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Columbia SC Bankruptcy Law Blog

Foreclosure options

For South Carolina homeowners, not being able to make mortgage payments is often a frightening experience. It is one thing to have to go to court over an unpaid credit card bill, but the possibility of losing one's home can cause significant anxiety.

Unfortunately, the paralysis that can result from being faced with foreclosure is often a homeowner's worst enemy. While a threat of foreclosure does not mean that it will actually happen, it is important for the homeowner to act quickly. There are several options,, some of which can save a person's home and possibly even reduce monthly payments. There is usually a time limit, however, which is why homeowners should seek assistance as soon as they start to have trouble making payments.

How much does bankruptcy actually lower a credit score?

When South Carolina residents file for bankruptcy, their credit score is negatively affected. How much of a hit is taken depends upon certain factors.

A Chapter 7 bankruptcy can remain on someone's credit report for up to 10 years. Bankruptcy immediately lowers a credit score by possibly hundreds of points. How much damage is done to a credit score depends on how high it was before the bankruptcy. Generally, the higher a person's credit score is, the bigger the hit it will take when they file for bankruptcy. Therefore, even people with a high credit score can lose enough points to give them a below average score. Eventually, their credit can begin to rebound, but they will need to demonstrate an ability to pay on time by obtaining a loan or getting a credit card. When a low credit score makes that difficult or impossible, a secured credit card is often a viable solution.

Commercial bankruptcies soar as personal filings fall

South Carolina residents may have been part of bankruptcy filings that soared in 2009 as individuals and businesses around the country began to feel the full impact of the financial crisis. Filings have been going down in recent years, but analysts are now saying that this decline is showing signs of leveling off. The American Bankruptcy Institute analyzes Chapter 7, Chapter 13 and Chapter 11 bankruptcy filings using information provided by Epiq Systems Inc., and data for the first quarter of 2016 shows that commercial bankruptcies were up by nearly 25 percent compared to the same period in 2015.

According to an ABI news release, 9,208 businesses filed for bankruptcy between January and March 2016. There were 7,438 commercial filings during the first quarter of 2015. Experts say that this surge reflects instability in the energy and retail sectors. The data also reveals a sharp increase in the number of individuals filing for Chapter 11 bankruptcy.

Debt relief for students of fraudulent for-profit colleges

South Carolina residents may recall that the prominent for-profit higher education company Corinthian Colleges filed for Chapter 11 bankruptcy in May 2015. In a March 25 speech, the U.S. Secretary of Education said that investigations had linked 91 of the troubled educator's campuses with fraud, which observers hope will make it easier for its former students to apply for debt relief.

A report from the Department of Education reveals that only 8,800 former students of the for-profit educator have seen their loans discharged. Corinthian Colleges had more than 70,000 students enrolled when it cancelled all classes in 2014 and as many as 350,000 in 2010. These numbers place a great burden on the DOE, and student advocates are calling for student debt relief rules to be relaxed. Students are currently required to apply for relief individually and complete copious amounts of paperwork.

Issue converting to a Chapter 7 bankruptcy

People in South Carolina who file for Chapter 11 bankruptcy and then convert it to Chapter 7 may face having to turn earnings over to the trustee based on a March 2016 ruling in a district court. The district court, which is located in Illinois, heard the case of a man who was unable to reorganize his debts and thus converted from a Chapter 11 to a Chapter 7. One of his creditors and the Chapter 7 trustee said the man had to turn his earnings from his debtor in possession account over to the trustee.

The man said that because he received the earnings after his original filing, they did not count as part of the estate. After the bankruptcy court sided with the creditor, the man filed an appeal but the decision was affirmed. However, at least one law professor says the district court was wrong to uphold the ruling of the bankruptcy court.

How medical debt impacts finances

Having health insurance can help defray the cost of care, but it is not a guarantee that a South Carolina resident won't experience financial hardship. One poll of residents of another southern state found that 76 percent of those who drew down their savings or racked up credit card debt in the prior two years had health insurance. According to a national poll, 26 percent of respondents said that a medical debt caused a serious financial problem.

In addition to running out of savings, those who are unable to pay the bills may be forced to declare bankruptcy. This could have a significant impact on their credit scores, which may make it hard to buy a home or get other types of financing. Those who have been hit by large medical debts have also had to significantly alter their lifestyle to cope.

Tips for paying off credit card debt

People in South Carolina who have credit card obligations and who receive a tax refund should consider using the refund to pay down that debt. While it may be tempting to spend the money on something more fun, it is worth keeping in mind that paying off a card with a $3,000 balance at 19 percent interest saves over $500 in the year ahead.

Even if the refund is not enough to pay off the total credit card debt, people can still use it to pay off part of the balance. A good strategy is to pay toward the card that has the highest interest rate. It might also be possible to move all debts to one card with the lowest interest rate.

Learning more about debt settlement

The process of debt settlement entails a debtor asking a creditor or creditors to take less than what they owe. While this may be advantageous for some South Carolina consumers, there are several variables that come into play before such a request may be seriously considered. First, a debtor must have one or more late or missed payments or an account has just gone into collections.

Absent this, a creditor may believe that a debtor has the means to repay the debt and will ask for full payment of an outstanding balance. However, for those who think that a debt settlement is in their best interest, they have three options to go about getting one. Two common options include working with a debt settlement company or talking directly to creditors in an effort to work out alternate payment terms.

Credit card debt steadily rising

According to data from ValuePenguin, as of November 2015, total consumer debt in the United States stood at $3.4 trillion, and outstanding revolving debt stood at $929 billion. The latter figure represents a nerly $90 billion increase since 2010. The steady increase in the amount of debt held by consumers in South Carolina and around the country is due to a number of factors, including easy credit and incentives to get credit cards.

Three out of every eight households in the country have credit card debt, with a mean of $5,700 being owed. The greater the income of a household, the larger the credit card debt is likely to be. However, the exception to this is that households with zero or negative worth carry, on average, the highest amount of debt.

Rapper goes back to bankruptcy court

South Carolina residents may have heard that rapper 50 Cent was ordered back to bankruptcy court over pictures he posted to his Instagram account. The rapper, whose real name is Curtis Jackson, filed for Chapter 11 bankruptcy in July 2015 after he was ordered to pay $7 million to a woman after leaking a sex tape she was in. The judge said in her ruling that she was concerned about a lack of transparency in the case, which was what instilled confidence in the bankruptcy process.

In addition to the woman, 50 Cent also owes a mortgage lender and a business partner money. Attorneys for the rapper say that the pictures in questions cannot be used against him. They further added that Jackson is an entertainer who is trying to promote a brand and is not intentionally hiding assets from creditors. Despite making a statement, 50 Cent's attorneys did not respond specifically to the judge's ruling.

The Huggins Law Firm, PA

The Huggins Law Firm, PA 1812 Lincoln Street, Suite 201 Columbia, SC 29201 Phone: 803-764-9921 Toll-Free: 866-691-3808 Fax: 803-764-1563