Credit Card Debt, Debt Relief

How Much of Your Monthly Income Should go Towards Paying Down Debt?

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Consumer debt. It seems to be an inevitable part of life for many Americans. In fact, most American consumers carry some level of debt. Getting out of it, however, is not so easy, which is why so many Americans use at least some portion of their income to pay towards their debt. Determining how much is appropriate can be complicated, depending on the consumer’s individual circumstances.

Generally speaking, it is important to pay more than the monthly minimum payment. A good rule of thumb is to follow the 50/30/20 rule. What this budgeting rule entails is the consumer spends 50 percent of monthly after-tax income or net income towards essential living expenses, such as mortgage payments, utility bills, food, and transportation costs. After that 50 percent is paid, the consumer allots the next 30 percent to his or her “wants,” meaning eating out, going on vacation, and other non-essential expenses. The remaining 20 percent is left for paying off debt or saving for the future.

Credit Card Debt

How Credit Card Debt Affects Your Health

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Credit card debt can cause a lot of damage, and not just to your credit score. Credit card debt can cause stress and wreak havoc on relationships. It can also lead to depression, anxiety, and other health problems. Once you are in debt, reaching your financial goals becomes much harder. Spending money paying debt leaves you with less money for retirement savings, purchasing a home, and achieving other financial milestones.

According to a recent study, carrying significant debt can lead to more than just a bad day. Researchers followed a group of baby boomers, starting when they were between the ages of 28 and 40 and then checking in with them again in their 50’s and older. The group was then separated into subgroups based on how much unsecured debt they had. According to the data, the more unsecured debt a person had, the higher level of physical pain he or she lived with when compared to individuals in the other groups.

Bankruptcy Trends

Latest Bankruptcy Filings Mixed

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August and September 2021 bankruptcy filings have been mixed. While certain types of bankruptcy cases have increased, others have gone down, according to data from Epiq’s AACER bankruptcy information services.

According to Epiq, overall bankruptcy filings for all chapters have declined by four percent, with 32,263 new filings made in August 2021 to 30,907 new filings reported in September 2021. Additionally, individual Chapter 7 filings decreased by nine percent between August and September.

Housing Market Trends

Mortgage Affordability Lowest in 13 Years

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Record home prices and slow growing incomes are two of the driving factors affecting mortgage affordability for so many today.

A median household would need to spend 32.1 percent of its income on mortgage payments for a median-priced home, according to the Federal Reserve Bank of Atlanta. That marks the highest percentage since November 2008, according to the Wall Street Journal.

student loan debt, Student Loans

Navient Will No Longer Service Federal Student Loans- What This Means for Borrowers

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Navient has announced that it will no longer service federal student loans. The company is one of the largest servicers for the U.S. Department of Education. Navient has a massive $1.7 trillion oustanding in its student loan portfolio.

The decision leaves around 6 million borrowers waiting to be matched with a new lender.  With a transition of this magnititude, problems are likely to occur. Here are a few things borrowers should do now if their student loans are getting reassigned to another lender.

Foreclosure Defense, Foreclosures

Foreclosure Moratorium Expires, Leaving 1.45 Million Homeowners in Serious Delinquency

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Even though mortgage delinquency rates have fallen by five percent since May, a record 1.45 million homeowners are seriously delinquent on their mortgages, according to figures from Black Knight.

The number of delinquencies has improved for 12 of the last 14 months, with only two increases in delinquencies reported. However, delinquency volumes have continued to increase to the point of pre-pandemic levels. According to Black Knight, around 1.45 million borrowers are at least 90 days delinquent on their mortgages as of the end of July. This stage of the process is known as a late-stage delinquency, meaning the borrower is not in foreclosure but is dangerously close. Black Knight reported that this figure was one million more than at the beginning of the COVID-19 pandemic. Many of these borrowers are still working with their lenders on forbearance plans.

Bankruptcy Law, Consumer Bankruptcy

Will a Bankruptcy Filing Remove a Vehicle Repossession?

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A bankruptcy discharge will relieve the filer of his or her debts, which means that the person can walk away with a clean financial slate.  However, a bankruptcy case does not remove all debts from the consumer’s credit report. In fact, certain debts and the legal proceedings associated with them can be difficult to remove, including vehicle repossession.

A consumer bankruptcy case, including Chapters 7 and 13, should remove negative marks on the consumer’s credit report. In a Chapter 7 bankruptcy case this is accomplished by liquidating the consumer’s assets that are not otherwise protected under a bankruptcy exemption and using those funds to pay off the consumer’s debts. Those not paid are then discharged at the end of the bankruptcy. Under a Chapter 13 bankruptcy case, the consumer works with the bankruptcy trustee on a repayment plan that lasts between three to five years. At the end of that time, the remaining debts are discharged from the consumer’s record.

Bankruptcy Law, Consumer Bankruptcy

Is It Possible to Refinance a Mortgage after Bankruptcy?

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One of the biggest fears expressed by bankruptcy filers is how a bankruptcy case will affect their ability to receive financing in the future.  While having a bankruptcy on a person’s credit report can make it more difficult to qualify for a mortgage, it is possible for someone who has completed bankruptcy to refinance his or her mortgage after the case is successfully closed.

A number of factors can influence how easy it is to refinance after bankruptcy, including the type of bankruptcy, whether it be a Chapter 7 or Chapter 13 bankruptcy. The type of mortgage loan that the borrower is looking to refinance can also heavily influence this.

Foreclosure Defense, Foreclosures

Foreclosure Filings Increase First Month After Moratorium Is Lifted

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Foreclosure filings have increased, just one month after the moratorium on foreclosures and evictions was lifted, according to data from ATTOM. Foreclosure filings have increased 27 percent nationwide. When compared to where these numbers were in August 2020, foreclosure filings in August 2021 were 60 percent higher.

ATTOM estimates that a total of 15,838 properties received a foreclosure filing during August 2021, whether it be through a notice of default, a bank repossession, or a scheduled auction.

Bankruptcy Law, Consumer Bankruptcy

When Is Filing for Bankruptcy the Best Option?

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Making the decision to file for bankruptcy is never an easy one. Many individuals hold off on filing for fear of what it will do to their credit or worse, fear of the unknown. For many consumers, taking that first step and initiating a bankruptcy case can be the best option for them. The key is deciding when to take that step.

The longer a person stays in debt, struggling to pay bills, defaulting on liabililities, the worse the financial damage will be.  Not to mention the emotional toll it takes.  By not taking action, a person can risk being sued by thier creditors or having their wages garnished. Credit card companies, creditors and even the IRS can take legal action to garnish your wages to pay off outstanding debt.