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Orlando Bankruptcy Law Blog

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.

Actions by Federal Reserve will likely increase credit card debt

The Federal Reserve recently increased its benchmark interest rate for the second time in three months. While the economy is growing, there are concerns that many borrowers in Florida and around the nation will be paying more money for interest. Holders of credit card debt will likely notice the interest rate increase more than other borrowers.

Whereas student loans and mortgages are often set with fixed rates, credit cards typically come with variable rates. Therefore, when the Federal Reserve raises rates, a credit card company does the same. The latest increase by the Fed will potentially cost those with credit debt $1.6 billion more in interest charges this year. The increases are likely to occur within the next couple of billing cycles.

Credit card debt reaches high national level

The country's consumer confidence level is the highest it has been in 15 years. This confidence has prompted many consumers in Florida and around the country to increase their spending. According to a personal finance website, much of this spending is being done by people using credit cards. As a result, national credit card debt levels are at their highest since 2007.

Financial experts predict that credit card debt will exceed $1 trillion in 2017. The previous highest levels had come a decade ago before the housing crash. Analysts report that consumers are paying their bills on times, thus pushing charge-off rates down. However, they are concerned that many people now charge such payments as mortgages or rent on their credit cards.

Cut credit card debt and save money with these tips

Many Florida residents are benefiting from improvements in the economy, such as increased employments rates and higher wages. However, financial experts cite the level of credit card debt in the country as a case for concern. They recommend decreasing this debt and increasing savings to become more financially stable and offer suggestions on how to achieve these goals.

One recommendation is to pay more than the minimum balance due on the credit card. This action could save a considerable amount in interest and make more money available for savings. Other strategies for lowering credit card debt involves thoroughly understanding credit scores and utilization rates Improving these numbers can have a positive impact on the rates a person gets, thus reducing the amount of interest paid.

Industry trends may affect credit card debt for consumers

Credit cards are very useful to many Florida residents and others throughout the country. Credit card companies often initiate changes in their programs and offerings to attract new customers. Sometimes the changes are beneficial to customers, but others may result in higher fees and costs. While credit card debt remains a serious issue for many cardholders, many borrowers continue to apply for new cards. A personal finance website recently offered some insight on several trends in the industry that are important to consider if seeking additional accounts.

Credit card companies traditionally have offered rewards such as free airline miles or hotel stays. However, many are looking at more basic rewards, such as cash back. The industry recognizes that consumers can use extra cash for a variety of expenses rather than getting travel perks. While this is a positive trend, another one cited in the report is not welcome news. 

Home foreclosure rates improving in Florida

The housing market has been a big topic in the news for quite some time in Florida and all around the country. The home foreclosure rate skyrocketed when the market was in such disarray. For a period of time, Florida ranked among the top states in the nation for the number of home foreclosures. However, the rate is dropping and now has closed the gap with the national average.

A consumer financial information company recently reported on foreclosure rates around the country. The information was gathered from 401 metro areas in the nation. The latest reports show that Southwest Florida has seen a decrease in the level of home foreclosures for 2016. This rate for the region is now below the state level and is moving toward the U.S. average. For over a year, the rate of foreclosures among all outstanding mortgages in the region has remained under 2 percent.

Use tax refund to pay off credit card debt

Many Florida residents may be among the estimated 70 percent of taxpayers who will receive a refund from their 2016 tax filing. For those receiving a refund, financial experts have offered some advice on what to do with those funds. One of their suggestions is to pay down credit card debt. Roughly 39 percent of the country's adults plan to pay down their debt with their tax refunds, according to a survey by the National Retail Federation.

Financial advisors note that situations vary for different people, and a refund might be better utilized elsewhere. They recommend that consumers establish a $500 emergency fund if they do not have one before using the money to pay down their debt. Also, if someone has an interest-free credit card, they would benefit putting the money toward something else. For those with debt levels of more than half their income, bankruptcy relief may be an appropriate option.

Ruling on post-bankruptcy loan modification benefits borrowers

Florida residents overwhelmed by debt may choose bankruptcy as an option in getting a fresh start with their finances. Several issues arise when a loan modification is sought following a bankruptcy discharge. A recent ruling by a judge in the nation's Bankruptcy Court may make the situation more difficult for lenders in this situation.

The ruling came after a case involving a physician and his wife who had filed for Chapter 7 bankruptcy several years ago. The physician had previously entered into several finance agreements with lenders for equipment used in his practice. At that time, he guaranteed his medical practice's obligations with these agreements. The guaranty obligations were listed in the physician's bankruptcy petition. The bankruptcy case was closed after he received a discharge of all debts, including the guaranty obligations.

What does debt reaffirmation mean?

Filing for Chapter 7 bankruptcy has the advantage of discharging debt you owe. However, if you used certain property as collateral for a loan, you still will have to provide some sort of compensation to the creditor to avoid losing the property. What do you do when you qualify for a Chapter 7 bankruptcy but want to keep a secured debt? The good news is that you may be able to do both. By reaffirming the debt, you can still file for Chapter 7 and retain the property.

Home foreclosure levels declining

A financial and consumer information company that tracks national trends has reported some encouraging news for homeowners in Florida and across the country. The level of home foreclosure inventory as well as the number of completed foreclosures has significantly decreased over the past year. The company includes all homes at some point in the foreclosure process in its definition of foreclosure inventory. Homes lost to foreclosure make up the number of completed foreclosures.

In addition, the company reports that there has been a decrease in mortgages in serious delinquency. A seriously delinquent mortgage is one that is 90 days or more past due, a loan in foreclosure or a real estate owned loan. This decrease was widespread throughout the country as the report shows declines in delinquencies in 48 states and the District of Columbia.

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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