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Stratford Bankruptcy Blog

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.

The effects of student loan co-signing on debt management

When children or relatives go off to college, it is often an exciting and expensive time. Some people may be approached during this period to co-sign on a student loan or on student loan refinancing. Since student debt is a common debt management issue across Connecticut and the United States, it is worth looking into the specific risks of this decision before choosing to do so.

Across the United States, student loan debt has reached over $1.48 trillion with the average student carrying a balance of almost $40,000. Interest rates range from about 2 percent to 12 percent, with federal student loans sitting between 5.05 and 7.6 percent for the 2018-19 school year. Some students will choose to refinance this debt after graduation for a lower interest rate, which often requires a co-signer.

Balancing debt management with long-term savings

Fitting debt into a monthly budget can be a difficult task. Many people in Connecticut struggle with balancing debt management with other priorities, like saving for the future. Here are a few tips for those struggling with saving for retirement and paying off debts.

Even those who have outstanding debts should consider saving for retirement. Often, the compound returns from savings over decades will be higher than interest accrued on a loan. This is especially true for those who have employers that match retirement contributions, which doubles the money right away. A financial planner may be able to help crunch these numbers and elaborate on retirement saving options.

Aging Americans face unique debt management challenges

Dealing with debts can be challenging for anyone, but those who are close to retirement might find it particularly challenging. While most people in Connecticut hope to retire without owing money, the reality for many is that this is not possible. Despite this, there are some debt management tips that those nearing retirement can consider to manage both their future savings and outstanding balances.

According to 2016 research, nearly half of all American families with heads of the household over 75 hold debt. For those households run by individuals 55 and older, 70 percent held debt. Those retiring with outstanding balances are certainly not alone, but that doesn't mean the circumstances don't demand some action.

Tips and habits that can help with debt management

As of 2017, American households carried a collective $13 trillion in household debt, according to the Federal Reserve Bank of New York. These numbers no doubt signal that Connecticut families who are struggling with debt are not alone. Luckily, there are some debt management tactics people can use to lighten their financial load.

People who get into trouble by spending their paycheck right away should consider automating their contributions to savings or debt repayment from the minute their get paid. This will keep them from thinking they have disposable income that should really go toward savings. An emergency fund is also an important thing to understand, especially for those paying down debt. These savings will ensure that should an emergency arise, no further debt will be needed to cover expenses. 

Credit card debt management tips

There are many questions people have when facing credit card debt. Is it a good idea to continue using credit cards with balances owing? Does asking for a credit increase negatively impact a person's credit score? Here are some credit card debt management tips that may help those in Connecticut facing these often complicated issues.

It is important that people understand the difference between "good debt," such as student loans and affordable mortgages, and consumer debt that is best avoided. Avoiding incurring additional consumer debt is almost always a good idea. While it is not necessary for everyone, avoiding credit card use can help to curb spending.

Planning can help seniors avoid medical debt management issues

Many individuals in the workforce get used to the perks of having a job, from reliable health insurance to a steady paycheck. But what happens when retirement hits at the same time medical bills skyrocket? It is critical for aging individuals in Connecticut to understand as much as possible about Medicare and debt management options when preparing for retirement.

Medical expenses are often the most sizable expense for seniors. To make matters more challenging, these bills are also often unexpected. Avoiding medical debt should be a priority for anyone looking to transition into retirement.

As household debt grows, debt relief becomes necessary

Debt often seems like a strange, unexplainable creature for many Connecticut consumers. While most people try to avoid taking on too much debt, many find that their balances continue to build until they reach a breaking point. Although it might feel like an impossible situation, there are many debt relief options -- including bankruptcy -- that can help consumers achieve the best possible financial future.

In the first quarter of 2018, average household debt in the United States tallied up to $13.2 trillion. When compared to the final quarter of 2017, households took on about $63 billion in additional debt, most of which came from mortgages. Although the increase may seem like a positive in that many more consumers were able to purchase their own homes, some experts find the sharp increase worrying.

How to manage interest rate hikes after personal bankruptcy

One of the biggest concerns people have when filing for bankruptcy is how it will affect their credit score. Credit scores can affect many things for individuals in Connecticut, from their ability to rent an apartment to the cost of leasing vehicle. However, a recent study from LendingTree showed that while those who have filed for personal bankruptcy pay more on loans, there are certain ways to lessen the load by demonstrating positive repayment habits.

So how much more do people pay in interest when their credit score involves personal bankruptcy? The answer depends on the purchase. With a car loan, for example, borrowers who have recently filed for bankruptcy can expect to pay $2,171 more on a five-year, $15,000 loan. Mortgages also cost significantly more when the borrower has filed, though credit score tends to be more important in these cases than bankruptcy history.

Many Americans may be struggling with debt management, data shows

Many Americans face various types of debt, from mortgages and student loans to outstanding balances on consumer credit cards. New data shows that, collectively, Americans are projected to hold an estimated $4 trillion in consumer debt by the end of this year. Connecticut residents facing debt management challenges may wish to understand these trends in order to see how their amounts owing compare to others in the country.

The data indicates that the amount the Americans owe, when compared to their income, has increased over the past few years. In 2010, Americans collectively owed 22 percent of their income in consumer debt. Today, that number has increased to over 26 percent. This figure is even higher than it was during the mid-2000s credit boom.

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