Bankruptcy filings for older Floridians have tripled over the last 25 years. This is a trend seen across the entire U.S. In 1991, only 1.2 out of every 1,000 Americans between ages 65 and 74 filed bankruptcy. By 2016, that increased to 3.6 out of every 1,000 Americans. Interestingly, while bankruptcy filings have increased for older Americans, bankruptcy filings have decreased among young Americans.

Bankruptcy Filings increase for Older Floridians for multiple reasons.

1. Increased healthcare costs: Healthcare costs have increased dramatically in recent decades. Baby boomers are reaching retirement age with higher health risks due to obesity, diabetes, and an overall lower rate of good health. All of which is leading to unexpected and higher healthcare costs.
2. Reduced income: The average income of older Americans filing bankruptcy is only $17,390.
3. Delayed eligibility age for full social security: To receive 100% full social security in 2018, you must be 66 years and 4 months of age. You can begin to receive partial social security at age 62.
4. Vanishing pensions/retirement savings: Baby boomers have only put away roughly 5% of their income for retirement. Only 54% of baby boomers have any retirement savings at all. There is not enough money saved to last throughout retirement or much room for unexpected expenses that may arise.
5. Too much debt: Older Americans have spent money and incurred debt to help their elderly parents and their children. Baby boomers increasingly need to care for their parents, which is an enormous burden. Parents are cosigning for their children’s student loans due to the high cost of college tuition. Overall, Americans are entering retirement age with higher debt.
6. Waiting too long: By the time older Americans decide to file bankruptcy, it is often too late. Their wealth is already gone, and there is not enough time to regain their footing. Many Americans wait too long to file bankruptcy due to bankruptcy’s negative connotation. Instead, bankruptcy should be looked at from a business perspective; removing emotion and focusing on making the best decision for you and your family.

When your debt is more than you can handle, it is important to take immediate action. Taking action sooner will give you more time to rebuild your savings and credit so you can fully recover. Contact the Law Office of David M. Goldman, PLLC today for a free initial bankruptcy consultation. A Jacksonville Bankruptcy Lawyer can help you decide if filing bankruptcy is best for your future.

Credit Counseling

Let’s start with defining credit counseling. Credit counseling is when you work with an agency or company you have hired to help you come up with a plan to pay off your debt. However, you must be very careful when choosing a credit counseling agency as many charge high rates and do not actually help you pay off your debt as promised. I have many clients who have come to me after this specific experience. It is best to choose a not-for-profit agency.

It is important to note from the very beginning that credit counseling will not reduce your overall debt. The goal is to come up with a plan to pay off your debt over three to five years. Credit counseling is also not helpful for secured debts such as mortgages and car loans. While your plan can include your secured debts, it is meant to deal with unsecured debts such as credit cards and personal loans.

The number one pro that makes credit counseling v. bankruptcy in Jacksonville, Florida a better option to many is its effect on your credit score. Credit counseling helps you to bring credit accounts in default current and also helps you to lower your balances. Additionally, the fact you are in credit counseling will not appear on your credit report. Because of these factors, your credit score begins to improve almost immediately.

Bankruptcy

Bankruptcy is the legal process in which you are no longer legally liable for your debts because your debts are discharged. A Chapter 7 Bankruptcy is a complete liquidation of your assets in exchange for your debts being discharged. However, because you are allowed certain exemptions to protect your assets, it is possible to not actually lose any of your assets.

The number one pro that makes bankruptcy appealing to many is how quick the process is (around 120 days) versus a payment plan of three to five years through credit counseling. The other major pro of filing a Chapter 7 Bankruptcy is that you do not have to pay back your debts because your debts are discharged. Bankruptcy is also better equipped to help you deal with your secured debts.

The biggest drawback to bankruptcy is its harsh effect on your credit score. Your credit score will be affected as soon as you begin the bankruptcy process and the fact that you filed bankruptcy will appear on your credit report for seven to ten years. However, many are surprised to learn they actually receive credit card applications in the mail shortly after their debts have been discharged. This is because creditors view those coming out of bankruptcy as good candidates to extend credit to because of the very low debt to income ratio. Not only are you able to obtain a new credit card shortly after bankruptcy, but many of my clients have obtained new car loans and mortgages as well. Therefore, although the fact you filed bankruptcy will remain on your credit report for seven to ten years, it is not a complete bar to obtaining new credit for nearly as long.

