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April 2013 Archives

Credit counseling may not be the best solution for debt relief

Residents of Florida struggling to make ends meet may not be able to get out of debt using credit counseling services. Credit counseling services work with people who are struggling with debt and create a debt management plan. The counseling service will then work with creditors to attempt to lower monthly payments and reduce fees and interest rates. However, according to National Debt Relief, the completion rate for this type of debt relief is only 26 percent. In theory, the premise behind credit counseling services is solid, and this is why people are able to get out of debt using them. Still, only one out five people complete their debt management plan. The majority of people who looked into these services ended up choosing other solutions for getting out of debt. This may be due to people becoming discouraged because of lack of concessions from creditors.

Trusts complicate bankruptcy issues

By definition, bankruptcy is a clearance of debts by someone facing financial hardships. People owed money by the individual filing bankruptcy do have rights to recover funds. Their rights to recover from trusts that the bankrupt individual holds have a number of issues that could be challenged in Florida proceedings.Trusts are created by an individual to hold assets to distribute to others in the future. A revocable trust can be ended and the assets reclaimed by the person creating the trust. An irrevocable trust cannot be ended by the actions of the person who created the trust. In revocable trusts, the creator of the trust controls the trust property until his death. Once the person dies, the trust assets are dispersed to the beneficiaries usually with the assistance of a trustee.

Casey Anthony does not want to sell story as part of bankruptcy

In 2011, Florida resident Casey Anthony was acquitted following a trial arising out of the death of her two-year old daughter, Caylee. She has since filed for bankruptcy. Anthony does not have any income and is currently unemployed. The amount of her debts was not disclosed.In March, the bankruptcy trustee petitioned the court for an order requiring Anthony to sell her life story. An attorney for Anthony objected on the grounds that bankruptcy is designed to provide people with a fresh start. Anthony has not yet written an autobiography or sold her story, and therefore any order requiring her to sell the story would force her to create something new. There are also concerns that the proposal may prevent Anthony from ever talking about her life after the proceedings are complete.

Florida homeowners may soon access new loan modification program

Homeowners in Florida and across the country have the option to modify their loans and take advantage of lower interest rates, but the process has been fraught with paperwork and technical requirements. For those holding relatively high-rate mortgages, the "Streamlined Modification Initiative" is set to simplify the process for owners with 90 days or more of delinquent payments. Some restrictions still apply, and the best source of information on eligibility is the servicer of the loan. The initiative was passed by the Federal Finance Housing Agency (FFHA) and will take effect on the first of July. All loan modifications under it will be handled by the agency's Freddie Mac and Fannie Mae lenders. Documentation is not required, but it may increase eligibility for more savings for those facing financial hardship. Historically, most lenders comply with (FFHA) actions by establishing similar programs, but lenders are not required to participate. A primary restriction on eligibility is that only first mortgages with less than 20 percent delinquency are eligible.

Digital advertiser files for Chapter 7 bankruptcy

CommonSense Media is a digital advertising network that was founded by a film producer and describes itself as a "digital alliance" of advertisers and publishers. The company has now filed for Chapter 7 bankruptcy to liquidate all of its tangible and intangible assets. Founded in 2007, the company was a leftist-leaning political organization that featured many news sites and blogs among its creditors. Florida companies, as well as those in other parts of the country, may choose to file Chapter 7 or Chapter 11, depending on their creditor structure and the goals of the bankruptcy. The owner is listed among the 48 creditors as well as the managing director. A meeting of creditors is scheduled to determine what assets may be available to pay the company's debts. The company reportedly has a total of $25,500 in accounts receivable and bank account funds.

More mortgage modifications may help Florida economy

Mortgage modification is an action frequently initiated by homeowners to lower the cost of monthly payments on their homes by taking advantage of reduced interest rates. According to one calculation, a reduction from three to five percent interest on a $150,000 mortgage can save homeowners $145 a month. Mortgage modifications are seen as a win for both the borrower and the economy by some economists. They claim that homeowner savings translate into increased spending, and this is what fuels job growth. Mortgage holders haven't missed out on the lesson of personal savings. Whether they have been steered into modification by the threat of foreclosure or simply need more cash to make improvements on the home, an increasing number of Florida residents appear to be taking advantage of the opportunity.

Florida bankruptcy case involves U.S. Bank

A businessman in Florida has been awarded $6 million by a jury after a finding against U.S. Bank. The jury found that the businessman was forced to file bankruptcy when the bank acted in bad faith. The verdict included $5 million in punitive damages, the largest amount awarded in the history of bankruptcy cases. Both the debtor and the bank are accusing each other of attacking and refusing to settle the dispute. The debtor accuses the bank of collection tactics that are akin to illegal loan shark activity, and the bank claims that it will appeal the decision based on its belief that the verdict was unfair. The bank has had only one other business in its equipment finance group file bankruptcy since 2006. 

Home-equity loan may help consolidate debts

Many Florida residents find themselves looking for ways to reduce outstanding debts. One option that may help homeowners find a measure of relief from overwhelming debt is to use a home equity loan to pay off other outstanding debts. One mortgage broker reported helping a client obtain a loan of $465,000 on a home worth $620,000. What the client primarily wanted to do was eliminate a home equity line of credit on which they owed nearly $37,000. The cash that the couple obtained was more than enough to pay $70,000 toward the line of credit and credit card debt. With an interest rate of only 3.75% and a 30 year term, the resultant payment was lower than what the couple had paid previously.