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Consumer Debt Reaches Pre-Recession Levels

Chapter 13 Bankruptcy Attorney

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.

Contact Faro & Crowder, PA today to schedule your free initial bankruptcy consultation

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


Can Bankruptcy Reduce Your House Payments?

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.

Home Mortgage

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.


Your Bankruptcy Roadmap

The Chapter 13 plan essentially puts you on an allowance for a period of time, to help you catch up on your bills, start rebuilding your credit score and get on with your life free of creditor harassment.

Bankruptcy Roadmap | Brevard County Bankruptcy Attorney

The plan

A Chapter 13 bankruptcy is sometimes referred to as the “wage-earner plan” or “repayment plan bankruptcy.”

Just like your petition was voluntary, you also have the first chance to put together a Chapter 13 plan. Depending on your income, the plan period may be either three or five years; generally speaking, a higher income means a longer plan, because the law assumes that you have more ability to pay back your debts.

At a minimum, the plan must account for current payments on secured debts, the total arrearage on secured debts and the trustee’s fee. Bear in mind that the “total arrearage” is not necessarily the amount the moneylender demands that you pay.

The plan must also be feasible. If you are behind on your mortgage, you must demonstrate the ability to pay off the entire amount within the plan period. It is possible to go back and modify the plan later, should your income or expenses change significantly.

Automatic stay

Creditors are prohibited from contacting you for the entire time that your bankruptcy is pending. As a practical matter, moneylenders often communicate to your attorney, who then forwards the information to you. While cumbersome, this process gives your attorney the opportunity to negotiate with moneylenders right from the start. It also gives you the freedom to check your mail without that sinking feeling that there will be more bills in the box than you can possibly pay.

A bankruptcy plan is a fairly complicated document that can put you back on the right path. To take the first step towards financial freedom, contact our office located in Melbourne, Florida.

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

Avoiding Consequences of Long-Term Unemployment through Bankruptcy

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Sustained high unemployment has permanently changed our economy, and the middle class must change to keep up.

This situation is not entirely new; for example, unemployment peaked at 10.8% in 1982. But then, the jobless could count on unemployment benefits and other government benefits to tide them over. The unemployment rate quickly went back down once the economy recovered, and the system worked. This time, long-term unemployment has overwhelmed government benefit programs designed to provide short-term relief, and the government has no money for new relief efforts. The result is that many American families are in an almost untenable financial position.

Many have been forced to liquidate their savings just to stay afloat. Once the savings run out, they sink. A proactive bankruptcy may be the answer to this dilemma.

Proactive bankruptcy

Some people hesitate to file bankruptcy because they are afraid that they will lose everything, but that is simply not the case. By the time they file, it may be too late to take advantage of the financial fresh start that bankruptcy affords.

Assume that you are over age 50, and become unemployed. There is a real possibility that you may be unemployed for a number of months and/or you may have to adjust to a permanently lower standard of living. Instead of cashing in your 401k to pay bills, Chapter 7 bankruptcy may be a better option.

Chapter 7 can eliminate most or all of your unsecured debt, thus minimizing the bills you have to pay and giving you more time above water. You can then focus on keeping your secured debt current, and preserve the money in your retirement nest egg as opposed to giving it to credit card companies and debt-buyers.

If you are facing long-term unemployment, Chapter 7 bankruptcy can give you the time you need to work things out. For a free consultation with attorneys who understand how bankruptcy works, contact our office. Follow us on Twitter @Faro_Crowder.


Giving a Face to the Long-Term Unemployed

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Florida has more long-term unemployed workers than almost any other state in the country.

A recent report gave more identity to the long-term unemployed, or those who have been jobless for more than 26 weeks. In Florida, Alaska, California, Illinois, North Carolina, New York, Connecticut and Rhode Island, between 46% and 60% of the jobless are long-term unemployed. 14% of these workers were in wholesale or retail trade; services, hospitality and manufacturing workers were also in double-digits. Statistically speaking, most of these displaced employees are between 25 and 34.

