The Huggins Law Firm, PA
Call to Schedule a Free Consultation
Columbia 803-764-1558 Charleston 843-509-0039

Columbia SC Bankruptcy Law Blog

Attorneys respond to bankruptcy trustee request for passwords

South Carolina consumers who file for bankruptcy need to provide information about finances, but bankruptcy lawyers say that trustees in another state are overstepping with some requests. Two Maryland trustees are asking debtors to disclose login information for their Amazon Prime, eBay and PayPal accounts. The debtors are also required to leave the accounts open and cannot change their passwords for at least 10 days.

While the aim with providing financial information on filing a bankruptcy is for trustees to gather as much information at the outset as possible so they do not have to delay the process by asking for further details, bankruptcy attorneys say there are better and less intrusive ways of handling these accounts. One is by asking for statements. Debtors could be required to disclose any information about these accounts and whether there is a balance on them in the initial bankruptcy paperwork. Instead, the trustees have made a request that may discourage debtors from filing for bankruptcy. One attorney says that in response, bankruptcy attorneys may simply advise their clients to shut the accounts down before filing.

The ACA may be responsible for fewer personal bankruptcies

Personal bankruptcies throughout America hit their peak in 2005. Since there, there have been 12 straight years of declining rates, and there has been a 50 percent drop since 2010. That year, there were 1.5 million consumer bankruptcies compared to 766,000 in 2016, and there are few signs that this trend will not continue in South Carolina and across the U.S. Many observers say that the Affordable Care Act has played a role in this trend.

Researchers believe that the legislation is responsible for as much as 50 percent or more of the decline. The ACA has worked to keep medical costs down by capping the out-of-pocket costs a person people have to pay. It has also reduced costs by making insurance available through Medicaid expansion and exchanges. A survey from the Centers for Disease Control and Prevention found that the number of respondents saying that they can't buy necessary coverage was at its lowest since the 1990s.

Lightening the burden of student loans

Increasingly, in South Carolina and across the U.S., people who borrowed money to pay for school are struggling to pay it back. For individuals who relied on private loans, which are typically more expensive than other borrowing options, there may be ways to secure temporary or permanent relief. Contacting an attorney may be an important step toward reducing or eliminating debt payments.

According to a report by online student loan marketplace LendEDU, more than 1.4 million people each year rely on private student loans to cover the costs remaining after financial aid and savings have been exhausted. Private loans typically have higher interest rates and private loan companies may be less likely to work with borrowers than their public counterparts. Borrowers who are struggling to make payments should contact their creditors to try to work something out.

The safety of investments when declaring bankruptcy

When South Carolina consumers file for personal bankruptcy, the two principal forms are Chapter 7 and Chapter 13. With Chapter 7, a person's non-exempt assets may be liquidated with the proceeds going towards creditors. Chapter 13 allows a restructuring in which a person repays creditors over a period of three or five years. Traditional and Roth IRAs are generally safe from creditors although there is a cap on the amount while the IRS may levy future disbursements from 401(k)s. A person might also want to look into using 401(k) funds to pay the IRS. Self-employed plans are also safe and do not have a cap. However, if a person is getting distributions, this protection on various retirement plans changes.

The safety of pensions vary, and employee stock purchase plans and profit sharing plans along with individual stocks may be seized in a bankruptcy. If there is a 529 college savings plan for children or grandchildren, these are generally exempt although recent deposits or large deposits made just before declaring bankruptcy may not be.

Creditors bemoan new rule for class-action lawsuits

A rule change could soon provide some relief to South Carolina consumers facing financial challenges due to credit card debt. Many credit companies issue clauses that force people into one-on-one arbitration instead of being able to join their cases with others in class-action lawsuits. These arbitration clauses that keep consumers from seeking court protection are about to undergo a significant change with a new rule from the Consumer Financial Protection Bureau.

