Data published by credit reporting agency Equifax indicates that people in Mississippi and across the country owe $13.5 trillion in total consumer debt. Of that debt, more than $1 trillion is owed by people between the ages of 18 and 29. This debt is primarily made up of student loans, but it also includes credit card debt, mortgage debt, auto loans and other types of consumer debt. The last time people in this demographic owed over $1 trillion was just before the 2008 financial crisis during the fourth quarter of 2007.
The data was gathered and put out by Equifax and the Fed Consumer Credit Panel of New York. People between the ages of 30 and 39 owe $2.9 trillion. The demographic owing the most in consumer debt is people between 40 and 49, who owe a total of $3.4 trillion. Those between the ages of 50 and 59 are not far behind, owing $3.2 trillion, according to the data.
People over 70 years of age have roughly the same amount of outstanding debt as young people between 18 and 29 at $1 trillion. People between 60 and 69 owe around $2 trillion. The type of debt affecting the most borrowers is student loan debt, which more than 44 million people carry. The U.S. Secretary of Education has said there is a student loan debt crisis. Some research indicates that 40 percent of those with student loan debt might default by the year 2023.
Individuals who are struggling to pay their debts might want to schedule a consultation with a lawyer. An attorney with experience practicing bankruptcy law may examine the facts of the person’s situation and suggesting options to reduce or eliminate debt. Filing for Chapter 7 or Chapter 13 bankruptcy triggers an automatic stay, suspending collections efforts by creditors.
Bankruptcy may be an option for Mississippi residents who have been overwhelmed by substantial debt. However, filing for bankruptcy can have a long-term impact on their credit. Before filing, they should consider several factors to decide whether it is the best option for them.
Debtors may want to try to negotiate a settlement with their creditors, who generally prefer obtaining a settlement rather than having the debt discharged in bankruptcy. Debtors may find it easier to negotiate a settlement if they are a few months behind on their payments, as creditors might not be inclined to reduce a debt if the payments are current.
Some debtors may benefit from credit counseling, particularly if they have been unable to reach a settlement with their creditors. With the assistance of credit counselors, it may be possible to get lower monthly payments and interest rates.
Lenders and creditors who have received judgements against debtors can be begin garnishing the wages of those debtors. If this occurs, filing for bankruptcy stop the wage garnishment and can even help debtors get some of the money that was garnished returned to them.
Medical bills that are not covered by insurance is another factor to consider in determining whether bankruptcy is the best way to resolve debt. Medical bills are the one of the main causes of bankruptcy because even with health insurance, people find it very difficult to pay those bills. By filing bankruptcy, people with substantial medical bills can pay them off using a 3-to-5-year payment plan or have them completely discharged.
A bankruptcy attorney may evaluate the financial circumstances of a client’s situation and may recommend filing a certain type of bankruptcy to stop wage garnishment. Assistance might be provided with developing a multi-year payment plan to resolve credit card debts and medical bills.
Bankruptcy law recognizes that debts might overwhelm Mississippi consumers. When individuals file for bankruptcy protection, they generally do so under either Chapter 7 or Chapter 13. The form of bankruptcy determines whether eligible debts will be discharged or if the person must continue to pay creditors under a court-mandated payment plan. The chapter under which people file also establishes waiting periods before they can file for bankruptcy again.
Under a Chapter 7 bankruptcy, the court relieves a person of financial burdens by discharging many unsecured debts. After people complete this process, the law requires that they wait eight years before seeking Chapter 7 protection again. If they want to file for Chapter 13 protection, however, they only need to wait four years after completing a Chapter 7 case.
Chapter 13 bankruptcy helps people overcome financial stress by creating a manageable payment plan. This protection can help someone catch up on bills over three or five years and avoid foreclosure or wage garnishment. Someone who took advantage of Chapter 13 protection could file for Chapter 7 after waiting six years. Only two years must pass, however, if a person wants to file a second Chapter 13 petition.
A person needs to consider many factors when filing for bankruptcy a first or second time. The action stays on a credit report for many years and can endanger future employment opportunities or access to credit. A consultation with an attorney could inform a person about the pros and cons of pursuing bankruptcy relief. An attorney could determine if a person could pass a means test and describe which assets might be exempt from liquidation.
To properly assess the impact of credit card debt in Mississippi, it’s important to compare debt levels with income levels. There is often a disparity in the American South. According to a study by CreditCards.com, however, New Mexico is the state most burdened by credit card debt. Massachusetts residents were the least burdened by such debt. The median income in New Mexico is $46,744 while the median income in Massachusetts was $77,385.
Residents in both states owed roughly the same to credit card companies, but New Mexico residents took nearly twice as long to pay down their balances. It took roughly 18 months for households to repay an average balance of $8,323. Households in Massachusetts took about nine months to repay an average balance of about $8,000. This assumes that a family was putting aside 15 percent of its earnings to repay money owed to creditors.
Differences in income also meant that the states such as Maryland or Virginia with the highest overall balances were not among those with the heaviest debt burden. American households as a whole average about $7,000 in credit card debt, according to a report from NerdWallet. To keep debt in check, individuals can choose to use a debit card or pay for items with cash. It may also be possible to transfer balances to a credit card with 0 percent interest.
Individuals who are going through financial challenges may find relief through bankruptcy. Bankruptcy could allow a person to retain assets or avoid having them liquidated as part of the debt repayment process. This means that a debtor may keep a home or equity in a home until a bankruptcy case is over. Furthermore, creditors may generally not engage in a repossession or a foreclosure until a case is closed.
Mississippi residents and others are on pace to amass $4 trillion in collective consumer debt by the conclusion of 2018. That would be an increase of $1 trillion over the past five years alone. The increase is attributed to both revolving debts and others like student and auto loans that have a fixed end date. Revolving debt has increased 22 percent since 2013 while student and auto loan debt has increased by 30 percent in the same time period.
Credit card interest rates are hovering between 16 and 17 percent on average, and that number could go up. This is because the Federal Reserve is planning on increasing interest rates up to four times in 2019. In 2018, Americans who have credit card balances have paid more than $100 billion in interest and other fees. Cumulatively, Americans owe $1.04 trillion in credit card debt, and this figure is expected to rise 5 percent in the last month of 2018.
The 5 percent increase was an estimate by LendingTree based on holiday sales figures. Americans have $2.9 trillion in non-revolving debts, but that figure does not account for outstanding mortgage balances. Those who are struggling to repay their credit card or other debts may be able to get help from a credit counseling service.
Those who are in the midst of financial challenges may be able to overcome them by filing for bankruptcy. In some cases, individuals may keep property like a house or car while they follow through with a repayment plan. In others, nonexempt assets may be liquidated in an effort to repay creditors. In either scenario, debtors are generally given a stay of creditor contact. This means that creditors are prohibited from taking steps to repossess an asset or contact a debtor about it.
