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Ann Arbor Bankruptcy Law Blog

How can you avoid additional finance charges on credit card debt?

Michigan consumers who want to avoid late fees and other finance charges added to their credit card must avoid late payments. In fact, it may be beneficial for consumers to be aware of all the requirements of their credit card providers. While it is common for card issuers to credit an individual’s account immediately upon receipt of payment, there may be exceptions. It may, therefore, be a good idea to submit payments for credit card debt a few days prior to the due date.

The card provider may require certain conditions to be met by credit card holders in order to have payments reflected in their accounts on the same day. This may include a requirement for submission of the payment by a specific time on the due date. Consumers will generally have until 5 p.m. or close of business on that day. It is advisable to include an identifying account number with the payment to avoid confusion that may lead to a different account being credited.

Medical debt may no longer lower credit scores after FICO changes

Michigan consumers may share the concerns of many about the negative effect medical debts have on their credit scores. Medical debt is mostly unanticipated, and many consumers feel that it should not be treated in the same way as other debts. The company who creates the widely used FICO scores, Fair Isaac Corp., announced that there are imminent changes that will become effective soon.

Consumers who are concerned about their unpaid medical debt may be happy to learn that their punishment will not be as harsh as in the past. The Consumer Financial Protection Bureau recognizes that many medical debts are unpaid due to disputes between insurance companies and medical providers, rather than bills that are simply unpaid. Consumers whose low credit score relates only to unpaid medical bills may see significant improvements in their credit scores.

How long before Chapter 13 or Chapter 7 discharges debts?

Consumers in Michigan who are facing overwhelming debt may be considering the protection of personal bankruptcy. They may be aware of the available options, and know that some debts may be discharged, but they could be concerned about how long this process will take to provide relief. This depends on whether the consumer qualifies for Chapter 7 or Chapter 13 bankruptcy.

Consumers with little or no income would commonly qualify for Chapter 7 bankruptcy. This option is known as liquidation bankruptcy and involves liquidation of the consumer’s liabilities. Most unsecured debts will be discharged, and the proceeds of liquidation will settle some other debts. Once court procedures and documentation are completed -- a process that takes about four months -- the consumer will be able to walk away from the debts. However, while the process is underway, they will be protected against creditor harassment, foreclosures and repossession.

Foreclosure scammers may threaten Michigan homeowners

Michigan residents are likely aware of reports about companies who prowl on struggling homeowners with false promises to save them from foreclosure. The company may advertise its services nationwide on flyers offering to assist homeowners in lowering their mortgage payments and preventing foreclosure. It is reported that one company is facing two lawsuits in different states, and more claims are suspected to follow.

One man described his experience, saying that he responded to a flyer claiming to drop mortgage rate levels to as low as 2 percent. He said that, following the birth of their baby, his wife left her job and they were considering the possibility of lowering their mortgage payments. He allegedly had to pay the company $3,000, and in return, it would negotiate a lower rate with the bank. While negotiations were underway, the homeowner was to pay his mortgage payments to the so-called mortgage rescue group.

Credit card debt errors of others may provide valuable lessons

Michigan consumers who are heading toward overwhelming credit card debt may find comfort in knowing that they are not alone. Many others are in the same position, and other people sharing their stories may help those in trouble. Valuable lessons can be learned from the errors made by others. While there are certainly some common mistakes that can lead to unmanageable debts, the area that seems to cause most concern is credit card debt.

One consumer who had been through the deep waters of overwhelming debt recently shared the errors he made, maybe not even realizing that many people make those same mistakes. He asserts that the most important lesson he learned was to examine the available options and never to hesitate to use the services of professionals to assist in making sensible choices. He described how he had started a business by maxing out two credit cards, but in hindsight, realized that a part-time job would have helped him with living expenses and enabled him to pay off the credit cards.

The Internet may help to reduce unmanageable medical debt

It is reported that a third of American adults have unpaid medical debts that are causing financial anxiety. Michigan residents who are desperate to find a way to manage medical debt may find comfort in knowing that there are ways to go about obtaining possible reduction in charges or extended payment periods. It is interesting to note that it is not only uninsured people experiencing overwhelming medical debt, but also those who have medical insurance.

Armed with a detailed statement of medical service charges, a person can set about checking each charge individually. The availability of the Internet is a great help, and fair prices for most treatments and procedures can be researched. A patient may want to compare the charges on his or her statement with the reimbursement that medical insurers would pay for the same services. It is also important to control the individual charges on the bill with treatment and services that were actually provided. It is not uncommon for a facility’s billing department to, for instance, erroneously charge for medication that was administered three times a day, while, in fact, it was only done once a day.

New rule may save heirs from facing foreclosure of family home

When the loved one of a Michigan family dies, the anxiety of the family could be escalated by the complicated process of passing the property to its heirs. Family members who have had no prior business dealings with the mortgage provider may experience difficulties with the transfer of the property. As a result, surviving family members often lose their homes or face foreclosure.

Guidance that was recently issued by The Consumer Financial Protection Bureau (CFPB) aims to assist the members of a family who have been named as heirs of a home from a deceased loved one. The CFPB indicated that the names of beneficiaries may be included in the mortgage agreement, affording them the opportunity to obtain a modification or refinance of the property, and thereby avoid foreclosure. Family members will now have the opportunity to negotiate payment modifications with the mortgage holder.

Chapter 13 bankruptcy may resolve a desperate financial situation

Michigan consumers may agree that most individuals face periods of financial difficulty at some stage of their lives. There are those who manage to minimize the damage by effective debt management or even selling personal assets to free up some funds. However, others end up desperate and despondent when their finances seem to be in a continuous downward spiral. This may be an opportune time to consider the protection offered by Chapter 13 or Chapter 7 bankruptcy.

While bankruptcy may seem to be a drastic step to take, and not ideal for every consumer, it may certainly offer a way out of a desperate situation. From the two available personal bankruptcy options, Chapter 7 is commonly suited for individuals without a regular income and may seem the most severe. Chapter 7 bankruptcy may discharge most unsecured debts, including credit card debt, but entails the liquidation of most to cover creditor claims.

Improved credit score may positively affect credit card debt

Michigan consumers who are considering applying for credit, such as a mortgage or other loans, will likely realize the importance of a high credit score. There are various ways to improve one’s credit score, though understanding the process is essential. Going about it the wrong way could actually damage the credit score. Care should also be taken to maintain manageable credit card debt while working on increasing the score. A high credit score may ensure better interest rates on loans.

The credit limit on a credit card affects one’s credit score, and having the credit limit increased will raise the credit score. While credit card issuers often automatically increase credit limits on cards with low limits, a consumer has to apply for a higher limit on cards that already have high limits. This is where care should be taken. Every application made for new credit is called a hard pull – or hard application -- and every hard pull reduces one’s credit score.

Beware of unsuspected medical debt damaging credit scores

Michigan residents may be interested to learn that failure to pay medical debt can negatively affect their credit reports without them even being aware of the debt. Because medical debt is not like a loan where an individual knows in advance what his or her commitment will be, it is quite possible for an unsuspecting patient to be unaware of separate amounts that are charged. A man in another state recently related his predicament when he applied for a credit card, responding to a zero percent interest offer. The application was declined because of an outstanding medical debt that dated back to 2012.

After suffering a stroke, the man was hospitalized, and his medical insurance paid the bill. He subsequently received a bill from the medical center for room charges. He believed that his insurance carrier had paid the money and that he was not responsible for the additional amount. He failed to settle the bill, causing it to go to collections and negatively affect his credit score. However, he was informed by his insurer that he was obligated to pay a portion of the bill.

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