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Orlando Bankruptcy Law Blog

Over 25 percent of consumers in the nation carry credit card debt

Millions of Florida residents and others around the nation use credit cards each day. While some may use them for a special trip or large purchase, others are using them for everyday expenses or for an emergency. Regardless of the reason for their use, credit card debt is on the rise in this country. In fact, roughly 28 percent of consumers now carry a balance each month on their cards.

A survey conducted by a website that provides comprehensive data on credit card usage also reports that over 40 percent of cardholders have carried balances two years or longer. Current interest rates on credit cards average approximately 16 percent. This interest level makes the balances that consumers carry very expensive, according to industry analysts.

Man sentenced to 8 years in prison for home foreclosure scam

Homeowners in Florida and in other states around the nation sometimes find themselves in financial difficulty. One of the largest expenses for most families is a mortgage payment. However, it is critical that this payment be made in order to stay in a home and avoid home foreclosure. Recently, a man was sentenced to prison after he made false promises to homeowners in a loan modification scam.

The man had made YouTube videos that told families he could save their homes from foreclosure. From 2011 to 2016, he misled consumers by saying he was an attorney or an employee of the nation's Department of Housing and Urban Development. Payments were sent directly to him. He allegedly received roughly $2.24 million from unsuspecting clients.

Interest rates for credit card debt at all-time high

Many Florida residents and others around the country frequently use credit cards for household purchases. While some consumers only use the cards for large items to earn points, others must use them for everyday expenditures. Still others might need them for emergency situations. Regardless of the type of usage, a recent report from the Federal Reserve shows that credit card debt in the country has now surpassed $1 trillion.

One area of concern is the decrease in savings for the average consumer. Financial advisors recommend that a person save roughly 10 to 15 percent of income. However, data shows that the actual savings rate is close to 3.5 percent. This pattern results in a smaller emergency fund and forces families to use credit cards for unforeseen expenses.

Debt relief in the face of national crisis

According to some analysts, the time may be approaching when the financial bubble will burst. In other words, the financial stability many are feeling may disappear. Some may already be experiencing it locally as major retailers close their doors. If a nationwide event occurs, it may result in widespread job losses, stock market crashes and a slowdown in the housing market. Many in Florida who already struggle to pay their debts may be looking for debt relief when their own efforts at reducing their debt fall short.

Some financial advisors warn people not to make common mistakes in paying down their debt. For example, borrowers may continue to make purchases with their credit cards even as they try to pay down the balances. This may be because of the points or rewards a particular card may offer, but the interest a consumer pays on a credit card balance often negates any incentives a purchase may earn. Consumers may also obtain a new credit card with an introductory low rate to pay off an old card, but they sabotage their debt payment plans by continuing to use both cards.

Short sales help those who are behind on house payments

Florida residents who frequent any of the many beaches may know what it is like when the tide is high and the waves are rough. Swimmers -- or even waders -- may feel as if they have complete control, and then a wave bowls over them. That feeling of being unable to breathe and at the mercy of the current is where financial experts get the term "underwater." Homeowners may feel this way if they owe more on their house than it is worth, particularly if they are behind on house payments.

If a homeowner is underwater, selling the home may seem impossible since a potential buyer would likely be unable to finance the amount owed. Nevertheless, selling may be the most practical step if the owner can no longer keep up with the payments. The situation gets worse each month until foreclosure looms.

Learn to manage credit card debt

Many consumers in Florida and around the country like to charge their purchases. Whether for convenience or necessity, households in the nation now carry an average credit card debt of around $16,000. The Federal Reserve reports that as a country, there is a debt over $1 trillion. Financial advisors recommend getting control of the debt before there is serious damage to someone's finances

While many routinely use credit cards, few understand the potential dangers. When a balance is paid in full each month, no interest or penalties are assessed; however, if a person carries a balance, interest charges are assessed, plus interest is accrued on that amount. The amount owed keeps increasing. The continually-growing balance can also have an adverse effect on a person's credit score. This has far-reaching consequences, such as inability to get loan approvals or favorable rates on loans.

Home foreclosure filings for August highest in 10 years

There have been several favorable indicators in the mortgage industry over the past several months following the crisis almost a decade ago. However, one metric moved in a negative direction, and industry leaders are watching carefully. The month-to-month increase of home foreclosure filings for Florida and elsewhere around the country more than doubled from the 10-year seasonal average.

A national data provider reports that over the past 10 years there has been roughly a 6 percent increase in foreclosure filings from July to August. However, last month's data showed that there were 14 percent more filings from July to August this year. Industry experts cite a seasonal monthly increase that accompanies a seasonal decline in the overall housing marketing. The real estate industry has seen decreases in foreclosure activity every month for almost two years.

How a Chapter 13 bankruptcy works in Florida

Florida residents looking for solutions for dealing with mounting debt often consider filing for bankruptcy. A Chapter 7 or a Chapter 13 filing may each provide relief for those struggling to meet financial obligations.

One important step towards making an informed choice is understanding how each type of bankruptcy works. Beyond that, your attorney can work with you to figure out whether a Chapter 7 or a Chapter 13 filing, or a different solution entirely, would suit your needs better.

Credit card debt even a problem for some with good credit scores

Many Florida residents and others around the country work hard to maintain strong credit scores. For some, however, credit scores may slip if they struggle with a significant amount of credit card debt. While this is typically the norm for those with significant balances on their cards, it is not always the case. A recent survey by a financial services company shows that even consumers with strong credit scores can still struggle with credit card debt.

The typical household in the nation has a credit card balance of over $5,500. Those consumers aged 30 to 50 have an even higher average balance between $8,000 and $9,000. Since credit scores are affected by payment history and credit utilization, even consumers with high card balances may have strong scores.

What happens when credit card bills go unpaid

It doesn't take much for a Florida resident to fall behind on his or her financial obligations. A sudden job loss, a blown-out car engine or an unexpected illness can all create an immediate and impactful cash crunch. Knowing how to respond can make a big difference in how things will ultimately turn out. The following tips are offered in the hopes of helping consumers know what to do when their credit card bills are 30, 60 or 90 days past due.

If a budgetary shortfall creates a short-term problem and credit card bills will be slightly late, it is important to contact the card issuer and let them know. At this stage, creditors are usually happy to work with card holders. This is still a phase where customer service is more important than collections, and the creditor may even offer to waive fines and fees.

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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