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Miami Bankruptcy Law Blog

Is it true that federal student loans won't be forgiven?

You may have accrued significant student loan debt, figuring it would be no problem to repay it once you began your career. Unfortunately, like many Florida residents, you encountered unforeseen financial troubles and you are having difficulty staying afloat, let alone paying down your student debt. You might be considering filing for bankruptcy, but you've heard that student loans are not eligible for a bankruptcy discharge.

It is true that bankruptcy won't cover federal student loans, according to the U.S. Department of Education. In some instances, which you should understand are very rare, student loan debt might be forgiven. For example, a catastrophic injury or illness that has left you permanently unable to work might qualify you for student loan forgiveness. You may be required to show that you attempted to repay your loans in good faith. If you worked in a public service government position or as a teacher, you may also get help with your student loans. If you are experiencing a temporary financial hardship, you might be able to apply for a deferment of your payments.

The unfortunate rise in gray bankruptcies

As Florida bankruptcy attorneys, we here at Kingcade Garcia McMaken have noticed that more and more of our clients fall into the senior citizen category. Unfortunately, as reported by the New York Times, this new "gray bankruptcy" trend continues to increase. Whereas seniors such as you accounted for only 2.1 percent of 1991 bankruptcies, you account for 12.2 percent of today's bankruptcies

Many of today's economic factors have combined to make overwhelming debt a huge problem for seniors, such as the following:

  • Your Social Security benefits waits have lengthened.
  • Your medical costs have skyrocketed.
  • Your Medicare coverage gaps have burgeoned.
  • Your debt amounts have dramatically increased.
  • Your savings have dramatically decreased.

The benefits of pre-bankruptcy credit counseling

A common misconception that many in Miami have about those who file for personal bankruptcy is that they are simply looking for a way to not have to pay back their debts. This line of thinking assumes that federal bankruptcy laws do not require you to seek other options. In reality, you will find that numerous other alternatives will be presented to you while you pursue your bankruptcy case. One that confuses many of those that we here at Kingcade Garcia McMaken work with as to its need is the requirement to go through credit counseling. 

Per the Administrative Office of the U.S. Courts, all considering personal bankruptcy must seek credit counseling prior to filing. This may frustrate you at first, as you have likely already thoroughly assessed your financial situation and developed your own conclusions. Credit counseling agencies, however, offer both experience in helping to manage debt as well as a fresh perspective on how to settle outstanding liabilities. What they also offer that can ultimately be invaluable to you is a detailed debt repayment plan. 

Choosing the right debt relief option for you

Floridian residents who are in a financial bind may be tinkering with the idea of looking into debt relief options. There are many benefits to different methods of relieving debt, but there can be potential drawbacks as well. A person should be aware of both before making a decision.

Nerd Wallet takes a look at a number of different debt relief options. They include debt settlement, debt management, and bankruptcy. Debt settlement allows a person to negotiate a lower debt. They will then make monthly payments and accumulate a pay-off amount. However, there is a risk that their creditors won't settle. This can harm their credit score in the long run. With debt management, a person is guaranteed that they will be free of their debt within 3 to 5 years. They pay off all of their debt with reduced interest rates, rather than reorganizing it.

How to avoid calls from harassing debt collectors

If you are one of the many Americans who are behind on your credit card, house, medical bill or car payments, you may have been contacted by a debt collector. While many times they appear as annoying phone calls periodically during the day and/or night, debt collectors may use a number of ways to get you to make a payment on your late account. The Fair Debt Collection Practices Act prohibits collectors from calling excessively, using profane language, using scare tactics, posing as attorneys or saying that you owe more than your actual debt amount. However, there are many stories of debt collectors going beyond what is allowed and harassing people.

In one case, a collector used a scare tactic to force a family to pay their delinquent payday loan, saying that they were going to take their children or send them to jail if they did not make a payment. One woman continued getting harassing phone calls from debt collectors attempting to collect her late husband's debt, two years after he passed away. She filed a lawsuit against the agency for the harassment and failing to discharge the debt from a deceased person.

Will you lose your house if you file for bankruptcy?

