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Dayton Bankruptcy Law Blog

Credit cards are holding millennials back

Many millennials in Ohio and throughout the country have student loan debt. However, a study from Northwest Mutual found that credit card debt may be hindering their ability to save for the future. Credit cards can come with interest rates above 20%, which is significantly higher than what a person would likely pay to finance the purchase of a home or car. That is also higher than the interest rate charged by most student loan companies.

The study found that 20% of millennials don't even know the interest rate on their credit card balances. Research has found that younger debtors use their credit cards to pay for food and travel. They typically begin using credit cards because they received applications in the mail. It isn't uncommon for millennials to have as many as four credit cards with balances on them at the same time.

Chapter 13 bankruptcy reorganizes debt and protects assets

The problem of overwhelming debts is not limited to people in Ohio with low or no income. People earning higher incomes sometimes get overextended and face difficulty keeping up with debt payments. Bankruptcy law recognizes this scenario and enables relief through a reorganization of debts under the terms of Chapter 13. During the process, a bankruptcy court imposes a three or five-year payment plan designed to fit within the debtor's income without forcing the liquidation of property.

The law does impose upper limits on the amounts of debt that a person can owe and still qualify to file for a reorganization bankruptcy. Unsecured debts cannot exceed $419,275, and secured debts cannot go above $1,257,850. As long as a person's debts do not rise above these thresholds, a bankruptcy court could approve a petition for Chapter 13 protection.

Reasons to avoid using credit cards for medical debt

Ohio residents may have noticed that the household income in the United States has risen by around 30% over the last 10 years. This is a good thing for many families because it affords them space in their budget to save money. At the same time, the costs of medical expenses have risen by 33%. Medical expenses have caused some households to take on debt, including credit card debt.

Putting medical debt on a credit card could mean paying high interest rates. Families can find themselves so far into debt that they do not have what it takes to even keep up with the interest payments. Thankfully, there are some things that people can do to keep medical debt off their credit card.

Millions of Americans are struggling with medical debt

Most of the Ohio residents who file a personal bankruptcy each year do so because of overwhelming medical debts. Figures published recently in the Journal of General Internal Medicine put the number of Americans facing financial hardship due to doctor and hospital bills at 137 million, and about half of the people polled recently by TD Ameritrade said that they would consider using funds that they have saved for their retirement years to pay medical expenses.

Americans with medical problems often find themselves burdened with debt because they do not know that the cost of treatment can vary widely. A surgeon from Johns Hopkins Hospital who has studied health care costs in the United States found that a heart procedure that would cost as much as $500,000 at many hospitals is performed for just $44,000 at some medical facilities. He says that patients should shop around before agreeing to treatment and negotiate the cost of procedures before signing any financial consent forms.

Bankruptcy rates for older Americans are soaring

The number of people filing for bankruptcy in Ohio and around the country who are 55 years of age or older has soared in recent years, and most of them are turning to debt relief because of unmanageable levels of medical debt. A study conducted by a University of Illinois law professor reveals that the number of bankruptcies filed by individuals between 55 and 64 years of age has increased by 66% since 1991, and the number of retired Americans seeking debt relief has surged by more than 200%.

This means that more than one in 10 bankruptcy filers is now 65 years of age or older. That figure stood at just 2% in 1991. While some older Americans pursue debt relief because of credit card or installment loan debt, most turn to bankruptcy after using all of their available resources to pay doctor and hospital bills. According to the University of Illinois study, 60% of the older Americans who file for bankruptcy each year do so because they have medical bills that they are unable to pay.

Debtors have rights when dealing with debt collectors

Ohio consumers who owe past due debt balances may be contacted by a debt collector. However, this doesn't mean that an individual will be required to make a payment. Furthermore, it is also possible that a person is contacted about a debt that he or she doesn't actually owe. If a debt collector does call, an individual has the opportunity to verify that the balance owed is correct and that it can still be collected.

Typically, state law imposes a statute of limitations on debt collectors, and that statute of limitations is generally four or six years. However, the clock begins the moment that a person makes a payment on that debt balance. Therefore, if a person makes a partial payment on an old debt, it may give debt collectors or other parties more time to take that person to court.

Will your creditors come to question you at the 341 meeting?

If you struggle with mounting debt and have finally decided to file for bankruptcy, you will soon attend the 341 meeting, also called the meeting of creditors.

This is basically a hearing that creditors are welcome to attend. However, of most importance to you is that you will meet the trustee assigned to administer your bankruptcy case.

Bankruptcy and seniors: an increasing reality

Many people in Ohio may well grow up with the idea that they will work hard during the majority of their life and then retire at some point. Their retirement years are generally expected to be funded by savings, Social Security and maybe even some wise investments. Very few people expect that their retirement years could be marked by the most serious financial problems of their entire life. That, however, seems to be the case for more seniors today than in prior generations.

The Washington Post reports that reports show a dramatic rise in the number of people over 65 filing for bankruptcy. These filers have an average median net worth of approximately negative $17,400.

Can you be forced into bankruptcy?

Personal bankruptcy is a personal choice that you may consider if you are experiencing insurmountable financial difficulties. The option to pursue a Chapter 7 or Chapter 13 bankruptcy is yours alone – or so you may think. What if someone told you that your creditors may petition the court for your bankruptcy against your will?

Lenders may, in fact, request that those who owe them money be forced into bankruptcy, according to FindLaw. Fortunately, involuntary bankruptcy is rare for individuals, although you may be interested in learning how this action can benefit creditors. It does them no good to send collection notices and bills to debtors if they are ignored. However, when eligible assets are liquidated through Chapter 7 bankruptcy, the funds are used to repay creditors. Those who owe significant debt may have a higher chance of being pushed into involuntary bankruptcy than the average debtor.

Receive credit counseling before filing for Chapter 13

When Ohio residents realize they are in a difficult financial situation, they may consider filing for Chapter 13 bankruptcy. Many people may not know that before they file for bankruptcy, they generally have to receive credit counseling.

Credit counseling usually helps people understand their financial situation. The Consumer Financial Protection Bureau says that a credit counselor generally sits down with people to look over their finances. During these sessions, people may look at their credit report and the credit counselor might show people how to create a budget. People may also learn money management strategies. People typically meet with a counselor for about an hour.

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