Tennessee residents who went into debt this holiday season were not alone. According to the National Retail Federation, Americans spent an average of over $1,000 each to buy gifts for their friends and family this year. That amount of money isn't in most people's bank accounts. Studies claim that 60% of Americans have less than $1,000 saved in the bank.
It isn't uncommon for individuals in Tennessee and other states to carry credit card or other types of debt. If a debtor is unable to stay current on a balance, it may be sent to a collections company, and debt collection companies may use a variety of tactics in an effort to get the money that they are owed. However, there are limits to what a debt collector can say or do to recover a past due balance.
Consumers in Tennessee may have more money to use for savings and purchases as across the United States, the median household income has risen by 30% in 10 years. While this is good news, Americans are dealing with medical costs that are growing faster than income. Since 2009, medical costs have gone up by 33%.
A number of credit card companies are reporting high rates of charge-offs. A charge-off is a loan that the creditor has determined it will not collect. Overall, the charge-off rate rose to its highest point since 2012's second quarter and was reported at 3.82% for the first quarter of 2019. This according to data gathered by Bloomberg Intelligence. People in Tennessee who are struggling to pay debts may take solace in the fact that they're not the only ones.
Roughly 12% of those who file for bankruptcy in Tennessee and other states are 65 and older. The rate was only 2% in 1991, and there are several reasons why older Americans are doing so more frequently. Generally speaking, older people are less likely to work, which may make it harder to pay their medical bills. Of those over age 65 who file for bankruptcy, 60% do so because they can't afford to repay a medical debt.
Americans owe a cumulative $900 billion to credit card companies. According to the Consumer Financial Protection Board, there are reasons to be worried that it will be difficult to pay off this balance in a timely manner. Of course, there are also reasons to believe that Tennessee residents and others shouldn't worry too much about paying down their debt. Low unemployment and low interest rates have made it possible for debtors to make their payments in a timely manner.
Tennessee residents who are struggling to pay their bills are sometimes reluctant to file for bankruptcy because of fears over what it could do to their credit scores. A Chapter 7 bankruptcy will remain on credit reports for up to 10 years and a Chapter 13 bankruptcy will appear for up to seven years, but that does not mean scores will remain low. Credit scores generally fall when a bankruptcy is filed and then begin to increase after it has been discharged.
Filing for bankruptcy in Tennessee may put a stop to a foreclosure or repossession. It could also prevent utilities from being shut off or a landlord from evicting a tenant. The automatic stay can also put a stop to wage garnishment, which would allow an individual to bring home a larger paycheck until the stay is lifted. Those who owe money to the IRS could be able to avoid a lien on their property while the stay is in place.
Those who live in Tennessee have the 17th highest average household credit card balances in the United States. Households in California owe an average of $10,175 in credit card debt, which is the highest in the United States. During the second quarter of 2019, the state added $4.4 billion in new debt, which was the most in the country. Altogether, Americans owed more than $1 trillion to credit card lenders at the start of 2019.
A report written by John Roberts, the Chief Justice of the Supreme Court, shows that bankruptcy rates are at their lowest in 10 years. The reasons for the lull in filings may have more to do with people being broke than secure, however. People in Tennessee and across the country might not be filing for bankruptcy because they can't afford to file and they have few assets to protect. Bankruptcy rates do not necessarily indicate the economic health of the country.