Baltimore Consumer Protection Attorney Blog

First quarter statistics show American families reduced debt

2013-05-20T19:13:28Z

Most Americans are in some form of debt. Mortgages and credit cards are two common ways in which Americans accrue debt. In Baltimore, Maryland, some individuals are easily able to manage their debt. There are, however, others who are overburdened with large amounts of debt.

According to the Federal Reserve, families in the United States reduced their debt by one percent during the first quarter of this year. It was also reported that outstanding household debt has fallen to $11.23 trillion. This number has reduced significantly from 2008, where household debt reached $12.68 trillion. Additionally, mortgage delinquencies have reportedly dropped to 5.4% from a previous 5.6%. Credit card delinquencies have also dropped from 10.6% to 10.2%.

]]> While overall in the nation, credit card and mortgage delinquencies have dropped, unmanageable debt continues to burden many of Americans. For these individuals, bankruptcy is a possible solution. While bankruptcy is certainly not for everyone, it allows individuals a way out of unmanageable debt.

Before an individual considers filing for bankruptcy there are certain factors that must be taken into consideration. For example, an individual will want to know what debts will and will not be forgiven and what will happen to his or her property. An individual will also want to find out if a co-signer would be stuck with any amount of the debt.

Bankruptcy is not the best option for everyone. However, it is a potential form of relief for an individual buried in debt, providing a debtor a fresh start.

Source: Hartford Courant, "Families Reduce 1st-quarter Debt Load To 2006 Level," Jim Puzzanghera, May 14, 2013

Medical expenses expose the sick to bankruptcy

2013-05-14T09:09:37Z

Every day in Baltimore, someone goes to the hospital or doctor's office for treatment of a disease or ailment. Unfortunately, sometimes the medical bills that pile up that are a result of the condition being treated can cause substantial medical debt.

Illness is the most common cause of personal bankruptcy in the United States, and the cost of drugs being a primary reason. Individuals fighting cancer face a particularly large risk of going into bankruptcy, as cancer drugs today cost approximately twice as much as they did ten years ago. For example, of the twelve new cancer drugs that the Federal Drug Administration approved last year, eleven cost more than $100,000 per year.

]]> An individual should not go bankrupt because he or she is sick. However, for many individuals facing the exorbitant cost of medications, the question becomes whether they will get the medications needed to save their lives if it means putting their family in a lifetime of debt.

Heavy medical expenses can easily become unmanageable debt. For some, bankruptcy becomes a possible solution, as it is a way to give a debtor a fresh start by releasing them from liability. It is, however, important to remember that bankruptcy is not for everyone.

An individual needs to consider a number of factors before filing for bankruptcy. Understanding what will happen to one's home and other property, along with whether or not a co-signer will end up being responsible for a person's debt, are just a few examples of things that need to be considered.

It is unfortunate that so many individuals go into debt when they get ill. For those individuals who are overloaded with medical bills, filing for bankruptcy is a potential option to receive relief.

Source: St. Cloud Times, "Costs of drugs force sick into bankruptcy, or worse," Linda Larson, May 8, 2013

March numbers show consumers being conservative with credit cards

2013-05-09T19:38:06Z

Many Baltimore residents have credit cards. Some of use them regularly, and others use them for big purchases, but we all know that it can be easy -- and sometimes necessary -- to lean on them in tough times. Recent information about credit card use throughout the country shows that consumers may be in a better spot than other times in the last few months.

According to the Federal Reserve, consuming borrowing had the lowest increase in eight months in March. Economists point to an effort among consumers to get credit card debt under control as a reason for reduced credit card use, and some Baltimore residents might agree.

]]> Living expenses in Baltimore are not cheap. Many people have to pay the mortgage, put gas in their cars, buy groceries and pay the bills in addition to other unexpected costs that arise. When times are tough and people can't afford it all, it is easy to rack up credit card debt. Now that people in our state are beginning to recover, however, their priority may be to find a way to pay down that debt. In fact, the Federal Reserve said March's borrowing rise was not at all related to credit cards. The borrowing increase was prompted solely by loans for vehicles and loans for education.

Even as people are starting to have to the capacity to put money toward debt, financial pressure rarely goes away forever. Even in the last few months, many people have started to feel the impact of lower take-home pay due in part to a rise in Social Security taxes. When financial obligations outweigh out assets, however, credit card debt can pile up. If it does, know that there are options for finding a way out.

Source: USA Today, "Consumers cut back on credit card use in March," May 7, 2013

Father turns to readers to help cover son's medical bills

2013-04-25T16:33:59Z

Baltimore parents would do anything for their children. Although you want to be able to protect your child at all times, you simply cannot. Imagine, then finding outthat your child has been in a serious accident. He or she needs extensive medical treatments to fully recover, but you -- like most parents -- don't have the money. What would you do?

