William H. Lively, Jr

Smith County Bankruptcy Blog

Many people face ongoing credit card debt

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.

Credit card debt growing for Americans

An increasing number of people in Texas are facing significant credit card bills that they may find themselves unable to pay. This is especially true after a change in financial circumstances, such as the loss of a job or a serious illness that incurs medical bills. Across the country, 83 percent of American adults have at least one credit card, but the average person has three. There is over $1.04 trillion of credit card debt in the United States, an increase from $857 billion in 2013. On average, American consumers have $5,331 in credit card debt in 2019, and most people don't pay off their full bill every month.

Credit card debt often varies by age. Younger and older Americans are less likely to have more extensive revolving personal debt, but members of Generation X and the baby boom generation are more likely to accumulate more significant debt. Of course, these are the ages at which people also have the highest income, so they may be the best placed to repay their outstanding debt. On the other hand, retired people on a fixed income may struggle to pay off their cards.

Declaring bankruptcy more than once

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.

Bankruptcy is actually a way to rebuild your credit score

Many people find that even saying the word bankruptcy leaves a bad taste in their mouth. They may have been raised to believe that anyone who seeks such protections is unscrupulous or irresponsible. The modern American lifestyle, unfortunately, often requires the use of credit.

In some cases, even individuals who have always been responsible with money can find themselves over their heads in debt, often due to medical expenses that they have no way to pay. You shouldn't have to live in fear of a creditor coming to call or the potential of losing your home just because you don't want to damage your credit or social standing.

Undue hardship necessary to discharge student loans in bankruptcy

Student loans enable Texas residents to attain their educational goals. However, students often struggle to pay these loans back. Nationwide, borrowers owe $1.5 trillion in student loan debts, and bankruptcy law specifically prohibits the discharge of student loans unless a borrower can show undue hardship.

The federal court system has not established a standard way to assess undue hardship, but courts typically apply the Brunner test when considering factors. Essentially, this test looks at extenuating circumstances and a person's good faith attempts to resolve the debt. If payments make the maintenance of a minimum standard of living impossible and the person has tried to make payments, then a court might view the situation as an undue hardship. Age, income and health could influence this decision.

Filing bankruptcy after the holidays? You are not alone

Over the holidays, many people find themselves spending more than they can afford. As a result, January leaves many Americans contemplating the possibility of bankruptcy.

According to CNBC, Americans accrued an average of $1,000 dollars in debt over the holidays this year. Data suggests this is almost $50 more per person than in the past. Many Americans say it will take them at least half of the year to pay off. However, even if these people are able to pay off their holiday shopping, many are still in overwhelming credit card debt. For many Americans, bankruptcy provides a way out.

Late credit card payments can damage personal credit

Credit card debt can be a source of difficulty and anxiety for people in Texas. Those who are dealing with financial problems might even miss payments. Ideally, for the sake of the person's credit rating, he or she should continue to make at least the minimum payments on the cards. Sometimes that isn't possible though, and so payments are missed. Failure to make credit card payments has different, increasing consequences depending on how long the payment is behind.

A payment on a credit card is considered late once it is more than 30 days past due. Credit bureaus typically categorize late payments as between 30 and 59 days, 60 and 89 days, 90 and 119 days, 120 and 149 days, 150 and 179 days or 180 days or more. When a payment is 30 days late, the credit card company will typically charge a late fee. Sometimes, these late fees can be waived if the person calls the company and explains the situation. The late payment will likely be reported to the credit bureaus though.

What property is exempt from Chapter 7 bankruptcy?

Perhaps you've held onto your grandmother's jewelry collection for the last 30 years. Or maybe you have a restored classic car collection or vacation property. Nevertheless, if you're underwater with debt, it may seem Chapter 7 bankruptcy is your only option.

Will you have to get rid of everything you own? If you have a lot of property that isn't essential to your life, you might need to get rid of some of it as a part of the Chapter 7 bankruptcy liquidation process, especially if this property could be viewed as "luxuries" and is not essential to your life. However, you may also be pleasantly surprised to discover how much of your property you can actually keep.

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William H. Lively, Jr


William H. Lively, Jr
432 S Bonner
Tyler, TX 75702

Phone: 903-920-0008
Phone: 903-593-3001
Fax: 903-595-3715
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