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To: All Fannie Mae Single-Family Servicers Impact of COVID-19 on Servicing
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The "golden years" of retirement are significantly tarnished for some older Americans, whose ranks among the bankrupt have surged fivefold since 1991.
Even though the U.S. population is aging, the spike in older Americans entering bankruptcy far exceeds the demographic shift, according to new research from the Consumer Bankruptcy Project, which analyzed data from bankruptcy court records and written questionnaires. About 100,000 of the 800,000 annual bankruptcy filings are from households headed by seniors, or about 12.2 percent of all filings.
The culprit appears to be cutbacks in the social safety net -- such as raising the retirement age and requiring seniors to pay more out-of-pocket health care costs -- as well as a shift in risk from government and corporations onto individuals. Americans are less likely today to retire with a private pension, given the growing popularity of 401(k)s, where workers are responsible for making their own investment and savings decisions, and more likely to be carrying mortgage and credit card debt into their 60s and 70s.
The full retirement age for Social Security, once 65, is inching up every year. And retirees are now paying 20 percent of their income on health care expenses even though they are covered by Medicare, compared with 12 percent for previous generations.
As a result, the rate of bankruptcy among Americans over age 65 has doubled over the period studied by the researchers. "For an increasing number of older Americans, their golden years are fraught with economic risks, the result of which is often bankruptcy," their report noted.
Because one-quarter of the country will be older than 65 by 2050 compared with 15 percent now, the authors predict America will see a "coming storm of broke elderly."
Older and poorerThe problem with these societal risk shifts, as the authors view it, is that seniors are the group least able to cope with such changes. Because of their age, they have fewer years to build or rebuild wealth, and it's common for older Americans to have trouble finding jobs that pay as much as they earned when they were younger, they noted.
"Retirement is a particularly precarious time of life," they wrote.
Bankruptcy is designed to provide a "fresh start" by wiping away debts or restructuring them in a way that makes it easier to pay them down, but bankrupt seniors don't have enough time to regrow their financial wealth, they added.
Bankrupt seniors are in rough financial shape, the researchers found. They are shouldering more than $100,000 in debt, compared with $1,000 in debt for their non-bankrupt peers. Financially solvent senior citizens have about $251,000 in wealth, but bankrupt older Americans have negative net wealth of more than $17,000.
Older Americans who file for bankruptcy are less likely than their younger peers to have a college degree, although there's no racial difference between older and younger debtors, the researchers found. But across the general population, Asian-Americans and Hispanics are less likely to file for bankruptcy than white or black Americans.
"All things went up in price"Older Americans who file for bankruptcy told the researchers in survey responses that they were often hit by a double-whammy: inadequate retirement income and rising costs -- especially health care costs.
"All things went up in price," one unidentified respondent told the researchers. "Retirement never went up. Had a part time job that was helping to meet monthly payments. House payment kept going up. Was fired from my part time job that I had for over 10 years without any warning. Being 67 and having back problems, not many people will hire you even as part time worker."
Others noted their health problems resulted in a loss of their job or income, while their insurance didn't fully cover their health expenses.
"I got to the point I owed more than I was making on Social Security. To get out from under these medical bills I had to file bankruptcy," another respondent told the researchers.
About 7 out of 10 respondents indicated that the combination of medical expenses and missing work contributed to their bankruptcies.
Asked what they were unable to afford in the year before going bankrupt, half of seniors said the most important thing they had to cut back on was medical care, such as surgeries, prescriptions and dental care.
"These responses continue to suggest that their health care coverage is inadequate," the researchers wrote.
Taken together, the portrait of retirement in the U.S. is one of instability and risk, at least for some Americans. And bankruptcy, while designed to provide some relief, may be "too little too late."
They added, "By the time they file, their wealth has vanished, and they simply do not have the enough years to get back on their feet."
You can repair your credit report on your own. Repairing your credit report means updating your information and making sure everything is accurate. You don’t need to pay anyone to do this. All you have to do is to get a copy of your credit report from the 3 main credit-reporting companies. Then, if you find any error you can directly contact the credit-reporting agency involved to file your dispute. Within a certain period of time, any information that you claim to be an error will be removed if the agency fails to verify otherwise.
Bankruptcy will remain on your credit report for up to 10 years. Until the set period is over, there is nothing you or anyone can do to delete that information. Creating a new identity to conceal your bankruptcy is against the law. Usually, bankruptcy credit repair scams like this involve applying for an Employer Identification Number (EIN) that you will use in your credit application instead of your social security number. These companies will proudly claim they are offering legitimate services but nothing can be farther from the truth. Providing false statements in a credit or loan application is a federal crime so is obtaining an EIN with fraudulent intent.
