Debt is a problem for most millennials in Mississippi and in other states. In 50 large cities across the United States, millennials are carrying an average of over $23,000 in personal debt excluding mortgages. San Antonio is the area with the largest average non-mortgage debt for millennials at $27,122 followed by Pittsburgh and Austin.
Student loans account for the largest proportion of debt in the U.S. for individuals age 22 to 37 followed by credit cards. Car loans are another major source of debt for millennials. One problem faced by many is that even in areas where the cost of living is low, wages are also lower.
Another problem that many young adults face when they are taking out loans is that their credit histories are not usually very extensive. Loans may end up costing them more because of a low credit score.
Some loans may be difficult to avoid. For example, most people need a car to get to and from work, so taking on a car loan may seem like a necessity. When juggled with student debt, credit cards and other personal loans, millennials in most major cities are finding debt difficult to manage.
Many debtors are turning to bankruptcy in order to stop repossession, creditor calls and wage garnishment. A bankruptcy attorney may be able to assist debtors who have fallen behind on their payments by filling out paperwork, providing legal advice and attending a meeting of creditors with the debtor prior to the final discharge of debt.
Most individual debtors choose to file a Chapter 7 bankruptcy, which can wipe out unsecured debts. Debtors who do not qualify to file a Chapter 7 may be able to file a Chapter 13 bankruptcy, which requires that payments be made for several years. An attorney may be able to help clients who are contemplating bankruptcy decide if it is a good solution for them.
In the 2017 fiscal year, individuals in the United States filed a total of 767,721 personal bankruptcies in the federal courts. Residents of Mississippi may benefit from learning about some common mistakes people make that may lead them to file for bankruptcy.
For example, overspending with credit cards is a major culprit as many individuals do not have an updated budget that is based on what they really need. Not having a well-developed budget means that individuals are unaware of how much disposable income they have and what they can buy without having to incur any debt. It also means that they are unaware of how much money they can actually borrow and repay within a sensible amount of time.
Another mistake people may make that can lead them into bankruptcy is spending money on certain unnecessary things, such as expensive vacations. Many people may be swayed by peer pressure or constant marketing to make these purchases without determining if they are actually able to afford them.
It is not uncommon for financial institutions to solicit individuals for credit cards. However, many people make the mistake of believing that because they have been solicited for credit they can actually afford to take on the debt and pay back the entire amount. They may also mistakenly believe that simply paying the minimum owed on a credit card debt is sufficient.
A bankruptcy attorney may evaluate the financial circumstances of a client and advise them of the differences between Chapter 7 and 13. In many cases, filing for bankruptcy can give a debtor a new financial start and allow them to retain their personal property.
While bankruptcy cases have been decreasing in Mississippi and across the U.S. since the end of the Great Recession, many consumers still need to file for bankruptcy protections each year. However, experts say that people need to understand a few key points before deciding to file for personal bankruptcy.
First, in order to get maximum debt relief, consumers need to make sure they declare all their debts in their bankruptcy filing. This means that they need to carefully review their financial situation and make sure they understand what types of debt they owe and who they owe it to. Second, consumers need to realize that bankruptcy filings are long, complicated and easy to mess up. For example, many people fail to provide all the necessary documents, such as bankruptcy schedules, or fail to complete federal requirements, such as attending debtor education classes. Unfortunately, these types of mistakes can significantly delay a case.
Speaking of delays, experts say that, in most cases, consumers shouldn’t postpone filing for personal bankruptcy. Filing can eliminate certain monthly debt payments, which could provide extra funds for essentials, including food and gas. A bankruptcy filing also puts an end to debt collection efforts and harassing phone calls, which can reduce anxiety and stress. Finally, consumers should realize that bankruptcy is permanent. This means that, while it may only stay on their credit report for seven to 10 years, it will remain on their record for the rest of their lives. As a result, it could prevent them from getting certain jobs or loans.
Individuals considering bankruptcy could learn more about their legal options by contacting an attorney. An attorney could review a client’s case and recommend the best way to obtain financial relief.
Source: Born2Invest, “Personal bankruptcy: 4 things to know before filing one,” Christopher Elliott, Aug. 10, 2018
Researchers have identified a startling new trend in bankruptcy filings. They have gone up significantly for elderly people in Mississippi and nationwide. Since 1991, the number of filings from people over the age of 65 went up by 480 percent by 2016. When looking at the filings from people over 75, the increase during that period approached 1,000 percent.
Insufficient income and medical expenses represent the primary forces overwhelming older people and retirees. Drawing upon survey data collected by the Consumer Bankruptcy Project, researchers found that almost 70 percent of elderly bankruptcy filers cited job loss, income decline or inadequate retirement savings as the cause of their financial troubles. Medical bills or problems interfering with work came in a close second with 62 percent of people responding that health care issues motivated their filings. Some people experienced a financial hardship because of changing eligibility for Social Security and the shift away from pensions to 401(k) savings plans.
The majority of people tried to repay their debts for two or more years before seeking debt relief. Although the rise of seniors going bankrupt has emerged as a new trend, young and middle-aged people still account for the majority of bankruptcy filers.
When debt overwhelms a person, threats of repossession, foreclosure or wage garnishment could add to the stress. A conversation with an attorney about bankruptcy could inform someone about the potential for debt relief. A lawyer could analyze an individual’s income and debts and explain how a Chapter 7 or Chapter 13 bankruptcy might resolve the problem. If a person decides to file, then an attorney could prepare financial disclosures for the court and assume communications with creditors. The advocacy of a lawyer might enable a person to start over with a manageable payment plan or discharge of debts.
When people in Mississippi file for bankruptcy, the court issues an automatic stay that prohibits creditors from continuing to seek payment. Although issues like multiple bankruptcy filings could interfere with the immediate issuance of an automatic stay, the court order typically becomes effective as soon as debtors file their bankruptcy paperwork and lasts until the discharge of debts. Creditors might initially violate the stay in the first couple of weeks after a filing because they have not yet processed the notice about a bankruptcy. Unless evidence shows that creditors willfully violated a stay, they will likely avoid legal consequences unless they persist with collection efforts.
Since debtors could expect to receive letters and telephone calls right away a bankruptcy filing, they should be ready to provide their case number and bankruptcy court information. Debtors should keep records of contact with creditors so that they can show that they provided notice to creditors about the stay. The court also mails official notices to all creditors, and attorneys can alert creditors to the stay for their clients as well.
Creditors that might repossess a vehicle or advance a foreclosure case could be held liable by a court if they seize property during a bankruptcy. A court will require the return of repossessed property and the payment of damages to the debtor if applicable.
A person concerned about mounting debts and missed payments could seek out the representation of a bankruptcy attorney. A legal review of the person’s debts and income could provide insights about which chapter of bankruptcy to file. A lawyer could take action to inform creditors about a filing as soon as possible and challenge those that defy the automatic stay. With legal support, a person might prepare bankruptcy disclosures completely and stop repossession.
