Tag Archives: Consumer Lending

Are Payday Loans Dischargeable in a Chapter 7?

Payday loans are generally dischargeable without any arguments in a Chapter 7 Bankruptcy, because these loans are unsecured debts. There are, however, a few special cases.

Payday Loans

Fraud

If you borrowed money within 90 days prior to filing bankruptcy, there is a presumption of bankruptcy fraud. Simply stated, the law presumes that you never intended to repay the money and that you used your bankruptcy filing as a sword instead of a shield. In such a situation, the payday lender may file an objection to discharge and a motion to remove the stay.

Many bankruptcy judges do not like payday lenders, believing that these lenders charge usurious rates and take advantage of consumers. Whether that perception is true or false is not the point. Because of this attitude, some judges may require the payday lender to prove fraudulent intent. Intent is particularly hard to prove if the actual loan was originally taken out more than 90 days prior to filing, and the consumer had to keep renewing the loan.

Postdated check

Some payday lenders may require you to surrender a postdated check. After you file, they may attempt to cash the check, arguing that they deposited the instrument in the normal course of business.

But the automatic stay prohibits creditors from taking any action against you, and the payday lender is clearly a “creditor” at that point.

Vehicle title loan

Many people place title loans and payday loans in the same category. For non-bankruptcy purposes, this classification may be appropriate. But, by accepting cash and putting up your car title as security for repayment, the vehicle title loan is a secured debt. The debt itself may be dischargeable, but the lender’s lien on your car title is still valid.

One option is a cram-down. If you borrowed $3000 but your car is only worth $1000, you may be able to pay the $1000 and keep your car. Another option is a conversion to a Chapter 13 bankruptcy, when the automatic stay stays in effect much longer, giving you time to pay off the loan.

To find relief from your creditors, contact us in Melbourne, Florida for your free consultation.


When the Spotlight Dims

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A group of former NFL players recently filed a lawsuit against the league, claiming that it exposed them to probable brain damage.National Football League players aren’t the only footballers who struggle with life after retirement.

According to a charity set up for former English League soccer players, 33% of players are divorced within one year of retirement, 40% file bankruptcy within five years, and 80% ultimately suffer from osteoarthritis. While the average salary in the Premier league is about 23,000 £ (38,000 USD) per week, that salary drops to 5,000 £ (8,000 USD) per week in the Champions league.

Causes of bankruptcy

While it is difficult to have sympathy for some professional athletes on both sides of the Atlantic, there is a connection between their bankruptcy and your bankruptcy. They each emerge from common causes:

  • Divorce: One of the most common marital stress factors is money, so it is little wonder that couples who are in divorce court sooner or later wind up in bankruptcy court. After divorce, the two new families must often try to survive on drastically reduced incomes, which makes these problems even worse.
  • Medical bills: Even if you have insurance, the cost of long-term rehabilitative care is staggering, to say the least. Medical bills can eat away your savings almost before you know what’s happening.

While bankruptcy cannot eliminate child-support payments and alimony, bankruptcy can eliminate many of your other unsecured debts to free up your limited cash for other obligations. Bankruptcy can eliminate medical bills, in most cases, giving you the financial fresh start that you need so desperately.

Contact us for your free bankruptcy consultation.

Contact a Brevard County Bankruptcy Attorney at Faro & Crowder, PA

If you are interested in learning more about how a bankruptcy filing will impact your debt, contact Faro Crowder, PA to schedule an appointment. We are located in Melbourne, Florida on Sarno Road and serve residents and businesses of the Space Coast and Brevard County.

Services Areas

We provide services throughout Central Florida including: Melbourne, Titusville, Palm Bay, Merritt Island, Cocoa, Cocoa Beach, Satellite Beach, West Melbourne, Cape Canaveral, Viera and Eau Gallie.

Get In Touch with Faro & Crowder, PA

Faro & Crowder, PA
Phone: 321-784-8158
Address:
1801 N. Sarno Road, Suite 01
Melbourne, FL 32935
Email: info@farolaw.com

Is the Credit Counseling Requirement a Legitimate Excuse to Avoid Filing?

Debts

The credit counseling requirement was one of the more talked-about Chapter 7 reforms in the last round of legislative updates. Now, almost a decade later, what does this prerequisite mean in practical terms? Does the average consumer filer even notice this requirement?

Background

The main reason that legislators took up bankruptcy reform in 2005 was that consumer bankruptcy had finally lost its stigma as a financial failure and was instead seen as a logical alternative to repaying an excessive amount of debt. That attitude was good news for consumers, but very bad news for credit card companies and other moneylenders.