Avoid bankruptcy credit repair scams with common sense. Check with the Better Business Bureau before you start doing business with any bankruptcy credit repair company. Never pay a company in advance for a service not yet rendered. The company should provide you a written contract and inform you of your legal rights.
There are no quick fixes when it comes to bankruptcy credit repair. Some may need the help of a professional. Most often, you can do it by yourself with simple yet effective steps such paying bills promptly. Either way bankruptcy credit repair requires time and a steady commitment on your part.
After your debts are discharged through a bankruptcy process, the credit reporting agencies and your creditors have an affirmative duty to update your information by indicating a zero balance and that the debt was discharged in bankruptcy. This will help your income to debt ratio, a primary component of your FICO score; and will help increase your score. Continuing to make payments in full and on time for any long-term debt that was not discharged (such as a mortgage), or on any reaffirmed debt will also help you quickly restore your credit.
Chapter 13’s work differently. Anything that you acquire while you are in Chapter 13 becomes property of your bankrupt estate, including any new purchases, such as a new car.
Due to the length of time that a Chapter 13 lasts ( 3 to 5 years), it is common for a debtor to need another vehicle during the course of the case. The Court understands that cars wear out, get wrecked, or develop mechanical problems that are too expensive to repair. In such situations, the Chapter 13 Trustee may approve you for a new car as long as you can demonstrate both a need for it, and an ability to pay for it; and there are lenders that work with debtors in bankruptcy.
If you are considering bankruptcy but are worried that your current vehicle will not last the term of your case, please know that purchasing another vehicle is possible. It is much better to purchase one with Trustee permission after you file than try to purchase one on the eve of filing, which can be considered bad faith and draw an objection from the Trustee and the Creditor.
If you are already in a Chapter 13 case and need another vehicle, simply contact your attorney and they will help walk you through the process.
The unequal economy that's emerged over the past decade, combined with patchy access to health care in rural areas, have had a severe impact on the people growing America's food. Recent data shows just how much. Farmers are dying by suicide at a higher rate than any other occupational group, according to the Centers for Disease Control and Prevention (CDC).
The suicide rate in the field of farming, fishing and forestry is 84.5 per 100,000 people -- more than five times that of the population as a whole. That's even as the nation overall has seen an increase in suicide rates over the last 30 years.
The CDC study comes with a few caveats. It looked at workers over 17 different states, but it left out some major agricultural states, like Iowa. And the occupational category that includes these workers includes small numbers of workers from related occupational groups, like fishing and forestry. (However, agricultural workers make up the vast majority of the "farming, fishing and forestry" occupational group.)
However, the figures in the CDC study mirror other recent findings. Rates of suicide have risen fastest, and are highest, in rural areas, the CDC found in a different study released earlier this month. Other countries have seen this issue, too -- including India, where 60,000 farmer suicides have been linked to climate change.
In the U.S., several longtime farm advocates say today's crisis mirrors one that happened in the 1980s, when many U.S. farmers struggled economically, with an accompanying spike in farmer suicides.
"The farm crisis was so bad, there was a terrible outbreak of suicide and depression," said Jennifer Fahy, communications director with Farm Aid, a group founded in 1985 that advocates for farmers. Today, she said, "I think it's actually worse."
"We're hearing from farmers on our hotline that farmer stress is extremely high," Fahy said. "Every time there's more uncertainty around issues around the farm economy is another day of phones ringing off the hook."
Finances are a major reason. Since 2013, farm income has been dropping steadily, according to the U.S. Department of Agriculture. This year, the average farm's income is projected to be 35 percent below its 2013 level.
"The current incomes we've seen for the last three years ... have been about like farm incomes from early in this century," said Hurt, a professor of agricultural economics at Purdue University in Indiana.
Farmers are also at the mercy of elements outside their direct control, from extreme weather events that threaten crops to commodity prices that offer less for farm goods than it costs to produce them.
"We've spoken to dairy farmers who are losing money on every pound of milk they sell," said Alana Knudson, co-director of the Walsh Center for Rural Health Analysis with the University of Chicago.
As America's trading partners slap tariffs on U.S. crops, those prices are set to be further undermined. Meanwhile, the Federal Reserve's gradual raising of interest rates threatens the financing for many smaller farms.
"A lot of our farmers take out operating loans so they can buy seed, fertilizer and spray. As we're looking at increasing interest rates, this is going to exacerbate financial vulnerability," Knudson said.
