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Council Bluffs Bankruptcy Law Blog

Some banks are ignoring bankruptcy discharge

Many people who are unable to pay their debts file for bankruptcy. However, thousands of people in Iowa and throughout the country who discharged their debts through bankruptcy have found that the debts were still on their credit reports years later. Because of this, multiple banks and financial establishments are being investigated by the U.S Trustee Program.

Iowa residents may not be aware that some of the largest banks are keeping debts active on credit reports long after debts have been discharged by the courts. Once these debts are discharged, banks and other creditors must comply by revising credit reports to show that the debts are not active. Instead, some banks have tried to force consumers to pay for debts that they no longer owe. The U.S. Trustee Program is investigating certain banks, including Synchrony Financial and Bank of America, for ignoring discharge orders, which is a violation of federal bankruptcy.  

Steps to deal with creditor harassment on the job

Debt collectors are allowed to make reasonable attempts to collect on delinquent debts. What they do not have the right to do is abuse or harass consumers. There are ways that Iowa consumers can handle creditor harassment.

One man had resumed his employment after being out of work for six months. He was barely able to afford groceries and rent at the time, and he was lagging behind on three payments for his credit cards. He managed to make small payments every now and then, but he started getting collection calls at his job to inform him that his debt had been forwarded to collection.

Debt collection practices surrounding medical bills

A number of consumers are overwhelmed with debt, and many are contacted by debt collection agencies. Out of the 25,800 complaints submitted to the Consumer Financial Protection Bureau, 8,700 of them are due to debt collection. One of the main complaints of Iowa consumers is that their medical bills are unresolved or are inaccurate.

Debt collection practices have been a growing problem, and one woman claims that a collection agency attempted to convince her to pay her deceased husband's medical debt. The person offered her the option of paying a portion of the debt, but she claims that she was never informed that she was responsible for it. Consumers, who are older, complained that debt collectors made a series of attempts to collect on medical debt that was already paid for by insurance. This can leave consumers baffled, since they are still disputing the medical expenses.

Scrutinizing statements can help limit high credit card debt

Many consumers do not review their credit card statements carefully. A number of Iowa card holders may not be aware of certain surprises that these monthly statements sometimes contain. Consumers may benefit by understanding what surprises may lurk as they struggle to avoid unnecessary credit card debt.

Unauthorized charges are sometimes contained in credit card statements. Some of these charges are credit insurance and other services, but they are not usually recognized due to the amount of consumer charges. The good news is that the Fair Credit Billing Act guarantees that cardholders are only liable to pay $50 for unauthorized charges. Cardholders may also discover enormous late fees on their statements.

Approaches to paying off credit card debt

Based on a 2012 survey conducted by the National Foundation for Credit Card Counseling, around four in 10 Americans have revolving debt on their credit cards. Many Iowa consumers may have plans to put extra money toward their credit card debt to completely pay it off or at least lower the balances. There are multiple approaches that consumers can take to pay off their credit cards.

One of the approaches is the snowball method, which is focusing on the card with the lowest balance. After the first card is paid off, consumers can start paying the card with the next lower balance and continue until that one is completely paid off. A second approach is to pay the card with the highest interest rate first. Since the highest interest rate card can cause the most financial distress, consumers would start paying off that card while still making monthly minimum payments on the other cards.

Outdoor clothing company files bankruptcy under Chapter 11

There are a number of reasons why people would file for bankruptcy. A series of unforeseen events or one crippling event could cause financial ruin and cause bills to become unpaid. While consumers usually file Chapter 7 bankruptcy to discharge their debts, Iowa businesses typically file Chapter 11 bankruptcy protection to restructure their business.

GoLite, a provider of outdoor clothing has filed for Chapter 11 bankruptcy. The reason for filing is to restructure its debt and have a profitable company.  The company overall liabilities are just under $10 million and have unsecured claims of almost $5 million. The company listed as having assets that are between $1 million and $10 million, but have not yet provided financial records. Six stores are expected to remain open as well as the company headquarters.

Endeavour files for bankruptcy protection

There are times when consumers and even businesses end up in financial dilemmas. Some Iowa readers may be aware that a company, Endeavour International Corp, recently filed for Chapter 11 bankruptcy protection. This proceeding is designed to allow the company to restructure its debt with the goal of stabilizing its finances and providing a framework for making it competitive in the marketplace.

Endeavour is an oil and gas exploration company which had a number of forbearance agreements with creditors in place after missing interest payments on existing debt. The grace period under the forbearance agreements expired on Oct. 1, and Endeavour was not able to meet the interest payments again. Apparently using the decision to file for Chapter 11 relief to its advantage, a restructuring support agreement was reached with its creditors that will decrease its outstanding debt by $568 million. The annual interest will also be reduced by 43 percent, but the creditors are demanding Endeavour emerge from bankruptcy protection by April 2015.

Creditor harassment and what creditors are permitted to do

It's not uncommon for consumers who owe debts to receive collection calls from creditors. Understandably, debt collectors will do almost anything in their power to collect on overdue debts. However, it's important for Iowa consumers to be aware of when debt collectors are crossing the line and what they can do about creditor harassment.

Collection agencies are allowed to contact consumers by phone, mail and in person. They may also contact a consumer's family and friends in an attempt to locate a person's whereabouts. When speaking with a collection agency, the representatives are permitted to discuss whom the original creditor is and the amount that is owed. They can also negotiate a payment arrangement and offer a settlement. While debt collectors are permitted to do certain things in order to collect on debts, there are a number of activities they are not allowed to do.

Paying credit card debt vs student loans

Sometimes, there are circumstances that arise that require individuals to use their credit cards or take out student loans. Consumers may wonder what debts they should start tackling when the bills start piling up. It's recommended that Iowa consumers pay off credit card debt first.

One individual has saved up $8,000 and has student loans, plus credit card balances. The person does not know whether he or she should pay the accrued interest for the student loans or pay off the credit cards, which all have different balances. The recommendation is for the individual to pay off the credit card debt first. When individuals carry balances, it can drastically take away from their finances. In addition, individuals who owe student loans have more protections and tax-deductible interest.

CFPB asked to include medical bills in supervision

The Dodd-Frank Act states that the Consumer Financial Protection Bureau has the authority to supervise larger participants for consumer financial products such as debt collection. A report published by the National Consumer Law Center requests for the CFPB to supervise large Iowa collection agencies that collect on overdue medical bills. Currently, medical debt is not included in CFPB supervision.

Larger participants are companies that receive over $10 million. However, the rule does not include medical debt in the $10 million threshold. Debt collection agencies that only collect on medical bills or only have a small number of medical accounts are able to avoid the supervision from the CFPB. It has been recommended that the CFPB include agencies that collect on medical debt into its supervision so that consumers are protected.

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