Smith County Bankruptcy Blog

Many Texas residents struggle to make ends meet, especially if they are drowning in credit card debt. It can be all too easy for credit card obligations to add up, especially as interest rates climb. While many people intend to pay off their balances every month, it can be difficult to do so, especially if people needed to use their cards to pay for a large purchase. In other cases, people lost their jobs or faced other changes to their financial circumstances that made it much more difficult to pay their bills. Still, many financial experts advise avoiding rolling credit card debt as much as possible.

However, according to reports, 82% of all credit card balances are carried past a month and often turn into long-time debt. This is true not only for people struggling with bad credit but also for those with high credit scores. Most of this debt remains for some time; around 70% of these balances revolve for at least a year and 55% of these balances remain for at least two years. Many people are inspired to open a credit card, make a large purchase or transfer a balance by a low introductory interest rate. However, the rate can soon rise to as much as 28%.

People in Texas may be deeply concerned about what to do if they receive a letter from a debt collector threatening a lawsuit. Their concerns may escalate if they learn that a case has been filed against them. This situation adds stress to the lives of people who are already struggling to pay their bills and facing calls from collection agencies. Over 70 million people across the country have dealt with collectors, and a full one-fourth of those felt threatened during their dealings.

As a result, people may be confused about what they can do to protect themselves and want to avoid the situation altogether. However, being aware of their rights under the law can help people to protect themselves. If people receive a summons and complaint over a debt, they should make sure to respond. Some people may feel like there is nothing they can do, but ignoring it can lead to a default judgment. People who are being sued can file an official answer by the specified deadline with the local court clerk.

In Texas and across the United States, millennials are experiencing difficulties with their credit card debts. Millennials frequently become tempted by credit card perks. Consequently, many millennials are delinquent in the payments on their credit cards. The delinquency ratio was not as severe in previous generations. Many young people formerly viewed stock trading with wary eyes in the past. These individuals were previously known for their frugality. However, current studies conducted by the Federal Reserve Bank of New York shows that many young consumers have lost control over their spending habits.

Signup bonuses appeal to younger generations who seek out the best cash back offers. Others want credit cards with no interest. A typical credit card charges an 18% interest rate for consumers with good credit. However, some credit cards carry higher interest rates. Although millennials might want to save money via bonuses, young people between the ages of 18 and 29 cannot afford to pay the high interest rates.

A rule proposed recently by the Consumer Financial Protection Bureau would allow debt collectors to contact consumers in Texas a lot more frequently. Collectors could make phone calls up to seven times each week and they would be allowed to send unlimited emails and text messages. Once collectors speak to the consumer though, they would not be allowed to call again for one week. This rule change would represent the first major update to the CFPB rules in 40 years.

According to an attorney who works with the National Consumer Law Center, the rule would open the door to contact through existing channels that debt collectors have not utilized. She said people should know they have the right to tell collectors how to contact them and they can revoke their consent to be contacted.