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Bryan P. Keenan

Pittsburgh Bankruptcy Legal Blog

Credit card debt an issue for many college students

Debt is nothing new for college students in Pittsburgh, throughout Pennsylvania and across the nation. While much of the focus today is on student loan debt with legislators and lenders considering ways to ease that financial burden young people face, another issue that is gaining greater attention is the amount of credit card debt students accrue. When stacked on top of the student loan debt, people can find themselves overwhelmed by debt even before they have framed their college diploma and started looking for a job in their chosen career. Understanding this problem is step one. Finding a strategy to address it often requires legal help.

A recent study indicates that more than one-third of college students across the nation are in some level of credit card debt. These students have at least $1,000 in debt with many increasingly relying on their credit cards since 2012. The study says that students are placing an undue burden on themselves and hindering their financial future. More than 30,000 students took part in the study. It found that more than half stated they were not ready to oversee their finances. Credit scores have also been damaged by this growing trend. 15% stated they had damage to their credit score because they were late with payments.

Possible changes to FDCPA can impact those with credit card debt

When Pittsburghers are in credit card debt or are facing other financial struggles, it can cause problems in every aspect of their lives. Personally and professionally, the fear and trepidation as to what the future holds will seem to be never ending for these individuals. A common concern is the number of calls and other methods of contact creditors and debt collectors make to try to get some or all the payments they are owed. There are certain limits to the number of calls these creditors can make and when they can be made based on the Fair Debt Collection Practices Act (FDCPA). Keeping track of the law and potential changes is important for debtors to be shielded from creditor harassment.

There have been new rules proposed to change FDCPA, though, and if they are implemented they would give creditors greater freedom to contact debtors. These modifications would let debt collectors send an unlimited number of emails and text messages to those who are behind on their bills. At the same time, there would be a reduction in how many phone calls to debtors can be made per week.

Some attempts to clear credit card debt make matters worse

Pennsylvanians who find themselves struggling with credit card debt and other accruing expenses will oftentimes listen to any advice to try to get into a better situation without filing for bankruptcy. There are many reasons why people avoid bankruptcy, including a belief that they are not upholding a responsibility, as well as a failure to understand exactly how beneficial bankruptcy can be. It is only after they have made a series of mistakes with popular debt solutions that they find they are not solutions at all. After that, they might consider other, time-tested strategies. To successfully utilize these strategies, individuals often turn to legal professionals.

Some of the ways in which people try to get out of overwhelming debt are taking on a consolidation loan, cashing out with mortgage refinancing, and taking a loan on a retirement plan. In the short-term, these tactics might seem to quell the pressure exerted by companies seeking to collect on credit card debt. However, over the long-term they generally make the situation more difficult. Taking out a consolidation loan, even one with a low interest rate, might seem wise. Yet, there are often disadvantageous terms and costs that are buried in the fine print. As such, pursuing this option might not make a person's finances better than they would be if they chose to file for bankruptcy.

New strategies could be used to try to collect credit card debt

Pittsburgh residents who are in debt and behind on their credit card payments will undoubtedly be accustomed to the constant calls and letters they receive reminding them of what they owe. While there are protections in place to keep debt collectors from being overly aggressive and making harassing contact, they still push the envelope as far as they can while staying close to within the lines of the law. Those who are facing these issues often don't know where to turn.

Now, with changes coming to the Consumer Financial Protection Bureau (CFPB), it is important to think about solutions to the debt problem with greater urgency to avoid the new strategies debt collectors might be allowed to use. A potential change that will impact consumers is the possibility that debt collectors will have the ability to send text messages and emails to those who owe money. Debt collectors are a frequent source for complaints from consumers as to their practices, so this potential expansion of their communication methods is worrisome.

How can you live through a bankruptcy filing?

Financial hardships are a normal part of adulthood for many people. When these become overwhelming, you might decide to file for bankruptcy to seek some financial relief. This isn't an easy way out of the debt that is crushing you, but it is often the best option available in Allegheny County.

