Increased consumer borrowing is generally seen as a good sign that the economy is recovering. It likely means that consumers are gaining confidence about the economy and are less worried about taking on additional debt.
]]> However, while the economy may be growing in some areas, the average American income is lagging behind the inflation rate. Last year, the average hourly pay rose 1.8 percent while inflation rose 2.7 percent. This means that while the average consumer is earning more, but the increases in income are not keeping up with rising prices.While the rise in consumer borrowing and credit card use may be seen as a sign of increased consumer confidence, it could also be a red flag for unmanageable credit card debt. Given the inflation rate, some consumers may eventually find themselves behind in their payments, or unable to pay their monthly bill at all.
Filing for Chapter 7 bankruptcy is one way for consumers to discharge unsecured debt, such as credit card debt and medical bills. Chapter 7 frequently involves the liquidation of property to pay creditors. However, Chapter 7 bankruptcy does not mean the liquidation of all assets. Filers are generally allowed to keep property that is necessary for living such as their house, car and clothing. Upon completing the bankruptcy process, a person's debts will be cleared.
Filing for Chapter 7 bankruptcy can be an immensely complicated process, however, so it's a wise idea to seek out knowledgeable advice when you run into questions about how to eliminate an overwhelming debt load.
Source: Houston Chronicle, "U.S. consumers stepped up borrowing in March," Martin Crutsinger, May 7, 2012
]]>Now, the Octomom is in deep financial trouble. She recently made the decision to file for Chapter 7 bankruptcy, which helped delay the foreclosure auction of her home for two weeks. If the house is sold at the auction, the woman and her children could be evicted. This is the second time Suleman and her children have been granted a reprieve to stay in their house.
]]> At the time Suleman filed for personal bankruptcy, she listed a total of $50,000 in assets, but her debts could be as high as $1 million. One of the primary motivators for her bankruptcy was her inability to afford her house payments, as she has accumulated over $30,000 in back payments.In a public statement issued after her filing, the woman noted that decision to choose Chapter 7 was difficult, but she knew it would end up being the best decision for her family. At this time, bankruptcy is providing the protection from creditors that she and her kids need.
Despite Suleman's situation representing a rather exceptional case, many Texas parents are feeling financial strain. The expenses related to child care, coupled with the money needed to provide food and shelter, can be absolutely overwhelming. However, parents also know that maintaining the welfare of their children is paramount, so filing for bankruptcy may be their best option.
Source: The Los Angeles Times, "'Octomom' Nadya Suleman wins reprieve; home auction delayed," May 7, 2012
]]>The study, conducted by a nonpartisan family advocacy group, detailed that approximately 2.3 million children have lived in homes repossessed during the foreclosure process. What's more is that a total of 3 million kids are living in a home that is at risk for being lost as a result of foreclosure. Some even estimate that the actual number of children affected by foreclosure is actually higher.
]]> One observer has indicated that children are the "invisible victims" of the nationwide foreclosure crisis. Whenever a child is forced to move to a different place due to foreclosure, their performance in school usually suffers as a result. Though financial troubles and foreclosures directly affect adults, their children are unfortunately caught in the mix.It's completely understandable that an unexpected financial shock, such as unemployment or large medical expenses, can put a person at risk of defaulting on their home mortgage. In order to help their families, individuals edging toward foreclosure may have a couple options to prevent their home from being taken away.
One potential way to stop foreclosure is by filing for Chapter 13 bankruptcy before your home is taken from you. Chapter 13 filings are more likely to preserve homeownership than Chapter 7, which is more focused on the liquidation of assets in order to pay back debts. Bankruptcy is one consideration, but there are other ways to prevent your home from being repossessed.
When facing the scary realities of foreclosure, many Texas residents probably want to keep the best interests of their families in mind when they are determining how to proceed. As such, it is important to weigh all options to stop foreclosure and begin to work toward paying down debts.
