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Cuyahoga Falls Bankruptcy Law Blog

What to do when foreclosure threatens your home sweet home

Ohio's economy, like most other states in the nation, has had its ups and downs. If you've been raising your family here for some time, you've probably faced quite a few challenges through the years, as the cost of living, housing market and employment rate (among other things) affects your daily life and long-term goals. Your family may have survived several crises, as well, such as medical emergencies or unforeseen circumstances that took a great toll on your finances.

Feeling like things are getting out of hand and not knowing how you are going to continue to make ends meet can be very overwhelming and stressful. It's important to remember that even a serious financial crisis does not necessarily mean you won't be able to get things back on track. Often, it's a matter of knowing your options, finding the most viable one for your circumstances and knowing where to seek support to help put your game plan into action.

Mistakes people make when paying down debts

Ohio residents who are struggling to pay down debt are not alone. According to data published by WalletHub, credit card debts for consumers in the United States are nearing their pre-2008 levels. As interest rates continue to rise, more and more people are turning their focus to paying off their obligations. The primary mistakes people make when trying to pay off debt are ignoring the root cause of the problem, continuing to use credit cards, creating new debts on new cards, worrying about credit scores and failing to stick to a plan.

People get into debt in many ways, but the cause always boils down to spending more than is earned. Before they can effectively pay off debts, they must establish an emergency fund and begin to live within their financial means. It is then important to stop using credit cards entirely. Paying off credit card debt is exponentially more difficult if the cards are still being used.

Bankruptcy misconceptions: The truth may set you free financially

Many individuals experience financial challenges at some point in their lives, and the financial weight of debt can be a heavy burden. If you are facing similar circumstances, you could be suffering from a situation in which there appears to be no end in sight.

While you might be able to obtain relief for your current predicament through bankruptcy, there may be some areas of concern that give you pause. However, certain assumptions regarding bankruptcy have no factual basis, and debunking these misconceptions could help you overcome any previous hesitation concerning the process.

Equifax changes could impact creditors nationwide

Many Oklahoma residents choose to file bankruptcy as a solution to their debt problems. Equifax, a major credit reporting company, has traditionally treated Chapter 13 bankruptcy filers differently than the other two major credit reporting companies by displaying the bankruptcy on a consumer's report for three more years than the other companies. Recently, the company has elected to make changes to that policy.

The other two major credit reporting companies, TransUnion and Experian, placed flags on consumer reports for seven years after a Chapter 13 bankruptcy was filed while Equifax placed flags on reports for the same consumers for 10 years. The company has now changed the policy but has not offered an explanation as to why the change was made.

The impact of medial debt on credit reports

Starting on Sept. 15, there will be a 180-day waiting period before an unpaid medical bill can show up on a credit report. Also starting on that date, medical debts in collections that are paid by an insurance provider will be deleted from a credit report. While that may be good news for some Ohio residents, it may not help everyone who has poor credit because of unpaid medical bills.

If people have an account in collections, it could drop their credit score between 40 and 100 points. A reduced credit score may mean that an individual has to pay more for home and auto insurance. It could also mean increased rates on credit cards and other loans. Simply qualifying for a loan may be more difficult as well. To some, this is unfair because medical debts should be thought of as different than other obligations.

Renting or buying a home after bankruptcy

A Chapter 13 bankruptcy is one in which a person works out a payment plan to repay creditors over three or five years. Some Ohio filers may be concerned about their ability to rent or buy a home after the bankruptcy. While this becomes more difficult after they declared bankruptcy, there are steps that can be taken to increase the likelihood that a landlord or lender will work with them.

The bankruptcy will come up in the credit history check, so it is best to be up front about it. The debtor could begin by writing a letter to the landlord explaining the situation. Many people file for bankruptcy each year, so it is not a particularly unusual situation to be in. Debtors might also want to explain the circumstances of the bankruptcy. For example, they might have declared bankruptcy due to medical bills and not because of irresponsible spending. They can also include letters of recommendation from other landlords, employers or people in the community. Photos of their current home in good condition may also help as may photos of children.

Stagnant wages linked to surge in credit card delinquencies

Consumers in Ohio and around the country are finding it increasingly difficult to keep up with their monthly bills according to a report from the Federal Reserve Bank of New York. The New York Fed says that credit card delinquency rates in the United States rose in both the first and second quarters of 2017 and now sit at 2.47 percent, and financial sector giants including Discover, Chase and Capital One have all reported a sharp increase in the number of revolving debt accounts falling into arrears.

Experts say that rising consumer debt delinquencies are partly a reflection of more flexible bank lending policies. Underwriting standards were tightened considerably following the financial and credit crisis of 2008, but banks have been willing to take more risks in recent years as the economy emerged from recession and began posting impressive growth and job creation figures. Riskier lending will generally lead to higher rates of default, but analysts say that stagnant wages are also an important factor.

Much-needed relief from the most burdensome of debts

Medical costs remain at the top when it comes to debts that burden consumers. In 2016, 43 million American adults - 20 percent of the population - dealt with out-of-control healthcare-related debts negatively affecting their credit.

Relief is on the way, ironically from an industry currently dealing with their own form of damage control following the now infamous Equifax hack.

Understanding the pitfalls of debt settlement

Ohio residents may believe that working with a debt settlement company is better than filing for bankruptcy. However, the impact to a person's credit score may be the same regardless of which option is chosen. In some cases, an individual could see his or her credit score fall into the 500s, which is generally considered fair or poor.

Debt collection companies may try to tell people that they will lose all of their property in a bankruptcy. The truth is that state and federal laws exempt certain types of property from being liquidated in a Chapter 7 case. Furthermore, debts may be discharged in as little as three months after filing. Another consideration debtors should make is that it may take years for debts to be settled when using the services of a companu. While negotiations are ongoing, it may be possible for creditors to file lawsuits or take other steps to get what they are owed.

The effect of debt on older Americans

Older Ohio residents are still in debt when they reach retirement age according to a MoneyMagnify analysis. The analysis was conducted using information from a University of Michigan study. Conducted since 1990, it asks more than 20,000 Americans at or over the age of 50 about the state of their finances.

The survey found that over one-third of Americans in that age group carry debts other than a mortgage each month. It also found that the average credit card debt among those who carried a monthly debt balance was $4,786. Overall, they had $12,940 in debt not counting any mortgage balances. Carrying debt may make it harder for older people to get the medical care that they need that is not covered by Medicare. This may increase the odds that they spend time in a nursing home or some other institutional setting.

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