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Orlando Bankruptcy Law Blog

Wells Fargo did not stop home foreclosure for qualified borrowers

Losing a house to foreclosure is a traumatizing event for homeowners. Some people in Florida are able to modify their loans or utilize certain federally-backed programs to stop home foreclosure. However, it recently came to light that a Wells Fargo mistake caused hundreds of people who qualified for help to be denied, which ultimately cost them their homes. 

From April 2010 to Oct. 2015, a Wells Fargo tool malfunctioned and miscalculated at least 625 requests for federally-backed mortgage modifications. All of the affected customers were already in foreclosure and qualified for the program, but because of the miscalculations, Wells Fargo denied their requests. Of those who were affected, 400 went on to lose their homes. 

Millennials may be in need of medical debt relief

There is no getting around it -- the cost of health care is astronomical. Medical costs are completely out of reach for the average Florida resident, and not just for catastrophic events. Generic costs associated with seeking care for minor illnesses and injuries is enough to push people into debt, and one group of people seems to be affected more than others -- millennials. This could potentially lead to more young adults seeking debt relief through bankruptcy.

A 2017 report from the Urban Institute stated that medical debt is the most frequently cited financial burden in the nation. Data from the Consumer Financial Protection Bureau seems to back this up, as it found that one out of every six Americans has at least one past-due medical bill sitting on their credit report. Of those with past-due medical debt, 27-year-olds made up the largest group of debtors at 11 percent. Under the Affordable Care Act, adults up to 26 can stay on their parent's insurance plans.

High interest rates contribute to growing credit card debt

Credit card interest rates have been going up over recent years, which has contributed to the growing balances carried by most Americans. Higher interest rates make it much more difficult to pay off existing credit card debt, and many people in Florida may see their balances rise despite making regular payments. This is extremely problematic for consumers who are struggling to pull themselves out of debt. 

Nationwide, consumers owe more than $1 trillion on their credit cards. Of that amount, over $100 billion is in interest. From March 2017 to March 2018, consumers shelled out $104 billion for credit card interest alone, which is 11 percent higher than the $93.7 billion they paid just a year prior. In 2013, consumers only paid $74.6 billion in interest. 

New rules will affect how student loan borrowers seek debt relief

Most borrowers know that they cannot discharge their student loans during bankruptcy. While this is generally true, relief through a federal program is an option for some people in Florida. Unfortunately, the guidelines for this program are currently under review, and projected changes could impact how some borrowers seek debt relief in the future. 

Under the borrowers' defense rules, students who took out federal loans and then used those funds to attend schools that either committed fraud or did not prepare their students for future employment may seek debt cancellation. The closed school discharge rule allows students who attended within four months of their college's closure to also seek debt cancellation, but only if their credits will not transfer to a comparable program within a period of three years. Individual situations might also call for canceled, reduced or modified loans. As of March 2018, there were more than 127,800 backlogged claims for student loan debt relief. 

Chapter 7 bankruptcy could provide the much-needed relief

Many Florida consumers quietly deal with an unwanted burden -- overwhelming debt. This can make every aspect of life more difficult, and it often weighs heavily on people's mental health. However, for many people, Chapter 7 bankruptcy can be a smart, financially safe option.

In 2005, the Bankruptcy Prevention and Consumer Protection Act went into law. Although the name seems positive, it can actually make it more difficult for those who need debt relief. Because of this act, those in need of debt relief must undergo six months or more of credit counseling before they even file for bankruptcy. Once the Chapter 7 filing is in, the debtor must then participate in a course for financial management. Although there is certainly nothing wrong with educating consumers on financial matters -- indeed it may help many people -- requiring debtors to do so at the cost of delaying debt relief may be overwhelming.

How to stop creditors and get debt relief?

For as long as there has been debt, debt collectors have existed. Many of these collectors use tactics that fall somewhere in the gray area outside of legal, although the law is perhaps a bit unclear on the matter. Coupled with the fact that debt collection fraud is rampant, many Florida consumers are unsure of where to turn for creditor and debt relief.

The Fair Debt Collection Practices Act is meant to prevent collectors from using certain methods when trying to recover a debt. This includes any behavior that is deemed unfair, deceptive or abusive. But what is unfair? A consumer might disagree with a debt collection agency on the definition of an unfair collection method.

Many millennials struggle with credit card debt

Credit card debt is one of the most pervasive forms of debt in American society. One survey found that 32 percent of people with debt would give up their favorite snacks for at least one year, and 31 percent said they would give up social media for a year to finally be debt-free. 

Although anyone can fall into credit card debt, it seems to affect millennials more than any other demographic. The problem has become so severe that many millennials are unable to purchase new cars and houses due to the immense debt they face. 

Many homeowners behind on house payments because of Irma

Natural disasters are unavoidable and often leave a wake of physical destruction in their paths. However, once the news crews pack up and leave, many people forget about the financial struggles of hurricane victims in Florida. For many, these types of disasters lead to them falling behind on house payments.

Nationwide, rates of mortgage delinquency are going down as more homeowners establish a better grip on their finances. The story in Florida is different, with more residents are delinquent on their house payments than in other areas of the United States due to Hurricane Irma. A mortgage is considered delinquent once it is more than 30 days past due, meaning that a homeowner only has to miss a single payment before find oneself in a precarious situation.

As Americans repay bills, debt relief still necessary for some

Paying back debt can be difficult, both financially and emotionally, but many Americans seem to be doing a good job of it. There are several factors that contribute to consumers' increased ability to repay their debts, including better job prospects and a thriving economy. However, this does not mean that all Florida consumers are doing so well, and many are still in need of other forms of debt relief.

Debts are considered delinquent once they are at least 30 days overdue. The percentage of people in the U.S. who are delinquent recently hit 1.73 percent, which is a slight increase from the 1.64 percent it was listed at in 2017's last quarter. However, it is still less than the 2.14 percent average over the last 15 years.

Can a short sale stop home foreclosure?

Given the choice between a foreclosure and a short sale, which would you choose? Most people in Florida zero in one the word "sale" and make a quick decision. Although it certainly seems like a smarter option to quickly sell before home foreclosure hits, it can actually do a great deal of harm.

So what is a short sale? A prospective buyer offers to purchase the house for less than what you currently owe on the mortgage. After that, you negotiate with your bank to avoid foreclosure, and get the lender to agree to accept the offered amount. Then you sell your home and avoid foreclosure. You could also lose out -- big time.

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