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Southaven MS Bankruptcy Law Blog

Communicating with collectors in light of credit card debt

One of the most harrowing experiences of any adult Mississippian's life is dealing with debt that has gone into collections. When someone who owes a debt, whether the dollar amount is small or staggering, the debt can go into collections if no payment is made for a certain amount of time and attempts to reach the debtor are unsuccessful.

While it is always helpful to prevent a debt from going to collections, sometimes mistakes are made and the creditors turn the debt over to a third party collector. This can happen with many types of debt, but the type most Americans are probably used to is credit card debt. If one has credit card debt that the person can't immediately repay, fortunately there are steps that can be taken to reduce creditor harassment and move forward productively.

Chapter 7: Keep some property, liquidate other assets

It was recently revealed that over 190,000 jobs were likely added to the U.S. economy this past March. While that is probably very welcome news for some Mississippi residents, the job market still has a long way to go. Many residents are still struggling with unemployment or underemployment; in either case, that challenge can lead to one's struggling with debt as well.

For those hit hardest by the tough economy, personal bankruptcy may be a consideration. Often one of the most thorough ways to obtain a fresh financial start, bankruptcy nonetheless should always be carefully considered. It's important for Mississippians to understand the basic differences between Chapter 7 bankruptcy and its Chapter 13 counterpart. Both can be used for getting debt under control, but in different ways.

Does filing for Chapter 13 affect joint credit card account?

Financial challenges are understandably difficult to navigate on one's own. However, many residents of Mississippi must grapple with not only their own financial difficulties, but also those of their family members. Many couples, for instance, have joint bank accounts, jointly-owned property, and may be listed on a partner's mortgage, car title or credit card.

When someone is listed as the authorized user of someone else's credit card, the authorized user is generally not responsible for the account itself. However, an authorized user's credit report will be affected by the use of that card, no matter which individual has used it. So, if one partner goes over the credit limit or misses payments, the hit to the credit will likely show up on both individuals' credit reports. Conversely, if one partner uses the card properly, a boost to credit could be shared by both.

Student loan defaults can spur wage garnishment

Many young Mississippians have taken advantage of the state's colleges, universities and technical schools to further their education. Students generally attend with the hope of obtaining a well-paying job afterwards, although the uncertain economy has dimmed that hope for some. Faced with staggering student loan balances and insufficient income to repay those balances, many students have defaulted on their loans.

Unfortunately, when one defaults on a student loan, that person faces the possibility of seeing their wages garnished down the road. While garnishments may not occur right away, their threat should be enough to spur borrowers into taking decisive, informed action. It's important to know that defaulted loans are usually no longer with the original lender. When a borrower experiences a certain number of missed payments, the loan will typically go into collection, usually handled by a third party.

Credit card debt increased in 2013

Since the start of the great recession, many Mississippians have struggled to make enough income to cover their expenses. This has been far from easy for many residents though, with an uncertain job market, stagnant wages and a rising cost of living. Many people have had to declare bankruptcy in order to stop garnishment, put an end to creditor harassment, and give themselves a fresh financial start.

As both Mississippi and the rest of the United States emerge from the worst of the recession, some people may be tempted once again to take on too much credit card debt. According to a recent consumer credit report from the Federal Reserve, Americans' reliance on credit card debt increased in 2013, although it dropped slightly in January 2014. Credit card debt went up by 1.3 percent in 2013, compared to less than one percent in the preceding two years. During the worst of the recession, in 2008 and 2009, credit card debt declined by 8 percent each year.

Mississippians may not be financially secure

Fifty years ago, President Lyndon Johnson declared a war on poverty. Although federal and state governments have focused on eradicating poverty and improving Americans' financial security, financial challenges are still present throughout Mississippi and the rest of the country. A significant portion of the population must try to keep their financial states afloat and avoid situations like garnishment and foreclosure.

The Corporation for Enterprise Development recently conducted a state-by-state study, examining the assets and opportunities in each state. The organization is focused on empowering low to moderate-income households to build and save their assets. In the past, the study only took note of families' economic security and ranked the states according to this information.

23 percent of Americans consider bankruptcy

As tax-filing season nears, many Mississippians are probably taking a closer look at their financial situation. What they may not realize is that a significant percentage of Americans consider filing for Chapter 7 bankruptcy to get debt relief because of their financial challenges.

A recent study focused in on the bankruptcy-filing population. According to its findings, roughly 23 percent of American households have thought about filing for bankruptcy. Of those surveyed, 18 percent actually carried out with the plan and filed for Chapter 7 bankruptcy. The study reveals some reasons people may be more or less inclined to file for bankruptcy. Often, those families who make less than $40,000 per year file for bankruptcy. They understand that bankruptcy can offer a fresh financial start. Nevertheless, others are skeptical, believing bankruptcy to be somewhat "shameful."

American debt rapidly increasing

The United States has found itself recovering from the Great Recession for the last several years. With this in mind, Mississippians may guess that Americans are being more conservative with their money: trying to save more and spend less. Recent data that has been released on the topic, however, reveals quite the opposite is true. Debt, including credit card debt, is on the rise at an incredible rate.

The Federal Reserve Bank of New York just released data about Americans' personal finances. Consumer debt is on the rise, reaching over $11 trillion. The number is startling in light of the current state of the economy. Debt has actually increased since 2011. In fact, the increase took a particular hike at the end of 2013, when debt increased by about 2 percent -- or a couple hundred billion dollars.

Underbanking in Mississippi

Many different economic and financial factors impact a Mississippian's financial state. Sometimes no matter how much responsibility an individual takes on to rectify the situation, pulling oneself out of a bad financial situation seems nearly impossible. This is when personal bankruptcy can come into play.

Recent figures about American households were compiled and set forth in the Assets and Opportunity Scorecard. The Corporation for Enterprise Development, an organization that studies household finances and relates them to public and business policies, compiled the figures. The figures reveal that Mississippi ranks in last place all of out the states with respect to household financial situations, noting that many of the Magnolia State's households are in a persistent state of insecurity.

Many Americans living paycheck-to-paycheck

Finances are a complicated matter. It can be difficult for a Mississippi resident to juggle income, expenses and savings -- especially when income is low or unstable and costs are constantly on the rise. The situation is only further complicated when solutions, like personal bankruptcy, are unfamiliar.

A recent report by the Corporation for Enterprise Development focuses in on the financial challenges of Americans, particularly those in economically insecure areas like Mississippi. Although the federal government is reporting steady, positive growth in the employment sector, the CFED has found that nearly 50 percent of Americans are living paycheck-to-paycheck.

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Subscribe to this blog's feed Visit Our Bankruptcy Law Website Heidi S. Milam

Attorney at Law, P.L.L.C.
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Southaven, MS 38671

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