DebtStoppers USA Bankruptcy Blog

After rising in 2011, average credit card debt and delinquency rates in the U.S. declined slightly in the first quarter of 2012.

Average debt per borrower fell $242 to $4,962, while the percent of cardholders late on payments by 90 days or more dropped from 0.78 percent to 0.73 percent, according to credit bureau TransUnion.

Yet despite the declines, new research shows that American households are still depending on credit to fund standard living expenses.

According to a national survey, 40 percent of low- and middle-income households with existing credit card debt have used their cards to cover basic costs like the rent, mortgage, groceries or utilities because the cash in their bank accounts wasn't sufficient.

At the root of the reliance on plastic is unemployment and medical bills.

Not surprisingly, 86 percent of those who had spent part of the previous year unemployed had accumulated credit card debt. For nearly half of study participants, credit card balances included at least one medical expense.

Compared to overall national debt, the average debt of low and middle income families in the survey was significantly higher at $7,145.

Even if debtors can manage payments above the monthly minimum, interest rates and fees can make paying down debt a long, painful process - especially for those recovering from a period without income.

Over time, large debts wreak havoc on credit and keep consumers in the habit of living paycheck to paycheck. A poor credit history leads to higher interest rates and more difficulty qualifying for loans, which in turn solidify dependence on credit cards.

For families with unmanageable debt, filing for bankruptcy can offer a clear solution for winning back financial freedom.

Chicago bankruptcy has the power to eliminate unsecured debts, stop foreclosure, and protect consumers from creditor actions.

You shouldn't have to pay interest on essentials like bread and electricity. If you're caught on the credit card merry-go-round, a Chicago bankruptcy filing can provide a fresh start.

Continue reading "Chicago Credit Card Debt Declines, But Illinois Consumers Still Relying on Plastic" »

The good news is that credit card debt fell in the first quarter of 2012.

The bad news is that a large number of Americans are still unable to pay basic expenses such as the mortgage, rent, groceries, and insurance without the help of credit - making high interest rates, credit card fees, and poor credit scores practically a given.

In a recent survey of low- to middle-income families conducted by policy center Demos, credit card debt in 2012 was $7,145, 27 percent lower than in a similar 2008 survey.

Overall, national credit card debt has declined $242 from late 2011, to $4,962, reports TransUnion.

Yet 40 percent of those surveyed by Demos couldn't pay standard living costs without credit because they didn't have enough in personal bank accounts.

Much of the debt revealed in the survey was accumulated as a result of unemployment and medical bills. In fact, 86 percent of participants who had been jobless in the past year say they took on credit card debt as a result.

While the Credit CARD Act - which went into law three years ago this May - has made it easier for consumers to make larger payments and avoid surprise rate hikes, paying off debts of $10,000 or more can still take decades.

Many borrowers get caught in a vicious cycle in which the only way they can afford to make minimum payments is by opening up additional lines of credit. As their balances increase on multiple cards, interest and fees rise while credit scores plummet.

No matter how many consumer protection laws are enacted, creditors work to make sure credit card debt is easy to get into but nearly impossible to get out of. If you're overwhelmed by debt, Tennessee bankruptcy can offer a solution.

Chapter 7 bankruptcy was specifically created to provide struggling consumers with relief from mounting unsecured debts such as credit card and medical debt.

Immediately after filing, consumers are protected from creditor harassment. Debt can sometimes be eliminated in just a few months - or, in some cases, weeks.

Waiting for your financial situation to get better isn't a smart strategy. Without intervention, large debts tend to grow larger with time. By filing for Tennessee bankruptcy, it's possible to reduce or completely eliminate debt - and the problems that come with it.

Continue reading "Despite Small Declines in Debt and Delinquencies, Consumers Still Rely on Credit Card Debt in Tennessee" »

It's been three years since the Credit CARD Act was signed into law. But while the average amount of credit card debt carried by Americans has fallen since 2009, U.S. families are still relying on plastic to afford basic living expenses.