Some individuals feel ashamed when they have to file for bankruptcy, but there is no reason for this. Having to write off debts is a normal operating expense for companies that offer credit. The important thing is that you handle the bankruptcy filing in the proper manner.

Seek immediate legal assistance to stop mortgage foreclosure

One of the most common concerns for Pittsburgh residents who are experiencing financial trouble is losing their home. Being informed that a mortgage foreclosure is imminent or is already in progress can be a frightening experience. Fortunately, there are options for people who are confronted by this difficult reality. Before overreacting or panicking, it is wise to think about the legal remedies that are available to retain one's home. Calling for advice immediately is key to taking advantage of those alternatives.

The law in Pennsylvania says that people who fall behind on a mortgage can face foreclosure in as little as 60 days following a delinquency. The lender is also required to send two notices to the debtor about having missed mortgage payments. In those letters, there are listed ways to avoid foreclosure. In general, there will be between two and four months to pay what is owed to keep the property out of foreclosure. For those who do not pay what is owed, the lender will then seek a mortgage foreclosure. A complaint will be served that this is underway.

What is a Chapter 13 bankruptcy hardship discharge?

When a Pittsburgh resident is struggling financially and is considering Chapter 13 bankruptcy, it is important to get good information and professional advice. There are benefits to Chapter 13 that make it preferable to many debtors when assessed in comparison to Chapter 7. For example, a debtor who uses Chapter 13 can retain certain properties without fear of repossession or liquidation. There will be three or five-year plan to repay the debt by sending payments to a trustee who will in turn send them to creditors. These are the basics. Since situations often differ, there are other factors that should be understood.

Some debtors are confronted with challenges that prevent the completion of the plan. In these cases, it is possible to get a hardship discharge. Once the Chapter 13 bankruptcy plan has been confirmed, there are times when a situation will arise that stops the debtor from being able to complete the plan. If this occurs, the court might grant a hardship discharge at the debtor's request.

What should I know about the Chapter 7 bankruptcy means test?

For Pittsburghers who are facing overwhelming debt and do not have property they want to retain, a Chapter 7 bankruptcy liquidation is the easiest and fastest way to clear debt and get back on stronger financial footing. However, there are basic requirements when filing for Chapter 7. One is the means test. Understanding what the means test is and what steps must be taken is critical to a case.

The means test is used to determine if a debtor qualifies for Chapter 7. The bankruptcy court will first examine the debtor's monthly income for the six months prior to filing. This income will be compared to the state's median income for a family. If it is less than or equal to the median income, then the person can file for Chapter 7. If not, then the next option is to file for Chapter 13. All forms of income will be calculated, including wages, salary, bonuses, commissions, dividends, interest, child support, spousal support, unemployment, pensions, workers' compensation, annuities and more. Tax refunds, Social Security retirement, Social Security disability and Temporary Assistance for Needy Families are excluded.

What are strategies to handle credit card debt collectors?

With companies downsizing and more and more Pittsburgh residents facing diminished or even a complete loss of income, aggressive debt collection is a growing problem. People who are already overwhelmed and worried about how they will make ends meet will have these fears exacerbated by a debt collector calling constantly. Fortunately, there are strategies that a debtor can use to handle debt collectors. Understanding how to do this often requires legal advice.

Many debt collectors are simply doing their jobs, but, in some cases, they can become aggressive and use illegal tactics on consumers who are not aware of their rights. Debtors might be working as employees of a creditor or the debt could have been sold and a company is seeking to collect on its investment. Many people might believe that ignoring the calls is effective. This will not make the calls stop. A better way is to understand what the debt collector is legally allowed to do.

Bankruptcy and tax refunds can affect each other

During income tax refund season, people often make plans about how they want to use the money they will receive. If you are one of the individuals who has crushing debts and will get back a refund, there are some things that you need to think about before you do anything with your income tax refund.

One thing to remember is that if you are expecting a refund, you shouldn't file for bankruptcy until after you receive the money. If you file before, the money will likely be handed over to the trustee to help pay down the debts you owe. Instead, consider these options for using the tax refund.

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Bryan P. Keenan & Associates, P.C.

993 Greentree Road
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