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Orlando Bankruptcy Law Blog

Smart ways to eliminate credit card debt

Financial stability can be elusive, and yet it is achievable for most people if they follow the advice of professionals. For Florida residents, credit card debt can be a source of stress and impair a family's or individual's ability to deal with other debts. While each situation may be different, there are smart ways for almost everyone to reduce and deal with credit card debt.

One tip most people should apply is to pay the most toward the card with the highest interest rate. Interest rates can vary greatly and affect the overall amount a person pays. The national average is reported to be 15.2 percent. While this way is a money-saver over time, experts warn that it could still take a long time to pay off all credit cards by employing this approach.

Reality of credit card debt may lie in generation gap

Not all credit card holders are the same, and neither are the struggles of those who use credit cards. Credit card debt can be financially debilitating for any Florida resident, as the recession once proved. However, the use of credit cards and management of credit card debt varies from generation to generation.

A recent study outlined the differences pertaining to credit cards based on age. There were three groups included in the poll. The groups were the generation known as the Millennials, Generation X and Y and the Baby Boomers.

Florida residents may struggle with loan modification changes

When the recession hit, many home owners across the country turned to different programs to help them keep their homes. One program was the Home Affordable Modification Program. With this program, Florida homeowners were able to obtain a loan modification to reduce their interest rate and their monthly mortgage payment. But, that change was temporary, and some fear the rise in rates and mortgage payments may lead to another struggle for homeowners in Florida.

The temporary reduction was for five years for those who qualified for the loan modification program. Now, when that time runs out, the increase may offset the financial stability some have grown used to. One estimate states that mortgage payments for some can rise anywhere from $150 to $1,000 a month.

Mixed feelings about home foreclosure rates in Florida

Before the recession, the home foreclosure rates recorded across the country were not very alarming. When the recession hit and the market spiraled into what was described as a free fall, the home foreclosure rates in Florida and other states rose dramatically. On the bright side, and also on a cautionary note, the latest home foreclosure rates match those recorded before the recession.

While the latest figures may point to an upswing in the economy, some warn of what it may really mean. It has been noted that 60 percent of the homes sold in the last few years have been cash sales. The median price is roughly around $75,000. This has attracted investors who are buying up properties under the impression that there will be a market boom again.

Credit card debt problems vary from person to person

The recession forced people to stop and think about their personal finances. One area of great concern for those in Florida and elsewhere was credit card debt. For many people, credit card debt led to serious financial issues that were difficult, if not impossible, to overcome on their own. Even with a revival of the economy, some people may be unclear about how much credit card debt is too much or even whether they have a problem to address.

The confusion may stem from not understanding the numbers. People may falsely assume that having a certain amount charged on a credit card may indicate a credit card debt problem. However, the indicator may not be the dollar amount charged, but how that dollar amount relates to the total line of credit available. 

Home foreclosure action taken against woman working on house

The housing crisis led a lot of homeowners to seek ways to keep the roof over their heads. A loan modification was one method that was used to avoid home foreclosure in Florida and across the country. However, it has come to light that some people who were in the midst of the loan modification process were foreclosed upon anyways, even being locked out of homes by the banks they were trying to work with.

One woman recently came home to find a padlock on the door of her home. The home in question had been involved in a fire, and the place was currently being rebuilt by a construction crew. The woman contends she was simultaneously dealing with the bank concerning a loan modification and says she was never underwater. According to her, she owns the home, and it was not in foreclosure.

Chapter 7 debt relief may not mean losing one's home in Florida

People naturally do not like the feeling of being trapped, whether physically or financially. Hence, it is important for Florida consumers to be wary of taking on too much debt. However, despite good intentions, many people find themselves in difficult financial straits and in desperate need of debt relief.

One option to obtain relief from debt is through a Chapter 7 bankruptcy. However, many people are hesitant to take this route because they are afraid of losing some of their most cherished possessions. What many do not realize is that there are many ways consumers can avoid having many possessions being liquidated during a Chapter 7 proceeding. Understand the applicable laws can help in achieving the best outcome.

Family vaction canceled because of credit card debt

Everybody deserves a vacation every once in a while. However, vacations are not usually cheap, and if one does not have his or her finances in order, a vacation may not be possible in Florida or in any other state. This is what one man found out just as he was planning a summer vacation with his family. While planning, he discovered that it would not be financially possible for the family to take a vacation due to overwhelming credit card debt.

It was June 2010 when the man was forced to tell his wife that they could not afford to take the family vacation they had planned. Not only were all five of the man's credit cards completely maxed out, he also had no cash available. This was surprising to the man since he earned a high income working as an IT manager. He usually brought home approximately $120,000 per year.

Bank charged with driving people into home foreclosure

During the recession, millions of homeowners turned to their banks to find a way to keep their homes. One way those affected found as a means of avoiding home foreclosure was to seek a loan modification through the existing mortgage lender. Loan modifications were successfully achieved by some Florida homeowners,  while others lost their homes anyways. One bank was recently accused by the Consumer Financial Protection Bureau of essentially causing thousands to suffer though home foreclosure unnecessarily.

Flagstar Bank is said to have stalled loan modification applications, and these delays in processing the applications led to thousands of foreclosures. Apparently, roughly 25 bank employees were responsible for dealing with 13,000 loan modification applications. The bank also stands accused of not letting homeowners know their applications were incomplete.

Credit card debt still problem in Florida and elsewhere

The financial crisis over the last number of years hit all areas of the country heavily. Florida, in particular, saw a rise in home foreclosures and other financial difficulties. Moreover, credit card debt and other debts wreaked havoc on the average household. As the recession waned, people found ways to deal with these financial issues. However, it now appears that credit card use -- and the debt that typically comes with it -- is on the rise again.

According to a new study, the debt related to credit card use hit a high at the end of June. Analysts caution that this rise was for the second quarter of this year and may not actually represent a major rise in credit card debt again. However, another study recently revealed that 20 percent of Americans seem to be living beyond their means. Further, they have admitted that they would have to make changes to their lifestyle if they were forced to stop use of credit cards.

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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