 trillion CARES Act, many who are struggling with debt, worry this money will be intercepted by creditors seeking payment. More than 80 million stimulus checks have been processed thus far, which is a huge source of relief for the 20 million Americans out of work.

Many creditors view these stimulus payments as a chance to receive payment on outstanding debt, especially those that have already been reduced to court judgments. If a financial institution is given a garnishment order, it is possible they will immediately freeze that amount of money deposited into the account, only providing the consumer a limited amount of time before the funds are taken by the creditor.  However, certain measures can be taken to protect this stimulus money from creditors.

Bankruptcy Law

Timing is Important When It Comes to Filing for Bankruptcy

When it comes to filing for bankruptcy, it is not always a matter of “if” but rather a matter of “when.” Depending on a person’s financial situation, it can pay to properly time out a bankruptcy filing. Whether it is the right time to file for bankruptcy can depend on several factors including whether someone is facing foreclosure, vehicle repossession, wage garnishment, or any of the following.

Mortgage Modification

When someone is facing foreclosure, a few different steps can be taken to delay or even prevent the process. One of these solutions is through a mortgage modification. Homeowners facing foreclosure should try this approach first before filing for bankruptcy.

Bankruptcy Law

How Long Does the Bankruptcy Automatic Stay Remain in Effect?

One of the benefits of filing for bankruptcy is the automatic stay and the protections it offers filers who are facing a multitude of collection calls from their creditors. It can also protect a person from lawsuits, wage garnishment, repossession, and losing valuable property.  As soon as the bankruptcy petition is filed, the automatic stay goes into effect. After this point, creditors and debt collectors are legally barred from attempting to collect on any debt owed by the filer.

The automatic stay will remain in effect throughout the duration of the bankruptcy case from filing to discharge. However, certain factors can affect the automatic stay and how long it remains in effect.

Bankruptcy Law, Medical Debt

University of Virginia Health System Sues Patients, Putting Liens on Homes and Seizing Paychecks

Medical debt remains the leading cause of bankruptcy in America. Thousands of patients at University of Virginia Health Systems (UVA) have seen the devastating consequences of past due medical debt.

Over the course of six years ending in June 2018, the University of Virginia Health System sued former patients over 36,000 times for a sum of over $106 million. The hospital has seized wages and bank accounts of former patients and have put liens on homes and property. This information comes from a Kaiser Health News study, which reviewed UVA Health System’s court records, hospital files, and interviewed hospital officials, as well as former patients.

Credit Card Debt, Debt Relief

How to Protect Your Wages from Credit Card Companies

A credit card company can garnish a person’s wages following a successful judgment, which is why it is important to not ignore collection attempts. While it can be hard to fight wage garnishment after it is entered, consumers do have options to protect themselves in the event this does occur.

Settling the Debt

One of the best ways to avoid a wage garnishment is to work directly with the credit card company or debt collector. Many times, the company may be willing to work with the consumer rather than go through the effort and spend the legal fees to take them to court.

They may require the consumer provide some type of proof that his or her financial situation is solid enough to handle the settlement amount. If the debt is large, they may require some type of security to ensure payment will occur.

Bankruptcy Law, Debt Relief

The Biggest Violations Made by Debt Collectors

Debt collectors can be persistent to the point of becoming threatening or intimidating. However, this does not mean consumers are without rights. The Fair Debt Collection Practices Act (FDCPA) protects consumers from unfair debt collection practices by third-party debt collectors. The law provides when debt collectors can contact individuals, what information they can provide to third parties, and other protections.

In 2018, the Federal Trade Commission received a total of 84,500 complaints regarding debt collectors. The following violations are the most common offenses made by debt collectors.

  1. Failure to Provide Written Verification of the Debt.

Any person who is contacted regarding a debt has the right to get written verification of the amount owed. Under the FDCPA, the debt collector must send written verification of the debt within five days after making initial contact. In that communication, the debt collector needs to provide the amount owed, the name of the original creditor, and information regarding how the individual can dispute the debt. However, many debt collectors fail to follow through on this requirement. Alternatively, many consumers are not aware they have the right to request this information.

Credit Card Debt, Debt Relief

When Can a Credit Card Company Garnish Your Wages?

