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Knoxville Bankruptcy Law Blog

Credit card companies want you to have more credit card debt

The main goal of credit card companies is not to protect the interests of the people using their cards. Their main priority is their own bottom lines, and they want people to have as much credit card debt as possible. This means more interest paid out over a longer period of time, which means more money for the companies. This is good for them but potentially financially damaging for Tennessee consumers.

Credit card debt often accumulates faster than a person realizes. One reason is because it is easy and fast to simply swipe a credit card, but there are also tactics that companies use to get people to spend more and get their balances high at a faster rate. One way they do this is by offering promotions to get people to apply for the cards, such as a one-time cash back bonus or gift card. 

Medical debt continues to be a problem for many Americans

Bills related to medical care and emergency needs are a significant financial burden for many in Tennessee and across the country. Even people with steady jobs, reasonable income and health insurance find themselves facing insurmountable medical debt after a procedure or just one visit to the emergency room. One problem is that many people don't know the cost beforehand of the type of care they are receiving.

One man says that back surgery a year ago saved him from paralysis, but he may spend the rest of his life paying off his medical bills. He went to a local ER for surgery on a severe hernia, yet soon after he was home recovering, the bills started to arrive. At one point, he was facing medical bills that amounted to around $650,000. Despite the fact that he was sent to the ER by a specialist for immediate surgery after an MRI, his insurance stated that it did not qualify as an emergency procedure.

A recession could bring trouble for those with credit card debt

People in Tennessee often use credit cards for many different types of purchases, including daily needs, vacations and even emergency expenses. There are many who are able to pay off their balances every month, but for some, it's not so easy. For those who carry a large amount of credit card debt, the threat of a potential recession in the future could be troublesome.

One reason that a recession could be bad news for credit card holders is that the interest rate is higher at this point than it was in the past. The average sits at just under 18%, and this could lead to even higher increases of debt if a recession impacts a person's ability to pay his or her balances in a timely manner. Even at this time, when the economy is good and consumer confidence is high, delinquent credit card accounts are becoming more of a problem.

Getting ahead of credit card debt before the holidays

Most Tennessee consumers have credit cards, and many of them use their cards to pay for everything from things they need on a daily basis to emergency expenses. It is not surprising that the amount of credit card spending significantly increases when the holidays come around. People tend to spend more, buy presents and attend parties, and this can be quite expensive. The result is that many people are left with unmanageable credit card debt after the new year.

Thankfully, there are simple things a reader can do to get ahead of holiday spending and credit card debt. One way to do this is to go ahead and start paying down credit card debt already accumulated. It may also help to have a plan for dealing with holiday credit card bills. 

How much medical debt can you discharge through Chapter 7?

There's a stigma associated with filing for bankruptcy, with many people assuming that those filing have simply mismanaged their finances or used their credit cards too freely. However, bankruptcy is a solution that most people avoid for as long as possible, and only enter into it because they have no other choice.

The fact that they are being faced with bankruptcy is not necessarily because they don't know how to handle their money. Rather, it is often because they have been dealt a difficult hand of cards. According to CNBC, an increasing number of Americans are filing for bankruptcy because of medical debt.

College students often end up with significant credit card debt

College is a time of freedom and independence, and for many Tennessee students, it is a time to learn a lot of life lessons. Unfortunately, some of these life lessons may include the accumulation of credit card debt. For many, college is a time of limited financial resources, and students often find themselves relying on credit cards. The result is that some graduate with both a degree and a significant amount of debt.

Some of the most significant costs for college students are tuition and books. These can be exorbitant costs for many, but the expenses of college go far beyond that. College life is expensive, even for those who have jobs. This takes a toll, with as many as 35% ending up with credit card debt they cannot really manage at such at young age. In some cases, students often feel like they have to hide their financial woes from their parents.

Which generation has the lowest amount of credit card debt?

People of all ages in Tennessee experience money problems from time to time. This is not something that is unique to millennials or people just out of college. Whether young or old, people can experience real and pressing financial concerns by holding credit card debt. While the perception may be that younger people are not as good with their money as other generations, that may not be the case when it comes to credit cards. 

Surprisingly, millennials actually have the lowest amount of credit card debt than other generations. Interestingly, the percentage of people in this generation who have this type of debt is lower than both the Baby Boomer and Gen X demographics. Studies show that just over 56% of milliennals carry a balance on their credit cards, while Baby Boomers and Gen Xers are just over 65% and 67%, respectively.

Are those credit card debt collection calls a scam or legitimate?

Credit cards can be considered a blessing and a curse depending on the situation. Some Tennessee residents may value having a card when they may need a little extra time to pay off an expense, and others may dread getting their bill each month due to having accumulated a considerable amount of credit card debt. For those in the latter group, collection calls may also be a worry.

Debt collectors can seem adamant about collecting on a debt. However, it is important for consumers to ensure that they are not being scammed. It can be difficult to know the difference between a legitimate call and a scam call, especially for those who receive collection calls regularly. Still, consumers have certain rights when it comes to the information that collectors must provide, so if a caller will not give information about who the creditor is or the name of the collection agency, demands immediate payment or asks for sensitive personal information over the phone, it may be a scam.

Younger generations and credit card debt

Most Tennessee consumers have credit cards, and many of them are able to pay them off at the end of each month. Each generation has a different approach to financial security and making prudent money decisions, and some of the younger generations are carrying a significant amount of credit card debt. Statistics indicate that Generation Z tends to rely heavily on purchasing things on credit, yet they are often only able to make minimum payments or less each month.

The first of Generation Z, which includes anyone born after 1995,  is entering young adulthood. A look at spending trends show that the number of people who belong in this specific generational demographic who are actively spending on credit cards and taking on debt is steadily rising. At this point, they are on track to outpace both millennials and Generation X in terms of credit card debt.

Key considerations after a Chapter 7 bankruptcy

The bankruptcy process allows people to start over. While many are eager to embrace this concept, some may not take the time to consider what their finances may look like once the bankruptcy process is complete.

Those who begin with a proper plan in place may set themselves up for financial success moving forward. To accomplish this after a Chapter 7 bankruptcy, there are a few things to consider. 

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