Unreliable finances are a major reason why three-quarters of farmers must rely on non-farm income, often from a second job. Health insurance access is another.
Health care and mental-health services can be critical, Knudson said, particularly in rural areas, where medical care may be scarce. The farm bill that passed the House last week threatens to undo that, she said, because it allows for health insurance to sell plans that exclude mental health coverage. The Senate version of the farm bill allocates $20 million to a program to connect farmers with behavioral health services.
Such programs are even more crucial today, said Fahy, because many publicly-funded programs that were created in the wake of the 1980s farm crisis have been chipped away over the years. She pointed to Minnesota, where a suicide hotline closed earlier this month after a budget dispute between the legislature and the governor.
"Farmer stress right now is extremely high, the farm economy is very precarious and not predicted to improve in the near future," she said. However, she added, "When there are steps in place to address the root cause, which is usually financial and legal, the stress becomes manageable."
Because people can feel stigma around issues of mental health, conversation is important, said Doug Samuel, associate psychology professor at Purdue University.
"When you're looking at someone who you have a concern about," Samuel advised, "don't be afraid to ask, don't be afraid to listen." © 2018 CBS Interactive Inc.. All Rights Reserved.
When choosing bankruptcy credit cards, look at the fees you have to pay. If there are more than two fees required, you may want to pass. Remember, you do not know how much your credit limit is and you do not want to find out when you get your card that you already have a high balance and little available credit due to the fees. Try to find bankruptcy credit cards without application fees and with a reasonable annual fee.
Other factors that you have to look at in bankruptcy credit cards are the interest rates and charges for late payments or for going over the credit limit. While the options may be limited after bankruptcy and you cannot expect to get the same deal as a person with a good credit score, you do not have to pay more than what is necessary.
There are reputable financial institutions that are willing to help you restore your credit.
Shop around, compare your options and be patient in your search. However, do not make the mistake of submitting your applications to all the credit card companies you are considering just to find out what their terms are. You can get information on the general terms of bankruptcy credit cards by simply inquiring with the different companies. Note that too many credit applications and credit checks will lower your credit score even more.
Of course, before you apply for bankruptcy credit cards make sure that card payments will not be a strain on your finances. It would also be good to start with just one or two bankruptcy credit cards (if any at all).
Once you have been approved for a credit card, read the terms and conditions carefully and ensure that you understand them completely before accepting the card. Try to keep the credit balance low and manageable. Again, timely payments are essential. Remember, bankruptcy credit cards are great tools to re-establishing your credit if you are responsible in using them.
Of course, two other places to find anyone is online or in the Yellow Pages. The Yellow Pages may be able to give you a good idea of what bankruptcy lawyers in your area, and they may also have their websites listed so you can go online and find out more about them. Of course, if you’re interested in also trying out virtual attorneys, going online is the only place to go.
Better than going through the Yellow Pages, searching online, or even asking friends and family, you should check different associations and organizations when looking for a bankruptcy lawyer. The American Bar Association is one of the best places you can look for a bankruptcy lawyer.
Their website even has an online lawyer locater where you can easily search for bankruptcy lawyers in your area. Another association that will help you search for a bankruptcy lawyer online is the National Association of Consumer Bankruptcy Attorneys. Their website also has an Attorney Finder where you can just enter in what kind of lawyer you’re looking for.
Remember that wherever you look for a bankruptcy lawyer, you need to collect a list of names, and not just let the first lawyer you find handle your case. Once you have a list of a few names, you can then start contacting them individually to find out if they’re the best lawyer for you.
It’s during this interview time that you’ll find out if the lawyer is capable, professional, and if you have a good rapport with them. Bankruptcy is an incredibly hard and incredibly stressful thing. You want to make sure that whoever helps you through it, that you feel comfortable with them.
A very informative article from msn.com read the article here. https://www.msn.com/en-us/money/personalfinance/heres-how-to-survive-bankruptcy/ar-AAvYOOg
Even the most responsible people can run into financial hardships. Sometimes these issues get so bad that they can't get out from under them. For those with unmanageable debt, one solution is to file for bankruptcy.
Having to file for bankruptcy can take an emotional and financial toll. Even so, in 2017 alone, there were 765,863 non-business bankruptcy filings, according to the Administrative Office of the U.S. Courts. While bankruptcy is a legal solution that can dismiss large portions of debt, it comes with serious consequences and requirements. Understanding what bankruptcy is, how it impacts your finances and the advantages and disadvantages can help you survive and recover from this financial shakeup.
