Illegal debt collection practices draw federal scrutiny

Unmanageable credit card debt, looming student loans and unpaid medical expenses are common nationwide. In the current economy, millions of Americans are struggling with debt. Debt collection agencies throughout the country are now facing state and federal scrutiny for violation of debt collection practices law. New legislation and pending lawsuits are part of the efforts to curb illegal creditor actions. After a debtor files bankruptcy, creditors must cease any collection effort and halt legal action. Despite clear laws that aim to prevent creditor action, debtors continue to deal with aggressive agents, lawyers and collection companies that will profit from purchased debts. Outdated laws and failed oversight has made debt collection a $12-billion-a-year business. It is estimated 30 million Americans are harassed and pursued by debt collectors, a number that is up 50% since 2003. While debt collection is nothing new, the high rates of unemployment combined with the collapse of the housing market and underwater mortgages, more debtors are unable to pay their creditors. While bankruptcy is one solution, it may not be enough to stop unscrupulous creditors. Debtors are forced to deal with menacing phone calls and unfounded arrest threats. In some cases, creditors have pursued neighbors and family… Continue reading

Gabby Douglas’ mom filed for Chapter 13, reorganized debts

Sometimes it takes a fresh start to get ahead. Since Gabby Douglas won a gold medal in the Olympics for women’s gymnastics, her mother has also made headlines, both for her sacrifice and the support she provided her daughter, but also because she filed for Chapter 13 bankruptcy earlier this year. She believes that filing bankruptcy allowed her to be able to live and reorganize debt so she could still repay what she owed. When talking about bankruptcy, she is not ashamed and was glad that there was a legal way to protect her home from foreclosure. One reason that debtors in New York hesitate to file bankruptcy is because of a certain stigma or the social pressure to continue to keep paying off debts. In reality, many of these debts will never get paid. For those who suffer from unmanageable debt, usually the hole gets deeper before there is any relief. Bankruptcy provides an opportunity to get a fresh start, but also to pave the way for future financial stability. Natalie Hawkins, Gabby’s mother, filed for Chapter 13 bankruptcy, allowing her to pay down her debt over several years. The bankruptcy filings list Ms. Hawkins as having assets totaling $163,706, including a townhouse… Continue reading

New bill urges discharge of private student loan debt

Generally, the bankruptcy code outlines which debts can be discharged, however, courts do have some authority in the event of severe hardship. In Chapter 7 and Chapter 13 bankruptcy, most unsecured debts, including credit card and medical debt can be discharged or reorganized, while secured debts, including student loans, taxes, and judgments must be paid in full. A new bill is calling on legislators to pass new regulations that would also allow the discharge of private student loans in bankruptcy. Many students in New York and nationwide are burdened by high rates of unemployment and a challenging job market as well as extremely high student loan debt with accumulating interest. In the current economy, many young people are indebted to private lenders and unable to recover, even after filing bankruptcy. While many federal loans have fixed interest rates and the ability to defer payments, many students who take on private student loan debt have no relief in the event of hardship. A recent survey found that many students who took out private loans didn’t know the difference between private and government loan debt. In the proposed new bill, colleges and universities would be required to inform students about federal aid options, including… Continue reading

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