When weighing your options of credit counseling v. bankruptcy in Jacksonville, Florida, which option is best for you largely comes down to which pros and cons are most important for you and how quickly you wish the process to be completed. A Chapter 7 Bankruptcy is by far a much faster and less expensive process as it is over within a few months rather than several years and you do not have to repay any of your debts. Contact the Law Office of David M. Goldman, PLLC today to speak with an experienced bankruptcy attorney that can help you better weigh your options.

Fortunately, against common belief, there is actually a statute of limitations on IRS debt. A statute of limitations is a state or federal law that sets a specific time limit on how long an entity or individual can try to collect a debt from you. The statute of limitations for the collection of IRS debt is ten years. As with most things, there are some exceptions to this rule.

The statute of limitations begins to run when the tax is assessed. Taxes are assessed when an IRS official signs a form that states how much you owe in taxes. This occurs after you file your taxes, but fail to pay the full amount owed. The date on this form signed by the IRS official is the official date from which the ten-year statute of limitations period will begin to run.

However, there are some circumstances in which this statute of limitations might last longer than ten years. For example, the statute of limitations pauses when you file bankruptcy and will remain paused for another 6 months after your bankruptcy case has been concluded. The statute of limitations also pauses, or tolls, when the IRS reviews a possible settlement option you submitted, or if the IRS files a lawsuit against you. When the statute of limitations tolls, the IRS is not able to try to collect from you. The statute of limitations is then extended by the amount of time they were unable to move forward with any collection efforts.

You should also be weary of installment agreements you enter into with the IRS. Often, such an installment agreement includes a waiver of the ten-year statute of limitations.

If the IRS filed a lien against you or your property, you will be happy to know that the lien also expires with the ten-year statute of limitations.

While having an IRS debt can be very taxing and it might be very tempting to try to hide under a rock until the statute of limitations has expired, that is not always the best option. By doing nothing, you could potentially be putting yourself in a worst situation. Knowing your options is always the best option when dealing with any type of debt. Those with IRS debt, likely have other types of debts as well. Consulting with an experienced debt collection attorney can help you understand all of your options. Contact the Law Office of David M. Goldman, PLLC today.

The debt will have to be repaid.

At first, you might think that it is a good thing that your debt has been charged-off and you might even think that you no longer owe the debt. Unfortunately, when your bank decides your account is uncollectible, that is simply an accounting term. It in no way affects your liability for the entire debt owed. However, there is one caveat. The bank can only collect on the debt until the statute of limitations expires. In Florida, the statute of limitations for a credit card debt is five years.

You should expect your debt to be sold to a debt collector who will try to collect the debt.

In the majority of circumstances, the bank will not try to pursue the debt themselves, but instead, the bank will either hire a debt collector to try to collect the debt or the bank will sell the debt to a debt collector for pennies on the dollar. In either scenario, your payments will most likely be made to a debt collector instead of to the bank. Luckily though, you can usually reach a settlement with the debt collector for less than the full amount owed and then make monthly payments on the settled amount.

Your credit score will take a hard hit.

The charge-off will stay on your credit report for up to seven years and put a bad mark on your credit report. Not to mention the history of missed payments that were already there, which will make qualifying for new credit very difficult. The best thing you can do is to still pay the debt in full. This way the account will be reported as “charged-off, paid in full” instead of “charged off” or “charged-off, settled for less than full balance”. Lenders will prefer to see that the debt was paid in full even though it was paid very late.

If you have a credit card debt that has been charged off by your bank, contact the Law Office of David M. Goldman, PLLC today. By speaking with an experienced Jacksonville attorney experienced in not only debt collection related matters, but bankruptcy as well, you can determine what course of action you should take in order to cure your charged-off debt. Just because your debt has already been charged-off does not mean you are out of options. Speak with a Jacksonville Debt Collection Attorney today.