In a recent survey of low- and middle-income families by policy center Demos, 40 percent admitted to using credit cards to cover standard expenses such as groceries, utilities, insurance, or the mortgage or rent in the past year because they did not have sufficient funds in their bank accounts to cover these costs.

Conducted this spring, the survey found that participants carried $7,145 in credit card debt, down from $9,887 in a similar 2008 study.

This year's survey did show some changes as a result of the CARD (Credit Card Accountability Responsibility and Disclosure) Act, which prevents many abusive practices in the credit card industry and makes it easier for consumers to understand credit card terms.

For instance, households with debts of more than $5,000 are increasingly likely to make larger payments thanks to new statements that show how long it will take a debtor to pay down their balance by making minimum payments - which may not even cover interest.

Additionally, fewer families suffered late fees and, as a result, penalty interest rate increases.

But despite some progress, the fact still exists that much of the income earned by the hardest-hit consumers is going to credit card companies.

Many times, debts grow so large that the only way to pay existing balances is by opening new credit card accounts.

Paying down debt can feel like an endless uphill battle. For many families, Atlanta bankruptcy provides the momentum to substantially lower debt burdens - and in the case of Chapter 7 bankruptcy, erase them completely. In addition, bankruptcy has the power to stop creditor harassment and actions.

When you're caught in the cycle of debt, all it takes is one or two late payments to send your finances careening out of control.

By filing for bankruptcy in Atlanta, it's often possible to eliminate debt and rebuild credit - and your life.

Continue reading "Despite Consumer Protection Laws, Many Still Struggle with Credit Card Debt in Atlanta" »

New statistics show that one in every three U.S. homeowners is underwater on their mortgage.

In Atlanta, the numbers are even worse. More than half of homeowners in the Atlanta area owe more on their home loans than their homes' market values, according to the data by MSNBC.com.

However, the picture may not be as bleak as it looks.

Despite the growing number of underwater mortgages and reported foreclosures, most homeowners are still able to keep up with their mortgage payments.

Only 8.3 percent of underwater borrowers in Atlanta are delinquent by 90 days or more - less than the national average of 10 percent.

As our Atlanta bankruptcy attorneys noted in a recent blog post, negative equity doesn't put homeowners at risk for foreclosure.

What does, however, is debt related to home equity borrowing and credit card charges that occurred when homeowners' home values were on the rise.

If recent economic growth stalls and unemployment rises, homeowners with overwhelming debt are likely to be forced into delinquency and, eventually, foreclosure - just as they were when we first entered the recession.

Since negative equity discourages potential home buyers, it may have a negative effect on the economy as a whole.

But there's good news for homeowners. While it's not possible to control home value - and thus equity - it is possible to control debt.

By restructuring debts with Chapter 13 bankruptcy in Atlanta, struggling families can often reduce or eliminate unsecured debts such as credit card and medical debt, freeing up more funds for mortgage payments.

At the same time, Chapter 13 provides legal protection from foreclosure. Thanks to an action known as the automatic stay, it's possible to protect against repossession and even stop foreclosure proceedings once they've begun.

Unless you need to sell your house, home value is just a number. With freedom from debt, you can protect your property and your ability to make payments, providing time for your equity to rise and your finances to recover.

Continue reading "For Underwater Georgia Homeowners Who Are Delinquent, Atlanta Bankruptcy Provides Relief" »

Nearly one-third of U.S. homeowners - or about 16 million mortgage holders - currently owe more on their home than it's worth, according to MSNBC.com.

But while being underwater on a mortgage is often associated with foreclosure, the majority of these borrowers have managed to stay current on home payments.

On average, only 10 percent of underwater borrowers are delinquent by 90 days or more, putting them at high risk for foreclosure.

Like our Tennessee bankruptcy lawyers discussed in an earlier blog post, the state of being underwater on a mortgage doesn't affect the ability to make payments.