Source: The Chicago Sun-Times, "Study: Foreclosures take toll on kids," Julie Schmit, April 19, 2012
]]>According to reports, Hernandez owes a creditor $469,387.22 as the result of a line of credit and promissory note. Last winter, the bank was able to secure court-ordered wage garnishment for the money he earned from two teams. However, the pitcher became a free agent and was cut a team's roster during spring training. Now that Hernandez has been picked up by the Braves, the court allowed for his wages to be garnished in order to pay back his creditor.
]]> Only days after Hernandez was picked up by the Atlanta Braves to work as a relief pitcher, his creditor filed a claim to garnish his wages. Hopefully the baseball player is able to work through his financial issues without significant trouble.Unfortunately, Hernandez is not alone in this situation. Many people in Texas are struggling financially and are ordered give up a portion of their paycheck in order to temporarily satisfy their creditors. This can be a scary prospect for any family that is going through a rough patch, but there are some ways to achieve debt relief and gain control of personal finances. One option is to file for personal bankruptcy. No matter if you file Chapter 7 or 13, there is a legally-enforced automatic stay, which halts all collection activity, including wage garnishment. As Texas families seek ways to stop their wages from being garnished and means to get out of debt, it is comforting to know that there are solutions available.
Source: The Washington Times, "Court orders Livan Hernandez's wages with Atlanta Braves garnished," Nathan Fenno, April 17, 2012
]]>Not long ago, the National Bureau of Economic Research published the results of a study of thousands of individuals. According to their results, at least 200,000 families will be using the cash they received as a tax return to pay for the costs associated with bankruptcy. This confirms a long-established pattern in bankruptcy filings noticed by attorneys throughout the country.
]]> The study attributed the rise in the number of families using their refunds to file bankruptcy, at least in part, to the federal bankruptcy reforms that took effect in 2005. As a result of the changes, it became more costly to file for bankruptcy, so many families wait until they receive their refund payment to file for personal bankruptcy. Before the law was passed, the average bankruptcy cost $921, but it jumped to $1,477 as a result of the reform.The aim of the 2005 change was to prevent bankruptcy abuses, but consumer advocates say it just prevents financially strapped people from getting the debt relief they need. As the returns for the 2011 tax year stream in, there will likely be another spike in bankruptcy filings, as more and more people can now afford the associated costs with their refund in-hand.
In so many cases, people are not trying to abuse bankruptcy protections, but legitimately need relief from harassing creditors. As personal debt continues to be a reality for many Americans, this trend will likely continue until other forms of relief are found. Until that time, it is still important for individuals to determine what kind of debt relief methods will work best in their unique situation.
Source: USA Today, "Tax refunds being used to pay for bankruptcy filings," Christine Dugas, April 12, 2012
]]>The study, conducted by a national credit information firm, revealed that 39 percent of those Americans who were late on paying debts continued to pay their car loans, but not their credit card or home mortgage bills. At the same time, only 10 percent of Americans were late on their car payment while staying current on their other debts.
]]> Analysts suggest this newly emerging pattern is just another symptom of the economic recession and slow recovery. The tight job market has pushed people to keep their cars, despite mounting credit card or student loan debt, in order to find a job or keep their existing employment. People are afraid to lose their jobs, so they are adjusting their spending habits in order to keep their jobs, and thus, their vehicles.Many who opt to pay their car loans before other debts feel as though they can negotiate with their credit card lenders and the foreclosure process takes long enough that they do not have to worry about losing their house. At the same time, these consumers worry their vehicles will almost immediately be repossessed if they fail to make payments.
This study reveals that many Americans crave debt relief options. Though bankruptcy may be the best route for some Texas families, there are still numerous options that can be explored to reduce the burden of debt. At times, modifying a loan to improve the payment terms and rates might the best option to make debt more manageable. The important thing to know is that bankruptcy professionals can connect individuals to solutions to ease their financial woes.
