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Card debt being paid off at slower rates?
According to a recent article, it has come to attention that young Americans borrow a lot of money with credit cards, and they repay the debt much more slowly than generations before them, says a recent study by Ohio State University. Although with the help of a Texas bankruptcy attorney, bankruptcy can be a solution to financial problems, it is smart to responsibly manage your finances. Lucia Dunn, an econ professor at OSU, has suggested that these new findings mean that the typical young credit card holder will probably die in debt to credit card companies. Dunn was a co-author of the study, along with Sarah Jiang, who is the manager of credit and business strategy at Capital One Financial in McLean, Va.
According to Professor Dunn, if this pattern continues, the United States may end up with a serious financial crisis among the elderly people who cannot pay off their credit card debt.
The study was originally published in an issue of Economic Inquiry. It was based on two long-term surveys, one of which included not only borrowing data but payoff data as well. This information has not been previously available to many researchers. It has allowed more accurate predictions in regards to when Americans will be financially able to pay off their card debts.
There are several reasons as to why these younger generations are struggling with debt more than those before them. Credit is now much more readily available, and general attitudes toward debt have changed dramatically. According to Dunn, “It’s a lot more socially acceptable to have debt and go into bankruptcy.”
The results have also found that younger people are paying off their massive credit card debts at slower rates. The current payoff rate is approximately 24 percentage points lower than their parents’ and a dramatic 77 percentage points lower than their grandparents’ rate.
There are other factors that play into this, such as the skyrocketing levels of student debt, which leads to trouble paying off credit card debt.
There was a bright side to the study though. Researchers found that if the minimum required monthly payment on cards were to be raised, borrowers would be forced to pay off more debt and possibly eliminate debt much earlier in their lives.
Credit card debt has become an increasingly serious problem for all Americans. If you or somebody you know is struggling with debt and/or bankruptcy, do not hesitate to contact an experienced Texas bankruptcy attorney to answer your questions and get you back on the right track.
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All about Your Credit Score
Your credit score is a three digit number that is used by businesses to determine if you are worthy of risk. Do not take this these three little numbers lightly. Although small, they have a lot a power and can affect your life negatively or positively. If you don’t think so, consider this; When you apply for credit, it is those three numbers that will determine if you get approved or denied. The same holds true when you apply for an apartment, insurance and a job.
Your credit score is determined by a mathematical formula and although there are tons of these formula models around, most companies use the FICO scoring model, which gauge between 300-850. The higher your score is the better risk you are--likewise the lower the score the higher the risk. Until 2009, each person had three FICO scores because there were three major credit reporting agencies using the FICO model, EquiFax, TransUnion and Experian. Experian is no longer under agreement with FICO. Although there are five categories that make up a credit score, each person’s score is determined based on their circumstances individually. That means that a new person with no credit history is not weighted the same as someone with an established credit history. Instead, the newbie is grouped and weighed against those in that same circumstance—tens of millions to be exact.
There are five categories used to make up a credit score. Payment history and debt owed are two categories that weighed most heavily.
- How you make your payments and any delinquent accounts goes into the Payment history category and is 35% of the pie.
Determining Wants vs. Needs while Budgeting
It has been reported that unemployment rates are improving and that people are spending more money than ever. Bankruptcy filings are falling in number in many parts of the country. Even though it seems that Americans are doing better financially, you can ensure continued development by creating a budget. When preparing your budget, you have to determine what the necessities are for you.
Some basic necessities that must be included are food, shelter, utility service for that shelter, clothing, and transportation. The problem with budgeting these necessities is the degree to which each is carried out.
Everyone needs a place to live. However, a place to live must be affordable within your budget. For example, if you have a small family, you don’t need to have a large home. Instead of spending the additional money on space that you do not need, you can be setting that money aside for savings. This also means that you do not have to have 75-inch television sets in every room.