As a Florida resident faced with overwhelming debt, you may be living in a constant state of anxiety, and you may have concerns ranging from how you will keep food on the table to whether you will be able to keep a roof over your head. You may, too, be considering filing for bankruptcy as a potential method of getting back on your feet, but you may have questions about whether you run the risk of losing your home, should you do so.

According to the Washington Post, most people who file for consumer bankruptcies do so through a Chapter 7 format. By filing for Chapter 7, you are essentially saying that you do not have enough money at your disposal to stay afloat, financially, and pay back debts you currently owe. In some cases, people who file for a Chapter 7 bankruptcy do lose certain assets, but losing your home is not an inevitable part of the process.

Many Americans struggle with medical debt

America has some of the most advanced medical technology in the world, helping to save the lives of many every year. Yet, a number of people in Florida and across the United States are not able to afford the price tag attached to these medical treatments. In fact, one in every three Americans struggle to pay their medical bills, according to the Kaiser Family Foundation. While paying these debts, 21 million are paying medical related credit card debt and 28 million have used everything they have in their savings accounts. Approximately 62 percent of people who file for bankruptcy in the U.S. state that medical expenses are responsible.

There are several issues in the health care system that lead to this outrageous debt. First, the high price of health care insurance, deductibles and copays make it near impossible for some to afford their health care. After making high monthly premium payments, people are expected to pay a percentage of their health care costs as well. Second, the price of health care changes dramatically depending on where you are getting treated, as well as what type of procedure you have performed. For example, someone who goes into the emergency room for a sprained ankle in one state may pay as little as $4 depending on their insurance, while a person with a different insurance in another part of the country may pay up to $24,000 for the same injury.

What steps can you take to reduce the chances of foreclosure?

If you are a Florida resident who has concerns about potentially losing your home, you are not alone. Unfortunately, many people across the state and nation struggle to stay afloat as far as their mortgage payments, and if you count yourself among them, you probably know all too well just how unnerving this can be. There are, however, some preemptive steps you can take to lessen the chance of experiencing foreclosure.

According to This Old House, one of the first things you should consider doing if you are fearful about losing your home is make a call to your lender. In some cases, your lender may be willing to work with you to help you keep your house, but you will certainly never know if you do not ask. Your chances of getting your lender to work with you or hold off on foreclosing on your home tend to improve when you have strong credit, however, so it is important that you get in touch before your credit takes a dive.

How do you reaffirm debt during Chapter 7?

If you have filed for Chapter 7 bankruptcy in Florida or anywhere throughout the United States, you are not alone. Close to one million people in the U.S. filed for bankruptcy last year alone. The most common type of bankruptcy filed is Chapter 7 or liquidation bankruptcy. Under Chapter 7, the trustee appointed to oversee your case will determine whether the court will repossess any of your property in order to repay creditors. Other creditors, such as financial institutions, may also reclaim their property if you fail to repay your loan. In some cases, you may wish to give up any liability you have on these types of loans and start over. There are ways, however, that you can reclaim certain types of debt and keep possession of your property during a Chapter 7 bankruptcy.

During the bankruptcy process, you may be asked if you wish to reaffirm debt that you owe. The financial institution would often times rather have you reclaim the debt, continue making payments on your loan and keep your property rather than lose the money that you owed to them. They may be willing to reinstate your loan with a lower interest rate and lower, more manageable monthly payments. This will help you keep your home, vehicle and other secured debts while making smaller payments each month.

Recognizing illegal debt collection practices

If you, like so many others across Florida, are facing increasing pressure from debt collection agencies, you may be searching for ways to end the harassment and regain control over your finances. Debt collectors will often resort to a broad range of tactics to try to get you to pay up, but in some cases their methods cross the line and become illegal. At Kingcade Garcia McMaken, we recognize how stressful it can be when debt collectors continuously contact you, and we have helped many clients facing similar circumstances find solutions that meet their needs.

According to the Federal Trade Commission, the Fair Debt Collection Practices Act sets guidelines that debt collectors must adhere to when they are trying to collect money from you. For example, it is against the law for debt collectors to lie to you, and this includes lying about the amount of money you owe and lying about who they are or what potential repercussions you might face.

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