Bankruptcy Law Blog

Tuesday, August 9, 2016

Consumer Watchdog Reins in Debt Collectors

What is being done about abusive debt collectors?

If you're like many Americans, you have debts that are in collection, and may have been faced with aggressive practice of debt collectors. Now, the Consumer Financial Protection Bureau (CFPB) has announced new rules to curb certain practices of third-party debt collectors that engage in debt collection activities on behalf of creditors or purchase. The new rules are also aimed at reining in debt buyers that purchase consumer debt, often for pennies on the dollar.

This is another step by the CFPB, put in place under the 2010 Dodd-Frank law, to protect credit consumers. We have previously reported that the federal consumer agency intends to regulate payday lenders, and the CFPB has plans to roll out additional initiatives aimed at creditors and first-party collectors later this year.

Read more . . .

Sunday, July 31, 2016

Don’t Try This at Home

A bizarre bankruptcy case from up near Birmingham has created a new rule: if you crash your car while drunk driving, your car loan can be forgiven when you file for bankruptcy.

Before we explain any further, let us be clear, drunk driving is not something we are encouraging. This is just a weird case that we thought it would be interesting to share.

Debt Dismissed Because Driver Was Drunk

The facts of the case are kind of sad. The guy in the case has been diagnosed with depression, and admits he became an alcoholic after suffering an injury that resulted in an honorable discharge from the military.

Read more . . .

Tuesday, July 19, 2016

Consumer Debt on the Mend

How can I improve my FICO score?

In the wake of the financial crisis of 2008, many consumers saw their credit scores fall into the subprime zone with FICO credit scores in a range from 300 to 599. Now, the percentage of subprime borrowers is hovering at 20 percent, which is the lowest level in over 10 years. By comparison, in 2010 that figure peaked at 25.5 percent as mortgages, credit cards and other consumer debts went unpaid, and this prompted banks to tighten lending standards.

There are a number of factors that are contributing to the improvement of credit scores.

Read more . . .

Tuesday, June 28, 2016

What Does That Really Mean? Common Bankruptcy Terms Explained

What Does That Really Mean? Common Bankruptcy Terms Explained 

When the attorneys at our firm talk with someone who is thinking about filing bankruptcy, or someone who is already going through the bankruptcy process, we try to talk like normal humans rather than the legal mutants we are.

Read more . . .

Thursday, June 23, 2016

Beware of Payday Lenders

What is the government doing to rein in payday lenders?

The Consumer Finance Protection Bureau recently proposed new rules aimed at bringing payday lenders and other short-term credit providers under federal jurisdiction. Consumers who are strapped for money often use these lenders as a short-term fix, but invariably wind up with long-term problems and falling into debt traps. While these lenders are currently regulated by the states, borrowers are often the target of lending abuses.

"Too many borrowers seeking a short-term cash fix are saddled with loans they cannot afford and sink into long-term debt," said CFPB Director Richard Cordray.

What are Payday Loans?

Payday loans are small, short-term loans of about $350 that are supposed to be repaid when a consumer gets his or her paycheck.

Read more . . .

Tuesday, May 31, 2016

The Affect of Loans on Credit Ratings

How do loans affect your credit rating?

In understanding how your loans affect your credit rating, it is important to grasp the differences among various types of debt. Almost everyone in our society lives with some debt. Typically, even very wealthy people purposely carry some debt because they understand the value of being creditworthy and the financial advantages of paying off some things over a prolonged period of time. The rest of us usually become aware early in our lives that our credit rating will affect us when we attempt to make significant purchases, such as a car or a home, and that it is in our own best interests to maintain a good credit score.             

Types of Debt

Debt is characterized into two primary types: secured and unsecured.

Read more . . .

Monday, May 16, 2016

How to Stop a Wage Garnishment

Does filing Chapter 7 bankruptcy stop a wage garnishment?

Many individuals who find themselves unable to pay their debts face the potential of having their wages garnished. A wage garnishment is a court order directing an employer to withhold part of an employee's earnings and pay it directly to a creditor until the debt is paid off.

In Alabama, most creditors need to obtain a court judgment stating that you owe them money in order to obtain a wage garnishment. Moreover, if you lose a lawsuit and a money judgment is entered against you, the party that prevailed in the lawsuit can also garnish your wages. Your wages can be garnished without a judgment, however, for unpaid income taxes, court ordered child support, support arrearages, and defaulted student loans.

Read more . . .

Saturday, May 7, 2016

Law Student Allowed to Discharge Bar Study Loan

Can you be relieved of any education related loans in bankruptcy?

Student loan debt is a overwhelming problem in this country.  In fact, it has been calculated that the average person has approximately $28,950 in student loan debt to pay back to the government.  Those who pursue careers as professionals, such as physicians and lawyers, often have a much greater amount than that.  Some have hundreds of thousands of dollars in loans.  Unfortunately, student loan debts are generally considered nondischargeable in bankruptcy (with certain exceptions).
Read more . . .

Monday, April 25, 2016

Foreclosures Continue to Plague Calhoun County

Why do foreclosures remain stubbornly high is some parts of Alabama?

