Tag Archives: Faro & Crowder

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.


We’re Number Two!

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New Jersey recently passed Florida as the state with the highest number of home mortgages at-risk for foreclosure.

Although there are more mortgages in the Sunshine State that are delinquent overall, 11.7 percent of these loans are “seriously delinquent,” compared to 11.8 percent in New Jersey. New York is third with 9.1 percent. All three states are judicial states, meaning that a lender must go through the courts before it can foreclose on a mortgage, so there is a mortgage foreclosure backlog. Observers also stated that Superstorm Sandy might have had some effect.

Saving your home with bankruptcy

A past-due mortgage can be one of the most stressful items in life. The best thing that bankruptcy can do, especially Chapter 13 Bankruptcy, is give you time to catch up on a delinquent home loan account.

Working with the bankruptcy trustee and your creditors, you can devise a repayment plan for either three or five years. You have the first opportunity to draft a plan. If the creditors do not object and the trustee approves, the plan automatically goes into effect.

If you do not plan to keep your home, bankruptcy can help. When you file your petition, an automatic stay generally applies to all creditors in the case. They can take no adverse action against you without specific, prior permission from the bankruptcy judge.

Contact us to receive your financial fresh start today.


Did The Means Test Effectively End Chapter 7 Bankruptcy?

Bankruptcy Worry

The means test is essentially just another form to file on an already-long list, and has very little, if any, impact on your decision to file Chapter 7 Bankruptcy.

The 2005 Bankruptcy reforms

While most “reform” legislation is usually a proposed solution to an existing problem, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA, pronounced bap-see-pa) was more of a solution to a nonexistent problem. There was a perception among moneylenders, most often in the credit card sector, that consumers were using bankruptcy to avoid paying huge credit card bills that had been amassed solely on luxury items.

That may have been true in a few cases. But the vast majority of Chapter 7 debtors, especially in the last five or six years, are forced to file bankruptcy because of medical bills, job loss or some other emergency situation basically beyond their control.

The means test

BAPCPA introduced the means test as a way to push debtors into Chapter 13, where they would be required to, at least theoretically, repay more of their unsecured debt than was mandated in a Chapter 7.

To be eligible to file Chapter 7, your income must be lower than the median income in your home town, or your disposable income over five years must be less than 25% of your unsecured debt. The actual amount varies, but, generally speaking, if you are part of a family of four and you earn less than $65,000 per year, you are eligible to file.

Only your attorney can tell you for sure, as the government allows certain expenses, disallows certain expenses and sometimes, albeit rarely, makes exceptions in close cases.

Contact our office to find out if bankruptcy is appropriate for you, and which chapter is best for your family.


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.


Consumer Debt Reaches Pre-Recession Levels

Home

Household debt rose $241 billion in the third quarter of 2013.

Analysts at the New York Fed say the 2.1 percent increase was the largest jump since 2007. The debt was primarily mortgage debt and new car loans, which is seen as a sign that consumers are gaining confidence in an improving economy. However, student-loan debt rose 5.3 percent, which was the largest single percentage increase. Some experts say that increasing student-loan debt, which just topped $1 trillion overall, is creating a drag on disposable income that is delaying the formation of new households: recent graduates are moving back home and young families are renting instead of buying.

Despite the fact that wages and job growth are both static, the borrowing trend is expected to continue.

Debt and bankruptcy

Many types of debt are dischargeable under a bankruptcy. It’s important to remember that bankruptcy may eliminate the obligation to repay the debt, but does not affect any other aspect of the agreement. A good example is past-due college tuition: bankruptcy may mean that you no longer owe the money; however, your school may continue to withhold your transcript or enforce other penalties.

Broadly speaking, there are three types of debt in a bankruptcy case:

  • Unsecured debt: Credit cards, payday loans, medical bills and other such obligations are generally dischargeable immediately in a Chapter 7 and after the expiration of three or five years in a Chapter 13.
  • Secured debt: Secured debts are a home mortgage, car note and so on. The underlying debt may be wiped out, but you still have an obligation to pay the note if you want to keep the secured item.
  • Priority debt: Unsecured debt that is related to federal or state taxes, child support, attorneys’ fees, student loans and a few other categories. Priority debts get repaid in full before other unsecured debts get paid at all, which is a good thing because many priority debts are also non-dischargeable.

For a free consultation with attorneys who understand how the process works in Central Florida, contact our office.


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.


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