Source: Associated Press, "Americans put a priority on staying current on the car loan, a study finds," Pallavi Gogoi, March 29, 2012
]]>This is what one long-time business owner is hoping for. Prior to the downturn in the economy he had owned and operated Burger King franchises for more than 30 years. Perhaps looking for a change from the fast-food industry, he sold those businesses and acquired two other franchises, the Macaroni Grill and the San Francisco Oven. This was in 2007, just before the restaurant industry took a particularly hard hit as a result of the economic downturn.
]]> It may have been the result of these major acquisitions at an inopportune time, a lifestyle that could no longer be supported and finally caught up with him or a combination of both, but the restaurateur recently opted to file for Chapter 7 bankruptcy protection. According to his bankruptcy filing, he had accumulated more than $17 million in debt, with only a little over $ 7 million in assets.Though Chapter 7 bankruptcy may appear at first glance as a loss of everything this man has worked for during his lifetime, people such as this business owner elect Chapter 7 liquidation bankruptcy when it makes the most sense to move on from unmanageable financial situations. Chapter 7 bankruptcy protection is available to business owners and ordinary individuals alike who are in over their heads with debt.
Source: KSPR, "Long time Springfield businessman files Chapter 7 bankruptcy," Emily Rittman, March 30, 2012
]]>It is not uncommon for one illness or hospital visit to put a Texas family into uncertain financial circumstances. A study, released by the National Center for Health Statistics, shows that as many as one-third of Americans had trouble paying medical bills during the first half of 2011. The most shocking aspect of their study is that 30 percent of people who have health insurance had trouble covering their medical expenses. Certainly, families earning lower levels of income have been hardest hit by rising medical costs, but even many of those with health care are in need of debt relief.
]]> This study has provided some very illuminating information about the state of finances for many families in Texas. Suddenly, even health insurance isn't always enough to protect against the high costs of health care. Unfortunately, the study reveals that many people are just one unexpected illness away from financial trouble.For those who are over their heads in medical debt, there are ways to find relief. Filing for personal bankruptcy may be a viable option for families in this circumstance. Medical debts are considered unsecured, because they are not attached to real property, such as a house or car. In most cases, unsecured debts are not exempt from the Chapter 7 bankruptcy process. Knowing which of your debts are exempt from bankruptcy can help you make a plan to emerge from debt into a stronger financial position.
Source: Houston Chronicle, "Insured but bankrupt: The hidden side of health care costs," Dr. Howard Brady, March 19, 2012
]]>Now, Walker is going through the process of liquidating many of his personal assets. In the Chapter 7 bankruptcy process, those who file are often required to liquidate nonexempt property in order to pay back debts. Most recently, Walker's 2006 championship ring, which he earned while playing for the Heat, was sold as part of his property liquidation. After spending a couple years on the market, someone finally agreed to buy the prized possession. Reports indicate that the ring will be sold for a total of $21,500.
]]> Walker is working through the bankruptcy process, as he still has a significant amount of debt to repay. Currently, he is trying to earn his way to a professional comeback by working through the league's farm system. For the time being, Walker has cut his personal expenses dramatically in order to work his way back into financial health.Although Walker came upon so much debt due to overspending, there are many Texas families that are trying to work through the same situation. Even though Walker was once earning a significant income, he fell on hard times, but found bankruptcy as a way to straighten out his financial affairs. For those who also struggle with debt incurred as a result of unexpected medical bills or unemployment, filing for Chapter 7 may be a viable option.
For many, liquidation is significant part of going through bankruptcy. Fortunately, certain items, such as a home, car and clothing are usually exempt from bankruptcy liquidation process. This allows families to maintain certain aspects of their everyday life while paying off debt. Though the process of debt repayment through liquidation can be confusing and difficult, it is an opportunity to work toward building better credit and a more stable financial future.