No one likes to hear their home is worth half of what they signed up to pay for it. But if you don't put your house for sale, you won't have to take a loss.

Often times, underwater homeowners struggle to pay the mortgage because of other circumstances.

The most common sources of trouble are excessive credit card debts and expensive home equity loans taken out when home values were much higher.

Over time, these obligations put substantial pressure on family finances. When homeowners hear that real estate prices are falling, it's easy to shift the blame to the economy when it's really our debt that's the problem.

But while you can't change your home's value, you may be able to change your debt situation.

By filing for Chapter 13 bankruptcy Tennessee homeowners can restructure most types of debt, often eliminating some or all unsecured debts like outstanding credit card balances and medical bills.

Meanwhile, Chapter 13 works to legally protect property - including your home - from repossession. Whether you've missed your first mortgage payment or are already in the foreclosure process, Tennessee bankruptcy can stop the bank from taking your home.

Home value is just a number. With freedom from debt, many Tennessee homeowners find they can more easily pay the bills - and enjoy their home - without fretting over the real estate market.

Continue reading "Most Underwater Homeowners Not Delinquent; For Those Who Are, Tennessee Bankruptcy Can Help" »

The statistics are startling: 16 million U.S. homeowners - or one of three people with a mortgage - owe more on their home loan than their house is worth.

In Chicago, those numbers are even higher. Just over 41 percent of owner-occupied homes with a mortgage have negative equity, according to MSNBC.com.

Yet despite the bleak data and stories of homeowners who walk away and mail their keys to the bank, the reality is that most borrowers are still managing to make mortgage payments.

In the Chicago metropolitan area, 12.7 percent are delinquent by 90 days or more. Nationally, delinquencies fall to just 10 percent. While still not ideal, the numbers are more encouraging than what's often reported in the media.

As our Chicago bankruptcy attorneys pointed out earlier this month, it's usually our debt - not our loss of home equity - that is the problem. Folks who borrowed against home equity or maxed out credit cards when the real estate market was booming are most likely to fall behind on payments today.

The good news is that, unless you plan to put your house on the market, its current value doesn't mean much.

However, because negative equity discourages home buyers, it impacts the home market - and the overall economy.

While it's not possible to boost home values, it may be possible for homeowners to boost their income - therefore making mortgage payments more affordable - by reducing debt.

Filing for Chapter 13 bankruptcy in Chicago provides borrowers the opportunity to restructure debt, often reducing or eliminating the amount of unsecured debt that must be paid back to creditors.

Meanwhile, a legal action called an automatic stay protects against repossession and stops foreclosure proceedings that have already begun.

With fewer monthly bills, it won't matter what Zillow says your home is worth. For many homeowners, bankruptcy provides much-needed financial - and emotional - relief.

Continue reading "While More Underwater Homeowners Are Making Payments, Delinquent Borrowers Can Still Benefit from Chicago Bankruptcy" »

The good news is that the economy is showing signs of life.

The bad news is that the recession has left many of us with so much debt that we won't be able to take advantage of the economic improvement.

As The Tennessean reports, home construction, factory output, and employment - all important economic indicators - are on the rise. Meanwhile, consumer borrowing and spending are picking up.

Yet one in five families in the U.S. owes more on credit cards, doctor's bills, and other forms of unsecured debt than we have in our savings, according to USA Today.

During the recession, many folks were forced to dip into savings and rely on credit card spending to make ends meet. Now we're left with the burden of large and expensive debts - and no cash cushion to serve as a safety net.

Since our credit card bills are so high, many of us have no choice but to continue relying on plastic for everyday payments.

When you're spending beyond your means without any savings to fall back on, all it takes is one missed paycheck or other unexpected expense to start a downward spiral into wrecked credit and foreclosure.

Getting finances under control means getting debt under control.

If you're carrying just $10,000 in credit card debt at an 18 percent interest rate, it could take you 20 years to pay it off - and that's assuming you make every payment on time.

