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Richmond Virginia Family Law Blog

Rule permits lawsuits against banks, credit card companies

Consumers in Virginia and across the United States can't be prevented from joining class action lawsuits against their banks or credit card companies by arbitration clauses. A rule issued by the Consumer Financial Protection Bureau is designed to stop companies from preventing consumers from taking legal action about issues that affect a large number of people.

The arbitration clauses in question are usually deep inside the terms and conditions that accompany a bank or credit card account. The clauses have been used to stop class action suits filed by customers as a group.

Bankruptcy court sides with debtor

A Virginia man who filed for Chapter 7 bankruptcy separately from his wife received a positive ruling from his district's bankruptcy court. The trustee in his case had challenged the fact that he was maintaining two homes while trying to discharge debts. The trustee declared that the debtor should sell one home instead of seeking relief through bankruptcy. The court, however, deemed his expenses to be valid and not an abuse of the Bankruptcy Code.

The judge decided that the man had not taken unfair advantage of hiscreditors. The court's analysis of his living expenses did not produce evidence of a reckless or lavish lifestyle. The fact that he maintained two homes did not in itself show an abuse of the law. The court even considered that he could have provided payments in some form to creditors if he had filed instead for Chapter 13. The court, however, did not consider his choice to file through Chapter 7 abusive either.

Myths about divorce can confuse separating spouses

Virginia residents headed for divorce may receive a lot of advice from family members and friends based on their personal experience or that of their own loved ones. However, a number of common beliefs are not true. Correcting that information can help to protect the emotional and financial well-being of people in this situation.

Some of this incorrect information can center on dividing finances and other assets. For example, many people believe that simply giving up one's ownership interest in the marital home in a divorce settlement is sufficient to extinguish mortgage obligations. However, the lender is not a party to the settlement agreement, and it will be necessary to obtain an indemnification from the party who will stay in the home.

Secured creditors must file proofs of claim on time

In Virginia bankruptcy cases and elsewhere, secured creditors are not required to file proofs of claim as unsecured creditors are. Nonetheless, a recent case set a precedent that if they do file a proof of claim to receive payments out of a Chapter 13 bankruptcy case, secured creditors must file it on time.

The case was heard in a U.S. Bankruptcy court in which a couple was giving the judge details of their plans to pay off their debt over the next three to five years. A secured creditor, a company that had a lien on the couple's home for unpaid property taxes, wanted to receive payments from the bankruptcy plan. The judge asked the couple if they wanted to file a claim for the creditor, but they declined. Because the creditor had not filed a claim, the couple stated that they would wait until later to pay the taxes.

Finances for blended families

Virginia families might face challenges after a divorce when one parent decides to marry another who has children. There are some things to consider when becoming a blended family.

Finances are usually a complicated topic, so it is best to discuss expectations and figure out how each partner feels about this issue. This includes talking about spending priorities, savings and what example to set for children. It is important to be on the same page about finances because both adults likely do not have the same level of wealth or financial needs, so a couple must decide how to handle disparities.

Dismissed bankruptcies could be a concern when financing a car

People going through a Chapter 13 bankruptcy in Virginia should take care to implement their court-ordered plans or they could face difficulties in obtaining credit in the future. There are a number of auto lenders that handle loans to consumers with past bankruptcies or other credit concerns.

However, even subprime lenders will likely have concerns about issuing a car loan in a case where a bankruptcy has been dismissed rather than discharged. Once people have filed for Chapter 13 bankruptcy, they must follow court rules and procedures. When a bankruptcy is discharged, that means that the process has been successful.On the other hand, a dismissed bankruptcy means that the process has not been completed. Bankruptcy filings can be dismissed without prejudice if a filer has made errors, filed the wrong forms or otherwise run up against procedural issues. In this case, a filer can re-file right away after correcting the error.

Credit card debt expected to grow after interest rate hike

One sign that the Federal Reserve Bank believes that the American economy is recovering could also lead to much more expensive credit card debt for consumers in Virginia and across the country. For consumers with debt, including credit card debt, home equity lines of credit or adjustable-rate mortgages, monthly payments can be expected to rise following the Fed's interest rate hike.

These types of consumer debt carry variable interest rates. The rates go up or down depending on the fluctuations of the prime rate, the Federal Reserve's short-term federal funds target rate. On June 14, the Fed announced that it was increasing that rate by one-quarter of a percentage point.

Handling finances before a divorce

For Virginia couples who are ending their marriage, the manner in which they should handle their finances with a divorce on the horizon may be a cause for concern. However, there are things they can do to prepare for the process.

Advice regarding legal issues should only be taken from those with the authority to provide such counsel. If there is any uncertainty about whether it is appropriate to make any type of financial changes right before a divorce, an attorney who is licensed in the state that has jurisdiction over the matter should be consulted. People should begin keeping a record of their income and expenses as soon as possible. This can be useful when creating a post-divorce budget. It can also be a factor in how the court rules on the allocation of debts and assets and whether child support or alimony should be awarded.

High deductible health insurance and medical debt

More Virginia residents might be using a high deductible health insurance plan than they were five years ago based on a study conducted by the National Center for Health Statistics. The study defined "high deductible" as a plan with an average deductible of $1,300 for a single person or $2,600 for family coverage. Between 2011 and 2016, the number of people aged 18 to 64 who were on such a plan rose from 26.3 percent to 39.3 percent.

While a high deductible health plan can save money on premiums, it may become a problem for families who are unable to afford the deductible if a medical crisis occurs. The journal "Nonprofit Quarterly" reported that for almost two-thirds of families, a $500 emergency meant either reducing spending or borrowing money. The cost of an illness or injury may snowball if people have to take unpaid time off work to recover, and they might even lose their job.

Downsides of credit card debt

Many Americans accumulate credit card debt at some point during their lives. The average amount of credit card debt in U.S. households is $5,700. This may not seem like a huge amount, but it can have long-term consequences that Virginia cardholders may need to be aware of.

People who need more money for living expenses or want to start an emergency savings fund may need to start paying off credit cards in full. When making minimum payments, interest is charged on the total balance. It is in the best interests of credit card companies for consumers to only pay the minimum amount so that interest is accrued. People who make only the minimum payment often spend more on interest than they do on the principal amount.

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