When someone is facing a credit card collection action, the last thing that person wants is to have his or her wages garnished by the credit card company. However, credit card companies do have the right to garnish a cardholder’s wages, just like any other creditor.

Before credit card debt can be collected, it must be considered delinquent.  At the time a person gets a credit card, he or she enters into an agreement to make monthly payments. If these payments are not made on time, that contract is considered broken and the debt delinquent. Once this happens, the credit card company is within its right to collect on the debt. Normally, missing a credit card payment results in a significant interest rate hike, but if the debt goes unpaid for too long, the credit card company can file a legal action to collection on the debt.

This step is where garnishment comes into play. Credit card companies cannot garnish the cardholder’s wages without first filing a legal complaint to collect on the debt and serving the complaint on the cardholder. The accountholder has a chance to respond to the complaint and file an answer within a set period of time. If he or she does not respond, the credit card company can obtain a default judgment against the cardholder, speeding up the process. However, if the cardholder does respond, the credit card company must prove that the debt is owed at a hearing before a judge.

student loan debt

5 Tips to Keep in Mind Before Taking out a Direct PLUS Loan

Many parents will do anything possible to help their children get a higher education, and that desire to help often takes the form of financial aid. It is estimated that at least 3.4 million individuals have taken out a Direct PLUS Loan to help pay for their child’s college education.  Before considering these loans, it is important to be aware of the risks that come with this form of financial assistance.

Direct PLUS Loans allow parents of eligible college students to take out loans for their children’s education through a federal government program. The U.S. Department of Education is the lender, which is why many borrowers believe that these loans offer a safe and secure option to pay for their child’s education.

  1. Loan Eligibility, Amount Available and Fees. Not all parents are eligible to take out Direct PLUS Loans. First, they must be taken out on behalf of biological and adopted children, although some situations allow for stepparents of dependent students to take out these loans. Parents can take out enough money needed to have their child attend college; minus any amount of financial aid the student receives. Since the tuition and expenses vary from college to college, no maximum amount is set on how much a parent can take out through the PLUS program.Interest rates on PLUS loans are set by the federal government and are currently at 7.6 percent. Since these loans are unsubsidized, this means that interest on the loan begins accruing immediately. Payments on the loans can be deferred by the borrower until his or her child finishes college, but the balance will grow since the interest continues to accrue. If no deferment is requested, the parent will need to start paying right away. Borrowers also will have to pay a loan fee along with interest charges, which varies depending on the year. The fee comes out proportionately from each loan disbursement, but it does not increase the total amount of the loan.
  2. Limits on Repayment Programs. Parents have a handful of repayment options available for PLUS loan programs. The standard repayment plan involves equal payments made over the course of ten years. Borrowers can also request a graduated repayment plan, which allows the borrower to start off with lower payments, building up every two years over a ten-year period. Borrowers can also pay under an extended plan, which spreads the payments out over 25 years instead of 10. The monthly payments are lower, but the borrower ends up paying much more in interest in the long run. However, parent borrowers are limited on the types of repayment plans they may have in addition to these plans, while student borrowers have more options available to them.
  3. Repayment Responsibility May Not Be Transferred. Many parent borrowers take out PLUS loans on the assumption that they can eventually transfer the debt to their child upon graduation. However, this option is not available for a PLUS loan. Responsibility for repayment stays with the parent who is the legal borrower. This fact is important for the parent to realize if loan payments present a problem later as the parent approaches retirement age.
  4.  Impact on Credit Score. Any time a borrower takes out a loan, it should be expected that his or her credit score will take a hit, and that includes PLUS loans. If a parent takes out a PLUS loan, he or she should expect the loan, its balance, and payment history on the loan will appear on the parent’s credit score. So long as the borrower makes payments on time, this fact should not cause too much of a problem. However, if the parent is not able to keep up and misses a payment, the damage to the borrower’s credit score could be significant.
  5. Consequences of Defaulting on the Loan. It is extremely important that the parent borrower be able to handle the payments associated with the PLUS loan. Defaulting on a PLUS loan comes with serious financial consequences and can put the borrower at risk of wage garnishment, as well as offsets on his or her tax refunds or Social Security disbursements.

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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