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Orlando Bankruptcy Law Blog

What avalanches, snowballs and credit card debt have in common

Many Florida residents might think of skiing the Alps or scaling the top of Mount Everest when they hear words like snowballs and avalanches in the same sentence. Not many, however, would conjure up images of credit card debt. Yet, these things are connected in the financial world.

Many people in this state, as well as others in the nation, have significant credit card debt. Financial observers say this is often a sign of a booming economy, meaning people are making large purchases, which puts money into the economy. The problem is some of the people who are spending have no way to pay back their credit obligations.

Home foreclosure rates down in Southwest Florida

The mortgage crisis in 2007 forced many homeowners in Florida and throughout the nation to find ways to keep their homes. Home foreclosure activity continued to rise in the state, according to a property and real estate data provider. However, there is a positive trend occurring in the industry, particularly in Southwest Florida.

Previously, the Sarasota-Manatee area had one of the highest foreclosure rates in the country. Now the area ranks 90th among the 217 largest national metro areas. The number of homes in some stage of the foreclosure process has decreased by 5 percent over the past year.

Tips to reduce credit card debt

Many Florida residents and others across the nation have concerns about theirs finances. A personal finance columnist routinely addresses questions from consumers regarding all aspects of money issues. For example, a recent topic addressed whether it was more beneficial to maintain an emergency fund in a savings account or to pay off credit card debt.

The columnist recognizes the widespread use of credit cards in the country. Some consumers may use cards for specific purchases, while others overspend unintentionally. She warns that credit card debt can mount quickly if the problem is not addressed.

Couple faces home foreclosure due to bank mistakes

Homeowners in Florida and around the country work each month to pay their mortgages and remain in their homes. In difficult financial situations, some may seek loan modifications to reduce the amount of monthly mortgage payments. Others may choose to file for bankruptcy in order to keep their home but start with a clean slate to rebuild financial stability. Recently, a consumer affairs columnist highlighted the woes of a couple in another state that believed they had taken the necessary steps to keep their house but now face home foreclosure.

In 2000, a couple had purchased their home, but they filed for bankruptcy in 2013. An agreement was reached with their bank to keep their home, and the couple made payments regularly for three years. However, in 2016, the bank tried to foreclose on the home for non-payment.

Couple seeking loan modification faced foreclosure

Many Florida residents and others across the country experienced financial difficulty in the recent mortgage crisis. In efforts to avoid foreclosure, some homeowners started the loan modification process. Working with financial institutions to lower monthly mortgage payments enabled some to stay in their homes. Despite following instructions from their bank, one couple's efforts to get their loan modified resulted in unexpected foreclosure proceedings.

A couple in another state had closed their construction business and taken out a mortgage for a cheaper home in 2008. Reportedly, the mortgage servicing was taken over by Bank of America. The original lender had agreed to modify the loan for the couple. However, the new lender repeatedly denied the request since all the loan payments were current.

Tips to manage credit card debt

Credit cards are a convenient method of payment for Florida residents. Many consumers are often able to pay their entire balance each month and incur no or very little interest expense. However, some households struggle to manage credit card debt. Reports show that the average amount of debt is about $5,700. However, for those people who do not pay balances off each month, the level of credit card debt is over $16,000.

Financial experts stress the importance of evaluating one's debt situation. Is the level of debt manageable? Some experts believe that the level of credit card debt is too high if a consumer cannot pay it back within six months. Other budget coaches acknowledge there is a problem when using funds from retirement or other investment accounts to pay the credit card companies. That would indicate that debt is serious and may prevent someone from making some financial decisions.

Should you use up savings before filing for bankruptcy?

Filing for bankruptcy is not as simple as submitting a document, walking away from debts and starting over financially. Every move you make can affect how the court determines your bankruptcy case. Therefore, you need to ensure you take the right steps not only after you file but also before. One action you may be considering is using up all the money in your savings account either to pay off as much debt as possible before declaring bankruptcy or to protect it from creditors. Either way, you need to be aware of the following information before you deplete your savings.

 

When to file for Chapter 7 Bankruptcy

Some Florida residents may find themselves struggling financially. Many may miss mortgage payments or are chronically late in submitting the payment. Consumers might pay only the minimum amount due on credit cards each month or start using the cards more frequently for day-to-day expenses. When financial concerns continue to mount, someone may consider filing for Chapter 7 bankruptcy to alleviate the financial stress.

An industry professional offered some insights on personal bankruptcy and discussed scenarios where it might be the best option for someone in financial distress. When a person has lost a job and cannot pay the bills, it is important to protect assets, such as a home and retirement savings. Retirement accounts would be protected in the event of a bankruptcy filing, for example.

Understand credit card debt

Many credit card holders in Florida and around the country have difficulty in managing their credit budgets. Their level of credit card debt has continued to rise, according to a report from a financial website. Consumers often take advantage of perks offered by the card companies, such as large sign-up bonuses. The card issuers have shared their thoughts on recent credit card trends.

While fees generate a large amount of income for credit card companies, the majority of their revenue comes from interest. However, the companies often tack on numerous fees for balance transfer, late payments, cash advances and foreign transactions. Experts also noted that over half of this country's consumers don't know their credit score.

Loan modification popular option for consumers

Many Florida homeowners experiencing financial difficulties are considering all possible options when it comes to avoiding foreclosure and keeping their homes. A loan modification is often a welcome remedy for families struggling to stay current with house payments and meet other obligations. Approximately 29,000 homeowners had their loans permanently modified in Jan. 2017.

About two thirds of the modifications came through propriety programs, according to a non-profit alliance of mortgage professionals. Around one third of them were done through the Home Affordable Modification Program, or HAMP. While HAMP ended at the end of 2016, applications received before Dec. 31 will still be reviewed.

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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