For families with too much debt to manage alone, Tennessee bankruptcy can be a practical solution. In many cases, credit card debt can be reduced or dismissed with a bankruptcy filing.

For those who qualify for Chapter 13 bankruptcy, filing can also stop foreclosure - even if the process has already begun.

With the weight of debt off your shoulders, it may finally be possible to enjoy financial freedom.

Continue reading "Economy Picks Up, But Consumers Are Still Weighed Down by Debt in Tennessee" »

The economy may be showing signs of improvement, but our finances are another story.

One in five U.S. families currently have more in debt than they have in savings, according to a recent USA Today report.

Even worse, some of us have no cash cushion at all. By the end of 2011, 23.4 percent of families reported having a savings balance of zero - up from 18.5 percent in 2009.

Despite our savings shortcomings, new research shows we have no plans to stop accumulating debt. This month, the Federal Reserve reported that consumer borrowing for car and school loans increased in March. Consumers also increased credit card use.

Meanwhile, median household income in the U.S. is still 7 percent lower than its 1999 peak.

Americans are caught in a vicious cycle. Not only are we spending more than we earn, but we're spending more than we have, period.

It's no wonder that thousands of homeowners say they expect to fall behind on mortgage payments any day now.

If we want to move beyond the recession, we've got to move beyond overspending. For millions of Americans, that means lowering debt. For those with overwhelming debt burdens, Atlanta bankruptcy is often the most realistic option.

Debt has the power to bog down every area of a person's life. As debt grows, so does the amount paid in interest and fees, requiring families to rely on more debt to make ends meet.

Maxing out credit cards leads to a lower credit score, which in turn leads to higher interest rates. Meanwhile, debt payments steal away funds that could be going to pay the mortgage.

By filing for bankruptcy in Atlanta, consumers can eliminate some or all of their credit card debt. With the burden of debt relieved, you'll be able to afford current bills - and catch up on delinquent ones.

Without savings, you don't have a safety net. One missed paycheck or unexpected bill could spell disaster. Bankruptcy can provide the protection - and peace of mind - your family needs to move forward.

Continue reading "As Economy Improves, Many Consumers Are Still Weighed Down by Debt in Atlanta" »

A new survey shows that half of Americans spend more than they earn for at least part of the year.

Yet only 1 in 10 believes they are living beyond their means, reports MSNBC.com - and the number of consumers in financial denial may only grow as the economy picks up.

During the recession, many U.S. consumers pared back costs but still had to fall back on credit cards to cover the gap between earnings and expenses.

Family finances have suffered as a result. Often times, folks will wait for their credit score to hit rock bottom before seeking relief through Chicago bankruptcy.

Now that the economy is showing signs of improvement, experts are seeing hints that consumers are ready to start spending again. For instance, borrowing for student loans and cars increased this spring.

Unfortunately, our finances may not be as ready for a recovery as we are.

Median household income in the U.S. is down 7 percent since 1999. Americans have little savings, and more than a third admit to dipping into those savings to pay the bills. Another 22 percent admit to using credit to cover the gap, while 12 percent of us say we delay paying the bills when we don't have the money.

Until we're honest with ourselves about living beyond our means, how can we regain financial control?

Since most consumers don't have much control over income, it's up to us to control spending. If your family is drowning in debt, Chicago bankruptcy can be a lifesaver.

By reducing or eliminating financial obligations, bankruptcy may allow your income to cover the mortgage payment, health insurance premiums, and other important bills.

When you can stop relying on credit cards to make ends meet, you can stop worrying about interest rates, late fees, bill collectors, foreclosure notices, and all those other concerns that keep Americans up at night. Debt relief equals stress relief.

Continue reading "Growing Consumer Denial About Overspending Contributes to Debt, Chicago Bankruptcy" »

If you had a broken leg, you wouldn't cross your fingers and hope it would heal on its own, right? You'd get yourself to a doctor - stat.