In his most recent State of the Union speech, President Barak Obama highlighted long-term unemployed and asked that American companies not discriminate against the jobless when making hiring decisions.

Unemployment and bankruptcy

Many jobless turn to seasonal work or day-labor in an attempt to keep some money coming in. In terms of motivations for filing bankruptcy, unemployment has taken a back seat to medical bills in recent years. Nonetheless, the unemployed are still highly at-risk for filing bankruptcy:

  • When cash becomes scarce, many families begin borrowing money to make ends meet. Many times, this debt is credit cards or perhaps payday loans.
  • Other families stop paying their unsecured debts altogether and commit all their funds to secured debts.
  • A near-universal effect is that families liquidate their savings, making them very vulnerable to financial emergencies.

Factors that lead to a bankruptcy filing, such as medical bills and unemployment, are hardly ever your fault. But, you must still take charge of the situation to keep it from getting worse. Consumer bankruptcy can eliminate excess debt and get you back on the right track.

To take charge of your pocketbook, contact us for your free consultation.


Returning What You Never Had

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Assume that you and your neighbor disagree over the ownership of a house, and you file a lawsuit to quiet title. Before the case is heard, the house burns down. What happens at the court date?

Most courts have refused to enter a decision in this situation, explaining that the point is now moot because it does not matter who owned the house. But now, according to the Ninth Circuit, you may owe your neighbor a new house.

In Shapiro v. Henson, Ms. Henson filed a voluntary Chapter 7 petition in 2009. She listed roughly $6,900 in a checking account on Schedule A, but she was not actually in possession of those funds because several checks were outstanding. The trustee filed a motion for turnover, and Ms. Shapiro refused to turn over money that she never really had. The bankruptcy court denied the motion, and the district court affirmed that decision.

On appeal, the court focused on two phrases in Section 542(a). The court interpreted the first phrase – “during the case” – as meaning that if a debtor had possession of property at any time during the case, as opposed to at all times during the case, that the trustee could file a turnover motion. The second phrase – “or the value of such property” – meant that the trustee could either recover the property itself or the cash equivalent of the property.

Relying exclusively on its interpretation of the statute and pre-Bankruptcy Code protocols, the court distinguished an Eighth Circuit case, In re Pryatt, which had reached the opposite result.

Application

This situation is not at all unusual, as a checking account’s actual balance and available balance are often two very different figures. The same applies to ACH payments and other automatic deductions: if the bank is making a $500 payment on your behalf from your account, for all practical purposes, that money is never in your possession.

Ms. Henson’s best option would have been to wait a day or two until the checks had cleared, and then file her Chapter 7 petition. If there was a pending foreclosure or repossession and waiting was not an option, most courts allow a debtor to file a petition first and then the schedules later.

Bankruptcy forms are like income tax forms: if you include the wrong information or file at the wrong time, such an error can cause an awful lot of problems later. For a free consultation with attorneys who understand how bankruptcy works, contact our office in Melbourne, Florida.

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

More Mortgages to More Consumers?

A major mortgage lender is returning to the subprime market.

Home Mortgages and Bankruptcy Attorney Melbourne, Florida

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.  We offer free initial consultations for bankruptcy and foreclosure defense.

Speak with an experienced Bankruptcy Attorney at Faro & Crowder, PA 321-784-8158

We offer a free initial consult for bankruptcy, debt relief, credit card debt and foreclosure defense.  Contact our office to schedule your consultation and discuss your debt relief options.

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Briefly Describe Your Legal Concern

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

We are a debt relief agency. We help people file for bankruptcy under the bankruptcy code.

2014 Bankruptcy Filings Expected to Remain High

Consumer bankruptcy filings are expected to remain high in certain parts of the country.

Although the filing rate is expected to decline overall in 2014, consumers in areas dominated by high unemployment and a poor housing market are expected to keep filing Chapter 13 Bankruptcy in large numbers. Meanwhile, more and more Chapter 7 bankruptcies are linked to medical bills. Three out of five debtors now have more medical debt than credit card debt.

Nationwide, there were over one million consumer bankruptcy filings in 2013; volume has now eclipsed one million for six consecutive years.