Source: The Huffington Post, "Antoine Walker Sells Miami Heat 2006 NBA Championship Ring For $21,500: Report," March 20, 2012
]]>In 2008, the former fraud investigator was battling with cancer, which caused her to take on a significant amount of medical debt. Eventually, her financial problems became so severe that her mortgage lender initiated foreclosure proceedings. During the foreclosure process, this former sleuth soon noticed that the documents her lender sent to the government claimed that the lender owned loans that were insured by the Federal Housing Administration. It did not take long for her to realize that the documents were fraudulent.
]]> In response to her discovery, the woman joined a lawsuit against major mortgage lenders for their irresponsible actions. As a result of the $25 billion settlement reached between banks and the federal government, the woman will be one of several whistleblowers receiving a large settlement for their part in uncovering the deceptive lending practices.This woman's attention to detail could help many homeowners in Texas find foreclosure relief. Aside from the payments owed to those included in the federal settlement, there are additional ways to receive help in the midst of a foreclosure. In some cases, bankruptcy can help families keep their homes. As the country continues to recover from the housing crisis, it is reassuring to know that there are people who will continue to look out for those who are struggling with their personal finances.
Source: Business Insurance, "OFF BEAT: Bank gets stung after foreclosing on insurance fraud investigator," March 19, 2012
]]>Every year credit lenders send 1099-C tax forms to consumers for debt that is forgiven. This year, an estimated 6.4 million of these forms will be mailed out, which is an increase of 2.5 million from the 2010 tax year. Receiving an unexpected tax notice is particularly burdensome for those in the process of improving their financial health.
]]> Thankfully, there are ways to gain an exemption from being liable to pay taxes on discharged debts. One of the ways to ease the tax burden is by proving that the discharged debts in question came as a result of a bankruptcy filing. According to income tax regulations, debts forgiven as a result of bankruptcy are non-taxable. Additionally, if you were financially insolvent, holding more debts than assets, at the time your debt was discharged, you are also excluded from the tax liability. By providing the appropriate documentation, you can be properly and officially cleared of paying taxes on such debts.To make the situation worse, many creditors have been sending out 1099-C forms in error. In some cases, the tax forms are mailed several years after a debt has been forgiven or multiple forms are sent out for the same debt. Whatever the case, it's important to make sure you take any necessary steps to determine whether or not you are actually responsible for paying taxes detailed on a 1099-C form, because creditors send a copy of the form to the Internal Revenue Service as well.
Filing for bankruptcy can be a long and confusing process, so having trustworthy advice and information can make the situation much easier. Those who have dealt with bankruptcy filings should not have to worry about being distracted by erroneous or unnecessary tax bills. Thankfully, there are professionals who can provide honest answers and solutions to help people return to financial stability.
Source: USA Today, "Debt that's been forgiven is taxable, but you may be exempt," Sandra Block, Mar. 5, 2012
]]>In order to better protect consumers against harassing creditors, two federal agencies are redoubling their efforts to put collectors' illegal tactics to an end. The Consumer Financial Protection Bureau is currently monitoring the largest debt collection agencies in an effort to increase the transparency of their practices. Moreover, the Federal Trade Commission is currently holding smaller collection agencies accountable. They have even shut down a call center in India for illegally harassing American consumers.
]]> The economic recession led many people to spend beyond their means through the use of credit cards and other lines of credit. Spurred by increased levels of borrowing, many collection agencies have opened their doors in order to attempt collect debts, some of which may not even exist. Federal legislation clearly outlines how collectors can and cannot collect personal debts, so now these two federal agencies are doing their part to enforce the law.People going through a difficult financial period don't need the added stress of continuous calls from creditors, especially if they have taken steps to return to financial health. There are too many stories of people being called day night and receiving threats to pay back debt they no longer owe. This practice is harmful and does nothing to help individuals get back on their feet. Thankfully, something is being done to give consumers the relief they need.