For many parents, there is no doubt that they would get their child the medical attention they needed to get better and deal with the cost later. One father who found himself in this frightening situation reached out to the online community for help.

]]> The man's son was serious injured in a longboarding accident earlier this month. The accident sent the 16-year-old into a coma. Additionally, he cracked his skull and sustained brain injuries in the accident. Because the father and his wife do not have health insurance, they are facing astronomical costs for their son's treatment. Not to be dismayed, however, the father -- an author -- arranged what is known as a book bomb.

He arranged for many people to purchase his book on the same day. Doing this often helps a book rise in the sales charts, giving it more visibility. The father's hope was that if enough people knew of the book and purchased it, he would be able to pay for at least part of his son's medical expenses.

Fortunately, the book bomb was a success. With the proceeds, he was able to cover emergency care costs as well as the hospital transportation expenses. However, one doctor estimated that it would take the boy years to fully recover, and therapy would be necessary. For this family, the medical bills will not stop soon.

Unfortunately, medical care is extremely expensive, leaving many with no way of paying it off. While this man was able to come up with a creative way to seek help, it will not cover everything -- and not everyone is able to get funding that way. Fortunately, when medical debt becomes too much bear, filing for bankruptcy may be a good option. An attorney can help explain how bankruptcy can help wipe out your medical debt.

Source: Deseret News, "Book buying effort helps Utah author with son's medical bills," Christine Rappleye, April 20, 2013

March numbers show Maryland foreclosures still rising

2013-04-18T17:26:32Z

A few weeks ago, we wrote about the foreclosure rates in Baltimore based on January numbers. A little over 8 percent of homeowners in the Baltimore area were behind on their mortgage payments by three months or more, and the rate of foreclosure was hovering around 3.4 percent. Now, however, it seems that things have only gotten worse.

The Baltimore Business Journal reported that so-called late-blooming foreclosures caused the number of filings to rise dramatically in March. In fact, the state as a whole recorded more than a 190 percent rise in foreclosure filings from February. From February to March, Maryland posted the second-highest increase in foreclosures in the country.

]]> So why is this happening in our state when the national foreclosure rate is the lowest it has been in six years? Some say that part of the cause is lessening foreclosure prevention efforts. When the recession was at its height, a dozen states -- including Maryland -- implemented strenuous programs to help fend off foreclosure for their residents. Now, however, those programs are less prominent.

Unfortunately, foreclosure continues to be a problem in Baltimore and the entirety of Maryland. However, as we've discussed before, there are ways to prevent it. When foreclosure becomes a possibility, most people are so far in debt that there is no conceivable way out. In such a situation, many people find that bankruptcy is a good way to find relief. An attorney can explain how filing for bankruptcy can stop foreclosure and help get your finances back on track.

Source: Baltimore Business Journal, "Foreclosures soar in Maryland," Kevin Litten, April 11, 2013

How discipline can save you from overwhelming credit card debt

2013-04-12T18:02:12Z

It's very easy to get carried away with credit card use, as some Baltimore residents know. When you can make a large purchase now but don't have to pay for it until later -- and even then you only have to make a minimum payment -- it can be difficult to use restraint. However, consumer credit card debt across the country has increased by more than $86 billion in the last three years, bringing the national total to nearly $834 billion. It's clear that if we continue on this path, there could be serious repercussions not just on ourselves, but on the national economy as well.

Fortunately, a recent article in the Huffington Post provides a few ways for consumers to get back on track when it comes to using credit cards. The first, and perhaps most obvious step, is to make a budget. Know what you bring in and what you spend money on each month after taxes, and then critique it. If you're spending too much, cut the things that aren't necessary. Also, make sure you're saving money for emergencies and setting some aside to pay down debts.

]]> Next, start paying down your debts. If you have more than one, put more money into the debts with the highest interest rates. While you're doing this, make sure to continue at least making minimum payments on debts that have low interest rates. Once you pay off one debt, use the money you were putting toward it for another debt.

Finally, you have to change the way you think about credit cards. As the economy is slowly recovering and some people are feeling a little more financially stable, it can be easy to start spending more again. To avoid significant debt, however, it is important to keep your spending in check, even when you're feeling flush. Focus on buying what you really need and limit pleasure purchases. If you end up in a tight spot financially later on, you'll be happy to have the extra cash.

Source: Huffington Post, "Billions in New Credit Card Debt Represents Clear Impetus for Change," Odysseas Papdimitriou, April 6, 2013

When does credit card debt expire?