So, the moneylenders lobbied Congress to change the rules and make bankruptcy harder to file. The idea was to create obstacles that made bankruptcy less attractive.

Credit counseling requirement

Beginning in 2005, Chapter 7 filers were required to attend and complete a certified credit counseling class, which, at least in theory, delved into the reasons behind the contemplated bankruptcy filing. Ten or fifteen years ago, when the Internet was still in its infancy, speaking with a licensed credit counselor still probably meant an afternoon off from work for a trip to someone’s office.

Today, there are literally hundreds of providers approved by the Florida bankruptcy courts. Typically, the approved classes are offered online in both English and Spanish. There is still a nominal investment of time (about 30 minutes) and money (about $30) involved.

After your bankruptcy is filed, there is a second class to take. The debtor education class may be taken in the same manner as the pre-filing course.  Faro & Crowder PA sends clients to the Dave Ramsey debtor education class.  Clients rave about the class because they actually learn to change the way they live and free themselves from the cycle of debt and insolvency.

Don’t put it off. To get started on your Chapter 7 Bankruptcy today, contact our office located in Melbourne, Florida.


Can Bankruptcy Reduce Your House Payments?

Home Mortgage

Preventing Home Foreclosure

A previous post discussed some of the general aspects of a Chapter 13 Bankruptcy plan. For homeowners who are delinquent on their mortgages, the amount to be repaid may be substantially lower than the amount the moneylender claims that you owe.

Reasonableness

Most mortgage companies are upfront and evenhanded when dealing with their customers. However, it is not uncommon for mortgage companies to charge some outlandish fees, such as:

  • Processing fees
  • Underwriting fee
  • Excessive application fees
  • Property inspection fees

Be on the lookout for such fees, and question them if they pop up. An attorney may also be able to argue that such fees are not reasonably related to the mortgage transaction, and have these fees stricken from the delinquency amount.

Avoiding the lien

Ask your attorney about some lien-reduction options that may be available. In some jurisdictions, you might file a motion to avoid the lien and dramatically reduce the past-due amount:

  • Cram-down: In some cases, you may be able to repay the current Fair Market Value of an item as opposed to the contract price. For example, if you bought a house for $100,000 but it is now only worth $80,000, you may be able to cram down the mortgage $20,000.
  • Strip-off: If there are multiple liens on a house and the FMV is too low to secure both lies, the junior lien may be subject to removal. Many people who bought real estate with an 80/20 financing package may be in this situation.
  • Statute of limitations: A Texas court has held that if a lender sends an acceleration notice but fails to foreclose within the proper time period, the lender has forfeited its right to foreclose on the note.

A Chapter 13 bankruptcy is nearly always voluntary, meaning that you must file it yourself. To make an investment in a better financial future, contact our office in Melbourne, Florida for your free consultation.


More Mortgages to More Consumers?

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A major mortgage lender is returning to the subprime market.

Since the mortgage collapse in 2008, skittish banks have only loaned money to the most credit-worthy consumers. Now, faced with a major revenue loss as mortgage lending volume declines overall, Wells Fargo may be loaning money to consumers with credit scores as low as 600. Other banks may follow suit, rolling out such programs as “second chance mortgage” or “alternative mortgage programs.”

The 2010 Dodd-Frank Act, along with some other structural changes, may have given banks the confidence they need to begin loaning more money to more people.

Borrowing money again

Wells has stated that it will steer clear of some of the more controversial sub-prime lending programs, such as zero-documentation loans and introductory-rate mortgages (a/k/a adjustable-rate mortgages). Just like a bank must lend money responsibly to make a profit, a bankruptcy consumer must borrow money responsibly in order to fully recover:

  • Chapter 7: As soon as you receive your discharge, you may be inundated with credit card offers. That is because the moneylenders know you cannot file another Chapter 7 for another several years. Don’t give into temptation or fall back into old habits. Start with one card with a very low limit, paying off the balance in full every month, and move forward from there as your credit score improves.
  • Chapter 13: Depending on the circumstances, you should be able to start borrowing money again after making a handful of on-time plan payments. The same rules apply: start slowly and build up gradually.

Bankruptcy gives you a fresh start. It is then up to you as to whether you move forward or move backwards. By borrowing money responsibly, your bankruptcy filing will only be a memory in just a few short years.

Claim your financial fresh start by contacting us for your free consultation. Our main office is conveniently located in Melbourne, Florida.

Contact Us For A Free Consultation






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