The so-called Great Recession of 2008 is slowly fading into the rearview mirror of the nation's psyche. In Alabama and across the nation, the financial crisis resulted in a number of homeowners losing their homes through foreclosure. While foreclosures in the state are not as widespread as they were during the height of the housing market collapse, some residents of Alabama still face the potential of losing their homes.

Foreclosures in Calhoun County

One particularly hard hit area continues to be Calhoun County, where home Read more . . .

Wednesday, March 30, 2016

Credit Card Debt: An Embarrassment, But Not of Riches

Who holds the highest revolving debt in the United States?

Most of us are well aware that revolving debt, including credit card debt, home equity loans and personal lines of credit, has risen sharply in this country. For many of us, this is a very personal issue since our own revolving debt is frighteningly high. According to a study by ValuePenguin, a New York-based financial company, by December of 2015, revolving debt had risen to $936 billion, up from $930 billion the month before. Credit card debt has reached its highest peak since the 2009 recession.

Ferreting Out the True Statistics

The study showed that average households in the U.S. now carry $5,700 in debt. While this may sound like a manageable amount, unfortunately, the reality is that the lowest income families and individuals are carrying the highest debt load.

Census Bureau and Federal Reserve Board reports differentiate credit card debtors into two categories: transactors, who pay off their credit card charges monthly and revolvers who carry credit card debt balances from month to month. It is the former who average the $5,700 amount in debt. For the revolvers, or balance-carrying households, the average amount of debt is $15,779. These debtors are also most likely to miss payments and are carrying their debt at interest rates as high as 18 percent.

These disturbing statistics point out the tail-chasing quality of credit card debt. Those who are least able to pay off their debts are paying the highest interest rates to begin with. As they make only minimum payments and sometimes miss payments, they accrue further fees and their debt becomes more and more insurmountable.

The Stigma of Debt Leads to Deception

No one wants to be in debt. In fact, there is such great stigma attached to being in debt that a great many people lie about how much money they actually owe. According to government data, there is an enormous discrepancy between how much lenders report lending ($683 billion) and how much borrowers report borrowing ($268 billion).

The figures show that people are more prone to lie about their credit card debt than about their mortgages or student loans. Apparently, there is far less stigma attached to borrowing to purchase a home or an education than to simply buy "things." According to NerdWallet, a personal finance information service, 70 percent of Americans believe that credit card debt is more shameful than any other type.

While, of course it is best to pay down your debt, paying off your highest interest credit cards first, in many situations this is impossible because of medical costs, for example, or job loss. If you have become overwhelmed with personal debt and are considering filing for personal bankruptcy, you should contact a reputable and experienced bankruptcy attorney to help you consider your best options.

Monday, March 21, 2016

Bankrupt Rapper 50 Cent Being Probed for Financial Misconduct

Curtis James Jackson III, aka, 50 Cent, the infamous rapper who achieved commercial success in the music industry after running afoul of the law back in the day, may be in trouble again.

Jackson burst onto the music scene back in 2003 with a hit rap song "In Da Club," went on to sell more than 22 millions CDs and acted in a few films. As he acquired wealth, he even bought a 21-bedroom mansion with a home movie theatre and 8-car garage in Connecticut, formerly owned by one-time boxing legend Mike Tyson.

Somewhere on the road to riches, it seems 50 Cent took a wrong turn, as he filed for bankruptcy last July. The circumstances surrounding the bankruptcy are also curios as Mr. Jackson filed for Chapter 13 protection after he lost a lawsuit regarding a sex-tape dispute in which the plaintiff was awarded $7 million. He is also involved in a multi-million dollar dispute with former business partners involving headphones.

Since his filing, it has been reported that 50 Cent posted pictures on social media sites showing him leading a lavish lifestyle by flashing piles of cash. Now, a Justice Department watchdog recently filed documents in U.S. Bankruptcy Court in Hartford, CT., saying the social media posts are "potential evidence of serious misconduct."

What is Chapter 13 Bankruptcy?

Chapter 13 is a type of bankruptcy that allows individuals who are struggling with debt to seek relief through the court. In this bankruptcy filing, an individual uses his or her income to pay some or all of what creditors are owed over time -- from three to five years, depending on the amount of individual's debt and income. In return, property can be retained by the person seeking relief. The court must approve the repayment plan and also determine that there is enough income to meet the payment obligations under the plan.

Financial Accountability

In the curious case of 50 Cent, the federal watchdog contends the perception of Jackson's lavish lifestyle requires financial accountability. This comes on the heels of the bankruptcy court judge ordering him to explain the social media posts in person. Since filing for bankruptcy in July, Mr. Jackson has posted photos that show piles of cash his couch and refrigerator. A Justice Department official reportedly said, the pictures are “openly contemptuous of the bankruptcy code and process.”

In short, the Justice Department has asked the judge to appoint an examiner to determine how much money 50 Cent has made since the bankruptcy filing and whether he has accurately reported his income. The facts of this case are rather curious, and it is uncertain what will become of 50 Cent's piles of cash. For the ordinary individual who is facing problems paying his or her debt, however, a bankruptcy attorney should be consulted to explore the options that may available.

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