Yet most Americans take the first approach when it comes to our financial health. When faced with potentially crippling money problems, we routinely hold off on taking action in hopes that problems will solve themselves. Nine times out of 10, however, the situation only gets worse.

Part of the trouble is that we tend to let our feelings get the better of us. Since most folks view their finances as a reflection of themselves, it's difficult to look at the situation without emotion.

Just like consumers, businesses frequently face hard economic decisions. But instead of second-guessing and worrying over their every move, they take fast action - whether it's cutting costs, laying off workers, or filing for Atlanta bankruptcy.

Businesses don't do much hoping; they see problems and take the shortest route to a solution.

By becoming more business-like about finances, Atlanta consumers could take bigger actions - and make bigger impacts.

When you're unable to pay the mortgage, it's not enough to save a few hundred dollars a month the way you might do by adjusting your budget or getting a mortgage modification (assuming you are one of the lucky few who qualify for a loan mod, that is).

If you're buried in credit card debt or behind on house payments, you need a serious change - and you need one fast. Filing for bankruptcy has the power to quickly save consumers thousands of dollars every month - enough to change the course of your financial future.

As our Atlanta bankruptcy lawyers often point out, a dream without a plan is just a wish.

It takes action to make dreams come true. Filing for bankruptcy in Atlanta has the ability to stop foreclosure, restructure debt, and lower bills. From the moment you file, you'll feel noticeable relief.

Continue reading "To Fix Finances, Consumers Must Take Emotions Out of Decisions to Cut Costs, File for Atlanta Bankruptcy" »

American consumers are traditionally pessimistic about the national economy. Yet when it comes to our own economies - our family finances - we can be optimistic to the point of default.

From mounting credit card debt to missed mortgage payments, today's average consumer faces big financial troubles. But when it's time to fix our finances, we tend to take baby steps.

We chalk the money problems up to a temporary issue, like those unexpected car repairs or that bigger-than-anticipated medical bill. We optimistically hope for a solution, such as that pay raise our boss mentioned last year. We might make a few budget tweaks here and there, but for the most part we continue spending as usual, using credit cards to cover the gap between income and expenses.

Before long, our credit cards are maxed out, our house is on the verge of foreclosure, and that raise that we were holding out hope for never came through.

Half-baked solutions produce half-baked results. If you want to overcome overwhelming debt, it takes more than wishing and hoping - it takes action.

As our Tennessee bankruptcy lawyers point out, businesses routinely get themselves into financial difficulty. And when they do, the management team doesn't sit around second-guessing themselves, feeling embarrassed or hoping for things to get better. They make cold-blooded, calculated decisions that produce big results fast.

If a current strategy isn't working, businesses change course. This could mean downsizing, cutting costs, or filing for Tennessee bankruptcy - or "reorganization," as the business world likes to call it.

Consumers have a tendency to take bankruptcy personally. It's why many folks wait to file until we're out of all other options - and money. But by viewing Tennessee bankruptcy as a business decision, not a reflection of character, many consumers could finally attain control over debt.

A mortgage modification or budget adjustment may be able to save a few hundred dollars a month, at best. Our Tennessee bankruptcy clients routinely save thousands of dollars each month - and have the ability to stop foreclosure, repossessions, and harassment by bill collectors.

Big problems take big solutions. If you're buried in credit card debt or behind on your mortgage, bankruptcy may be the answer.

Continue reading "To Repair Finances, Consumers Must Take Pragmatic Approach to Cutting Costs, Filing for Tennessee Bankruptcy" »

When businesses suffer economic setbacks, they take action: cutting costs, laying off workers, and, often times, filing for bankruptcy.

When consumers suffer economic setbacks, we tend to wait around and hope for the best. You can probably guess whose strategy is more effective.

By becoming more business-like in our approach to decision-making, say Chicago bankruptcy lawyers, more Americans may be able to nip overwhelming debt in the bud.

