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Why you can't run away from debt collectors
A study from the Consumer Financial Protection Bureau notes that almost one in four Americans has a debt in collections.
If you are not able to make your payments, it may seem like a good idea to hide from your debt collector. However, this is a solution that will not hold up long term. Debt collection agents are experts at tracking people down, and they will likely find you sooner rather than later.
Why debt collectors keep searching
Debt collectors use different tools to find debtors. They usually start with the information given by the original creditor, including things like credit applications and agreements. This information helps them track down details about the debtor.
How collections agencies use your credit report
For debt collectors, credit reports are like a map that shows the big picture of a person's financial situation and history. Some collectors might use credit scores because they are less expensive, however, a full credit report is more detailed.
Can I defend my home from foreclosure in Maryland?
The idea of losing one's home to foreclosure can be a distressing ordeal. In Maryland, homeowners have options to defend their homes and avoid this unfortunate situation.
Though falling behind on your mortgage payments can make you feel like you are in hot financial waters, being informed can give you the confidence you need to handle the matter calmly and rationally.
Loan modification
Through loan modification, you can negotiate with your lender to change the terms of your loan. This might include lowering the interest rate or extending the loan period to make your monthly payments more manageable.
Forbearance
If your financial troubles are temporary, a forbearance agreement may be a viable option. Under forbearance, your lender may allow you to temporarily pause or reduce your mortgage payments. This can provide you with the breathing room you need to get back on your feet.
Repayment plan
A repayment plan involves spreading out your missed mortgage payments over a period of time. This option can be suitable if you have a temporary setback and can afford to pay a bit extra each month to catch up on the arrears.
Actions to avoid before filing for bankruptcy
If you have credit cards or loans and feel you no longer have control, you are not alone. Many Americans feel this way but do not recognize that bankruptcy can help.
People tend to feel shame when they cannot afford to pay off their debts. However, most people experience financial hardships and may require the fresh start that bankruptcy can offer. However, before they file for bankruptcy, they should know what actions to avoid.
Do not take on new debts
People apply for credit cards, loans and for other forms of financial help for various reasons, including to help make ends meet, to afford emergency costs and to pay for their lifestyle. In stressful economic times, more people take on new debt, and more people file for bankruptcy. In fact, bankruptcy rates rose about 10% from June 2022 to the same time in 2023. The crux of the issue is that credit card bills increase and people choose to take out loans and more credit cards to pay for other expenses. It becomes an overwhelming cycle of debt that people do not know how to escape.
Does Maryland have the highest rate of bankruptcy filings in the U.S.?
How does our state stack up against others when it comes to the number of bankruptcy filings? While Maryland does not have the highest rate of bankruptcy filings, the state still falls within the top 25. If you find yourself facing overwhelming debt, you are not alone in today's economic landscape.
If you are looking to regain control of your finances, Chapter 13 bankruptcy is a valuable option.
The benefits of Chapter 13 bankruptcy
Chapter 13 bankruptcy offers several benefits that can help people navigate their way out of debt while preserving assets and maintaining a sense of financial stability. In 2022, 157,087 people filed this type of bankruptcy, which allows individuals to create a structured repayment plan that spans three to five years. This means debtors can gradually pay off their debts, making it more manageable compared to the immediate demands of Chapter 7 bankruptcy.
One significant advantage of Chapter 13 is the ability to retain valuable assets like homes and cars. Through the repayment plan, debtors can catch up on missed payments and avoid foreclosure or repossession. Filing for Chapter 13 bankruptcy also offers a protective shield against creditors as well as has a less severe and shorter-lived impact on credit scores.
Should I file for bankruptcy?
According to the United States Courts, the number of bankruptcies filed in the U.S. in 2022 dropped to 387,721 from 413,616 the year before. Even though it looks like fewer people are taking this path, filing for bankruptcy may still be the best option for you.
Making the choice to file for bankruptcy is a significant financial decision that requires careful consideration of your circumstances. These signs can help you decide when it is best to file for bankruptcy.
Signs that bankruptcy might be right for you
Several signs might indicate that it is time to file for bankruptcy:
- Overwhelming debt: If your debts have become unmanageable, and you are struggling to meet your obligations despite your best efforts, bankruptcy could offer relief.
