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Coral Gables Legal Blog

How some student loans might be canceled

Some Florida might believe that student loans cannot be discharged in a bankruptcy. While this is generally true, there are some exceptional circumstances in which it may be possible to get student loans discharged by the government. For example, student loans may be discharged if the school closes or engages in fraudulent activity. In the former case, the student must have been enrolled within 120 days of the school's closure.

There are several examples of the latter case. One is if the school falsely certified the student's eligibility for the loans or signed the student's name to a loan. Another is if the student trained for a career field that student cannot enter for reasons including disability or a criminal record. If a school fails to pay a refund to a lender or the federal government, that portion of the loan may also be discharged. These examples apply to loans from the FFEL program and the Direct Loan program. If a school violated state laws in some way, this may also be a reason for discharge.

Fed interest rate hikes to raise payments for debtors in Florida

Credit cards, adjustable-rate mortgages and home equity loans tie their interest rates to a rate set by the Federal Reserve. This rate establishes the cost of short-term loans between banks, and increases ripple out to Florida borrowers and affect their payments. The Federal Reserve has already raised this critical rate twice in 2017 by one-quarter percent each time. Financial experts expect a third increase by a similar amount later later in the year.

A chief economist at Bankrate.com said that 15.07 percent represents the average credit card rate. An increase of a one-quarter point in the rate adds approximately $175 in total annual interest to a credit card balance of $5,000. Financial professionals, however, anticipate that the Federal Reserve will continue to raise rates three times a year through 2019, which could raise the annual interest burden on $5,000 to $525.

The number of health plans with high deductibles increases

Since the implementation of the Affordable Care Act, a rising number of people in Florida and the rest of the nation have been using health plans that have high deductibles. This is according to a study recently conducted by the National Center for Health Statistics at the United States Centers for Disease Control and Prevention.

The study shows that the percentage of people age 18 to 64 with high-deductible private health insurance increased from 26.3 percent in 2011 to 39.3 percent in 2016. This reflects an increase of nearly 50 percent in high deductible health plans (HDHP). In 2016, an HDHP was classified as a health plan that consisted of annual deductibles of at least $1,300 and $2,600 for self-only coverage and family coverage, respectively.

Debt settlement companies ordered to cease activities

The attorney general of Florida and the Federal Trade Commission have been able to obtain a court order that requires 11 companies to immediately cease all of their debt settlement activities in the state. The companies are accused of misleading consumers and violating several federal and state regulations. According to the complaint, the companies collected large amounts from consumers each month but failed to apply these sums to their outstanding credit card balances.

Debt settlement firms claim that they are able to convince credit card companies to settle overdue accounts for pennies on the dollar, but they do not always explain to consumers how this can be achieved. These companies often collect payments from consumers each month and place them into escrow accounts, and they then wait until credit card balances are seriously delinquent before offering reduced amounts to settle outstanding debts in full.

Communication important in helping children during divorce

Florida parents who are getting a divorce can help their children adjust during this difficult time. At the outset, they should be honest with their children who will know that something is wrong when a parent moves out. Children need reassurance that the divorce is not about them as well as space to ask questions and process their emotions. If children do not talk about the divorce, parents should start conversations about it and check in to see how they are feeling.

Children may deal with their grief in different ways. In some cases, parents may want to arrange for a child to see a therapist. Parents need to take care of themselves as well. If they allow themselves to become too run down, they will be unable to help their children.

Illegal debt collection methods

If you have ever fallen behind on your bills, you may have firsthand knowledge of just how aggressive debt collectors can be in their collection tactics. While they are within their rights to attempt to collect any money owed to them, creditors and debt collectors may not use methods considered unlawful when doing so.

For example, when trying to collect payments from you, debt collectors cannot:

Older couples and divorce

Older couples in Florida are more likely to get a divorce compared to their counterparts in 1990, but this remains the age group that is least likely to split. Furthermore, not all marriages of older couples are equally vulnerable to divorce. For example, a 2012 study found that compared to second or later marriage, first marriages were less than half as likely to end in divorce.

Finances are also a factor. Couples who have $50,000 or fewer in assets are more likely to divorce than those who have over $250,000 in assets. Factors that do not appear to affect the divorce rate in this age group include retirement, the "empty nest" syndrome, health problems or education levels.

Study examines effects of politics on relationships

Some Florida couples might find they are arguing more about politics since the last presidential election. According to a recent survey by Wakefield Research, 22 percent of people said they knew a couple whose relationship had suffered because of the election of Donald Trump.

The survey, which gathered data from 1,000 participants between April 12 and 18, also found that 10 percent of couples said they had split up over political disagreements. The rate went up to 22 percent among millennials. Although finances are a common area of conflict for couples, more than 20 percent of respondents said that they had been fighting more about politics than money over the past six months.

Judge rules trustee cannot retroactively change payment plan

Based on a case that occurred in another state, a bankruptcy trustee in Florida is unlikely to be allowed to retroactively change a Chapter 13 payment plan so that it matches an allowed creditor's claim. A judge for the U.S. Bankruptcy Court for the Southern District of Texas ruled that a trustee did not have the right to make these changes in 25 cases. In some cases, the changes put the debtors in arrears with their mortgage.

A Chapter 13 plan allows debtors to use their income to pay back creditors over three or five years and keep their assets. The plan is approved by the bankruptcy court, and the trustee supervises the payments. For home mortgage payments, a trustee must distribute the amount shown in the approved claim and not in the payment plan. However, this adjustment is supposed to be forward looking, and there is not supposed to be a change in the original payment plan.

Court says recent credit card charges not evidence of fraud

Florida residents who are struggling with debt might wonder whether they can file for bankruptcy and if they can discharge recent debts. In a West Virginia case, a bank tried to claim that a debtor could not discharge almost $8,000 worth of credit card debt incurred around two months before she filed for Chapter 7 bankruptcy. Under the Bankruptcy Code, a person cannot discharge debt for services incurred within 90 days of the bankruptcy filing or for luxury goods if a single creditor is owed more than $675 for those goods. The woman had taken a cash advance on her credit card in the amount of approximately $8,000 two months before her bankruptcy filing.

However, after looking at the woman's spending and hearing her testimony, the bankruptcy court found that the bank could not present evidence that the money had been spent on luxury goods. The only items that might have been classified as luxury goods were a computer game and a pair of boots for $420. Since the woman lost her home in a fire, the court said a charge of $183 to Kohl's could have been for necessities.

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