Whether it's a cutback at work, an illness, or an expensive car repair, unexpected costs can throw us for a loop when we're already living close to the financial edge.

But instead of quickly going into problem-solving mode to protect our bottom line, most folks are more likely to rely on credit cards while waiting for that raise our boss talked about last year.

Before we know it, our cards are maxed out, our mortgage payments are no longer affordable, and that raise never showed up in our paychecks.

Optimism is a great quality to have - just not when it comes to getting out of debt.

Business leaders know that the best time to take action is before financial troubles get out of control. If income isn't covering expenses, they don't wait until the bills are impossible to pay - they figure out how to lower the bills.

If that means filing for bankruptcy, or "reorganization," then so be it. Businesses don't make decisions based on emotions - there's no embarrassment, guilt or pride - they just do what they need to do to survive.

When your finances are in trouble, fixing them requires taking the biggest action possible. While you're sitting around waiting for a raise, a mortgage modification or a windfall, your situation will most likely get worse.

A Chicago bankruptcy filing can reorganize finances, saving potentially thousands of dollars per month. In the meantime, it can also legally protect against foreclosure and other repossessions.

A drastic situation calls for drastic measures. If you're behind on the mortgage or buried in credit card debt, bankruptcy may be the best business decision you ever make.

Continue reading "Making Business-Like Decisions, Filing for Chicago Bankruptcy May Be Best Way to Fix Finances" »

As banks prepare to release a new flood of foreclosures onto the market this summer, already-falling home values will likely get even lower.

But while many homeowners are dismayed by the notion of losing more equity - especially if they're part of the estimated 11 million borrowers already underwater - Tennessee bankruptcy lawyers warn against getting too caught up in home values.

After all, concern with equity is what got many Americans into trouble in the first place.

During the height of the housing bubble, homeowners used rocketing real estate values as permission to take out home equity loans and lines of credit so that we could spend well beyond our means.

Houses were never meant to be investments - and certainly not get-rich-quick schemes. Our parents and grandparents bought their properties for security, a place to live, and a chance to raise a family.

Somewhere along the way, Americans have forgotten that a house is meant to be a home.

The only time values matter is when you're ready to sell. Otherwise, value - like age - is just a number.

Ninety-nine percent of the time, it isn't home equity (or a lack thereof) that interferes with a family's ability to pay the mortgage - it's debt.

Most Americans have spent the last five years so focused on economic numbers such as real estate values, the unemployment rate, and the stock market that we've neglected the most important numbers - those that make up our basic family budget.

When spending exceeds income, of course paying bills will become a problem.

Facing the facts isn't easy, which is why most of us would rather shift our attention to doom-and-gloom media stories. But by passively waiting for the economy to improve, we miss out on enjoying a real, lasting solution.

Tennessee bankruptcy has the ability to help millions of families stop foreclosure, prevent wage garnishments and repossessions, and reduce or completely eliminate our unsecured debts.

There's no reason that you shouldn't be able to stay in your home and find relief from overwhelming debt. Filing for bankruptcy in Tennessee can be an affordable way for homeowners to obtain legal debt protection - and a fresh financial start.

Continue reading "Debt, Not Declining Home Values, Leads to Mortgage Struggles and Foreclosures in Tennessee" »

Despite a rise in existing home sales earlier this year, the media reports that home values are still dropping - and that the decline may only get worse as banks began releasing a new round of foreclosures onto the market.

As usual, the negative news has sent homeowners into a panic over the thought of losing even more home equity.

But the American obsession with home value may be preventing us from seeing the real problem - and, thus, the solution - to our financial troubles.

As our Atlanta bankruptcy lawyers often explain to clients, primary residences were never meant to be investments.

In our parents' and grandparents' day, a house was a place to live, to raise a family, and to create a lifetime of memories. But as home prices soared at the approach of the new millennium, our perceptions began to change.

Americans stopped looking at houses as homes and began viewing them as a means for keeping up with the Joneses.

