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Tyler Texas Bankruptcy Law Blog

Personal debt far outweighs savings, but bankruptcy may help

Personal debt continues to be a struggle for many Americans, including thousands here in Texas. According to data recently gathered by Northwestern Mutual, the average American had more than $38,000 in debt in 2018. This amount did not include home mortgages. The research also found that individuals are two-times more likely to thousands, perhaps even tens of thousands, of dollars in debt than they do in savings. Only 23% of Americans didn't carry any debt last year.

There are a number of factors contributing to increasing personal debt. Amongst them are medical expenses, student loans and credit card debt. Childcare expenses and housing costs have also left individuals struggling to get by. Another element of personal debt may be transportation costs, more specifically car payments. The average auto purchaser in 2018 borrowed money in excess of the average per capita income, meaning that it may be challenging to pay back.

Multiple types of bankruptcy: What's the difference?

You may not know much about bankruptcy law. What you do know is that you're facing a serious financial crisis. Your credit card balance is sky high, and you have no way to pay it off. You have medical bills because of a loved one's recent surgery, and your boss just informed you that they are cutting costs and your services are no longer needed.

That sounds like a recipe for complete financial disaster, but it doesn't necessarily have to be. There are multiple types of bankruptcy, and if you qualify, you may utilize a viable option to help you obtain debt relief and then lay the groundwork for a stronger financial future. First, you have to understand the difference between bankruptcies so you can determine which one best fits your needs.

Student loan debts hit senior citizens hard

Student loans have left many Texans struggling to make ends meet. With college costing tens of thousands of dollars, many consider whether it's even worth it. But those who do choose to take on debt to obtain an education can wind up paying on those loans for a significant period of time, even if they are able to obtain good jobs upon graduation.

Sadly, reports indicate that seniors aged 60 and older posses $86 billion in student loan debt. The average borrower in this age group has more than $33,000 in student loan debt. Some of this is for their own education taken out decades ago, while others cosigned on loans for their children. This debt burden affects nearly three million seniors, who can even see their Social Security benefits reduced to cover their student loan obligations. This figure is four times higher than it was just a decade ago, and it wouldn't be surprising if that continues to balloon. This is especially true considering that there is no time limit on the government's efforts to collect this debt.

Stop home foreclosure with Chapter 13 bankruptcy

Many Texans work hard to keep a roof over their head. Yet, it doesn't take much for the financial strains to make it challenging to pay bills to maintain that housing. Although Texans who rent can always finish up their lease and move to a cheaper living arrangement, homeowners can't simply walk away from their mortgage without serious financial consequences. As a result, many Texans who fall on hard financial times find themselves struggling to stay current on their mortgage. When they fall several months behind on their payment, they may face foreclosure.

Yet, an individual doesn't have to lose his or her home due to financial trouble. By filing for personal bankruptcy, whether it is Chapter 7 or Chapter 13, an individual can benefit from an automatic stay on foreclosure proceedings. This can buy a homeowner time to seek the elimination of other debts so that mortgage payments can be made up. Through Chapter 13 bankruptcy, individuals enter into a repayment plan to pay off some debts, while others are written off. This can allow an individual to keep his or her home.

Thinking about Chapter 7 bankruptcy? We're ready to help

Recently, this blog discussed a survey regarding credit card debt. It found that about half of all Americans carry a credit card balance from month-to-month. There are many reasons for this, including the sudden onset of a medical condition and the loss of a job. Regardless of the specific circumstances at hand, many Texans who turn to credit cards do so because they are in need of financial resources to cover debts that can't afford. While many make a zealous effort to pay these debts off, the sad reality is that it is often a debt spiral that can quickly get out of hand.

Trying to pay back these debts can leave an individual facing years, sometimes even decades, of financial struggle and uncertainty. These individuals may forego getting married, having children or buying a house. Yet others will end up being forced to sell their homes in order to pay off other accumulated debts. This cycle of debt can be stressful and worrisome. Yet, it doesn't necessarily have to be. That is because an attorney who is skilled with personal bankruptcy may be able to guide these individuals through the legal process, thereby allowing them to come out on the other side with a fresh financial start.

