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Giving You Hope For a Debt-Free Future

Columbia Bankruptcy Law Blog

Subprime auto loan delinquencies can be relieved with Chapter 7

Consumer debt is on the rise, and current household debt is at a record $13 trillion. This is a nearly 1 percent increase over the past quarter, which seems to be following behind the soaring stock market. However, massive amounts of household debt can be incredibly difficult to overcome, especially when a serious life change impacts income. For many South Carolina consumers, rising household debts can be best addressed through Chapter 7 bankruptcy.

Many consumers in compromising financial positions are there due to subprime auto loans. These loans are for consumers with credit scores of 620 or lower, and many of these loans are delinquent. These loans are made directly through car dealers and other auto finance companies, as bank auto loans are typically only made to consumers with higher credit scores.

Wiping medical debt maybe not enough for South Carolina patients

People fear becoming sick for many different reasons. Some worry about missing work, while others struggle with caring for themselves. However, one of the biggest fears concerning sickness might just be medical bills. Even South Carolina consumers who have excellent health insurance can still be sidelined by overwhelming medical debt from an unexpected illness or injury. The problem of medical debt is so incredibly pervasive that a group of nurses took matters into their own hands.

The out-of-state nurse's group set out to raise money to help those in their state struggling with medical debt. A nurse from the group pointed out that they witnessed many local families experience financial ruin over health care, and that it was difficult to see these families unable to seek essential care for both their children and themselves. The nurses worked with two different groups to effectively wipe out $1 million worth of medical debt in their state.

A drop in income can be helped by bankruptcy in South Carolina

Finding a fulfilling job that provides extra income for a family can be difficult, but many women thought they found the ideal solution in Lularoe, a direct sales company. In South Carolina, the clothing company is mostly known for its brightly-patterned leggings, but many women who started selling them are now dealing with insurmountable debt. Since Jan. 2016, at least 24 people filed for bankruptcy -- both Chapter 7 and 13 -- citing Lularoe as at least one of the causes.

One of those women filed for bankruptcy in July 2017. She reported her annual income from 2016 as $61,330, all of which apparently came from operating her Lularoe clothing business. However, by 2017, she was only earning about $184 a month, and her income from Jan. to July 2017 was approximately $10,500, a significant decrease from 2016. Such a drastic drop in income made it nearly impossible for her to pay back her debts, which total over $85,000.

South Carolina consumers making fewer bankruptcy filings

The Administrative Office of the U.S. Courts tracks bankruptcy filings nationwide, following trends over 12-month periods. Its most recent tracking found that personal bankruptcy filings declined over the past year, indicating that the current economic state is relatively stable. Although this might come as good news for South Carolina consumers, some bankruptcy experts believe that filings could soon be on the rise.

There were over 790,000 bankruptcy filings in the year ending Sept. 2017, which was only slightly lower than the approximately 850,000 bankruptcy filings from the previous 12-month period. This past year boasted the lowest bankruptcy filings since 2007. However, it was also the smallest yearly decline in six years since bankruptcy filings began to decrease.

Scam businesses took millions from debtors in South Carolina

Student loans are an ongoing problem, and it does not look as if they are going anywhere soon. With trillions of dollars in student loans, people in South Carolina and across the rest of the United States are understandably eager for a solution. Unfortunately, many student loan debtors were taken advantage of by fraudulent companies that offered relief.

Federal authorities believe that consumers were conned into paying over $95 million worth of upfront fees to deceptive businesses. These businesses allegedly portrayed themselves as affiliates of loan servicers and federal relief programs. Student loan debtors were promised that their debt would be greatly reduced or even forgiven altogether if they signed on with these companies, some of which advertised federal programs that were free to apply or that were only for a small percentage of borrowers that qualified.

Recognizing when debt collectors cross the line

Overwhelming debt can make you feel like a criminal. The mail carrier seems to bring only bad news. You may wake up in the middle of the night and check outside to see if the repo company has taken your car. You may hesitate to answer the phone or a knock at the door. You may even be afraid to leave your house.

If you have struggled with debt for a while, you may even begin to feel that it is normal to be looking over your shoulder for the debt collectors. However, this is not normal, and there are certain boundaries debt collectors must obey.

Monthly credit card balances a problem in South Carolina

Popular media often portrays credit card debt as the result of irresponsible spending and splurging. This can leave many people feeling alone and isolated in their debt when they have to use credit cards for necessities. Consequently, it can be incredibly difficult for South Carolina debtors who have trouble surmounting monthly balances.

A recent survey found that 28 percent of people in the United States carry credit card balances over from one month to the next. Of those, 43 percent have dealt with ongoing balances for two years or more. The survey also found that those earning less than $50,000 annually were less likely to carry credit card balances than those who earned more, with a respective difference of 24 and 38 percent.

Bankruptcy need not equal permanent financial crisis

When you realized you were in need of immediate debt relief solutions, you may have felt a bit overwhelmed and worried. You are certainly not the first South Carolina resident to face financial problems; in fact, if you were to say you have never had any money troubles at all, that would likely be a rare exception to the rule. Most people have had to overcome financial challenges at some point in their lives. You may have already bounced back a time or two following financial woes.

If this time has been a bit more challenging, it may be because the economy has taken some serious hits in recent years, or perhaps life threw an unexpected curve ball at you. Maybe you lost your job or had to use all your savings to pay medical bills your insurance did not cover. If you chose bankruptcy as the most viable option for obtaining debt relief, you may wondering what impact it will have on your financial future.

Chapter 13 bankruptcy can halt foreclosures in South Carolina

Because of pervasive social stigma, many people in South Carolina tend to put off filing for bankruptcy at all costs. However, putting off dealing with insurmountable debt only exacerbates the problem. Bankruptcy can be an incredibly useful tool for people who have no way of digging themselves out of debt alone, and many find that Chapter 13 strikes the right medium for handling their debt.

Unlike Chapter 7, which liquidates debt, Chapter 13 bankruptcy is a type of repayment plan. While total liquidation of unsecured debts might sound preferable, Chapter 13 has many benefits, including the ability to stop foreclosures in their tracks. Refiling rules are also less strict with Chapter 13. It's possible after four years, whereas Chapter 7 requires eight years from a past bankruptcy. However, these time limits do not apply if a person's bankruptcy was dismissed without any discharge of debt.

Alternatives to foreclosure exist for South Carolina homeowners

Homes are often the largest investment that people make. Aside from a significant financial commitment, owning a home also represents safety and security for many in South Carolina. When faced with significant amounts of debt and possible foreclosure, finding effective alternatives can be important. Giving in to foreclosure can have profoundly negative effects on a homeowner's credit and financial stability when done unnecessarily.

Homeowners often wrongly believe that there is nothing to be done once the possibility of foreclosure is brought up. Some opt to throw in the towel prematurely, allowing their lender to repossess their home. Many lenders will actively work with homeowners during this process and will allow for a special forbearance. Those who have experienced either increased living expenses or reduced incomes and can demonstrate this to their lender might qualify for a newly arranged payment plan. This might include a temporary payment reduction or even suspended payments.

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