By taking out home equity loans and using skyrocketing values as an excuse to allow spending to exceed income, American consumers amassed an unprecedented amount of debt.

When home values began to fall, we used the loss of equity as a scapegoat for our debt troubles.

In reality, it doesn't matter what your home is worth unless you're trying to sell it. Home equity has nothing to do with a borrower's ability to pay the mortgage or fight off foreclosure.

Housing numbers are merely a distraction from the real source of the problem - our out-of-step finances. Simply put, we have too much debt.

But there's good news. Because financial troubles aren't caused by the real estate market, families don't have to wait for the market to improve to fix their finances. Often times, an Atlanta bankruptcy plan can stop foreclosure, halt wage garnishment, and eliminate most - if not all - of a family's debt.

Filing for bankruptcy can be an affordable way for Americans to protect their interests and find a fresh financial start.

Continue reading "Home Equity Loss Not the Real Cause of Homeowner Debt in Atlanta" »

The real estate market is seeing some promising signs of recovery - for instance, sales of existing homes are up slightly - yet prices are still falling.

As banks release formerly-held foreclosures onto the market, home values are only expected to drop further.

But while many homeowners are panicking at the prospect of being underwater on their mortgages, the loss of home equity probably isn't their real problem.

Our Chicago bankruptcy lawyers often point out that borrowing against home equity, not the decline of home values, is what has landed so many Americans in hot water.

In the past, a home was a safe shelter, a place to raise children, and a source of pride. No one expected to make money off their primary residence; they were content to just live in it.

Somewhere along the way, we stopped looking at houses as homes and began treating them as investments. Because homeowners speculated that value would increase rapidly, they allowed themselves to borrow against home equity and charge expenses that vastly exceeded income.

When the housing market didn't behave as hoped, many homeowners were left with debt.

With the media so focused on housing numbers and foreclosures, it's easy to shift blame to the national economy. But for most of us, the root of the problem is our family economy.

A loss of equity means little unless you have to sell your home. It's the overwhelming debt that usually leads to trouble paying the mortgage.

But this may be good news. While there's no guaranteed way to restore home equity, it is often possible to eliminate debt.

For homeowners behind on mortgage payments and struggling with debt, Chicago bankruptcy may be able to help. By filing for bankruptcy in Chicago, it's frequently possible to stop foreclosure, prevent repossession, and lower - if not entirely eliminate - debt.

Continue reading "Too Much Borrowing, Not Loss of Home Equity, Is Root Cause of Debt in Chicago" »

The last time Congress rewrote bankruptcy laws, it was to prohibit students from using bankruptcy to escape education loan obligations.

Now - in light of a $1 trillion student loan bubble - legislators are discussing the possibility of reversing that position, reports The Wall Street Journal.

Back in 2005, the government prohibited the discharge of student debt through bankruptcy, except when someone faced an undue hardship such as a physical disability that prevented the person from working, because of fears that students would simply walk away from their loans.

Since then, tuition has skyrocketed while enrollment has increased, resulting in a steadily growing student debt burden far larger than Uncle Sam could have predicted.

Between 2000 and 2010, the average student debt load surged 24 percent to more than $16,000. Students who attend private schools often carry balances of $100,000 or more.

Not only is the burden impacting the debt holders, but it's also threatening the stability of the entire economy.

With jobs scarce, many recent graduates have been unable to find well-paying positions - or in some cases, any job at all. In the past decade, earnings of young workers with a bachelor's degree have fallen 15 percent.

Many young adults are holding off on taking out car loans, buying homes, or making other economy-stimulating purchases.

These days, it's not a matter of whether students will choose to make good on their promises, but whether they will be financially able to make good on their promises.

By allowing bankruptcy in Atlanta and other regions to help students most in need, some politicians hope to stave off what's seen as the next big economic bubble.

Of course, even if a bill is approved, it will only apply to private student loans - not the government-backed loans that account for 90 percent of student debt. With as many as 27 percent of borrowers already delinquent on school loan payments, it may be too little too late.