Debt collectors seek to legally use texting and emailing

Creditors can be overzealous in their debt collection practices. Fortunately for consumers, state and federal laws, such as the Fair Debt Collection Practices Act, regulate many of these creditors' aggressive tactics. Yet, creditors often overstep their bounds, leading to harassment. Unfortunately, the debt collection industry is looking to increase its access to consumers by pushing for laws that allow for text and email communications.

As it reads now, the law is unclear about whether creditors can utilize these forms of communication to collect debt. After all, the law was first passed in the 1970s and hasn't seen many changes over time. Therefore, the law as it stands now didn't really contemplate the extensive use of the Internet and cellphones. Professionals in the debt collection industry claim that these communications are the best way to reach consumers, particularly Millennials who are less likely to answer and return phone calls. These professionals believe that texting and emailing may lead to more efficient and less confrontational collections.

Are you one of many in Texas facing serious financial crisis?

There are basically three overall categories that apply to every Texas resident's financial situation. There is a global economy, a local economy and a personal economy. Any or all of these economic issues can affect your daily life and either make or break your financial portfolio. There's a natural ebb and flow involved with finances. In short, you might have some months or years that are better than others.

It's best to try to avoid panic if you encounter financial problems in life. Worrying can't solve anything, and it takes clear thinking and knowledge of options to determine a best course of action to help overcome financial obstacles. The more you understand about the types of issues that cause financial distress, the better equipped you'll be to rebound if financial crisis hits your household.

Survey finds that credit card balances remain problematic

There are many ways that individuals can find themselves saddled with debt. In many cases, though, Texans are forced to turn to credit cards to cover unexpected costs, whether they be car repairs, medical bills or home maintenance. While these cards provide quick access to a line of credit, individuals who use them can find themselves hurtling toward a seemingly inescapable debt spiral.

In fact, a recent survey found that nearly half of Americans carry a monthly credit card balance, meaning that they don't pay off the debt in full in each month. Less than one-third of those surveyed said they expected to pay off their credit card debt within the next year. More than 70 percent of those surveyed said that they their average credit card balance is more than $1,000. The average national credit card balance is more than $5,000.

Don't be scared of bankruptcy's effect on credit score

Far too many Americans struggle with debt. While some of this debt is due to out of control spending, in many instances, it is caused by an unexpected event, such as the onset of a medical condition or the losing of a job. Many people who wind up in this position struggle to try to dig themselves out of the hole, but the financial obligations often prove overwhelming. Bankruptcy provides these individuals with a very real debt relief option. However, many Texans find themselves wondering how it will affect them and their financial health in the future.

While it is true that pursuing Chapter 7 or Chapter 13 bankruptcy will generally have a negative impact on one's credit score, it does not doom one to an eternal life of financial struggle. It's quite the opposite, actually. Bankruptcy can provide an individual with the fresh financial start he or she needs to get back on his or her feet. Then, that individual can focus on rebuilding his or her credit.

What debts remain after a successful Chapter 7 bankruptcy?

Dealing with debt is not easy; however, there are ways and mechanisms one can address these matters. Take, for example, Chapter 7 bankruptcy, This is often referred to as liquidation bankruptcy. This is because the Chapter 7 process requires an individual sell off, or liquidate, a significant portion of his or her assets in order to pay off creditors. There are some exemptions to this liquidation so that debtors don't have to start over from scratch post-bankruptcy. However, as those individuals who successfully complete the Chapter 7 bankruptcy process move on with their lives, they may be surprised to find that they still owe some debts. This is why it is critical to fully understand the effect of a given bankruptcy option before pursuing it.

Generally speaking, Chapter 7 bankruptcy allows for the discharge of most debts. But there are some debts that either cannot be discharged or are very difficult to discharge. Child support arrearages and spousal support, for example, cannot be written off through Chapter 7 bankruptcy. Also, debts that are not listed on the initial Chapter 7 filings are ineligible for discharge, which shows just how important it is to be thoroughly detailed from the get-go.

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