You also need to have utility service but, that does not mean that you have to have every single channel that your TV service provider offers. Considering a Netflix subscription in place of cable, or opting to open the windows and run fans instead of an air conditioner are responsible options for sticking to a utility budget.
We all need food to survive. This does not mean living on fast food or fancy restaurants is necessary. Fix just enough food to ensure that all of it will be consumed by your family instead of being wasted. You can also shop at stores that are less expensive, such as a store that doesn't have employees to remove shopping carts from the parking lot or one that does not provide plastic bags for free.
When considering clothing and transportation, again, be cost efficient. You do not have to have a Ferrari when an inexpensive car will do what you need. Secondhand clothing stores are less expensive and often have quality clothing.
The point is to live within your means. Stick to your budget and do not spend money that you do not have to spend. If you find yourself considering bankruptcy, an experienced San Antonio bankruptcy attorney can assess your situation and advise you of the options available to you.
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Chapter 13 Bankruptcy Can Help Stop Foreclosure
The FDIC provides some troubling statistics about foreclosures. One out of every 200 homes will be foreclosed upon. Every three months, 250,000 homeowners enter foreclosure. One child in every classroom in America is at risk of losing his/her home because their parents are unable to pay their mortgage.
There are ways, however, to avoid foreclosure and work towards saving your home, even for a homeowner who has fallen so far behind that the mortgage lender has scheduled an auction. Filing for Chapter 13 bankruptcy will stop that foreclosure sale. When you file for bankruptcy, there is an automatic stay put into place that prohibits most creditors from continuing collection activities. This stay includes foreclosure sales.
Chapter 13 also allows you to cure the mortgage default and catch up with your loan. Many times, when a homeowner gets behind on their mortgage payments, the lender either won’t do a loan modification with the homeowner, or offers a repayment plan that is too high for the homeowner to keep up with, resulting in the foreclosure sale.
A Chapter 13 bankruptcy allows you to repay your debts over a three to five year period. For example, let’s look at a homeowner who is paying $1500 per month for their mortgage and they owe an arrearage of $15,000. Chapter 13 will spread that $15,000 over sixty months (five years) at $250 per month, meaning the homeowner will now be sending the mortgage company $1750 per month ($1500 for current mortgage, $250 for arrearage). If the court approves that payment plan, the mortgage company has to accept it. They cannot decline and foreclose.
If you are facing foreclosure, contact a knowledgeable Texas bankruptcy attorney to help save your family’s home. Email us today in San Antonio for a consultation. We can answer any questions you may have about how a Chapter 13 bankruptcy can help save your home from foreclosure.
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Strategies for balancing your budget
With the economic downturn that took place in the United States over the past few years, some people are still struggling to get back on their feet. A recent article has listed a few easy tips that could make balancing your budget and getting a handle on debt a much easier task.
- Spend extra money on credit card and loan balances. USAA member Nikki Tracht and her family had been dealing with extreme levels of debt. One of the things she learned was to start using any extra money on bills and loan balances. With her new system, Tracht makes minimum payments on all bills…except the one with the lowest balance. Her extra money goes toward that one, so one bill is getting paid off completely at a time.
- Selling or returning what you’re not using. Many other members of USAA say that they usually sell their extra unneeded items online, because every dollar you get back counts. The money earned can go towards your credit card bill and any other unpaid loans.
Strategies for Balancing your Budget
With the economic downturn that has taken place in the United States over the past few years, some people are still struggling to get back on their feet. A recent article listed a few easy tips that could make balancing your budget and getting a handle on debt a much simpler task.
- Spend extra money on credit card and loan balances. USAA member Nikki Tracht and her family had been dealing with extreme levels of debt. One of the things she learned was to start using any extra money on bills and loan balances. With her new system, Tracht makes minimum payments on all bills…except the one with the lowest balance. Her extra money goes toward that one, so one bill is getting paid off completely at a time.
