Debt has become a constant companion for most Tennessee residents. Hopefully, 'good" debt is used as leverage to further advance economic interests and 'bad" debt is minimized and managed only as a tool of last resort. Unfortunately, unexpected circumstances can occur that place the total debt, from whatever source, beyond the individual's ability to pay. No one gets to the point of considering bankruptcy lightly, but sometimes there is simply no other alternative than to seek a fresh start.
The link between medical coverage and bankruptcy
Losing medical care on even a temporary basis can double a person's risk of declaring bankruptcy. This is according to a study published by the American Bankruptcy Institute that looked at data available through the Bureau of Labor Statistics (BLS). The study found that interruptions in coverage were typically related to a divorce or losing a job. It also found that individuals could be at risk for losing their jobs because of a health condition.
Survey finds fewer Americans paying credit cards in full
The Credit Card Confidence Index from CompareCards.com has provided some new insight into how Tennessee residents and others are managing their credit card balances. According to the survey, only 30% of respondents said that they were able to pay their credit card balances in full. Furthermore, 21% said that they were unable to pay their credit bills in full during the previous six months. This is the fourth straight month in which that percentage has increased.
Seniors and debt: bankruptcy during retirement
In Tennessee and across the United States, many senior citizens do not retire in style. Instead, retired seniors often live on low Social Security incomes or Social Security disability payments. Some seniors cannot afford to buy groceries unless they have food stamps. Additionally, many of these seniors experience overwhelming debt. Struggling with debt is challenging, especially if the person is near retirement age. Numerous seniors who are 65 and older face severe financial challenges.
Young people have high credit card debt
Student loan debt among the Millenial generation gets a lot of attention for a good reason, but what gets less attention is the high amount of credit card debt accumulated by this same group. According to a survey conducted by CompareCards, only 13 percent of younger credit cardholders in Tennessee and other states say they are completely debt-free. They also say that this credit card debt is more of a financial burden than their student loans.
Many bankruptcies are linked to student loans
America's student loan debt crisis is taking its toll on consumers in Tennessee and across the United States. A new study by LendEDU finds that 32% of individuals filing for Chapter 7 bankruptcy have student loan debt. Of those individuals, student loans account for almost 50% of their average total obligations.
Most bankruptcies linked to medical bills
Many people in Tennessee are struggling to make ends meet and falling behind on their bills. There are a number of issues that can contribute to financial troubles, from excessive credit card debts to sudden job loss. However, the most common single cause of personal bankruptcy in the United States is medical debt. In fact, a full two-thirds of all bankruptcy filings are linked to significant medical bills that people are unable to repay. Excessive consumer spending is linked to 44% of bankruptcies, while costly mortgages are linked to 45%.
Bankruptcy collections
When people living in Tennessee file for bankruptcy, they typically do so with the understanding that the automatic stay of bankruptcy, and eventual discharge of debts, will stop creditor harassment. Unfortunately, there have been cases in which a creditor has decided to pursue a debt after a bankruptcy discharge.
Bankruptcy could discharge debts from lawsuit judgments
Some bankruptcy cases in Tennessee involve court-issued judgments that obligate defendants to pay debts resulting from lawsuits. Because federal law governs bankruptcy, the judgments issued by state courts will not automatically avoid discharge within a bankruptcy. A creditor expecting to collect on a judgment, however, might petition the bankruptcy court to deem the applicable debts nondischargeable if the judgment resulted from intentional conduct or fraud.
Why Tennessee seniors shouldn't use 401(k) funds to pay off debts
The number of older Americans filing for bankruptcy today is three times what it was in 1991. A combination of factors has contributed to the increase, including rising health care costs and a decline in pension benefits. Generally speaking, older Americans have fewer retirement funds today than in the past. This puts them at a greater risk for bankruptcy. In many cases, a 401(k) savings plan is the only cushion they have to fall back on.
