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Durham Bankruptcy Law Blog

Consumer debt figures recently released

As of February 2019, consumer debt in the United States totaled $4.05 trillion. Individuals in North Carolina and throughout the country saw their revolving debt increase by $35.4 billion while consumer debt increased by $31.4 billion in January 2019. Non-revolving debt increased by $148.6 billion in February, which was lower than the increase seen during the previous month. Revolving debt generally means credit card debt while non-revolving debt generally refers to auto and student loans.

Mortgage debt and home equity lines of credit are not factored into overall debt totals. According to Federal Reserve data, consumer debt rose at a 4.5% annual rate. That was lower than the 5.3% annual rate in January and an increase from 4.2% in December 2018. The overall increase from January to February was about $15.2 billion less than what had been forecast.

Report: millions of Americans delinquent on their auto loans

When times are tough and must decide whether to feed your family or make your car payment, you’re probably going to choose your family. You’re not alone. A new report published in February 2019 revealed as many as 7 million Americans were more than 90 days overdue on their car payments. Late payments typically incur late fees which increase the amount you owe

The New York Federal Reserve believes there are several possible explanations for this trend:

Strategies for paying off student loan debt

You’ve just graduated from college and are ready to take on the world. Six months later, the first bill arrives and it’s time to repay your student loans. Approximately 45 million Americans are in your position. Student loan debt doubles credit card debt in the United States, putting a financial strain on our nation’s recent graduates.

There are ways to manage this debt. Focusing on the principle amount is daunting but that’s the wrong way to look at it. If you were climbing a mountain, wouldn’t you prefer to take the journey one step at a time instead of focusing on how far you are from the summit? Paying back your student loans is similar. Focus on making your payments month-by-month rather than the full loan balance.

In-service patients often receive out-of-network bills

The results of a study released recently by the Health Care Cost Institute suggests that about one in seven hospital patients receives a bill for out-of-network treatment despite obtaining their care at an in-service medical facility. The nonprofit health research group arrived at this figure after assessing almost 620,000 hospital admissions in 37 states. North Carolina was one of 15 states where between 10 and 15 percent of in-service patients were sent bills for out-of-network treatment.

In many cases, these bills surprised patients who took steps to ensure that all of their treatment options were covered by their health insurance policies. This happens because hospitals often use independent laboratories for medical testing and out-of-network doctors. Experts say the problem is getting worse because insurance providers are offering policies with more restrictions and are becoming stricter about reimbursement. In addition to determining how many hospital patients receive out-of-network bills, the IIHS study also examined the most common causes of uncovered treatment.

How employers help with financial issues

North Carolina companies and others throughout the country routinely offer employees health care or other benefits. Today, it is becoming more common for employers to offer individuals ways to pay down their debts or avoid going into debt. For instance, TrueConnect offers emergency loans so that employees don't have to turn to payday lenders during a time of financial hardship. MedPut provides interest-free loans that are repaid through payroll deductions as well as helping to negotiate existing medical debts.

According to data from Mercer, financial stress costs businesses in the United States up to $250 billion a year. Therefore, it is important that employers offer solutions to remove or reduce that stress if possible. In some ways, it can be just as important as focusing on physical fitness to keep workers healthy and reduce insurance costs. An insurance company called Unum allows employees to convert unused paid time off to cash that is used to help pay off student loans.

Why saving money is a must for anyone struggling with debt

If you are among the many people out there struggling with debt, you are not alone. Unfortunately, it is highly common to slip into financial problems early on and at any point of crisis. Money management is not often taught in school or by parents. And that is exactly the kind of ignorance that many credit card companies count on when seeking new customers.

Debt is a slippery slope that can lead many people down a path of greater problems down the road when the issues are left unsettled. What leads to the constraints of money problems? Insufficient funds. Not having a savings in place is the one single thing that leads many people down a destructive path of financial trouble.

Auto repossession and Chapter 13 bankruptcy

For many North Carolina residents, their car is a necessary item that allows them to go to work or attend school. However, some people may face serious financial difficulties that prevent them from paying off their car loans. As a result, they may face the threat of repossession. People can contact their lenders and attempt to negotiate a solution, including changing the payment date, deferring the loan, or modifying the terms.

However, if negotiations with the lender are unsuccessful, there are other ways that people can work to keep their cars. Many people who are facing an auto repossession are also being crushed by personal debt in other areas of their life, such as credit card bills. For these people, filing for personal bankruptcy may be an option to seek debt relief. The two most common types of personal bankruptcy, Chapter 7 and Chapter 13. Once a person files for bankruptcy, an automatic stay is placed on collection efforts, including auto repossession.

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.

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