2013-04-03T15:55:46Z

Many people in Baltimore know what it's like to have credit card debt. Times are tough, so sometimes you need to put those big purchases on your credit card and pay it off over time. When debt builds up, though, it is easy to get overwhelmed trying to figure out how you will ever pay it off. But did you know that credit card debt eventually expires?

Yes, credit card debt comes with a statute of limitations. Figuring out when your debt expires, however, can be difficult. According to state law in Maryland, the statute of limitations on suing a consumer over unpaid debt is three years. However, because credit card agreements and state law sometimes differ, it may depend on how a judge interprets an individual situation.

]]> Because of the ambiguity of credit card debt expiration dates, it's important for Baltimore residents to take the proper steps if a creditor comes calling through legal channels. If you get sued over debt that you believe has expired, it is important to still show up in court. If the debt has truly expired, the case will likely be dismissed. However, if a judge rules that the credit card company can still go after you through the courts, you may be in trouble for not showing up.

Expiration dates on debt exist because old debt is difficult to prove in court due to the possibility of documentation errors. If you end up being sued for debt that you believe has expired, it may be helpful to speak with an attorney.

Source: Fox Business, "Expiration Dates Fuzzy on old Card Debt," Fred O. Williams, March 25, 2013

Foreclosure rates keep climbing in Baltimore

2013-03-28T19:59:27Z

Many people have experienced financial difficulties at some point in their lives. Often serious financial troubles stem from uncontrollable events like divorce, a major medical issue or the loss of a job. And even though these events are -- for the most part -- out of a person's control, creditors are not sympathetic.

When creditors come calling, it can be frightening and overwhelming. Often, people who are deep in debt have no way to pay it off. And when the bill you can't pay is your mortgage, you could end up face to face with foreclosure. Unfortunately, many Baltimore residents know what this is like.

]]> According to CoreLogic, a market research firm, the foreclosure rate in the Baltimore area has gone up by 0.33 percent since last January. As of this January, the rate was 3.41 percent. Speaking to that trend, 8.07 Baltimore-area homeowners were behind on their mortgage payments by at least 90 days in January. This represents a slight increase from January of last year.

Unfortunately, Maryland has one of the highest foreclosure rates in the country. However, homeowners who are struggling to make ends meet in Baltimore and across the state should know that there are ways to get out of debt and possibly avoid foreclosure.

One way to find debt relief is through bankruptcy. Filing for bankruptcy -- whether Chapter 7 or Chapter 13 -- will automatically halt harassing phone calls from creditors. In addition, it will stop foreclosure proceedings at least temporarily, and you may end up being able to keep your home.

Source: Baltimore Business Journal, "Mortgage delinquencies, foreclosures rise in Baltimore," James Briggs, March 25, 2013

Study shows young people avoid credit cards, fearing debt

2013-03-22T19:38:15Z

Think about the last time you used your credit card in Baltimore. Maybe you needed a new refrigerator or your water heater broke. Most people use credit cards for big expenses that are difficult to pay all at once. If you pay off your debt as required, there is nothing to worry about. As we discussed a few weeks ago, however, many people have found themselves deep in debt due to credit card payments. This trend, it seems, is keeping some people from getting a credit card at all.

According to a Sallie Mae and Ipsos Public Affairs survey, less than 40 percent of college undergraduates had a credit card last year. In 2010, nearly half of students between 18 and 24 had a credit card. While some point to a law enacted in 2009 that tightened rules on how credit card companies can market on college campuses, many young people say they are simply afraid of debt.

]]> In an economy in which it often seems like no job is safe, the fear of incurring too much debt is not unfounded. However, some say that the lack of credit card use among young adults could have heavy repercussions on the economy and on their own lives.

In order to buy a house or a car, you need to show a credit history. If you don't have a credit card, you won't have much of a credit history. This means that younger people may have a hard time making these large purchases. At the same time, however, it means car and home sales could go down. Some say that the industries may have to change their ways to accommodate this debt-conscious generation.

Although young people may be wary to go into debt, many people live perfectly well with manageable debt. However, we live in hard times, and some people simply have no choice but to use credit cards for purchases. Fortunately, if debt becomes too much to bear, there are ways to find relief.

Source: Chicago Tribune, "The young and the creditless: Young adults eschew credit cards," Jeanna Smialek, March 20, 2013

Homeowners bounce back from foreclosure

2013-03-14T16:39:50Z

In the last few years, many people in Baltimore have experienced the foreclosure process. For many, unavoidable circumstances like job loss and medical bills led to insurmountable debt that forced them into foreclosure. Going through a foreclosure can tarnish a person's credit score, making it difficult to purchase a home again later on. However, a recent study by RealtyTrac shows that many of these homeowners are finding ways to bounce back from financial turmoil.

