Filing for bankruptcy allows people to get a fresh start financially and erase past debts, but a legitimate concern many consumers have is the effect it will have on their credit score and their ability to take out credit, again.
One of the biggest misconceptions about filing for bankruptcy is that it will ruin your credit score and your financial future. To the contrary, after filing for bankruptcy you can begin restoring your credit right away.
Credit card debt is a problem that countless consumers struggle with. But according to recent data provided by Experian, Gen X consumers carry more credit card debt than any other generation.
Experian’s data showed that Gen X holds the highest average credit card balances at $8,658. As members of Gen X approach middle age, many of them raising families, they are also struggling to pay down credit card debt they have been holding since their 20s.
Debt can oftentimes come with a negative connotation, but not all consumer debt is created equal. In fact, some types of debt are better than others. It is important for consumers to know the difference between the two types before taking on additional debt.
Good debt, for the most part, is debt that is used to help a consumer pay for goals or purchases that will enhance his or her overall wealth. Debt in this category includes mortgages and student loan debt, as well as small business loans. These types of debt tend to carry low interest rates and are tax deductible. Good debt is associated with a piece of property or collateral to guarantee the debt, although that is not always the case, such as with student loans.
When someone is in debt, he or she may feel trapped with nowhere to turn. According to Northwestern Mutual’s 2018 Planning & Progress Study, the average American consumer has $38,000 in debt, not including their mortgage.
As soon as creditors or debt collectors begin contacting the consumer regarding what he or she owes, the person may feel like he or she has no choice but to do whatever is being demanded of him or her. However, most consumers do not realize that they do, in fact, have rights when it comes to debt they owe. It helps to know what these rights are when debt collectors or creditors come calling.
Getting out of debt can seem like a never-ending battle. Once someone falls behind on one or more bill payments, the debt collector calls can be relentless. The late fees and penalties that are often assessed on past-due accounts, not to mention the interest rate spikes that come along with missing a payment, can make getting back on one’s feet nearly impossible. There are certain steps that can help consumers who are facing these types of situations get out of debt and stay out.
Remain Calm.
It can be easy to react out of stress or panic and make decisions that someone would not normally have made, especially when dealing with debt collectors. It is important that whatever decisions are made by the consumer are ones that are carefully considered and logical. Many consumers may react out of fear and enter into payment agreements that they would not normally agree with and cannot realistically afford just to get the debt collector to back down. The aggressive techniques used by many debt collectors have this motive in mind. Make sure you understand and get the terms in writing, first. Never agree immediately to a payment arrangement over the phone with a debt collector.
Tax season is not always a happy time for everyone. While many consumers look forward to filing their tax returns to obtain their tax refunds, others are left with balances they owe to the IRS in the form of tax debt. The good news is relief options are available when dealing with the IRS.
Tax debt relief is available to individuals who owe the IRS money but are not able to pay on their debts. If a taxpayer anticipates having to pay any amount in taxes, it is important that he or she first determines how much that amount will be. It is best to first file your taxes to determine what the amount owed will be.
American seniors have seen their debt levels increase significantly over the past two decades. It is estimated that the total debt load carried by American consumers over the age of 70 years old increased by 543% between 1999 and 2019. It now stands at a record high of $1.1 trillion, according to the Federal Reserve Bank of New York.
Individuals who were in their 60s saw their debt increase by 471%, bringing their total debt load to $2.14 trillion. Seniors were not the only group who saw large increases in their debt, but these two age groups saw the largest increases.
Credit card debt is a burden for many consumers. Most have a complicated relationship with their credit cards. On one hand, disciplined and modest use of a credit card to make certain purchases can help establish a good credit score. On the other hand, if the balance on a credit card is not paid in full each month, and on time, the balance can quickly spiral out of control.
According a recent study by CompareCards, American consumers are carrying an all-time high of $1.1 trillion in credit card and other types of revolving debt. This figure is up nearly 20 percent from where it was just ten years ago.
Consumer debt is increasing nationwide, affecting individuals in all types of economic and sociographic groups. However, millennials seem to be the generation hit the hardest. In fact, millennials living in certain U.S. cities are hurting the most when it comes to their debt, according to a recent study from LendingTree.
LendingTree found that individuals in the millennial generation, born between the years 1981 and 1996, carried large amounts of auto debt, as well as student loan debt. These two categories made up the biggest portion of non-mortgage debt carried by millennial consumers.
A new piece of legislation has been introduced in the Florida State Senate which would protect the professional licenses of student loan borrowers from being suspended or revoked in the event they fall into default on their loan obligations.
The measure is Senate Bill 356, also known as the “Keep Our Graduates Working Act.” The bill expressly prohibits a state authority from suspending or revoking an individual’s professional license, registration, permit or certificate due to the person falling into delinquency or default on his or her student loan obligations.