- Selling or returning what you’re not using. Many other members of USAA say that they usually sell their extra unneeded items online, because every dollar you get back counts. The money earned can go towards your credit card bill and any other unpaid loans.
Texas Homestead Exemptions Good for Ranchers
One of the most common forms of consumer bankruptcy is a Chapter 7, in which debts are eliminated through the repossession of certain assets. In a Chapter 13 bankruptcy, debt is reorganized so that assets can be protected, and in some cases even saved. Not all assets have to be eliminated in a Chapter 7 bankruptcy, however, and Texas has one of the most lenient bankruptcy exemption codes in the country. 
One such exemption is the Texas homestead exemption, which allows debtors to keep their homes, providing that the home is less than 10 acres in a metropolitan area and 100 acres in a rural area. According to the Texas Comptroller’s Office, only a debtor’s principal residence qualifies for the homestead exemption, and the house must be used as the debtor’s principal residence on January 1 of the tax year for which bankruptcy is being filed.
Filing chapter 13 bankruptcy in Texas
If you are considering filing for bankruptcy, one option that you have is to file under Chapter 13 bankruptcy. If you choose to do so, you will be able to create a payment plan with supervision of the bankruptcy court. After creating the payment plan, you will have between two and five years to repay all of your creditors.
To File for Chapter 13 Bankruptcy, you must follow the steps listed below. To ensure that you file correctly, it is best to hire a competent Texas bankruptcy attorney.
- Define the Texas bankruptcy district that you live in. You must file your case in the correct district according to the Bankruptcy Code and the local rules of bankruptcy court in Texas. The four districts in Texas are: Northern, Southern, Eastern and Western. The boundaries are available online.
Social Security Benefits to be Protected in Bankruptcy
When it comes to bankruptcy in America, there is rarely an occasion that it is coupled with good news. However, there is a cause for a sigh of relief for millions of consumers.
The Ninth Court of Circuit Appeals has protected Social Security benefits from creditors that seek to retrieve any penny they can from bankrupt consumers. Most people who are bankrupt are already facing financial hardships which are not made any easier when faced with a fixed income. Many of these people are disabled or elderly. The court has determined that Social Security income would not be used or considered in a Chapter 13 repayment plan.
Bankruptcy attorneys all over the country are applauding this latest court decision. What this means to you, the consumer, is that when faced with the decision to file bankruptcy, you do not have to worry about losing your fixed income nor having it compromised by having it considered when determining the best bankruptcy plan for your situation.
What to Do When You Are In a Financial Crisis
Going through a financial crisis can be one of the most difficult things you can go through in your life. It can cause so much stress and uncertainty. From losing a job to not being able to pay bills in a timely manner because of unexpected medical expenses or uncontrollable circumstances, you can never predict when the crisis will hit. When it does, here are some simple tips to keep your head afloat.
First, understand it is totally normal to feel stressed and overwhelmed – but do not let that get to you! Keep a level head and try your best to keep a positive outlook. Times may be rough but your focus on the positive will help you and your emotions. You just do not want to get all uptight and stressed. Talk to people who can support you and give you a good outlook and perspective to your situation.
Second, take a step back and look at the situation – see what it really looks like and what it all means. Taking emotions out can benefit you to understand more clearly. You want to be able to assess the whole situation and be able to strategize your solution to the issues. Ask yourself what your priority is and what is the total amount due to each creditor? Mark due dates and payment amounts – a spreadsheet might be a great tool to utilize to get you started and organized.
Lastly, figure out how you will get the money to move in the right direction. Will it be staying on a strict budget? Less spending? Getting another job? Maybe selling some of your unneeded things in a rummage sale or online? You might even have to look at what is a want and what is a need – do you really need cable at this time? Evaluating all your expenses will help you understand where you can cut and use that money to pay-off debt.
Contact a San Antonio attorney today if you are in serious debt and not sure how to go about getting rid of it. We can help you to reverse your financial crisis and get a fresh financial start.
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