What is bankruptcy?
It is the legal process to relieve individuals and businesses when they are unable to pay their debts. The process is complex and may require hiring attorneys who specialize in this topic. Every bankruptcy is unique, and the court will evaluate each individual's financial situation, their debt and their ability to pay back that debt to determine whether they can declare bankruptcy. If the court decides that you can declare bankruptcy, it will also decide what debt is dismissed and may still require you to pay back some of your debt. Keep in mind that declaring bankruptcy will negatively impact your credit history make getting loans and new credit cards difficult or require you to accept a higher rate.
When is bankruptcy a good idea?
Bankruptcy will not only relieve you of certain debt, but the court will usually assign you a budget, so you can repay your remaining debt. It will stop foreclosures of homes, repossessions of cars and other property, cease wage garnishments and prevent your utilities from being turned off. Also, creditors and collection agencies must stop contacting you for repayment once you file for bankruptcy. If they continue calling after you notify them, they can be fined.
While each case is different, bankruptcy can reduce or dismiss common debt from credit cards, medical bills, past-due utility bills and even rent. Keep in mind that there is debt that is never, or rarely, dismissed by bankruptcy, such as child support and alimony, student loans and owed taxes. And while you may no longer be required to pay your car payment, your car may be repossessed.
What are the types of bankruptcy?
While businesses usually file Chapter 11, for individuals, the most common types of bankruptcy are Chapter 7 and Chapter 13. Each has its advantages, and your personal situation will determine which may be appropriate for you. In Chapter 7, the court sells your property and assets to pay back your debt. Any debt left over will be dismissed. Some property is excluded, but you could lose your car and home. This bankruptcy will stay on your credit report for 10 years, and you won't be able to file again for eight years.
In Chapter 13, you will work with the court to repay a part or all of your debts. In this bankruptcy, you can retain your possessions and assets and not have them sold or repossessed. Repayment plans can last from three to five years and the bankruptcy will be on your credit history for only seven years. And if you have to, you can refile a Chapter 13 bankruptcy in as few as two years.
How can you improve your credit after bankruptcy?
One of the biggest consequences of declaring bankruptcy is the impact to your credit. Not only will the filing impact your credit, but any loans or credit card debt settled by the bankruptcy will also be negative items on your credit report. After bankruptcy, you may not be eligible for new loans and credit for years after you file, and you can expect banks, lenders and credit card companies to charge you higher interest rates and require security deposits and larger down payments for the products they offer. While you can't offset the impact of bankruptcy to your credit, there are things you can do to improve it over time.
Try to avoid adding any new negative items to your credit report by sticking to a budget, paying all your bills on time and avoiding building new debt. Research any new loan or credit application to see whether bankruptcy will cause automatic denial. Applying for new credit too soon or having multiple denials can hurt your credit even more. A good tool to improve your credit is a secured credit card. These cards require a deposit, which can be equal to your spending limit. Otherwise, you can use them like any credit card. Paying the full balance every month will have a positive impact on your credit.
During bankruptcy, you may have the opportunity to make a reaffirmation of a debt, where the specific debt is not included in the bankruptcy. This would be beneficial for something like a car loan, where you would be able to keep your car as long as you can still make the payments. Keeping the loan in good standing can help you build your credit.
A virtual bankruptcy lawyer can communicate with you through emails and by the phone, and send any necessary documents for you to read or sign through email, fax, or regular mail. There are so many options with today’s technology that anything you and your bankruptcy lawyer need to do with each other, you don’t ever have to meet face to face to do it.
Because virtual lawyers don’t have the expensive corporate offices and fancy conference rooms that traditional law firms do, they are able to keep their overhead costs and expenses at an all-time low. Because of this, they can offer their clients the same expertise, professionalism and skill that any other lawyer can but at a much reduced price – something especially important when you’re filing for bankruptcy.
So can a virtual bankruptcy lawyer help you file for bankruptcy, and will they be an effective lawyer? Yes! There’s no reason to think that just because your lawyer is working out of their home office rather than their corner office that they’re any less capable of handling your bankruptcy case than any other lawyer.
But, it’s also important that you research any virtual bankruptcy lawyer as extensively as you’re researching other lawyers you may be considering. Because just like with any other lawyer, a virtual bankruptcy lawyer may be who’s right for you, but that’s not necessarily the case.
Of course, virtual bankruptcy lawyers can be found virtually – online. But what if you want to speak to other lawyers as well? (And you really should!) Where do you start looking for a good bankruptcy lawyer? We say... you've already found one!