First you should consider all possibilities that could get you out of your current debt situation. One possible alternative is to come up with a repayment plan based on your current income. This approach basically allows you to make a little progress with each paycheck you receive. You will most likely be living paycheck to paycheck, but if you are in a lot of debt, you are probably already doing this. If you think this approach is possible for you, you must then consider whether you can emotionally deal with the lingering debt and harassing telephone calls you most definitely receive from your creditors until you have paid everything off. This could last for years and take a toll on your mental and physical health. If you think you can do this financially, but do not believe you can handle the mental or physical stress that comes with it, then this approach may not be a good one for you.

If the above approach is not for you, then you might want to consider filing for bankruptcy, but you must first fully understand which chapter of bankruptcy you are eligible to file and how bankruptcy will affect your debts, assets, future, and health. There are generally two types of bankruptcies an individual files. The first is a Chapter 7, which is a strict liquidation of your assets and a wiping out of your debts, and the second is a Chapter 13, which is a reorganization of your debts. Which chapter you are able to file mostly depends on your household income and family size.

What is a deficiency judgment? Since the sale price is less than the full amount owed on the mortgage, the difference between the total debt owed and the sale price is known as the deficiency. In some states, the lender can seek a personal judgment against you after the short sale to recover this deficiency amount. If this judgment is entered against you, then the lender may collect this from the borrower by garnishing wages or levying the debtor’s bank account; Florida is one of these states.

The good news is there are ways to avoid a deficiency judgment after a short sale. One of the best methods is to negotiate a full waiver of the lender’s right to seek a deficiency judgment while negotiating the short sale with your mortgage holder. If the lender agrees, then the provision will be included in your short sale agreement. The agreement must state the transaction is in full satisfaction of the debt and that the lender waives its right to the deficiency.

1. Gives you a “Fresh Start.” This means you liability for your dischargeable will be eliminated.
2. Will stop Foreclosure proceedings or allow you time to catch up on past due payments.

Debt settlement is a useful tool in improving an individuals financial situation, but it is not without pitfalls. When someone has a large unsecured debt, such as a credit card, they can offer their creditor an alternative payment plan. For example: Marc owes $7,000 to a credit card company. Marc has had a severe drop in income and hasn’t been able to make payments to his creditor for several months. Marc wants to pay his debt, but can’t afford the large payment the company requires. He goes to his attorney friend and the attorney negotiates with the creditor on his behalf. Creditors often prefer large initial payments, with a promise to pay small incremental amounts thereafter. If the credit card company agrees, Marc can pay them $1,000 today and make $200 payments each monthly for twenty-four months. They may agree to this because he hasn’t been making payments thus far and it is well known that his attorney friend files bankruptcy cases. If Marc were to file a bankruptcy, this creditor knows they would get little to nothing in payment. When they agree, Marc has struck a deal that has him paying $5,800 to satisfy a $7,000 debt obligation. This is a $1,200 dollar savings which makes Marc happy because it’s more manageable and less than he originally owed. Just before taxes are due, when Marc’s debt is long forgotten, he gets a letter in the mail from the IRS. He nervously opens it to find a Form 1099-C for $1,200 in income, the exact amount he saved in his settlement. This is called “Debt Forgiveness Income”. The IRS’ theory is that because Marc’s overall worth has gone up by a net $1,200, he has in effect earned $1,200 in value and should be taxed on it.

In Marc’s situation he can probably handle the tax liability from an extra $1,200 in income for the year, but as the debt forgiven gets larger, the ability to absorb that liability decreases.

Pros

First, if you want to keep the property, you must sign the reaffirmation agreement. Also, if you do sign, you will be certain what your payments will be, what your interest rate is, etc. Signing a reaffirmation agreement may also help rebuild your credit, since you are taking responsibility for a pre-filing debt and are making regular payments on a debt.

In a Chapter 7 case, if a loved one dies and leave you an inheritance within 180 days from the date of filing your case, then this money becomes part of your bankruptcy estate. The trustee may want some or all of the inherited funds to distribute to creditors. The important thing to remember is that the date that you become eligible for the inheritance that is the date to use in this 180 day analysis. This is the date of the loved one’s death, not when you actually receive the money or property.

In a Chapter 13 case there is an ongoing obligation to keep the trustee appraised of what property you own. Once they learn of an inheritance, they will likely take those funds for the benefit of your creditors. This can occur any time during the case. Since Chapter 13 cases are often as long as five years, it is important to make arrangements with relatives who may pass on during this time.