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Stratford Bankruptcy Blog

Why do people file for personal bankruptcy?

Debt is not an uncommon problem for people across the United States. Collectively, Americans hold $1.5 trillion in student loan debt alone. The weight of this combined with other household debt and bills can be overwhelming for some Connecticut families. In some cases, personal bankruptcy may be the best option. 

Medical debt is one of the more common reasons people choose to file for bankruptcy, as it can involve very overwhelming bills within a short period of time. Combined with student loan debt, this can push someone past what they are able to pay. Another common reason is the loss of a job or the inability to find work. A combination of two of these factors or all three may make bankruptcy a necessary step.

Should someone buy a car during Chapter 7 bankruptcy>

One of the biggest questions people have about bankruptcy is how it might affect their future ability to purchase items, particularly on credit. One of the specific issues Connecticut filers may wonder about is their ability to buy a car during Chapter 7 bankruptcy. The answer to this question is not always straightforward, as there is a difference between being able to buy a car and it being a good idea.

The Chapter 7 bankruptcy process typically lasts three to six months. During this process, filers must list their assets for the courts. Nonexempt assets must be sold under this type of bankruptcy, with proceeds going to creditors. A vehicle may be exempt from this provided it falls under the vehicle exemption amount set out under Connecticut law.

Pros and cons of debt management plans

When people visit a professional to discuss financial issues, they are usually hoping to come out with some enhanced knowledge and and an awareness of the next steps to tackle their challenges. A debt management plan is a common way that professionals will work to address manageable debt for Connecticut clients. Here are a few things people should know about these plans in order to decide if this is the best path to take in their situation.

Many people mistake debt management plans for debt settlement. Debt settlement is a process typically led by a legal professional where people are able to reduce the amount they owe. This is usually the best option for people who have more debt than they can reasonably manage. Those who choose a debt management plan will have to pay back all of what they owe, with the only reduction being reduced fees or interest from a lender involved in drafting the plan.

Balancing debt management with saving an emergency fund

One of the biggest challenges for people facing high debt loads is deciding whether to aggressively pay down debt or save some money to avoid needing another loan in the future. Connecticut individuals facing this debt management dilemma should consider many factors when deciding whether to save or pay down debt. Steps can include reviewing their cash flow, clarifying access to lower interest credit and reviewing household budgets.

An emergency fund is a priority for many Americans, especially those with uncertain income. Uncertainty can take many forms, but generally freelancers and startup workers are in a more vulnerable position than long-term employees and should save accordingly. It is a good idea to have three to six months worth of expenses available in case an emergency arises.

Debt management tips for new graduates

The high cost of education and limited opportunity to earn income can make it difficult to have a healthy financial life in college. For Connecticut students, graduation often comes with major debt management questions. How much should they set aside for savings versus debt repayment? What does a healthy budget look like? Here are a few tips that can help recent graduates get off on the right financial foot.

Self-awareness can be very helpful in managing finances. People should know whether they are inclined to overspend, and limit themselves if their habits are unsustainable. They should also clarify what their future goals are, as this can often dictate the financial moves they should make.

Can debt relief and forgiveness from creditors fix finances?

When considering whether to file for bankruptcy, it is not unusual for someone to hear advice about contacting creditors in an effort to have debts lowered or forgiven. But is debt relief and forgiveness a myth, or can indebted Connecticut residents really get their amounts owing reduced by a credit card company? The truth is that debt forgiveness can happen, depending on the lender, but it often comes with some strings attached.

It is true that debt collectors are occasionally willing to negotiate on amounts owing, especially when it comes to interest accrued. This is often done as a reward of sorts for committing to a payment plan. However, taxes associated with "forgiven" debt will likely still need to be paid, so the deal may not be as good as one would originally think.

More older individuals facing personal bankruptcy

Reaching retirement is often a time in life that many Connecticut residents look forward to, especially if that time is near. Hopefully, individuals have utilized retirement accounts to give themselves a nice nest egg to live on after they stop working. However, many older individuals appear to be struggling financially as of late, and numerous baby boomers are filing for personal bankruptcy.

A recent report indicated that over a period of 15 years, bankruptcy petitions for individuals 75 or older have more than tripled. Additionally, one out of every seven individuals who file for bankruptcy is at least 65 years old. The report also indicated that during that period from 1991 to 2016, the filings for parties in the 65 to 74-year-old age range increased over 200 percent. 

How to get a business loan after filing for personal bankruptcy

Many entrepreneurs have hit financial snags on their way to success. But in the current financial landscape, modern business builders in Connecticut may wonder if business loans are obtainable for those with a history of personal bankruptcy. Luckily, lenders often have options for people with a less-than-ideal credit history.

The first thing would-be business owners should look at when applying for a loan is their credit score. Minimum credit score requirements can vary a great deal, depending on the lender. Some accept credit scores as low as the 500s, while others require up to a 700 minimum.

Prepare for retirement debt management while working

Owing money just before and during retirement is more common than people may think. In fact, 2016 data showed that 70 percent of U.S. households headed by people between 65 and 74 years of age were holding some amount of debt. Even for households headed by individuals 75 and over, 50 percent held debt. Retirees in Connecticut have some unique challenges when it comes to debt management as they typically have a fixed income.

One of the most common types of debt that many Americans end up dealing with in retirement is a mortgage. One of the challenges of mortgage repayment when retired is that typically, refinancing a mortgage is less of an option without employment income. Additionally, employment income can help support bill payments including mortgages.

Choosing between personal bankruptcy and debt consolidation

When choosing whether or not to file for bankruptcy, most people consider a few different options. One of the most common considerations is debt consolidation. This refers to taking on new debt to cover old debt, combining most or all outstanding balances under one new loan. Connecticut individuals weighing the options between this and personal bankruptcy have a few things to consider.

First, one should consider the pros and cons of debt consolidation. Debt consolidation can make it easier to pay down debt as it can mean you have only one lender to pay. This is particularly beneficial if the new loan has a lower interest rate than the others. However, in order for this lower interest rate to be possible, a borrower typically needs good credit or a solid co-signer.

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