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Should you file personal bankruptcy because of credit card debt?

Connecticut readers may know that most Americans have credit card debt. For some, however, this debt eventually becomes more than is reasonably manageable. When left unchecked, credit card debt can lead to financial struggles in other areas, and compounding interest can make a person feel like he or she will never get ahead. When overwhelmed by a credit card debt situation, credit card holders may wonder if they should file personal bankruptcy

Many consumers fall prey to credit cards because companies use certain ploys to draw people in by offering certain benefits. For example, many stores ask patrons if they would like to open a store credit card in exchange for a certain percentage off their purchase that day. While this may seem like an attractive offer, it can actually lead to problems in the future as more and more is charged to that card.

Debt management relief on high-risk loans to help some consumers

Consumers in Connecticut and throughout the country will soon get a break against the debt traps that place unreasonable burdens on them to pay back all or most of certain debt obligations at once. The Consumer Financial Protection Bureau (CFPB) just finalized a rule that requires certain protections regarding payday loans, auto title loans, deposit advance products and balloon payments in some longer-term loans. The relief will assist some consumers in facilitating better debt management measures to keep their debt from burgeoning out of control.

These types of loans often utilize predated checks that are used to pay off short-term loans, usually made in smaller amounts that are theoretically going to be paid off by the borrower's next paycheck. In auto title loans, a short-term loan is granted on the basis of the borrower's auto title being put up for collateral. The borrower may have to put up access to his/her checking account or auto title to get a longer-term loan that has a balloon payment at the end.

Avoiding accusations of Chapter 7 bankruptcy fraud

For most Connecticut residents, filing for bankruptcy is an unfamiliar process. Faced with the need to identify, list and value all accumulated assets, many people will make a number of mistakes. In some cases, those mistakes can be misconstrued as acts of fraud. That's why it's critical to work with a qualified Chapter 7 bankruptcy attorney throughout the process.

If a bankruptcy case presents unusual details, the trustee and court that oversees the process may determine that there have been acts of fraud. An example is found in the case of a former neurosurgeon who now stands accused of intentionally hiding assets during his personal bankruptcy. He now faces the risk of prison time in addition to a $250,000 fine. According to prosecutors, the man submitted a falsified financial statement to the court. They believe that he took steps to hide more than $300,000 as well as a valuable motorcycle.

Were these consumers made aware of Chapter 7 bankruptcy?

When a Connecticut resident is in need of bankruptcy services, the initial stages of that process involve a consultation with a bankruptcy attorney. That professional will review the consumer's financial information, and provide a recommendation about which type of bankruptcy is appropriate. Very often, consumers with no sizable assets are advised to pursue Chapter 7 bankruptcy, which can lead to the elimination of many forms of unsecured debt.

According to a recent report, there are areas of the country where consumers are not provided with the guidance and advice needed to complete the bankruptcy process. It appears that in at least one southern city, African American residents who are living at the lowest end of the economic spectrum are encouraged to file any form of bankruptcy. That action is completed not to create lasting debt relief, but simply to slow down collection efforts.

Even responsible consumers sometimes require debt relief

When most Connecticut residents think about insurmountable debt, they often envision an individual who has embraced indiscriminate spending and other questionable actions. In reality, however, many people find themselves in serious need of debt relief, even those who have carefully managed their money throughout their adult lives. According to a recent survey, 38 percent of Americans who have a credit score at or above 660 are currently struggling with high credit card debt.

It is important to understand that a number of factors go into determining an individual's credit score. It is possible to rack up considerable debt while maintaining a very high score. Unfortunately, if an unexpected event causes a severe financial crunch, it is easy to enter a debt tailspin. That can happen even in cases where individuals or families have been very cautious in their spending and saving habits over the years.

Chapter 7 bankruptcy as an estate planning option

For most Connecticut residents, estate planning and bankruptcy are two distinct sets of needs, with very little crossover between the two. That said, there are circumstances in which Chapter 7 bankruptcy can play a powerful role in the estate planning process. With proper planning, it is possible to pass down wealth from one generation to the next, without placing those assets at risk for loss.

Consider, for example, a case in which an adult child has gone through a period of severe financial turmoil. If that individual receives an inheritance, creditors have the right to pursue those assets to cover outstanding financial obligations. In some cases, that can mean the depletion of some or all of a person's inheritance.

Is personal bankruptcy better than debt settlement?

Faced with a mountain of debt, many Connecticut residents are looking for a way out. Among the available options are personal bankruptcy and debt settlement. It is important to understand the differences between the two when charting a course of action. In many ways, personal bankruptcy offers a better path out of debt than most settlement plans.

To begin, debt settlement often takes years to complete. In many cases, consumers are advised to stop making payments on their outstanding obligations while negotiations are underway. That can cause significant damage to their credit, which will take years to recover from. The risk of lawsuits during this time also increases when debts go unpaid.

Debt management: Tips for prioritizing student loan debt

Many Connecticut residents emerge from college with a hefty student loan burden to accompany their shiny new degree. When financial chaos strikes, student loan debt can place enormous pressure on already strained finances. Many people know that they need to create a debt management plan, but are unsure where to begin. Prioritizing student loans in relation to other types of debt is a great place to start.

In some cases, it makes sense to pay down student loan debt before attacking other outstanding obligations. An example is for those who hold student loans with excessively high interest rates. Student loans that have a relatively low balance are also good candidates for early repayment. Another group who should consider focusing on student loan debt first are those who are considering seeking personal bankruptcy protection. Bankruptcy will not eliminate student loan debt, but could lead to the discharge of many types of unsecured debt.

Handling debt collectors during debt management efforts

Many Connecticut residents prioritize achieving financial stability over most other goals. Debt management is a process that can have numerous rewards, but it also takes a certain period of time to accomplish. During that time, debt collectors may come calling. Consumers need to know how to respond when contacted by a debt collection agency, and they should understand their rights and responsibilities in regard to debt collection efforts.

The first thing to understand is that it is never necessary to provide personal information simply because a request is made by a debt collector. Debt collection agencies have files on the consumers they contact. It is not necessary to provide them with additional information. In fact, since many scams are disguised as debt collection efforts, answering personal questions increases one's risk of falling victim to a scam.

Here's how debt management can make or break a relationship

When Connecticut residents are looking for love, they have a certain set of requirements that they are hoping will be met. Among those is finding a mate that has achieved a degree of financial security, and who is able to manage money effectively. If those qualities are not present, then many people will simply move on to the next prospect. That is why achieving steady debt management is essential.

A recent survey asked 1,000 people how they feel about student loan debt. Approximately 75 percent of respondents said that high levels of student loan debt was "baggage" that would be brought into a union. Some people claimed that excessive debt was more concerning than a past divorce, a child or a non-violent felony conviction.

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