Tag: millennials and credit card debt

Credit Card Debt, Debt Collection, Debt Relief

U.S. Cities Seeing the Highest Increase in Millennial Debt

Posted on by Admin

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.

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

One in Four Millennials Depleting Their 401(k)s to Pay Down Debt

Posted on by Admin

According to a new report released by Merrill Lynch and Age Wave, one in four consumers under the age of 34 have made the decision to take money out of their retirement accounts to try and get out of debt. Of the reasons reported for why these individuals took money out of their retirement accounts was to pay down student loan debt or credit card debt.

This is a critical mistake and one that comes with a 10 percent tax penalty, not to mention more long-term consequences. Since any money that goes into a 401(k) account is from pre-tax dollars, the IRS taxes money taken from a 401(k) at a higher rate than normal income.

Not only will a person be paying a higher amount in taxes on money taken from a 401(k), but they will also be jeopardizing their retirement and borrowing against their future wealth.  The goal of retiring can seem far off for millennials, but the earlier you plan and save for retirement the better.

The fact that younger consumers feel they have no choice but to reach into their retirement savings comes as no surprise, especially considering the fact that many of these individuals carry a significant amount of credit card and student loan debt. This is before some of them even apply for their first job.

It is estimated that Americans hold a total of $1.6 trillion in student loan debt. The average undergraduate student graduates with approximately $37,000 in student loan debt, according to the Merrill Lynch study. On top of that, these individuals also are carrying an average of $3,700 credit card debt. However, despite this fact, financial experts do not advise using retirement savings to pay off debt.

It is important that consumers be aware of the fact that money in 401(k) accounts is protected in bankruptcy. In fact, social security, 401(k)’s and pensions  worth up to $1.245 million are all exempt from creditors during bankruptcy. This means that retirement income and savings are out of reach and protected under federal law. A Chapter 7 bankruptcy allows you to hold onto all of your retirement savings and keep every penny of your 401(k).

However, this is only the case if the money remains in your 401(k) retirement account.  Removing funds from the 401(k) or any retirement account before filing for bankruptcy turns the funds from a protected asset to an unprotected asset.

If the amount of debt you are struggling to pay is so unmanageable that you are considering filing for bankruptcy, it is important to remember that retirement savings are protected under Florida’s bankruptcy exemptions. It is important to speak with an attorney, especially if you have recently lost your job and have considered pulling from your retirement savings to help pay for day-to-day living expenses.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Related Resource:

https://www.cbsnews.com/news/one-in-four-millennials-with-401ks-are-raiding-retirement-savings-early-to-pay-down-debt/

 

Credit, Credit Card Debt, Debt Relief, Student Loans, Timothy Kingcade Posts

More Millennials Carry Credit Card Debt than Student Loan Debt

Posted on by Admin

Student loan debt has said to have been the biggest financial burden the Millennial generation will face, but more and more individuals in this generation say they are in fact, struggling with credit card debt. In fact, credit card debt – as opposed to student loan debt – is the most prevalent type of debt among the group.  According to a recent NBC News/GenForward survey, 46 percent of U.S. adults between the ages of 18 and 34 carry credit card debt. Approximately 36 percent of them carry student loan debt. The survey reported that around three out of four Millennials carried some type of debt. More than 75 percent of those surveyed said they carried at least one type of debt, including credit cards, student loans and car loans. Only one in five Millennials reported having a mortgage debt.

One-fourth of these Millennials who carry credit card debt have balances of more than $30,000. One-fourth say that their balances are below $10,000. Around 11 percent of those in this age group surveyed have over $100,000 in debt with 22 percent of them being debt free.

The survey found that Millennials with college degrees were more likely to have credit card debt with 56 percent reported graduating with credit card debt. Forty percent who held credit card debt did not have a college degree.

When it comes to having a personal savings, 62 percent of Millennials owed more in debt than they had in a savings account. Only less than one-fourth had more in their savings account than owed in debt. Approximately one in three Millennials have less than $1,000 in savings. One-fourth of Millennials have no savings at all.

Entering the workforce with such a large amount of debt pushes young individuals to hold off on saving for the future, which leaves many of them unprepared in the event of an emergency. It also puts them at a slower start in preparing for retirement.

When asked if they would have trouble paying on an unexpected financial expense of $1,000 or more, two-thirds of them stated they would have a hard time meeting that obligation. Out of the group surveyed, those who were African-American or Latino would have the hardest time paying these obligations, although the difficulty was not exclusive to just these two groups.

If the Millennials were parents, around 48 percent of them reported that they would have a great deal of trouble in the event a financial crisis; for example, a job loss or medical emergency. Of the Millennials who did not have children, 39 percent of them reported this fact.

Credit card debt and student loan debt have caused a number of Millennials to postpone major life events like starting a family, purchasing a home and saving for retirement.

Click here to read more on this story.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.