Source: The Huffington Post, "Debt Collectors Targeted For Heightened Unlawful Harassment," Catherine New, Mar. 1, 2012
]]>Certainly, there is an important element of personal responsibility when it comes to determining how much to spend on a credit card, but that does not appropriately depict the complex nature of personal debt. Society's tendency to encourage people to consume more and more has pushed people into debt. One researcher at a national university commented that we have created an "entire infrastructure" to "encourage credit card use and debt."
]]> At the same time the nation has dealt with personal debt issues, credit card companies have not done enough to help consumers manage their spending. In fact, credit card lenders significantly increased the number of cards issued throughout the last year.The bottom line is that the blame for such high levels of credit card debt should not exclusively reside with cardholders. There is a wide-variety of factors that have contributed to the personal debt issues. As such, simply blaming people for profligate spending will not be enough to fix the nation's economic issues.
Most importantly, there is a way out of credit card debt. Of course, getting out of debt is not necessarily an easy task, but with dedication and the help of trustworthy professionals, an individual can find debt relief. Getting out of debt can involve a variety of complicated and confusing regulations, so a helping hand can be very useful. Careful planning can go a long way when improving your financial health.
Source: Fox Business, "OMG! Stop Demonizing People With Credit Card Debt," Peter Andrew, Feb. 27, 2012
]]>The $26 billion settlement included five of the nation's biggest mortgage lenders. The next phase of the settlement will include reforms intended to help overwhelmed, underwater borrowers attempting to modify their home loans.
]]> One of the biggest issues borrowers have faced is the inability to make contact with their lender when they attempt to modify their home loan. When they do make contact, individuals are often given the run-around and are forced to call someone else. Additionally, there are many redundancies in the modification process, as people are often asked to provide the "same documents again and again."One of the major promises to come out of the foreclosure settlement is that borrowers will have a single point of contact for loan modification within the lending institution. Last year, mortgage lenders ensured they would streamline the modification process by establishing a single point of contact, but consumer advocates have noted that little has changed in the way lenders operate. Continual promises from lenders have many doubting whether or not the necessary changes will be made.
Being unable to modify a home loan can be very stressful for homeowners, especially if they are close to losing their home. People have so much of their lives tied up in their homes. The stress and emotion of foreclosure is often too much for people to handle. When borrowers are dealing with such an important aspect of their life, the security of their home, they deserve to feel as though their lender understands the urgency of their needs.
Source: The New York Times, "Some Doubt a Settlement Will End Mortgage Ills," Nelson D. Shwartz, Feb. 20, 2012
]]>According to one recent report, national student loan debt adds up to $750 billion, which is more than the total of American credit card debt. Projections indicate that graduates will not soon see debt relief, as individual student debt loads are expected to continue to rise.
]]> If everyone was able to pay off their student loan debt, it wouldn't be an issue, but bankruptcy professionals are seeing increasing numbers of people defaulting on their student loans. This has some people worried that this may be the next big financial crisis, similar to the home mortgage crisis a few years back.Furthermore, it is incredibly difficult to include student loans in debt forgiveness plans, as a result of bankruptcy. In other words, unpaid student debts can follow you as long as you live.
The specter of an underperforming job market also makes this situation more worrisome for recent graduates. Without a reliable source of income, it is obviously hard to pay off loans.
On balance, analysts have indicated that widespread student loan defaults would not be as damaging to the economy as the housing market collapse. What's more is that the job market is showing signs of improvement, so that may improve people's ability to lighten their student loan debt load.
The most important thing to take away from the student debt situation is that there is help if you need it. Understanding the details of what kinds of debt you hold, whether they are secured or unsecured, and what exactly a bankruptcy means for you can be very difficult if you don't have the proper knowledge. Thankfully, you can consult with a trustworthy bankruptcy professional to help you understand your options if you are experiencing financial instability.
Source: Fox Business, "Student Loan Debt: Next Big Economic Shock," Gail Buckner, Feb. 13, 2012
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