Reasons people file bankruptcy

Here in Central Florida, the poor housing market has contributed mightily to persistently high unemployment. The Sunshine State’s population is also significantly older than that of other states, making the people susceptible to more and higher medical bills.

Families and individuals often have few ways to deal with these crises: the housing and employment markets are driven by macroeconomic factors that few people can control, and no one can turn back the clock on the aging process. So, consumer bankruptcy is the best option for dealing with these negative economic forces:

  • Chapter 13 bankruptcy can help you stay in your home and catch up on delinquent payments, while helping you rebuild your credit.
  • Chapter 7 bankruptcy can eliminate many medical bills in only a matter of months, giving you more money to commit elsewhere.

Poor market conditions and poor physical health may not be your fault, but it is still your responsibility to take charge of your family’s financial future. Bankruptcy is the best way to retake control over your money.

Do something about your finances by contacting us for your free consultation. Our attorneys and staff has years of experience.

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 Wage Stagnation Real or Illusory?

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President Harry Truman once wished for a one-armed economist. The reason? Seemingly all his economic advisors consistently said “on the one hand X, but on the other hand Y.”

Wage stagnation is a current case-in-point. It has become almost axiomatic to say that the middle-class is shrinking. One economist begs to differ, claiming that this statement fails to account for such things as the actual purchasing power of a dollar. For example, an average employee in 1959 would have had to work 100.5 hours to purchase a washing machine, as opposed to just 23.3 hours in 2013. Or, a 1959 employee had to work 127.8 hours to purchase a television, as opposed to 20.7 hours today.

Professor Smith also argues that today’s workers enjoy many more noncash employee benefits than did their predecessors.

Spending and saving

The wage-stagnation point is certainly debatable. But the savings rate may shed some additional light on the subject. Whereas the savings rate was once as high as 7%, it has dropped to only 1% or 2% in recent years. So, there are a lot of underfunded retirement plans and bare savings accounts in today’s America.

The low savings rate means a couple of things for American families:

  • Many people are almost entirely dependent on rising wages to keep pace with rising costs. If there is any significant discrepancy, some families must either forego paying some bills or borrow money via credit cards and payday loans.
  • Without a sufficient amount of savings, many people are vulnerable to financial emergencies, such as medical bills or long-term unemployment.

If you are behind on your bills, Chapter 13 Bankruptcy can help you catch up and start to rebuild both your credit score and your savings account.

To find out how bankruptcy can help you, contact our office for your free consultation.


Are HELOCS Dischargeable in Bankruptcy?

Home equity is exempt in Florida, although the amount of the exemption may be a matter of time. If you have a Home Equity Line of Credit, the actual debt may be wiped out but not the lien on your property

HELOCS Discharable in Bankruptcy | Brevard County Bankruptcy Attorney

What is a HELOC?

Many people refer to a HELOC as a “home equity loan.” But, strictly speaking, a HELOC is not a loan. A HELOC is more like a secured credit card: the bank agrees to extend a predetermined line of credit and, if you default on the payments, the bank may foreclose on the lien you gave the bank.

Chapter 7 Bankruptcy

A Chapter 7 Bankruptcy discharges the debt, but does not erase the lien. So, you have no personal liability to repay the note, but the bank can take your house if you default on the payments.

What’s the difference? Assume there is a deficiency, because you are underwater (your mortgage balance exceeds the fair market value of your home). Because the bankruptcy discharged the underlying debt, the bank may not sue you for the deficient amount.

Chapter 13 Bankruptcy

You may not have to repay the entire HELOC balance in a Chapter 13. If you are underwater on the mortgage, the court may allow you to strip-off all or part of the amount.

If you must repay the entire amount, which is likely, you can set the payments yourself in the Chapter 13 plan. As long as the trustee finds that the plan is reasonable, you can pay back the HELOC in equal monthly installments through the plan period, as opposed to the lump-sum payment that the moneylender is probably demanding.

For more information about what debts are dischargeable in bankruptcy, contact us for your free 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

Contact Us For A Free Consultation






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