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Debt-settlement industry: persistently under fire

Talk about a business niche that has an unrelenting image problem.

Once again, the debt-settlement industry is making media waves for the adverse repercussions visited on consumers across the country who solicit the “assistance” of companies that pledge debt relief and simply don’t deliver on their promises.

As many of our readers in Texas and elsewhere likely already know from having heard stories or personally being involved with such companies, negative news concerning these business entities is far from singular or surprising.

Regarding nation's debt crisis, are we digging out or digging in?

So, are we doing better or not? Has the national economy at least stopped snarling at the middle class sufficiently enough over the past couple years to enable most challenged debtors to regain their financial footing?

These questions certainly seem reasonable enough to ask, and at this time. After all, the monstrous housing collapse and attendant credit crisis -- the so-called Great Recession -- that was visited upon Texas and the rest of the country is commonly gauged by economists to have mushroomed in 2007. That was long enough ago to enable some perspective now and to seemingly allow millions of beleaguered consumers time to claw back from troublesome debt levels toward renewed financial stability.

Then again, maybe not. A financial writer in a recent Wall Street Journal article argues that, while high numbers of middle-class consumers have in fact been able to pare down high debt levels in recent years, that debt relief is now being undercut by new borrowing.

After bankruptcy, rebuilding credit is important

The decision to file for bankruptcy is a big one, and those who understand the implications of a filing do not take it lightly. Probably the biggest reason to be cautious about filing for bankruptcy is the impact a filing has on one’s credit. While a bankruptcy filing may not have an immediate drastically negative effect on one’s credit score, depending on the debtor’s circumstances, there are certainly more long-term challenges it presents.

A bankruptcy filing will negatively impact one’s credit score for as long as it appears on one’s credit report. For Chapter 7 bankruptcy, this is ten years from the filing date. For Chapter 13 bankruptcy, the number is ten years. During that time, one will have challenges obtaining credit since many lenders will not grant credit with a bankruptcy on one’s credit report. This can obviously make it challenging when one needs to finance a home or auto purchase.

Report shows consumers are charging more, paying down less

Even the most skeptical among us can agree that the economy is finally starting to show signs of sustained recovery following the recent recession, as foreclosures have dropped, employment is up and consumers are spending more.

Indeed, a recently released report by the website CardHub.com suggests that not only are consumers spending more here in the U.S., they're relying more on their credit cards to do it, while not necessarily paying them down very quickly.

According to the report, $32.5 billion of credit card debt was paid down by U.S. consumers during the first quarter of 2014. While this certainly seems like an impressive figure at first glance, it's actually 28 percent less than the amount of credit card debt paid down by consumers in 2009.

U.S. Supreme Court weighs in on bankruptcy exemption question

If you’re a Texas resident who is besieged by high debt levels brought on by factors beyond your control, you are undoubtedly pursuing debt relief.

In doing so, you have perhaps considered filing for bankruptcy, wondering while thinking about the process whether certain of your assets will be shielded from creditors.

The short answer to that question is this: The federal Bankruptcy Code does allow debtors in the bankruptcy process to protect certain assets from the reach of creditors. Deemed “exempt” assets, such property commonly includes a threshold amount of equity in a home, an automobile, occupational tools of trade and some home appliances and furnishings. Many states, including Texas, also have laws that list assets qualifying for protection from creditors.

Prescription drug costs drive heavy medical debt, even for insured

In a 2013 survey conducted by the Commonwealth Fund, respondents were asked if the cost of medication had caused them to go without it in the last year. Of the adults who answered, 27 percent responded "yes." An analyst with the Commonwealth Fund said that percentage represents an estimated 50 million individuals. More than 20 percent of the respondents who had insurance said "yes," a 43 percent of those who were uninsured said "yes."

Even as the Affordable Care Act has expanded insurance for millions of people who otherwise didn't have it, the cost of prescription drugs is still too high for many Americans. If you have a chronic illness, then you may pay thousands of dollars in out-of-pocket costs, even though you have health insurance. Many people also have to resort to using their credit cards to pay for medications each month.

Bankruptcy alternatives for hard-pressed consumers

As we have previously noted for our readers throughout Texas, consumer bankruptcy can owe to one or many interrelated factors, with every case being unique.

In recent years, those factors have been on firm display across the country, with tough economic times highlighting the stiff challenges that many individuals and families nationally are facing across a broad front.

Credit cards are often used, for example, to pay for unexpected medical crises. Home values have plummeted, resulting in a massive number of foreclosures across the nation. Student loans, car loans, unpaid back taxes … all these exactions and more have resulted in economic dislocation for many debtors.

Can a bill collector take my Social Security checks?

As we have often seen in San Antonio, people of all ages and types run into financial difficulties at times in their lives. Unfortunately, for some people, their senior years can be marred by not only financial problems but also setbacks in their health.

As you undoubtedly know, medical bills are one of the leading causes of bankruptcy. Seniors can be understandably concerned when the face financial difficulties and health problems at the same time, wondering if a bill collector will somehow get his hands on their sorely needed Social Security income.

Student debt: ripple effects across the larger economy

Student debt held by Texas residents and many millions of Americans in other states as well is often readily distinguished by financial commentators from other types of unsecured debt.

That means most centrally things like credit card debt and medical bills. Many media pundits are quick to note that those types of financial obligations, once reaching insuperable levels, can be discharged through a bankruptcy filing. The same is not generally true for persons focused on securing debt relief by ridding themselves of prohibitively high student loan obligations.

With limited exceptions, student debt is not dischargeable through bankruptcy. Business writers often note that this inability to discharge has a broad impact on American society, given that debt-laden former students cannot fully engage as consumers by buying homes, automobiles and other high-ticket items that fuel economic growth. 

There's that harassing caller again: how to deal with him or her

We recently passed along a few general tips for our readers in Texas and elsewhere regarding how to respond to contacts from aggressive debt collectors (please see our blog entry dated May 2, 2014). A central recommendation for any challenged debtor is of course to secure the prompt and knowledgeable assistance of a proven bankruptcy attorney with ample experience helping clients resolve debt issues.

Today’s post expands on the theme of our earlier entry, providing additional information that we hope many of our readers with debt relief concerns find immediately useful, as well as encouraging.

A few words on that latter point first: Debtors who are being harassed by debt collectors should immediately note -- and never forget -- that they are far from helpless when dealing with over-the-top behavior that is uncivil and often illegal.

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