After an individual or family goes through foreclosure or a short sale, it can take several years to get a credit score back up. Generally, a short sale or a foreclosure will result in an 85- to 160-point drop in credit points. With an increasing number of consumers facing financial problems, however, some lenders have become more willing to work with these people.

]]> Some creditors require that an individual who has gone through foreclosure or a short sale wait a certain number of years before being able to qualify for a loan. That wait can be reduced by a good credit score or the ability to prove that financial trouble that led to foreclosure was caused by a serious, one-time event like divorce or medical needs.

When a family is forced into foreclosure or a short sale, it may seem like the future is bleak. However, brokers continue to report increasing numbers of "boomerang" buyers seeking new homes after foreclosure, showing that there is life after foreclosure. Simply paying the bills on time can help strengthen a weak credit score.

Source: CNN Money, "Boomerang buyers return to market after foreclosure," Les Christie, March 11, 2013

Stay on top of your health coverage to stay out of medical debt

2013-03-05T16:39:35Z

Bankruptcy is something that many people in Baltimore and the rest of the country are faced with on a daily basis. For a lot of these people, there was no choice but to file for bankruptcy after financial problems led to overwhelming debt. While there are many circumstances that can lead to bankruptcy, medical debt is among the most common.

If you've been struck by a serious illness or suffer a serious injury unexpectedly, there is little you can do to avoid expensive medical bills. But there are some things you can do in advance to ensure you're prepared in case a medical catastrophe should strike.

]]> First, start setting aside some money for emergency health care costs. Whether you put aside $20 a month or use a Health Savings Account or Flexible Spending Account, having some money on hand at all times for medical expenses will ease the financial burden of an unexpected medical emergency.

If you've experienced a health issue and need to see a doctor, there are some other ways to keep costs down. The best way is to know your insurance plan and do your research. Know what hospitals and doctors are in your network. Similarly, ask your doctors questions about the cost of care. Some tests or treatments may cost more than others, so make sure it's absolutely necessary if you're going to opt for a more expensive treatment.

Finally, review your bills to make sure everything is correct. Sometimes mistakes are made in billing, but they can be easy to overlook. If everything is correct, but you can't afford to pay it all at once, talk to your doctor's office about setting up a payment plan.

Ultimately, there's only so much you can do to plan for medical debt. If it hits, it can still create substantial financial problems for many people, even if you've been preparing. Fortunately, situations like this are why bankruptcy exists. When medical debt becomes too much to bear, it may be a good time to speak with an experienced bankruptcy attorney.

Source: Huffington Post, "5 Ways To Avoid Medical Debt," Ben Edwards, March 3, 2013

45 percent of Americans have more credit card debt than savings

2013-02-28T17:43:17Z

Here in Baltimore, many of us have at least one credit card. Some may even have a few credit cards. When finances are good, many people make sure to pay off their debt quickly. But when we're stuck dealing with a tumultuous economy, job loss or a sudden medical emergency, you may be left to pay other bills with your credit card because you just don't have the money. Unfortunately, this can lead to substantial credit card debt that can feel suffocating.

If you've found yourself feeling this way, you're not alone. A recent study found that close to half of U.S. residents have more credit card debt than emergency savings, according to Bankrate.com. This number is down slightly from past years, but not by much.

]]> Although the Commerce Department recently reported that saving among consumers was up by more than 2 percent from November, the current savings rate is still in line with a 20-year decline in savings. In fact, the report even said those with a higher pay grade also struggle with credit card debt. A third of people who make at least $75,000 per year have more credit card debt than savings.

Paying off credit card debt can be very difficult when there are so many other expenses we have to worry about. Fortunately, there are ways to seek debt relief when the burden of credit card bills becomes too much to bear. One option that will not only discharge your unsecured debts, but also stop harassing phone calls from creditors is bankruptcy. An experienced attorney can explain how bankruptcy works and whether it's right for your situation.

Source: ABC News, "Nearly Half of Americans Have More Credit Card Debt Than Savings," Susanna Kim, Feb. 25, 2013

Finding relief from debilitating debt

2013-02-19T21:11:18Z

In Baltimore, many people understand the meaning of debilitating debt. Maybe you've stopped being able to pay your mortgage, or you've had choose between paying off your credit card debt and buying groceries. Others may be saddled with medical debt due to an unexpected injury, while some face the financial difficulties of divorce. No matter what your situation, it's important to know that there are ways to get out of debt.