- Impending foreclosure: If you are falling behind on mortgage payments and facing the risk of losing your home, bankruptcy might help you avoid foreclosure.
Bankruptcy and the marijuana business: a legal limbo
As of July 2023, Maryland joined the growing number of states permitting the licensed sale of recreational marijuana. With the cannabis industry essentially starting at zero in the state, this has created a promising new business opportunity for entrepreneurs, including people of color, in Greenbelt and the rest of Prince George's County.
A $26 billion industry
In fact, as more and more states decriminalize cannabis, thousands of dispensaries and other marijuana businesses have popped up across the country. In 2021 alone, legal marijuana sales generated $26 billion in revenue. Just like any other business, cannabis businesses are at risk of failure due to economic downturns, bad luck or other reasons. When most business owners are struggling to pay their debts, they can file for bankruptcy protection as an individual to stop creditor harassment and give them the chance at a reasonable solution. But bankruptcy is not an option for most people in the marijuana industry.
What is the No. 1 reason people file for bankruptcy?
Accumulated and unpaid healthcare expenses create an overwhelming burden on households across the nation each year. As reported by finmasters.com, medical debts incurred by uninsured individuals account for 46% of bankruptcies and represent their No. 1 cause.
Many personal bankruptcies also result from a combination of two or more factors. Treating a medical issue, for example, while also taking the necessary time off without pay to recover often creates a critical state of affairs. Other unexpected expenses or a surge of credit card bills could add to an already perfect storm and hinder a household's ability to get back on track.
How many medical debts could a bankruptcy discharge?
The United States Bankruptcy Code does not specify a limit on how much medical debt the court may discharge. As noted by creditkarma.com, under certain circumstances, bankruptcy petitioners may have all their unpaid healthcare debts discharged through a Chapter 7 filing.
Options for financial relief for medical debt from diabetes
For decades, many people have been successfully managing diabetes. As a result, others may forget about the seriousness of the illness and what treatment requires for sufferers.
Recent experiences highlight a new growing concern among diabetes patients. Individuals may not only find themselves with physical struggles but with financial ones as well.
An overlooked consequence of the illness
Diabetes affects people all around the world. However, the "Diabetes Belt" in Southern parts of this country has provided medical professionals with a concentrated demographic to study people dealing with the condition.
One "side effect" of the disease that many do not think about is the medical debts a person can amass from treatments. A study by National Public Radio discovered that over 20% have medical debt in collections in the Diabetes Belt. In one county, the number neared 40%, which far outpaces the national average of 13%.
Bankruptcy may offer relief from overwhelming student loan debt
Since 2020, at least 40 million federal student loan borrowers had their monthly payments paused. As reported by the Associated Press, with payments now set to resume, the U.S. Department of Education anticipates a historic number of borrowers not having the means to meet their due dates.
Higher living expenses combined with the inflation increase could result in many borrowers defaulting. Students who graduated during the pandemic may have found jobs with starting salaries that covered their expenses. Their current budgets, however, may not have the ability to "stretch" enough to include loan payments.
A student loan default may lead to aggressive collection efforts
According to data from the U.S. Federal Reserve, borrowers carry a total of about $2 trillion worth of outstanding student loans. Missed payments on student loans may also add up and possibly lead to default.
Rebuilding your credit after filing for bankruptcy
Filing for bankruptcy can have a significant impact on your creditworthiness and financial standing. However, it is important to remember that bankruptcy is not the end of your financial journey. With dedication and responsible financial habits, it is possible to rebuild your credit after filing for bankruptcy.
Here are some strategies that can help you rebuild your credit and work toward a healthier financial future.
Create a budget and stick to it
Assess your income and expenses and create a realistic budget that allows you to meet your financial obligations while leaving room for savings. By tracking your spending and avoiding unnecessary debt, you can demonstrate responsible financial behavior and regain control over your finances.
Establish an emergency fund
Building an emergency fund is necessary to avoid falling into debt again. Set aside a portion of your income each month and gradually build up your savings. Having an emergency fund will provide you with a safety net in case of unexpected expenses and reduce the need to rely on credit.
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We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
