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Orlando Bankruptcy Law Blog

What are the different debt relief options with bankruptcy?

Florida residents often find themselves having financial difficulties to the point that they are unable to meet their obligations. It is then that the prospect of filing for bankruptcy might be a viable debt relief option. There are two main types of bankruptcy that consumers file -- Chapter 7 and Chapter 13.

A Chapter 7 bankruptcy is called a liquidation bankruptcy because any assets that do not fall within an exemption allowed by either the state of Florida or the U.S. Bankruptcy Code will be liquidated. In most cases, the majority of an individual's assets will fall under an exception. However, for those who have a second home, a second car or other assets that do not fall within an exemption, the trustee could take those assets and sell them in order to pay creditors. Of course, before a person can file under this chapter, he or she will have to meet certain financial requirements.

There is a financial life after Chapter 7 bankruptcy

As many Florida residents continue to struggle financially, they might be searching for debt relief options. Some of them might avoid thinking about filing for Chapter 7 bankruptcy because they are under the mistaken belief that their financial lives will never recover. The truth is that there is financial life after the proceedings are finished.

It is true that credit scores do take a hit after a bankruptcy. However, without filing, an individual's credit score would usually only continue to get worse. Bankruptcy often stops that downward spiral. In fact, research has shown that by the time a filer receives a discharge, his or her credit score is already beginning to recover.

Preparing for a Chapter 7 bankruptcy consultation

Like many Florida residents, once you make the decision that you need to take control of your financial situation, it can be a challenge to determine where to turn. Filing for Chapter 7 bankruptcy can be a frustrating and complex process, and it is recommended that you not go through it alone. In order to make the most of your consultation with an attorney, there are certain steps you should take.

The first thing to gather is information regarding all of your debts. This does not only include statements about the bills themselves, but also any information regarding collection activities on those accounts. If a creditor has initiated legal action against you, the legal documentation will also need to be reviewed so that the lawsuit can be added to the bankruptcy. It is important that all of your debts be included in the bankruptcy because if they are not, you will still be responsible for them after the bankruptcy is complete.

Dealing with second mortgage arrears in bankruptcy

Many Florida residents who are behind on the payments for their first mortgage loans are also having difficulty making payments on their second mortgage loans. Fortunately, there is a way to deal with second mortgage arrears. Filing for Chapter 13 bankruptcy could help eliminate a second mortgage, but only under certain circumstances.

During challenging financial times, many Florida residents took out second mortgages to make ends meet. When the housing market collapsed, far too many homeowners discovered that their homes were now worth less than they owed. Not only did homeowners in this situation lose their equity, but they also became victims of the Great Recession. People lost their jobs and/or any wealth they had accumulated, which only further jeopardized their financial situations.

Beware: There is as yet no quick debt relief for student loans

It was recently reported that student loans are second only to mortgage loans on the list of consumer debts nationwide. At $1.2 trillion, they surpass both auto loans and credit card debt. The sad fact is that most of the student loan debt in Florida and other states is in arrears with little chance of it being paid. This situation has  created the ideal platform for scammers to target student loan holders who are desperate for debt relief.

Nevertheless, regardless of the marketing gimmicks of scammers -- there are no quick fixes to get out of student loan debt. Most scammers ask for payments that could be as much as $600 for promised debt relief. Victims of such scams have reported paying the fee and then never hearing from the companies again -- leaving them out of pocket and with no relief.

Being sued by a debt collector? You're not alone

Of the many troubles people with significant debt may encounter, being sued for collection is one of the most stressful. If you've ever been pressured by a creditor or a debt collection company to pay up, you know how invasive and threatening these companies' tactics can be.

According to statistics from ProPublica, approximately 4 million Americans had their wages garnished as part of consumer debt collection lawsuits in 2013 alone. While wage garnishment has been a possible action lenders could take on defaulted debtors for many years, studies show that more and more lenders began taking advantage of this option around the time of the 2007 to 2009 recession. One possible reason for this could be the increasingly popularity of debt buying. Debt buying is when a debt collection company buys the debts from a larger lender for cents on the dollar and then attempts to collect the money from the original debtor. Statistics show that these companies are now filing the majority of debt collection lawsuits.

Many people are seeking debt relief for their medical bills

Like many Florida residents, numerous people around the country end up owing thousands of dollars in medical bills that they are unable to pay. Finding medical debt relief is not always easy. In fact, several nonprofit hospitals file lawsuits against individuals who are unable to pay their bills each year. Recently, some of those hospitals became the subject of an investigation.

The hospitals in question had programs on the books for debt forgiveness. Furthermore, patients below a certain income level are also supposed to receive free health care. There are also other programs for reduced costs. However, many patients were unaware of these programs and were still being sued for unpaid medical bills.

Florida declines funds to help stop home foreclosure actions

It is no secret that Florida was one of the hardest hit states when the housing market collapsed. In fact, several thousand homeowners around the state are still in jeopardy of losing their homes. For this reason, many people are curious as to why the state declined federal funds that could help stop home foreclosure actions for at least some struggling homeowners.

According to reports, the Florida Housing Finance Corporation was eligible to dip into approximately $2 billion in money that was available to it and several other states. The funds were made available in two $1 billion parts. In the first phase of payouts, Florida did accept around $78 million. Those funds helped nearly 25,000 homeowners avoid foreclosure. However, around 120,000 additional homeowners were denied funds, which means that the state only used less than two-thirds of the federal funds it could have used.

Home foreclosure is still an issue in many real estate markets

It might not surprise Florida homeowners that the number of people who lost their homes during the recent Great Recession was matched only during the Great Depression of the 1930s. During the last 10 years, data compiled by one source estimates that approximately 6,324,545 home foreclosure actions were completed. By comparison, a "normal" year would see only about 250,000 home repossessions by lenders.

Even though the market has seen marked improvement, foreclosures are still an issue in many real estate markets. There is even speculation that another housing bubble could be getting ready to burst in some areas. Because of this possibility, sources are remaining cautiously optimistic about the market.

Determining whether a debt repayment plan was in good faith

Filing for Chapter 13 bankruptcy allows Florida residents to keep their property while dealing with their financial situations. A debt repayment plan is required as part of the process. That plan needs to be made and presented in good faith, and sometimes, it is up to the court to determine whether that is truly the case.

For example, a woman's financial situation had deteriorated to the point where she could not even afford to file for Chapter 7 bankruptcy because she could not pay her attorney. Therefore, she filed under Chapter 13. When she presented her repayment plan to the court, it only included the payments of fees and no payments were included for creditors.

Paul Urich
Orlando Office

Law Office of Paul L. Urich, P.A.
1510 East Colonial Drive
Suite 204
Orlando, FL 32803
Phone: 407-896-3077
Fax: 407-896-3041

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