Smith County Bankruptcy Blog

People in Texas and across the country owe an ever-increasing amount of debt. In February, consumer credit rose less than expected, but still grew by $15.2 billion. Outstanding debt had been predicted to rise by $17.5 billion in February, according to the Federal Reserve. This increase marks a 4.5 percent growth. Every month, the Fed tracks the amount of debt Americans owe. It grew by a smaller amount than it did in January, when outstanding credit obligations grew by 5.2 percent. However, it was larger than the December 2018 growth, which was a 4.2 percent increase.

These figures are subdivided into revolving and non-revolving debt. Revolving credit includes credit card debt and other types of consumer loans. It rose by $35.4 billion dollars in February, 4 billion more than the $31.4 billion increase in January. On the other hand, non-revolving debt, which includes items like student and auto loans, rose by $146.8 billion in February, less than the $181.2 billion growth in this sector in January. In total, Americans owed $4.05 trillion in consumer debt as of February 2019.

Many people who are up to their necks in debt put off filing for bankruptcy because they worry that they will no longer be creditworthy after filing for debt relief. While your credit rating is sure to take a steep hit in a bankruptcy filing, if you are considering filing for bankruptcy, you are already in serious financial distress.

There are a lot of myths surrounding filing for Chapter 7 bankruptcy relief, and one is that you will not be able to obtain future credit. In actuality, you will likely be bombarded with offers of credit after your debt is discharged. True, the interest rates will be higher than those you might be used to, but the offers are real.

Many Texans are struggling with significant amounts of credit card debt that they find it difficult to repay. While some people are able to pay off their credit card bills each month and avoid carrying a balance, those who do carry a balance often extend it out over a year or more. According to one report, 56 percent of people who carry balances on their credit cards maintain them for more than a year. Around 23 percent have remained in debt for three years or more while 14 percent have carried their debt for five years or more.

Of course, as balances remain on credit cards, the cost of the initial transaction rises dramatically. People pay substantially more interest the longer they carry their credit card balances. While credit cards can be an important financial option, individuals can also accumulate excessive debt that they are not able to repay. This is particularly true for people who face financial challenges after their initial purchases. Interestingly, while people with lower incomes are more likely to not pay off their credit cards every month, people with higher incomes may be more likely to carry a balance over a long period of time.

Bankruptcy is a powerful financial tool for people in Texas who have burdensome debt, but they aren't a magic shield that protects from future financial woes. Many individuals find themselves in a situation where they may want to file for bankruptcy a second time. While getting a second bankruptcy has certain limitations and waiting periods, it is possible for some. For many, however, there may be other ways to relieve debt.

For a previous Chapter 7 filer, there is a waiting period of at least eight years before another Chapter 7 petition can be filed. To file Chapter 13 bankruptcy, which restructures rather than discharges debt, a person must wait four years after having filed for Chapter 7. People who previously filed for Chapter 13 only need to wait two years before filing for Chapter 13 again. These bankruptcy wait times were introduced in 2015.