The rule change will overturn arbitration clauses on most debt issued by creditors. This includes bank loans, revolving credit and auto loans with few exceptions. The clauses may still remain, but they will be incapable of blocking class-action lawsuits. A 2015 report by the CFPB stated that mandatory arbitration clauses were in widespread use by both banks and credit card debt issuers. During the fake accounts scandal at Wells Fargo, an arbitration clause was used to attempt to block lawsuits.

Medical debt weighs on the wallets of many Americans

Many South Carolina residents are struggling with serious medical debt after major health care expenses were not covered by insurance or due to being uninsured. A startup is pledging to dedicate its proceeds toward helping people this situation.

The startup, called Better, is a service that helps people to work with their health insurance companies to get reimbursed for out-of-network provider visits that are covered under insurance. It charges users 10 percent of their reimbursements. The startup stated that it has pledged to use these revenues to fund up to $16 million in medical debt relief.

Secured creditors must timely file claims

A Chapter 13 bankruptcy case in South Carolina will give creditors an opportunity to make a claim with the court so that they have a chance to receive payments once a court approves a bankruptcy plan. Late filers, however, could miss their chance to collect payments. A court in another state ruled in June against a creditor holding a tax lien against a couple's house because of a late claim filing.

The money owed for property taxes was not a secret during the bankruptcy proceedings. Notice had been sent to the creditor informing the entity of the couple's bankruptcy filing and the deadline for making claims. Although the lien holder did not complete any paperwork, the court asked the debtors if they wished to include the unpaid taxes in the plan. They declined, and the court went on to approve a payment plan that did not address the taxes although the court informed the couple that the taxes would remain payable.

College students, loans and credit card debt

South Carolina college students may be carrying more debt than previous generations, but they may also be more careful with their debt load. Around the country, members of the class of 2016 had an average student loan debt of $37,172. Overdraft fees and late payment fees for credit cards are also costing students.

However, although students have overdrafts twice as often as the general population and around 33 percent have paid a credit card bill late, most millennials are responsible with their credit cards. More than half report that they pay the balance off each month. More than three-quarters have never had an interest rate increase.

Fed rate hike could cause credit card debt to spike

For many people in South Carolina and across the United States struggling with credit card debt, a new action by the Federal Reserve may see their monthly payments growing even more expensive than they already are. The Federal Reserve Bank announced that it is hiking its federal funds interest rate on June 14.

While this is the rate used for interbank lending and not for commercial debt, it is used as a reference point for interest rates of all kinds and has effects that cascade throughout the system. This means that for consumer debts with variable interest rates like credit cards, adjustable rate mortgages or home equity loans, the rate can be expected to head upwards. These hikes are expected to continue as additional interest rate escalation is expected in 2017 with more to come through 2019.

Medical bills overwhelm many with high insurance deductibles

People in South Carolina with high deductible health insurance coverage often struggle to pay medical bills. Those with chronic conditions that force them to meet their deductibles every year especially face financial hardship. The National Center for Health Statistics from the Centers for Disease Control and Prevention defines such a plan as having a deductible of at least $1,300 for an individual and $2,600 for a family.

These plans often force users to pay co-pays on top of paying out of pocket to meet a deductible and qualify for coverage. A medical expense of $1,300 too often causes a financial crisis for numerous Americans. Even a $500 emergency often means cutting back on spending or seeking a loan. A study of adults between the ages of 18 and 64 who are in private insurance plans with high deductibles found that they have significantly more difficulty meeting medical expenses than people covered by plans with lower deductibles.

The Huggins Law Firm, PA

Columbia Office
1812 Lincoln Street
Suite 201
Columbia, SC 29201

Phone: 803-764-1558
Fax: 803-764-1563
Columbia Bankruptcy Office

Columbia Office

Charleston Office
925-D Wappoo Road
Charleston, SC 29407

Phone: 843-509-0039
Fax: 866-481-2325
Map & Directions

Charleston Office