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Knoxville Bankruptcy Law Blog

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. 

Potential legislation may help those with surprise medical debt

When a Tennessee resident has medical insurance, he or she may not expect to have to pay much out of pocket when visiting a doctor, going to the emergency room or scheduling a necessary procedure. Unfortunately, many actually find themselves facing unexpected medical debt, even when they go to an in-network provider or hospital. It's an unpleasant surprise to learn that certain services are not covered and no one told them about it.

This tactic has been in use for awhile, and it is one reason for overwhelming medical debt for many consumers. The problem is extensive enough to have caught the attention of the U.S. Congress. There is proposed legislation that would make the health care billing process more fair for consumers, eliminating the issue of surprise bills. Some doctors and other groups oppose this proposed legislation, arguing that it would negatively impact vulnerable patients.

The types of purchases that cause credit card debt to accumulate

Every financial situation is unique, and while most people have and use credit cards, the way that debt is accumulated differs from person to person. In Tennessee and elsewhere, many assume that when a person is struggling to manage his or her credit card debt it is a result of an emergency or unexpected expense, but that is not always the case. Sometimes, these balances accumulate due to unchecked discretionary spending.

Many people use credit cards for various types of purchases, and they are able to pay off their balances each month. Those who cannot, however, are accumulating an average of 18% interest. This adds up quickly, and it's often surprising to learn how much is really owed and how much one can actually afford to pay each month. It also comes as a surprise to many to find out what expenses are really to blame for overwhelming credit card debt.

When is debt a reason to file for Chapter 7 bankruptcy?

Most Tennessee consumers have debt, and for some, it can be an overwhelming financial burden. There are times when some people would suggest that debt is not a negative thing, but there is a line when any type of debt can become too much for a person to handle. At this point, a person would be wise to start thinking about ways to deal with debt, which may include filing for Chapter 7 bankruptcy.

What makes a debt good or bad really depends on how it impacts the financial health of the consumer. What some consider to be good debt are the types of debt that a person can manage with full and timely payments. These are balances that do not lead to financial distress or cause a person to pull money from another need just to make a payment. 

Can Chapter 7 bankruptcy stop collection efforts?

When a person is behind with his or her payments and is unable to catch up, the creditor will work to collect payment in various ways. The company may start calling and sending letters, but if these methods are ineffective, it may turn the debt over to a collections agency. This can be overwhelming for a Tennessee consumer who is already juggling significant debt, but there may be a way out, including filing for Chapter 7 bankruptcy.

Collections agencies often employ tactics that can seem harassing and unfair. While there are limits to what they can do, their job is to collect debt, and they will try very hard to accomplish that goal. When a consumer gets that initial phone call, it's important to ensure that he or she has all the information about the debt and also that what the collections agent is saying is accurate. 

Credit card debt worsens for millennials

The so-called millennial generation has been described in multiple ways, and "financially savvy" would have been one such descriptor. Unfortunately for Tennessee residents of a certain age, those days are apparently over, with credit card debt showing a sharp rise among millennials. In an uncertain economy, there are multiple tactics millennials can use to overcome credit card debt, including debt restructuring, counseling and even bankruptcy. 

From 2008 through 2012, fewer than half of all millennials even had credit cards, but since then, the trend has risen considerably and disturbingly. Some 8% of millennial credit card balances were denoted as "seriously delinquent," far higher than any other age group. When added to the $370 billion in student loans already shouldered by this generation, additional financial burdens can be problematic at best and catastrophic at worst. 

Eliminating credit card debt is a common goal

First there's the outfit that will be perfect for the job interview. Then, the kids need new clothes for school. Before long, the little things combine with the bigger things and the Tennessee resident finds him or herself facing overwhelming credit card debt. Many individuals discover that credit card debt can quickly become a problem. For whatever reason, debts begin to accumulate and getting the situation under control can become daunting if not seemingly impossible.

When this appears to be the case, the first step to resolving the problem is to identify exactly what is owed to and to whom. It is time to gather up all the bills and determine exactly what is owed. In addition to taking a look at all of the statements, the individual will also want to obtain a copy of his or her credit report to make sure that all accounts have been identified and that there are no inaccuracies that need to be addressed.

What is the snowball debt repayment method?

Getting out of debt can feel like an uphill battle, but it can get much easier with a smart debt repayment plan. You do not have to be a professional in debt relief to dig yourself out of significant debt. Simple solutions are available.

The snowball debt relief method is proven to work if you have the dedication to see it through. If you are in deep debt, however, consider filing for bankruptcy for a clean slate instead. Learn more about the snowball method to choose the right path for you.

Options for dealing with significant medical debt

When a person goes through a serious medical problem, serious medical bills often follow. Even with insurance, a trip to the emergency room, prolonged illness or surgery can ultimately result in medical debt that a person may not be able to manage. There are several things a person can do in this situation, and it may be possible to find relief from debt collectors or work with creditors. 

One of the first things a Tennessee consumer would be wise to do is confirm that the amount of the debt is correct.  Hospitals and other medical facilities can make mistakes, and billing errors are quite common. If a person cannot afford payments on the confirmed amount or cannot pay any amount, he or she may want to reach out to the creditors. It may be possible to work on a payment plan.

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