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Orlando Bankruptcy Law Blog

3 simple ways to manage credit card debt

If you're overwhelmed with credit card debt, filing for bankruptcy isn't the only option you have. You may be able to manage your debt without having to take that route. Before doing so, consult with an Orlando, Florida, bankruptcy lawyer to see if bankruptcy is a more favorable option or if paying off any debt before filing will hurt your case. Once you're sure you can handle credit card debt management, try these three ways to simplify payments and reduce interest.

Is a mortgage possible during or after a Chapter 13 bankruptcy?

Many Florida residents believe that their chances of getting a mortgage are close to zero when their financial situations require them to seek protection from a bankruptcy court. Fortunately, bankruptcy does not have the same stigma that it did in decades past. It might give them hope to know that it is possible to obtain a mortgage during or after a Chapter 13 bankruptcy, depending on the circumstances.

Lenders often view those who file Chapter 13 -- often called a debt reorganization -- more favorably than those who file Chapter 7 because Chapter 13 filers are making an effort to repay at least some of their debts. Further, the credit reporting agencies view this reorganization more favorably as evidenced by the fact that it must be removed from an individual's credit report after seven years instead of 10 for a Chapter 7. Regardless of the chapter filed, a person's credit score does not suffer the same damage as those who are in financial distress and do not file at all.

Avoiding home foreclosure can be a slippery slope

When finances are strained, making a mortgage loan payment could be difficult. Missing even one payment could begin a slippery slope to avoiding home foreclosure. Most Florida residents will exhaust all of their options trying to save their homes.

A lender might forgive missing one payment, but it will be expected that the homeowner will make it up the following month and pay any penalties that accompany it. This could be nearly impossible for a Florida homeowner whose finances are already stretched to their maximum. Other options will need to be explored in order to avoid the potential for foreclosure.

A trip to the ER could call for medical debt relief

Many Florida residents frequent hospital emergency rooms when necessary. Many choose the hospital that is covered by their health insurance. The problem is that the doctors and other medical professionals that might be required for their care might not be considered within the network of the health care provider. This means that when the bills come in, they can be much higher than anticipated, which could prompt the need for medical debt relief.

Researchers looked into this possibility by examining some two million claims. They discovered that at least two of every 10 claims involved a medical professional that was not in the patient's network even though the hospital was part of his or her insurance plan. This happens because hospitals contract with doctors, and those doctors are not required to accept the same insurance carriers as the hospital does.

Florida Supreme Court abolishes home foreclosure time limit

The Florida Supreme Court recently made a ruling that could potentially affect thousands of people across the state. Up until recently, lenders had five years to bring a home foreclosure action. However, the state's highest court recently ruled that the statute of limitations no longer applies.

The court reasoned that the statute of limitations changes with every month that a borrower is delinquent on mortgage loan payments. This is a change from the previous understanding that the time began running from a specific moment in time and could not be changed. It is estimated that the ruling affects approximately $400 million in mortgage loan debt throughout the state.

Student was able to discharge loans in Chapter 7 bankruptcy

One of the first things that Florida residents discover when they contemplate going to court for debt relief is that student loans cannot be discharged except under certain circumstances. Due to this fact, many people do not even try. However, a woman did ask the bankruptcy court to discharge her student loans when she filed for Chapter 7 bankruptcy, and the court granted that request.

When the woman entered into a financial contract with an educational institution, the agreement provided for the payment of registration costs, tuition and books in the future. She never received any funds personally and never signed a promissory note. The institution argued that the contract contained all of the required elements to make it a loan, but the bankruptcy court disagreed.

Minimum payments perpetuate credit card debt

For many Florida residents, the "plastic" in their wallets has helped them through tough financial times when there was just not enough pay check left at the end of the month. When the credit card bills come, they are only required to make a minimum payment. What is not to like, right? Unfortunately, making minimum payments only perpetuates credit card debt that can quickly end up becoming more of a financial burden than a help.

Credit card companies used to require customers to make minimum payments of approximately 5 percent of the balance. This allowed a portion of the payment to apply toward principal, which would help pay down the balance faster. That changed in the 2000s when companies only began requiring approximately 2 percent as a minimum payment.

Impact of Chapter 13 or Chapter 7 bankruptcy on a Florida filer

The economy may be recovering from the Great Recession, but many Florida residents are still struggling financially. Many consumers continue to have trouble just making ends meet. Someone in dire financial straits might be considering filing for Chapter 13 or Chapter 7 bankruptcy, but are not sure what either option can accomplish.

Chapter 13 puts the filer on a payment plan that ordinarily lasts anywhere from three to five years. People who want to keep their homes, but are significantly behind on their payments, often file this chapter of bankruptcy. However, it most often requires the filer to have a steady income and enough disposable income to support the plan.

The Chapter 7 bankruptcy catch-22: How to pay for it

Florida residents who are overwhelmed by debt are often struggling to make ends meet. Even if they want to file for Chapter 7 bankruptcy, many people do not believe that they can afford it. This is the catch-22 that many might consider to be a roadblock that they cannot get past while they search for freedom from their debts.

Because they do not believe that they will be able to pay for an attorney, many Florida residents do not even make the call. However, there are attorneys who would be willing to set up a payment plan that might be feasible. It might take longer to actually file, but it would be better than simply not filing at all.

Is reaffirming certain debts in Chapter 7 bankruptcy a good idea?

Some of the debts that Florida residents take on are secured by a piece of property that is considered to be collateral for the debt. An auto loan is one example. When a Chapter 7 bankruptcy is filed, those contracts are essentially broken and the lender ma have ultimately the right to repossess the property securing the debt. It might be possible to keep that property by reaffirming the debt, but it would be best to first determine whether that would be in your best interest.

When you advise the bankruptcy court that you would like to retain a piece of property that secures a debt, your income and expenses, along with the value of the item you wish to keep, will be reviewed. If the court approves your request, you can "reaffirm" the debt with the lender, which is normally under the same terms that were in place prior to the bankruptcy filing. The U.S. Bankruptcy Code gives you 60 days to change your mind, and it makes sense to take that time to be sure it is the right financial decision.

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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