Articles Posted in Bankruptcy

jail for unpaid debtIt is quite unusual to go to jail for an unpaid debt. Debtors’ prisons were abolished in the 19th century in the United States, and the Fair Debt Collection Practices Act prohibits debt collectors from threatening you with criminal prosecution.

In the state of Florida, you can’t be put in jail for failing to pay a debt or judgment. What can happen when you fail to pay a debt is that it will be reported to credit bureaus, and it will become part of your credit history for up to seven years. It is also possible that your property is seized and your wages may be garnished. But since debtors’ prisons were found to be unconstitutional and biased against people with lower incomes, you are not likely to face jail time over an unpaid debt.

However, you should be aware that there are certain situations that can lead to jail time in relation to an outstanding debt. These include:

will bankruptcy stop irs garnishmentFalling on hard times financially can also lead to falling behind on your taxes. When your tax debt becomes extremely delinquent, the IRS may issue a garnishment on your wages. This garnishment, or levy, allows the IRS to take part of your wages each pay period. A garnishment will continue until you: A. make other arrangements to pay off your tax debt; B. your debt has been paid in full; or C. the levy has been released. Overwhelmed by the thought of losing your wages, you may wonder if filing for bankruptcy will relieve you from an IRS garnishment.

Filing for bankruptcy can in fact offer some relief from the stress of an IRS garnishment. Once you file bankruptcy, a court ordered automatic stay will immediately go into effect. This stay will stop any type of debt collection, including garnishments and seizures, for the duration of the bankruptcy case. However, since bankruptcy will not get rid of most tax debts, how your garnishment is affected after the case is over will depend on which type of bankruptcy is filed: Chapter 7 or Chapter 13.

In a Chapter 7 bankruptcy filing, all of your dischargeable debts will be wiped out. Since most tax debts are not dischargeable, they will remain. The IRS garnishment will, however, be temporarily halted due to the automatic stay while your bankruptcy case is processed. When your case is over, you will still owe on your tax debt. For this reason, while Chapter 7 can offer a window of relief, it does not offer a long-term solution to the situation.

refuses to pay child supportDealing with a former spouse who is not paying their court-ordered share of child support can be an unfortunate hassle. Left with this financial and emotional burden, you may feel like you’ve made every attempt to collect but just aren’t getting anywhere. You may even be at the point where you’re asking yourself, “is withholding visitation an option?”

The answer to that question is no. You cannot refuse visitation if your ex is not paying child support. While you may be able to have your ex-spouse’s visitation rights modified in court, withholding visitation rights is considered custodial interference. Child support and visitation rights are two separate issues that should not be confused.

  • Child support is determined in court, and must follow the guidelines of the Child Support Enforcement Act. These guidelines vary from state to state. The factors that are looked at include the child’s needs (health care, education, child care, etc.), the income and needs of the custodial parent, the paying parent’s income and the child’s standard of living before the divorce or separation.

student loan bankruptcyIf the debt from your student loans is overwhelming you, you’re not alone. According to the Institute for College Access & Success, an independent non-profit organization, 68% of students who graduated from both private and public colleges in 2015 had student loan debt. The debt average had risen 4% since 2014 to a whopping $30,100 per borrower in 2015.

While it can be challenging, it is not impossible to have student loan debt discharged in bankruptcy. In order for your student loan to be discharged, you must be able to prove that it is causing undue hardship. Courts use certain tests to make this determination. The most common is called the Brunner Test, in which courts will look for you to meet the following three criteria:

  1. You are unable to maintain a minimal standard of living for you and your dependents if you are required to continue paying your student loans.

When you fhow to stop creditors from callingace the unfortunate situation of falling behind on your credit card, mortgage, auto loan or other bills, you may also find you’ve become the victim of debt collection harassment. The goal of this type of harassment is to annoy, intimidate or bully a consumer into paying off a debt.

Debt collection harassment can come in different forms—email, direct mail or texts—but it is most often done by constant, repetitive phone calls. These phone calls are often designed to annoy and belittle not only the person who holds the debt, but also whoever happens to answer the phone. At worst they may contain profane language and threats. They might even contact your friends and neighbors about your debt, seeking to humiliate you.

Fortunately, you have rights. While debt collection agencies are legally permitted to collect the debt that is owed to a creditor, they are not legally permitted to use abusive tactics to collect this debt from you. The Federal Trade Commission, the nation’s consumer protection agency, enforces something called the Fair Debt Collection Practices Act. This act prohibits debt collectors from using abusive, unreasonable and/or deceptive practices to collect a debt.

Bankruptcy is an excellent retirement strategy, especially if you are behind in saving for retirement because your credit card debt is robbing you of your ability to save.

Just look at the math:

Let’s say you’re about 10 years away from retirement, and you owe $25,000 in credit card debt at a typical 18.9% interest. Based upon your budget, you can pay no more than $500 per month toward this debt while maintaining your monthly expenses.

In JACKSONVILLE, foreclosures filings continue to decrease, however there are still thousands of homeowners still struggling with their mortgage companies.

http://jacksonville.com/news/crime/2015-08-07/story/federal-judge-rules-bank-america-hurt-jacksonville-couple-must-pay 

Florida courts, specifically Duval, St. Johns, Clay and Nassau counties, areas that affect First Coast Families continue to fast pace foreclosures through the court system, in many cases ignoring homeowner’s due process rights. 

Last August Bank of America agreed to a record $16.7 billion settlement with the Justice Department over their past mortgage practices. Part of the settlement also requires Bank of America to provide $7 billion in consumer relief over the next four years.

As this landmark settlement has faded from headlines questions regarding the payout of consumer relief have surfaced. Bank of America has told a number of borrowers that it intends to ‘forgive’ some loans that have been discharged in borrowers’ bankruptcies. But that debt has already been forgiven.

Our own Chip Parker, has been interviewed by The New York Times and had this to say on the issue: “Releasing a debt that has already been discharged is not in the spirit of the settlement. My concern is that the bank will use these cases to avoid having to give true principal reductions to people who need it.”

“Post Foreclosure Hell” describes the latest gift to Americans from the banks, FANNIE MAE and FREDDIE MAC. After the massive bail-outs by the American taxpayer, the banks, FANNIE and FREDDIE are now using “deficiency judgments” to collect on loans years after foreclosed homes were taken and sold. If successful, homeowners who believed the foreclosure crisis was behind them could find a lawsuit at their door and there hard earned wages being garnished. In Florida alone, thousands of deficiency suits were filed prior to July 1, 2014. If you are served with a deficiency lawsuit, do not ignore it. Your assets could be seized or your wages garnished. Contact an attorney immediately. At Parker & DuFresne, P.A. we defend these judgments and we can help you learn your options. Call us today for a free consultation!

In a recent Reuters article, defaults on second mortgages will likely trigger another round of foreclosures.

Homeowners who took out home equity lines of credit during the housing boom are increasingly missing payments. This trend could continue as the time when homeowners will have to start paying the principal down on those loans is fast approaching. Approximately 40% of HELOCs could be affected with a staggering sum of $220 billion.

The housing bubble and its aftermath is still affecting consumers and their families today. As HELOC payments in the billions of dollars jump, consumers still facing a soft job market or stagnant wages won’t adjust to the increased payments demanded by the Banks.