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Coral Gables Legal Blog

Consumer Financial Protection Bureau issues new arbitration rule

Most Florida debtors know that financial institutions do not issue credit cards until consumers have agreed to a long list of terms. These conditions often include provisions that require any disputes to be settled through binding arbitration. Lenders prefer arbitration because it is less public, less expensive and more predictable than traditional litigation. However, advocacy groups have claimed that these provisions sidestep the courts and are unfair to consumers.

This criticism has been particularly severe when arbitration clauses have prevented consumers from filing class-action lawsuits. The Consumer Financial Protection Bureau addressed this issue on July 10 by issuing a new rule. Under the new CFPB rule, lenders may still include arbitration clauses in their terms and conditions, but they may no longer use them to thwart class-action litigation. Opponents of the rule say that trial lawyers will be its chief beneficiaries as resolving disputes in court generally takes longer and costs more.

How to stop creditor harassment in Florida

Being in severe debt is unpleasant and stressful enough without creditors calling you nonstop. Harassment from debt collectors not only makes the situation worse but is also illegal due to the Fair Debt Collection Practices Act.

You do not have to suffer through such treatment regardless of how much money you owe and your ability to pay it off. You can end creditor harassment now by taking the following actions.

Importance of a timely proof of claim

Florida residents may be interested in a bankruptcy case involving a creditor with a lien on a debtor's property due to unpaid property taxes. The creditor was denied the ability to collect as part of the bankruptcy claim due to specific filing rules for Chapter 13 cases.

According to case records, the creditor was barred from being included in the bankruptcy disbursement because they did not file a proof of claim by the allotted deadline. Although secured creditors are not required to file a proof of claim in order to collect, they may still need to file in order to be included in a bankruptcy. This gave the debtors the option to file on the creditor's behalf or wait until after the conclusion of the bankruptcy to pay them off.

Innovative startup wants to relieve medical debt load

Unpaid medical bills burden many Florida residents, especially those without insurance, but also people who have insurance with high deductibles and copays. A startup company called Better was formed to help people address out-of-network medical expenses, and it has announced that it intends to apply its proceeds to settling medical debt for people who cannot pay.

Although the organization's stated goal of resolving $16 million in medical bills sounds ambitious, the company can buy medical debt at a fraction of the original costs charged to patients. The company partners with RIP Medical Debt, which negotiates with billing agencies to reduce the amounts owed. After Better makes a debt purchase at a reduced rate for a person who cannot pay, it applies its revenue to the debt so that it is forgiven. Its financial model calls for it to receive 10 percent of amounts that patients ultimately receive back from their insurers.

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:

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