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Durham Bankruptcy Law Blog

Credit card debt growing across the nation

Many people in North Carolina are struggling with insurmountable amounts of credit card debt. This is especially true if they have paid for some significant expenses on credit or their income has declined after signing up for new credit cards. Across the country, people are accumulating increasing amounts of debt; the average individual debt reached $5,331 in 2019 on credit cards alone. Most people are unable to pay off their full balance each month; only 45 percent pay in full when they receive their monthly statements.

A number of factors may influence how much credit card debt a person has. People between 45 and 54 have the highest amount of debt. At the same time, people in the same category often have the highest incomes, so they may be better able to deal with the amounts that they owe. Younger and older Americans have lower amounts of debt. As people retire, they are less likely to accumulate major purchases on their credit cards as they adjust to a fixed income. In addition, those who make more money are also more likely to spend money. At the same time, those people may be better placed to pay off their debt. This debt-to-income ratio may be a more important metric.

How you can tell your finances are on the verge of disaster

It can be easy to look away and not pay attention to your troubled finances. However, even if “out of sight, out of mind” works for you, your finances will not get better by ignoring them. When you do not stay involved in your finances, you may not only miss when a major financial collapse is imminent, but you will not be prepared for it. One thing that can really help stave off any major financial problems is recognizing when a disaster is about to strike.

Here are the red flags and situations you should be paying attention to that can save you from a financial crisis.

Why do most Americans file bankruptcy?

Every year, over 530,000 Americans file bankruptcy. However, you may still associate it with a negative stigma. Many people associate bankruptcy with irresponsible credit card spending or poor financial management, but the truth is far more complicated.

A recent study identified the driving factors behind bankruptcies in the U.S. Although Americans can have numerous, complex motivations for filing bankruptcy, the study identified the single most prevalent cause: medical debt.

What are the top three causes of debt?

Debt is a slippery slope that is often hard, if not impossible to avoid. A new poll reveals that 25 percent of Americans see no hope of paying off their debt before they die. Another 40 percent of Americans simply don't know when they will be able to pay off their debt. That leaves the remaining 35 percent of the population with a payment plan and a known payoff date and the rare few with no debt at all.

These are startling numbers that lead to the question, why are debt levels so high? Of course, anyone in debt can tell you the answer, but here is a summary.

North Carolina has seen a big increase in student debt

Student debt has become a bigger and bigger presence in the finances of Americans. A recent analysis by Experian points to such debt having increased considerably here in the U.S. over the past decade.

According to this analysis, the total amount of outstanding student debt in the nation has grown by 129 percent since 2008.

Could debt be bad for your health?

If you believe that money can bring you happiness, do you also believe that debt can be detrimental to your health? If so, you may be right. Nobody likes to look at a stack of bills that need to be paid, but being in debt can really impact your health.

When you do not have enough money to enjoy living the life you want to live, from taking vacations, indulging in hobbies or even buying the newest electronic gadget, you can feel sad. But it is one thing to feel down because you are unable to buy the things you want, it is another thing to have the weight of debt constantly on your shoulders.

How to get back your feet after filing bankruptcy

While filing bankruptcy is a good option for many people, you might still have concerns. What will your life be like after bankruptcy? How can you recover? Fortunately, filing bankruptcy can give you a fresh start and it is relatively simple to recover and get your life back. There are a few simple actions you can take to set yourself up for success in life after filing bankruptcy. 

Living will, power of attorney can be a good idea

A living will and power of attorney are two instruments you can use to make decisions about your medical care. They are called advance directives since they give you the ability to make directives in advance of a catastrophic medical problem.

A living will lets you state your wishes about medical care or choose someone else to make those decisions if can't do so. A health care power of attorney also allows you to choose someone to make health care decisions if you are unable to do so yourself.

Is it possible to rebuild credit after filing for bankruptcy?

Struggling with an overwhelming amount of debt is undeniably stressful. Filing for bankruptcy may seem like a viable solution to overcome such circumstances. However, you may have questions on what life after bankruptcy will be like.

Whether you will be able to rebuild your credit is a common concern among those filing for bankruptcy. Because your credit may not currently be in the best state, doing anything to further diminish your credit score may seem impractical. 

Should you consolidate debt or file for bankruptcy?

If you are trying to navigate your way through overwhelming debt, you know how stressful it can be. You are not alone in this feeling; many Americans are dealing with debt. In 2017, the amount of debt in the U.S. climbed to a new high at $13 trillion. That amount was $280 billion higher than the previous record high back in 2008.

No matter the reason why you accumulated debt, the good news is there are ways to help you. Two methods that can assist you include filing for bankruptcy and debt consolidation. People have been using both to ease or eliminate debt from their life. Each are unique so your unique situation will determine which option would be best to pursue.

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