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Knoxville Bankruptcy Law Blog

Effectively dealing with credit card debt from the holidays

The holidays are a time when consumers of all income levels tend to spend more. With gifts to buy, family to visit and parties to attend, people often depend on their credit cards to pay for the things they need. For many Tennessee consumers, this means they are going into the new year with a significant amount of credit card debt. 

In the moment, credit card purchases may seem important or necessary, but they can quickly add up. Thanks to accumulating interest, a person may find that his or her credit card balances are unmanageable. Thankfully, there are a few things a person can do to start dealing with these balances effectively. One helpful step can include using certain apps to manage credit card payments, send reminders and tally expenses. This may help avoid late payments.

Harsh collection practices over medical debt garners criticism

Medical care is expensive, even for those who have insurance and decent salaries. People of all income levels are susceptible to the extensive impact that unexpected medical debt can have, a type of burden that can quickly wipe out a person's savings and leave him or her with an unmanageable financial burden. In order to collect on these past-due balances, some hospitals have taken to implementing aggressive collection tactics. 

Aggressive billing practices have caught the attention of the media and others, leading to a significant amount of criticism. Patients in Tennessee are like the many others across the nation who have to accumulate debt to get medical care that they or their families need. Despite their patients' predicaments, some hospitals have taken to suing people who are past-due on their payments. 

Starting the year with positive financial goals

The beginning of a new year means one thing: resolutions. If you are one of the many who make resolutions, you may have many of the same goals year after year. For example, you might resolve to lose weight, exercise or watch less TV. However, it may be possible that this year you have more urgent matters to confront.

If your finances have you lying awake at night or dodging phone calls from creditors, you may have decided to focus your energy on conquering your debt in 2020. This is the goal of more Americans than ever, which is not surprising since the average household seems to carry significantly higher debt this year than in recent years.

Seeking debt relief that will provide long-term stability

When a person is facing overwhelming credit card debt, some of the things that can come with that can include everything from wage garnishment to constant phone calls from creditors. Thanks to accumulating interest and minimum payments, it can be hard for a Tennessee consumer to figure how to find debt relief and claim a better financial future. One way a person may do this is by securing a personal loan.

This type of loan can allow a person to consolidate balances and pay off credit card debt. The downside to this is that the consumer is then left with a personal loan he or she will have to pay off. For some people, this is not an effective way to deal with debt. It may not be long before a consumer is unable to make payments on the personal loan just like on past credit card debt. This is especially true for a person who may continue to spend using a credit card.

Who has the most credit card debt?

Many people in Tennessee use credit cards for everything from daily purchases to emergency needs, such as medical bills. While many are able to manage their balances and make more than minimum payments each month, others may find they are not able to do this. Ultimately, credit card debt can lead to serious financial problems for many. 

When a person considers who has the most credit card debt, it may be may assumed that it's individuals with a lower net worth. Surprisingly, consumers who have a net worth of $100,000 or more are more likely to carry credit card debt than those who have a negative net worth. Of these high net worth individuals with this type of debt, around 39% owe at least $5,000. Other statistics indicate that people earning $40,000 or less have the least amount of credit card debt.

When medical debt and credit card debt go hand in hand

When people have financial struggles, it is often for reasons beyond their control, such as a medical emergency or loss of a job. An unexpected illness or surgery can result in medical debt that a person cannot effectively manage on his or her own. As a result, a Tennessee adult may end up depending on credit cards simply to make ends meet or make payments on hospital bills. For many people, medical debt and credit card debt go hand in hand.

Estimates suggest that as much as 33% of credit card debt is medical bills. Of the people who are using credit cards to make payments on their medical bills, around 60% say it is because they have no other choice. If a person is juggling these types of payments, it can snowball and add up quickly, resulting in an overwhelming debt burden they can no longer manage.

Is it possible to discharge student loan debt?

Massive student loan debt is one of the rising economic problems in the United States. This debt now totals over $1.6 trillion, and many politicians have looked for ways to relieve students of this burden. For the time being, this debt is merely a way of life for many people who just wanted a higher education. 

Over time, some people may begin to wonder if they can eliminate their student loan debt by filing for bankruptcy. After all, bankruptcy is a viable means to discharge various other types of debt. Unfortunately, there is still no program in place that allows you to negate your student loans. 

Southerners carry a greater burden of credit card debt

Most people have credit cards, but many users are able to pay of balances each month or manage their balances to the point where they are not a problem. For many, particularly in the southern United States, credit card debt is unmanageable, leading to various types of financial struggles. Consumers in Tennessee may find that their balances are beyond their control after even just a few missed payments and accumulated interest.

There are many reasons why people rack up credit card debt. Some people simply splurge, perhaps displaying a bit more of the famous southern hospitality than is good for their financial health. Others rely on credit cards as a fallback plan when unexpected expenses and situations arise, such as medical emergencies or a job loss. 

Many people may need debt relief due to personal loans

People take on debt for many reasons, but it is often because they feel it is the only solution to their current situation. For example, Tennessee families may end up with a lot of medical debt because of an unexpected emergency. One of the fastest growing categories of debt in the United States is personal loans, which a consumer may take on because it seems like a smart option by which to deal with certain financial needs or debt relief concerns. 

Across the country, personal loan balances now reach approximately $300 million, a number that indicates they are growing at a rate of 11% per year. People often choose to take on this type of debt as a way to consolidate their credit card balances or fund specific things, such as home improvement projects. However, there are some surprising disadvantages to these types of loans. 

Student loan debt and Chapter 7 bankruptcy

When a Tennessee consumer is overwhelmed by his or her financial responsibilities, it can lead to unpleasant consequences, such as wage garnishment and other debt collection efforts. Credit card debt and medical bills can lead to an unmanageable debt burden, as can student loan debt. Many people seek debt relief through Chapter 7 bankruptcy, but one type of debt not dischargeable through this process is student loan debt.

Many people emerge from college or graduate school with a lot of student loan debt. They have the intention of making payments over several years to pay off the balance, but many find that circumstances beyond their control prevent them from doing that. Despite the widespread problem of this type of debt, federal bankruptcy laws prevent people from getting rid of these balances when they file for bankruptcy. 

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