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Orlando Bankruptcy Law Blog

Should you cosign someone else's loan?

Cosigning a loan may not seem like a big deal. You are just using your good credit to help a friend or family member, so he or she can qualify for a loan. Maybe the loan is for a car, house or to pay for school.

While it is true, you are using your credit to help this loved one qualify for a loan, it is also true you are guaranteeing your loved one will continue paying this loan. If he or she does not, you will be held responsible for paying the loan.

What role does a judge play in Chapter 7 bankruptcy?

When a person in Florida realizes that he or she can no longer make ends meet, it might be time to consider options under bankruptcy. Seeking debt relief through Chapter 13 or Chapter 7 bankruptcy can be effective, but many people are still unsure of how the process works. Here are a few things that can help people have a better understanding of the bankruptcy process.

Most legal matters are dealt with in either criminal or civil court. However, bankruptcy is different in that it has its own system of dedicated courts throughout the federal judicial system. There is at least one bankruptcy court in each state, although some have more. Bankruptcy judges who preside in these courts do not deal with civil or criminal matters and instead issue rulings on bankruptcy cases. These judges also sort out issues with eligibility and whether a filer's debt should be discharged.

Florida residents took on significant credit card debt in 2018

Staying out of debt might seem easy in theory, but it is often difficult in practice. There often seems to be no end to unexpected bills or expenses, from medical bills to car repairs and much, much more. As credit card debt grows, Florida consumers might find that they are unable to keep up with all of their monthly payments, which can put them into difficult situations where they might have to choose between which bills to pay and which to put off. Pursuing bankruptcy can help people address these types of financial concerns.

American consumers spent more on credit than ever before in 2018. By the fourth quarter of that year, consumer debt had reached $13.3 trillion. However, not all consumers are adding debt at the same rate, as residents of some states end up spending more than others. Florida residents are taking on more debt than residents in many other states.

Interest makes it difficult to overcome credit card debt

Credit cards have a lot of benefits. They can help consumers manage large purchases or bridge the gap between paychecks. Many cards offer even offer rewards, such as redeemable award points, cash back or airline points. The news is not all good, though, as interest rates can cause credit card debt to quickly spiral out of control.

Some Florida consumers might already know that credit card debt recently hit $1 trillion. This news by itself might not be entirely negative, especially since experts believe that Americans are confident in the economy and willing to borrow more. About 66 percent of people in America believe the economy is in generally good shape, which is a 17 percent increase from 2009. While this might be a positive for the economy, some people might be inadvertently taking on more than they can handle.

Grand jury indicts 11 in home foreclosure scheme

Buying a home is a mark of adulthood and accomplishment in Florida. People often spend years establishing their careers, getting financially secure and saving up money before making the move to homeownership. When these homeowners fall on hard times and are faced with home foreclosure, it can be easy to be fooled by those looking to make money off of another's misfortune.

Investigators say that multiple alleged schemes targeting homeowners near or already in foreclosure prompted  a federal grand jury to indict 11 people across various states. Those charged are accused of offering to negotiate with lenders or to buy mortgages at a discounted price. The organizations running these schemes charged a fee for these services, which were supposed to help homeowners trying to avoid losing their homes. Prosecutors say they never actually performed any of those functions.

Consumers think they handle credit card debt well, but do they?

Balancing debt in today's social climate can be an overwhelming task. Despite this, the majority of consumers in Florida and across the rest of the United States feel like they manage their personal finances better than the government handles its budget. While this might seem like an unimportant idea, it could be contributing to how some people take on additional credit card debt.

WalletHub conducted a national survey about credit cards and determined that 90 percent of people in America say they are better at managing money than the federal government. Despite this, WalletHub's 2019 Debt Survey discovered that 156 million people in America routinely take on debt for otherwise frivolous purchases. With credit card debt predicted to increase by another $60 billion in 2019, some consumers might not be as proficient at debt management as they think.

Should I seek debt relief with my spouse or by myself?

Filing for bankruptcy in Florida is a big decision, especially if it will affect more than just yourself. You and your spouse might feel stuck weighing the benefits of filing against trying to pay everything back yourselves. However, this is not the only decision you need to make. When seeking debt relief, you also need to figure out whether you will file by yourself or jointly with your spouse.

Whether filing for Chapter 7 or Chapter 13 bankruptcy, there are several benefits to filing jointly. For example, it is cheaper to file jointly with your spouse than for you to each file separately. This is because you only need to pay the court filing once, whereas you would have to shell out two court fees for separate filings. The cheaper option might work out well if you are already in a difficult financial position.

Chapter 13 and lien stripping

Are you considering filing bankruptcy? Do you have a second mortgage on your Florida home? If you answered yes to both of those questions, you may wish to consider filing Chapter 13 bankruptcy. With Chapter 13, you may be able to strip the second mortgage lien from your home and save your home from foreclosure

Unlike a Chapter 7 bankruptcy that discharges your consumer debt, including your credit card debts, a Chapter 13 bankruptcy allows you to reorganize your debts and substantially pay them off over three to five years. Usually, you can first renegotiate the debts with your various creditors, reducing your remaining balances and getting more favorable interest rates.

Medical debt behind many Chapter 13 bankruptcy filings

Forking out money for medical bills can be annoying. After all, many people in Florida are already shelling out significant monthly payments for health insurance, and added bills can really compound financial worries. In some cases, those medical bills can do more than just stress out the recipient -- they can lead to Chapter 13 bankruptcy.

A study from the Consumer Bankruptcy Project -- CBP -- discovered that medical debt contributes to over 66 percent of all bankruptcy filings. This amounts to about 500,000 medical bankruptcies every year. Many people hoped that the Affordable Care Act would cause those numbers to go down, but that was not the case. Instead, medical bankruptcy filings have remained steady.

Veterans seeking debt relief often give up their benefits

The decision to file for bankruptcy is not always easy and typically involves consideration of a number of financial issues. People in Florida have to consider many different factors before filing, such as their current level of debt, income and much more. However, for veterans, the decision to seek debt relief could be much more difficult.

In general, disability benefits are not taxable, and as such are not included under the umbrella of disposable income in bankruptcy filings. A glaring exception -- veteran disability benefits. Under current law, when a disabled veteran files for bankruptcy, his or her veteran's disability benefits are counted as disposable income. This means that these benefits can be seized by debt collectors for repayment.

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