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Knoxville Bankruptcy Law Blog

Is Chapter 7 bankruptcy a solution for credit card debt?

Facing an overwhelming amount of credit card debt can be stressful for a Tennessee consumer. After falling behind on payments, debt collectors may start calling and creditors may move to initiate processes like wage garnishment. Credit card debt has reached a startling new level in the United States, which means more consumers may need to consider the benefits of Chapter 7 bankruptcy.

Carrying a large amount of credit card debt is much more than an inconvenience. For many, it is a financial hindrance, taking away from things like saving for retirement and establishing an emergency fund. With accumulating interest and balances that roll over each month, it's often a challenge to make more than the required minimum payments. Americans are accumulating billions of dollars in credit card debt, so this problem is likely more prominent than many realize.

Should a consumer try to settle credit card debt?

There are many unpleasant consequences that come with owing a significant amount of money to credit card companies. For example, a creditor may call at all hours of the day, or a debt collector may initiate the wage garnishment process after a certain amount of time. Credit card debt can seem overwhelming and make it feel impossible to get ahead. This is why some consumers in Tennessee explore the opportunity to settle their debt.

Settling credit card debt involves negotiating the balance down by working directly with the credit card company or a third-party acting on behalf of the credit card company. If the credit card company accepts the negotiated amount, it will stop the collection process after receiving payment. One drawback to this is that the creditor will likely expect payment within a short amount of time, often in the form of a lump sum. 

Should you get a divorce before you file for bankruptcy?

When major issues come up in life, it is not always easy to find a solution to them. Even if you know that the only way to fix certain problems is to take substantial steps, it can be difficult to know when and how to take those steps. For example, if you are facing tremendous debt issues, you may feel the need to file for bankruptcy. However, your marriage may also be coming to an end, and you do not know which issue to handle first.

As with most difficult situations, the answer to whether to file for bankruptcy or divorce first is: it depends. Your personal circumstances will play a significant role in whether you want to move through the bankruptcy process before getting divorced or whether getting a divorce first would be more favorable.

Is Chapter 7 bankruptcy the right way forward?

Many people are entering 2020 with a significant amount of debt, which typically comes along with a good deal of stress. It can be especially stressful when debt collectors start calling or creditors resort to certain types of collection efforts, such as wage garnishment. To make this process stop and gain a fresh financial start, some people look to Chapter 7 bankruptcy for relief.

Filing for bankruptcy can stop all collection efforts, halting the foreclosure process, stopping wage garnishment and giving a person relief from all of the phone calls from collections. However, it can be a costly process that can impact a person's credit for years to come. Before moving forward with this choice, a Tennessee consumer will want to think carefully about the potential benefits and drawbacks of this decision.

Is a personal loan the way to get debt relief from credit cards?

People rely on credit cards for everything from weekly grocery store purchases to emergency expenses. When unexpected things arise or there are more things to purchase than normal, such as during the holidays, it can lead to higher balances than what may be manageable. As a result, Tennessee consumers look for debt relief from from their credit card bills from various sources, including personal loans.

One of the most difficult aspects of credit card debt is the accumulating interest. People who cannot pay in full each month carry over the balance, on which interest continues to accumulate. Each month, the unpaid balance grows and the interest adds up. Personal loans are an attractive option for some people because they often carry a much lower interest rate. By applying for these loans, they can pay off their credit card debt and focus on paying the personal loan back instead.

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.

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