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Knoxville Bankruptcy Law Blog

Seeking debt relief from certain types of debt

Most adults have at least some debt, but there are certain types of balances that are considered more harmful than others. Some debt, particularly those balances that have high interest rates, can cause financial harm for some Tennessee consumers. Eventually, it may be necessary to look for debt relief in order to deal with these balances in a more effective manner.

What many consider good debt are balances that benefit the consumer. Good debt is related to things that will result in an increase in net worth or future benefit, such as student loans or a mortgage. Student loans mean that a person is getting an education that will give him or her a better chance of getting a good job in the future. A mortgage means that a person is building equity and investing money wisely. However, good debt can quickly become bad debt if a person is not able to manage these balances.

Knowing the most prevalent causes of lingering credit card debt

While dealing with substantial levels of monetary hardship may never be ideal, unfortunately, various scenarios make it all too easy to fall prey to the trials of debt. Some forms of debt can pile up in a hurry, and the fallout of your past spending habits could leave you facing an uphill battle for relief.

Credit cards continue to be one of the leading causes of debt and with the ease of access and use of similar payment methods, it isn't hard to see why this rings true. Although you may be aware of the primary source of your financial woes, knowing how to stem the tide of debt is another matter entirely.

Which age groups are in more need of debt relief?

Struggling with debt is not a problem that is specific to one age group. Virtually every demographic is struggling with financial concerns that include credit card debt and medical bills, but each generation looks at their different types of debt in different ways. Some age groups may have a more significant need for debt relief than others.

Many Tennessee consumers buy things on credit. It is also common to have various types of personal loans, such as student loans. Statistics indicate that the average amount of personal debt Americans carry is around $90,000. Gen Z, which includes those ages 18 to 23 has the lowest amount of debt overall. However, their debt burdens are steadily increasing, up by 22% since 2015.

Simple ways to lower credit card debt

Many in Tennessee depend on their credit cards to pay for everyday things, impulse purchases and even medical needs. Because it's simple to just swipe a card and move on, it's easy to see how credit card debt can quickly accumulate. It doesn't take long before a balance is so high that only minimum payments are possible, and this can result in accumulating interest and even greater credit card debt. 

There may come a point where cutting down on credit card spending is essential. While necessary, it's not always easy to adjust spending habits and stop making purchases on credit. Studies say that men are more likely than women to max out their credit cards, and one in three people are likely to max them out on a big purchase. 

What can Gex Xers do about their excessive credit card debt?

Different generations have different perspectives on debt. Consumers in Tennessee spend money and manage their finances because of deeply personal reasons, and for some, this means relying heavily on credit cards. As a result, credit card debt is a serious problem for some, particularly those in Gen X, which includes those individuals born between the years of 1965 and 1980.

Some believe this particular generation is a victim of various difficult financial and economic factors, such as an unstable job market, the housing crisis of the early 2000s and more. As a result, Generation X is also known as Generation Debt. Studies indicate that people around the age of 50 have credit card balances that amount to around $9,000. For many, this is more debt that a person can effectively manage.

More older Americans looking for debt relief options

Overwhelming debt is a problem for many consumers, and older individuals in Tennessee are no exception to this issue. In fact, the amount of debt affecting older Americans has increased exponentially over the last 20 years. Statistics indicate that from 1999 to 2019, the amount of debt for people age 70 and up has increased by 543%. This means there are many past retirement age who are looking for possible debt relief options.

One reason for this is that seniors are experiencing the fallout from a deterioration in many social programs on which they planned to depend after retirement. Many find themselves having to accumulate debt simply to make ends meet. Others find that the money the saved for retirement is not sufficient to cover their needs, such as medical care, rent and more. 

The price of the decisions you make after achieving your goals

If overwhelming levels of debt leave you in a financial stranglehold, you may wish to take every possible measure to alleviate the strain of such burdens from your life. A similar scenario could leave you exploring all available options to help you reduce or eliminate your debts and begin building a brighter financial future.

While obtaining relief from such hardships can be a freeing and rewarding feeling, it may also only prove to be part of the battle to safeguard your financial future. How you handle your newfound monetary freedom could bring about certain unforeseen consequences, some of which might be costly.

The heavy cost of credit card debt

Many consumers in Tennessee use their credit cards for daily purchases like groceries, as well as emergency expenses, such as medical bills. As a result, the average person has at least some credit card debt. It's easy to swipe and go, but for those who carry a balance over each month, this type of spending can come with unexpected costs. After months of minimum payments and accumulating interest, it's possible to end up with a lot of credit card debt and no way to pay it off.

According to statistics, the average cardholder owes almost $6,200 in credit card bills. This number is up from around $6,000 in 2018. This is a lot of money, but these numbers may not actually tell the whole story about the problem of credit card debt. These numbers don't account for interest, which can average as high as 14% to 17%. Those with these types of balances will also have to pay a few hundred dollars more in interest alone. 

Medical debt remains major concern for many Americans

Falling behind on payments for certain types of debt can lead to a number of unpleasant consequences. From wage garnishment to constant phone calls from debt collectors, owing a significant amount of debt can be stressful and overwhelming. One of the most common types of debts is medical debt. Statistics indicate that around 32% of American workers have this type of debt and approximately half have defaulted on it.

Of those who have outstanding medical debt, approximately 28% have more than $10,000 in health care bills. This is much more than many in Tennessee can afford to pay, even when making payments each month. It is easy to see how these balances can become unmanageable, especially considering that other types of debt and financial obligations usually have to be paid in addition to these balances.

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.

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