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Stratford Bankruptcy Blog

Bankruptcy: Incomes stagnate as spending rises

The last few months of the year are filled with celebrations and holidays, many of which seem to fall one right after the other. From purchasing new home decor to buying gifts, Connecticut consumers usually end up spending a significant amount of money during this time of year. However, with income remaining fairly stagnant and consumer spending going up, some people might inadvertently find themselves in financially-strained situations. For these individuals, bankruptcy could be helpful.

Economists predicted that American spending would rise by .5% in July 2019. Spending actually grew by .6%. Personal consumption expenditures -- PCE -- accounted for .2% of that increase. This rise in spending might have been offset by the slight decrease in food prices, but energy services and goods rose significantly.

Can bankruptcy help with overdue medical debt?

Seeking medical care when sick or attending regular appointments for health care prevention is important for the health and vitality of people living in Connecticut. Unfortunately, some people choose to forgo getting necessary medical attention because they are scared of what comes after -- bills. This fear is far from unfounded. Medical debt is a growing problem, although one that can be addressed through bankruptcy.

Approximately 43 million people in America have unpaid or past due medical debt that is negatively affecting their credit scores. Unpaid medical bills account for about half of all overdue debt in the U.S. While medical debt can slowly build up over time due to smaller expenses, much of the overdue bills are related to larger, unexpected care. Ambulance rides and hospital stays are common sources, as is receiving care from doctors who patients believed were in-network but turned out to be not.

Scammed students could benefit from bankruptcy

It is no secret that there is a student loan crisis in the United States. Both current and former college students in Connecticut may feel desperate to find a way to repay those loans, but rising tuition costs and stagnant wages have made it nearly impossible for many people. Unfortunately, thousands of students have claimed that they were scammed into student loans by their schools. These individuals and other people may not have considered that bankruptcy could be a more effective strategy for dealing with this type of debt.

A significant number of scam allegations involve for-profit colleges that promised students things they simply could not deliver. The U.S. Department of Education has a program that is supposed to help affected students erase their student loans, but it is not working very well. Over 239,930 people have applied to the program, 179,377 of which are still pending.

Not sure how personal bankruptcy works? Read this

Filing for bankruptcy is a way for people in Connecticut to address their debts that they can no longer repay. However, the process is much more involved than simply filing and then waiting for debt to disappear. There are generally two types of personal bankruptcy that consumers can use -- Chapter 7 and Chapter 13. Here are a few things that may help individuals better understand the process of personal bankruptcy.

To file for Chapter 7, a person must pass the means test, which assesses his or her debts, incomes and assets. If that individual passes the test it usually means that he or she does not earn enough to be able to repay the debts. Any qualifying debt can then be discharged, giving that person a fresh financial start. However, it also means that valuable assets like cars or jewelry may be sold to satisfy some of the creditors.

Why are so many baby boomers filing for bankruptcy?

Financial trouble can strike at any age and for virtually any reason. Even those who feel as if they have adequately prepared for emergencies should understand that it is impossible to foresee everything that might come up in the future. These types of financial troubles seem to be particularly troublesome for baby boomers in Connecticut. Many are turning to bankruptcy as a result.

Baby boomers are filing for bankruptcy at increasingly higher and higher rates. Individuals over the age of 65 now account for one out of every seven bankruptcy filings. The problem is not reserved for boomers who are on the younger end of the spectrum, either. In 2016, approximately half of American adults over the age of 75 had debt. In 2007, fewer than one-third of this age group had debt.

Bankruptcy an option for consumers eager to decrease debt

The current unemployment rate in America is relatively low, but that does not mean that some Connecticut consumers feel confident about the future. Reducing debt is a priority for many people right now. However, some people may struggle more than others when it comes to paying off debts. For these individuals, bankruptcy could be a smart choice.

Consumer confidence in the economy is waning, although that may simply be part of an ongoing cycle. Attitudes toward things like purchasing vehicles and homes appear to move cyclically, and positive attitudes are currently declining from a recent peak. In fact, many people are more worried about the future of the economy despite the low 3.7% unemployment rate as of July 2019. This means that consumers are working toward not just decreasing debt, but also building up savings.

When is Chapter 7 bankruptcy a better option than Chapter 13?

When a person realizes that his or her debt has reached an unmanageable point, it might be time to think about bankruptcy. There are two types of consumer bankruptcy to consider -- Chapter 7 and Chapter 13. While a person's income may dictate which bankruptcy he or she qualifies for, there are times when both forms of bankruptcy are possible.

If an individual in Connecticut meets the income limitation for Chapter 7 bankruptcy, he or she may feel conflicted about how to proceed. Although Chapter 7 discharges most of a person's debt, the debtor may have to give up valuable property that is not exempt from the process. Chapter 13 allows debtors to keep most property. While Chapter 13 might sound preferable, whether a person is able to keep certain property is not the only factor to think about.

As millennials struggle with credit cards, bankruptcy could help

There is perhaps nothing inherently wrong with having a credit card. Some Connecticut consumers use credit cards to improve their credit scores, or to make specific purchases in order to earn reward points. Paying off the balance every month is often important to maximizing these benefits. Unfortunately, it is easy to end up carrying increasingly larger balances from month to month. As millennials struggle with growing balances, some may find that bankruptcy can be an effective tool for handling overwhelming amounts of debt.

Between 2008 and 2012, Only 41% of millennials used credit cards, but now that figure has jumped to 52%. The increased popularity of credit cards among millennials is not particularly concerning, but how they are managing those accounts is. In the first quarter of 2019, 8% of this generation's credit card balances were considered seriously delinquent, more than any other age group. A total of 60% of adults aged 18 to 34 either carry large balances, shell out for late fees or engage in costly behaviors with credit cards. The average credit card interest rate is approximately 17%, so carrying a balance and falling behind on payments will only add to a person's debt load.

Bankruptcy can help worried consumers address debts

Household debt has been growing for over a decade, but it does not all come down to consumer spending. Much of the consumer debt that people in Connecticut now live with is the result of borrowing just to survive the ongoing aftermath of the Great Recession. Experts are cautioning that the growing household debt could cause serious problems for some people should the country hit another recession. Economic decline could be a common factor among those who choose to file for bankruptcy.

Many people borrow money out of necessity rather than for frivolous expenditures. Since the end of the recent recession, people have been borrowing at higher and higher rates, causing consumer debt to balloon to record highs. These debts are often student or auto loans, mortgages and credit card balances. When those affected by the recession could not find new, better-paying jobs, many ended up borrowing money just to pay the bills.

How personal bankruptcy affects retirement and bank accounts

Most people want to know what will happen to their homes and vehicles during bankruptcy. It is understandable to feel concerned about two things that are so integral to the safety and security of a person. However, it is important for people in Connecticut to understand how personal bankruptcy will also affect their financial accounts.

Bank accounts are treated differently in Chapter 7 and Chapter 13 bankruptcy. When it comes to Chapter 7, filers can expect to keep their accounts, but not necessarily most or even all of the funds. A person may be able to keep some of the money in the account should it meet certain exemption criteria. In Chapter 13, filers usually keep their accounts and the money in them. This is because Chapter 7's goal is liquidation while Chapter 13's is repayment.

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