There are several options for finding debt relief, including credit counseling and bankruptcy. Deciding which one is best for you depends on how deep in debt you are.

]]> If you're having trouble managing your debt, but you aren't so far behind that it's seemingly impossible to get out, speaking to an experienced credit counselor may be a good idea. A credit counselor will take a look at your finances and help you determine the best plan for moving forward. He or she might help you create a budget to work within while establishing a payment play to get you up-to-date on delinquent balances.

For those who need more than just a new budget to get their finances back on track, filing for bankruptcy might be a good option. There are two types of bankruptcy: Chapter 7 and Chapter 13. Those who file for Chapter 13 will have some of their debts discharged and will create a three- to five-year payment plan to pay back the rest. In Chapter 7, a consumer's assets will be sold off to pay back creditors, and all unsecured debts will be wiped out.

If you think that bankruptcy may be the right option for you, speaking to an experienced attorney is a good first step. There are different requirements for who can file for each type, and an attorney can help you determine which type fits your financial situation.

Source: Fox Business, "Choices for Debt Relief," Fred O. Williams, Feb. 8, 2013

Maryland nonprofit seeks state funding for foreclosure

2013-02-16T16:18:21Z

While national foreclosure rates have dropped this year, many people in Maryland continue to face the possibility of losing their homes. Now that the robo-signing scandal has been settled for the most part, banks are getting back to filing foreclosures.

While some people are able to stop foreclosure through a bankruptcy filing or a short sale, some people end up having to work through it and eventually vacate their homes, putting them and their neighborhoods in a difficult position. One Maryland nonprofit is hoping to change that if it is awarded funding from the state's foreclosure settlement money.

]]> Maryland was awarded $14 million in foreclosure settlement money, and that funding has been saved to go toward the Neighborhood Conservation Initiative program, which helps restore neighborhoods that have been ravaged by foreclosure. Enterprise Community Partners is hoping that the state will grant it $4 million of that settlement so it can work with and support developers who could buy foreclosed properties, fix them up and sell them or rent them to low-income families.

Enterprise Community Partners plans to match the $4 million if it receives it. And it has the support of Prince George's County officials. However, 32 other groups have applied for funding totally $65 million. A panel will decide who will get funding by the end of the month.

Maryland, like many other states, was hit hard with foreclosures over the last few years, and many of its neighborhoods were left littered with vacant homes. Hopefully the groups that end up receiving state funding will be successful in their efforts to address this situation and help those who have been affected by foreclosure.

Source: The Examiner, "Prince George's County backs bid for $4 million in state foreclosure funding," Matt Connolly, Feb. 14, 2013

Senate working toward student loan bankruptcy options

2013-02-14T18:56:06Z

Few, if any, people look hopefully towards bankruptcy as an outcome of their current financial situation. However, any number of unpredictable incidents can arise (from the onset of steep medical costs to a home-destroying natural disaster) that have the potential to make bankruptcy through either Chapter 7 or Chapter 13 a positive step toward restoring a person's long-term financial health.

On the other hand, one leading cause of financial strain that usually can be anticipated is loan debt. With the heavy concentration of prestigious (but often expensive) schools, the Baltimore area is no stranger to the issue of mounting student loan debt, which according to new reports has risen to a new total of $24,301 for the average debtor.

]]> These debts, unlike what's owed on account of a credit card or home mortgage loan, is currently impossible to discharge under a personal bankruptcy. Fortunately for debtors, some members of the U.S. Senate are beginning to recognize this problem and push towards a change.

Late last month a bill sponsored by six senators was introduced in the Senate that would allow privately-issued student loans to be absolved through a bankruptcy, such as the Chapter 7 and Chapter 13 declarations that are frequently employed by those facing impossible financial straits.

The bill, known as the Fairness for Struggling Students Act of 2013, is geared toward alleviating the "mortgage-sized student loan debt" that forces many graduates to put off other important milestones like purchasing a home or starting a family. If passed, the bill would allow student loans accrued from private sources (which accounts for 15 percent of the nation's $1 trillion total student loan debts) to be discharged in a personal bankruptcy.

Hoping to stave off what some have referred to as the "next mortgage crisis," many lawmakers are making serious headway on expanding the road to sound financial health for America's students and graduates who may be staring down burgeoning loan principals. The insight and experience of an attorney skilled in financial law can also prove to be invaluable, and those unsure of how to begin the process of bankruptcy should contact one as soon as possible.

Source: CU Times, "Student Loan Bankruptcy Discharge Bill Reintroduced in Senate," Heather Anderson, Jan. 28, 2013