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Orlando Bankruptcy Law Blog

Unemployment can make credit card debt more of an issue

Any financial difficulties can be overwhelming and distressing, but when unemployment is the cause of financial problems, there may be a dire need to deal with mounting debt that seems to have no end. Credit card debt can compound when a person is unemployed. In Florida and elsewhere, unemployment is a major cause of bankruptcy, and it may interest some to know that credit card debt can be effectively handled by filing for bankruptcy.

While weighing the bankruptcy options or waiting for the process to unfold, there are steps those dealing with credit card debt can take to ensure a brighter financial future and a smoother bankruptcy process in general. One step is to inform creditors of a problem. Creditors want to work with those who are struggling and may be to help those on the verge of filing for bankruptcy by possibly lowering payments or suspending payments until bankruptcy is approved or credit card debt is discharged altogether.

Choosing between mortgage modification and bankruptcy

When you are in the midst of a long-lasting financial crisis, it can be difficult to know where to turn or what steps to take to regain control. Luckily for homeowners in Florida, there are options, and anyone in crisis should explore the different options in order to be sure he or she is choosing the right means of fixing the problem. For some, it may be difficult to choose between seeking a mortgage modification or filing for bankruptcy.

A mortgage modification certainly has its perks for many and has helped countless homeowners keep their homes.  But, the process of obtaining a mortgage modification can be overwhelming in that the homeowner really is at the mercy of the banks. The bank ultimately decides whether or not they want to even discuss modification options, and the homeowner has no means of recourse if the bank decides a modification is not a viable option.

Is credit card debt bad for your health?

Credit card debt can have a negative impact on many areas of life, but it is also important for Florida consumers to consider the negative impact that it may have on their health. As stress of any kind can cause health problems, it is no surprise to learn that credit card debt can lead to an onslaught of various health issues, such as high blood pressure. When a consumer can discharge debt, it is reasonable to assume that it can lead to a higher overall quality of life. 

In addition to high blood pressure, an overwhelming debt burden can cause weight gain over time. A recent survey of young adults found that college students with credit card balances of more that $1,000 often struggled with obesity and other health problems. Overwhelming debts are not the only reason for health problems, but they can exacerbate existing health issues.

Stop home foreclosure: Is personal bankruptcy the remedy?

Some homeowners nationwide, including in Florida, are still finding it difficult to stay on top of their mortgage payments despite the reported recovery of the housing market and general economy. According to a recent survey, almost half of those polled are pessimistic about their financial futures. More than six out of every 10 believe that the country is still in the middle of a housing crisis, and for many, home foreclosure is imminent.

Many survey responders indicated they had to forfeit something in order to maintain mortgage or rent payments. These sacrifices included getting additional jobs or working extra hours, and some even used the money they would typically add to savings or retirement funds to make up for a shortfall regarding the mortgage payment. Others utilized their credit cards for emergency funding.

How to create a strategy for personal debt relief

For many in Florida, high levels of debt have become a serious matter, leading to increased stress, anxiety and damage to interpersonal relationships. Finding a way to gain control over one's debt is essential to regaining stability and serenity. That said, many consumers are unsure where to begin and need help in creating a sustainable debt relief strategy.

One of the best ways to pay down high levels of debt is to begin by prioritizing the list of accounts that have an outstanding balance. Those debts that are listed as the highest priority should be paid first each month, and any remaining cash should be put to use paying down debts that fall lower on the priority list. In this way, a system is created that can lead to the elimination of debt over time.

Chapter 13 bankruptcy remains the best choice for debt discharge

For many Florida homeowners, years of financial difficulties have led to a scenario in which debt relief is imperative. For those who have taken out a second mortgage on their home, it is possible that the property is now worth less than the total amount owed. Many homeowners would like to address second mortgage debt within Chapter 7 bankruptcy, but a recent U.S. Supreme Court ruling has eliminated that possibility. For now, Chapter 13 bankruptcy remains the best bet for individuals in this set of financial circumstances.

The case before the Supreme Court looked specifically at whether a second mortgage on an underwater home should be considered to be a secured loan. Secured lines of credit are those that are backed by something of value that the lender could seize, such as a piece of real estate or a vehicle. A second mortgage on a home with less value than the amount of the loan can be argued to be unsecured, because there is nothing of value for the lender to claim in the event of default.

Is Chapter 7 bankruptcy a viable option for seniors?

Some older residents of Florida may find that the burden of their debt load has become overwhelming. Such circumstances may result from medical expenses, financial aid provided for needy children and, in some cases, even study loans. Unfortunately, many seniors are embarrassed by their situations, and they delay taking action to remedy their financial quandary. In an effort to overcome the predicament, some drain their retirement accounts, leaving them destitute in their retirement. Some will not even consider Chapter 7 bankruptcy because of the negative connotations afforded to it.

Negotiating with credit card companies and even medical creditors may provide some relief, but it may only prolong the dire situation. Chapter 7 bankruptcy is also known as liquidation bankruptcy, because it involves the liquidation of some assets. But, it will also discharge most unsecured debts, such as credit card debts and medical debts. There are ways by which retirees can avoid having to give up their homes, by taking advantage of the homestead exemption allowed under state law to keep their estates intact.

Credit card debt: Store credit cards to be handled with care

Because it is so easy and convenient to use credit cards for all kinds of purchases, many consumers in Florida and elsewhere have accumulated debts that have become overwhelming. Keeping credit card debt under control is quite a challenge, and then there is the added temptation of promised savings and discounts on retail store cards. To tantalize consumers even more, sign-up discounts are offered that often lead to unanticipated purchases.

Store credit cards have advantages and disadvantages, and consumers may be wise to consider the impact such credit cards will have on their financial stability before signing those application forms. The interest rates on credit cards linked to particular stores are typically higher than the co-branded cards offered by some groups. A consumer needs to consider whether the advantages of the sign-up discounts will not be cancelled out by the additional interest that will be paid.

Filing for bankruptcy will stop the home foreclosure process

When an individual or family sits down to consider bankruptcy as an option to stop a financial downward spiral, that individual or family may not be fully aware of how a bankruptcy filing will impact the home foreclosure process. The thought of home foreclosure under any circumstances can be a frightening prospect, but this prospect can often be avoided by filing for bankruptcy. It is important for Florida residents considering bankruptcy to understand the how bankruptcy filings affect home foreclosures.

First and foremost, once bankruptcy has been filed there is a stay of home foreclosure action. This stay, or temporary halting of the home foreclosure, does not mean a petitioner gets to stop paying his or her mortgage and forget about past-due debts. It is still necessary to catch up on house payments and assess one's standing in regards to being able to pay a mortgage in the future.

Credit card debt can be tackled responsibly by Florida residents

Credit card debt can impact every area of a person's life and finances. There are many solutions touted for those looking to take back control. However, Florida residents should know the difference between responsible and logical ways to handle overwhelming credit card debt and solutions that can result in deeper financial trouble.

Some credit card companies will dangle the enticing option of balance transfers as a means of getting a 0 percent interest rate to pay down a balance. Some of these offers are only for a short amount of time. This means failure to pay off the debt in the allotted special percentage offer time frame could result in deeper debt that is even more difficult to pay off. Car title loans are another option that can result in a lien on a car and even more debt.

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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