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Orlando Bankruptcy Law Blog

Tax exclusions for loan modification and other debt forgiveness

The recent mortgage crisis was devastating for many Florida residents and others around the country. Homeowners in financial straits often had difficulties making house payments in a timely manner. In many instances, those struggling financially were faced with a loan modification, foreclosure or short sale. Consumers were allowed to deduct these forms of mortgage debt forgiveness on their taxes. Industry advocates are hoping to make this tax exclusion permanent.

The long-term impact of the new Tax Cuts and Jobs Act remains to be seen as many of the provisions are now being implemented. Recently, the National Association of Realtors sent members to speak to the House Ways and Means Subcommittee on Tax Policy. The NAR representatives are arguing that a 2007 policy regarding tax relief for mortgage forgiveness be made permanent. Their contention is that if homeowners who are already having problems paying their mortgages have to pay taxes on the cancelled debt, an undue burden falls on them.

Wage garnishment may be issued to collect unpaid credit card debt

If any residents in Florida or anywhere around the nation are having difficulty making ends meet, the last thing they need is to have part of their job earnings withheld. However, wage garnishment is a fairly common practice by creditors. Wages are most often garnished to collect unpaid credit card debt, child support, taxes or student loans. Financial experts recommend several steps to those who may experience wage garnishment.

Creditors must sue those who owe them money and win a judgment against them. At that point, an employer would receive a court order requiring them to withhold part of someone's pay. The withholding would continue until the full amount of a debt is paid. Courts can also order a creditor to take funds directly from an individual's bank account to settle a debt. However, creditors are not allowed to take money from a paycheck without going through a specific process.

Credit card debt for the nation at record high

Consumer confidence in the economy appears to be growing in Florida and all around the country. While this appears to be a positive trend, there is one financial indicator that is causing some concern among experts. The country's credit card debt has recently reached a record high.

A personal finance website reported that the national credit card debt level is over $1 trillion. Furthermore, the debt added to that overall level in 2017 was the highest in the past 10 years. Reports show that the average credit card balance for every household in the country is over $8,500.

New federal relief program may stem home foreclosure rate

When natural disasters such as floods, tornadoes and hurricanes occur, it is devastating for families to lose their homes and belongings. In 2017, many Florida residents and others around the country were displaced and unable to work. This resulted in the inability for some individuals to remain current with their mortgage payments. However, thanks to the Federal Housing Administration, homeowners were extended mortgage relief and were able to avoid home foreclosure.

The agency announced that mortgage relief would go to various states, including Florida, that were affected by several hurricanes and the wildfires out west. The relief offered is that families would be able to stay in their homes. The proposed plan would also protect the Mutual Mortgage Insurance Fund.

How higher credit card debt is likely this year

When the federal funds rate is increased, interest rates rise likewise for consumers in Florida and across the country. An increase like this would affect a variety of financial instruments, including credit cards. For those people who carry credit card debt, the situation could prove to be difficult.

The economy is considered to be stronger, as overall conditions are favorable. However, consumer debt is a growing problem. After a low in 2013, revolving debt has been increasing. At the end of 2017, the total credit card balances owed exceeded $1 trillion. For those households with card balances, the amount owed was $15,000.

Key elements of a chapter 7 bankruptcy for a small business

There are a number of reasons why businesses fall into extensive debt. For those small business owners looking to eliminate such debt and close their business, a Chapter 7 bankruptcy might be a good idea. 

Considering the magnitude of this decision, it is important that business owners fully understand what it entails. There are a few key elements of a chapter 7 bankruptcy to be aware of.

Consumers waiting on tax refund to file Chapter 7 bankruptcy

Many Florida residents and others around the country are excited to learn that they will be receiving a refund after they submit their tax returns. Financial experts have a litany of suggestions about how people should put their tax returns to good use. However, many consumers are still struggling financially. Research shows that some families are waiting for their tax returns so that they will be able to afford filing for Chapter 7 bankruptcy.

While advisers recommend that people should use their refunds to save for retirement or pay off debt, they fail to realize some families have difficulty just making ends meet. A survey conducted last year showed that almost a quarter of those anticipating a tax refund would use it for everyday expenses. Very few had plans to splurge on a special item or major purchase.

Millennials less likely to have credit card debt

Though there are varying age ranges, millennials are typically defined as those individuals in Florida and anywhere around the country who were born from roughly 1980 to 2000. Trend watchers often cite how members of this demographic are having a profound effect on many businesses. People in this age group are not as likely to read hard copies of newspapers or magazine or shop in actual stores. Also, millennials are not as likely to incur credit card debt as some members of other generations.

According to a survey conducted by an online financial website, most older consumers have at least one credit card. However, only one third of young adults aged 18 to 24 use credit cards. The type of card they use is different as well. That age group is more likely to use a prepaid card or a debit card.

How the home foreclosure crisis affected Florida

The mortgage crisis affected many Florida families, with the market plummeting 10 years ago. Many residents lost their jobs and were unable to pay for their mortgages as their incomes were drastically cut. As a result, home foreclosure levels increased significantly. A recent article reflected on the impact these foreclosures had on the state.

Retired judges were brought in to address the staggering number of foreclosures filed. This so-called "rocket docket" saw the handling of almost 4,000 in a month. This led to thousands of houses being put on the market at once and caused the values of the homes to plummet.

Consumers willing to take on credit card debt for certain items

Many Florida residents and others around the nation have different mindsets when it comes to paying for big ticket items. While some consumers would never consider going into debt to pay for certain things, others are willing to incur some credit card debt to cover the expenses. A consumer finance website lists the various expenses for which some people will use their credit cards.

Almost one-third of consumers in the country stated that they would use their credit cards for major life events. However, experts stress that planning a wedding or having a child both offer time for someone to save money prior to those events. Others say that they would incur credit card debt if they needed to pay for planned medical expenses, such as tests or routine appointments. Unlike emergency expenses, these costs may be better paid for through health savings accounts or other flexible spending funds rather than credit cards.

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Paul Urich
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1510 East Colonial Drive
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Orlando, FL 32803
Phone: 407-982-3763
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