But while an Atlanta bankruptcy filing can't discharge student debt directly, it may be able to help ease the pain by reducing other forms of debt such as credit card balances and medical expenses.

By lightening the overall load, bankruptcy can make it possible for young consumers to begin heading down the path to a brighter financial future.

Continue reading "Hoping to Ease Student Debt, Legislators Propose New Laws for Bankruptcy in Atlanta, U.S." »

Bankruptcy was created to help Americans relieve the burden of impossible debt. Yet for the past 7 years, there was one important type of debt it couldn't ease: student loans.

But some legislators are bent on changing that, according to The Wall Street Journal.

In 2005, Congress revised bankruptcy laws to exclude the discharge of debt from education loans, except in rare circumstances. The theory was that, without collateral like homes and cars, young graduates would find it all too easy to walk away from their obligations if bankruptcy was a possibility.

What Congress couldn't foresee was just how out of control the student debt crisis would get within the next decade.

Earlier this year, the collective total of education loan debt reached the $1 trillion mark, higher than the nation's collective credit card debt.

Meanwhile, college graduates are finding it difficult to make payments. It's estimated that 27 percent of borrowers who have begun paying back loans are already delinquent.

Some are referring to the situation as the next big economic bubble. For the many young grads struggling to find decently-paying jobs, paying down debt may not currently be possible. Not surprisingly, young adults are putting off major purchases like homes and cars, which is having an effect on the entire economy.

A proposed bill would allow the most overwhelmed graduates to file for bankruptcy in Tennessee and other states. Unfortunately, even if it passed, it would only apply to a small portion of borrowers - those with private loans from banks and other lenders.

Ninety percent of school loans are government-backed, and therefore wouldn't be eligible for bankruptcy.

However, Tennessee bankruptcy may still offer indirect assistance to students, and families of students, drowning in student loan debt.

By relieving other forms of unsecured debt such as credit card debt and medical expenses, filing for bankruptcy may help debtors better afford loan payments, lower their overall debt burden, and eventually begin rebuilding credit.

Continue reading "Concern About Student Loan Debt Drives Discussion Over New Tennessee Bankruptcy Laws" »

Bankruptcy has always been intended for Americans who need help breaking free from the burden of overwhelming debt.

Yet, since 2005, bankruptcy protection has been unable to help those with certain types of debt - namely, student loans.

Now lawmakers are debating whether bankruptcy laws in Chicago and other areas across the U.S. should be revised to include some education loans, according to The Wall Street Journal.

In 2005, Congress rewrote bankruptcy laws to ban the discharge of student debts through bankruptcy, citing concerns that new grads with few assets to lose would be too tempted to walk away from obligations.

Since then, skyrocketing college costs and increasing reliance on debt have created what some have termed the student loan bubble.

Even after adjustments for inflation, the average student debt load of new grads increased 24 percent between 2000 and 2010 to $16,932 - and many law and medical school students have debt burdens in the hundreds of thousands.

This year, collective student debt in the U.S. hit $1 trillion - more than our country's collective credit card debt.

Its weight is dragging down not only college students and their families, but the entire economy, as young consumers are unable to find jobs and, as a result, afford homes and cars.

It's no longer a question of whether students will be encouraged to walk away from their obligations if we help them, but whether they'll be able to survive financially if we don't.

New legislation would make it easier for college grads to reduce extreme debt. However, it would only apply to loans issued by private lenders like banks - not the government-backed loans that currently make up 90 percent of student debt. Politicians fear taxpayers would balk at picking up the tab if students were to default on loans handed out by Uncle Sam.

But while Chicago bankruptcy might not be able to directly relieve student debt, it can still relieve the burden faced by some young consumers.

College students and the relatives who have helped fund their education can free up money for education loan payments by reducing other forms of debt through bankruptcy - primarily credit card debt.

Those with large payments - whether for an education loan or a mortgage - tend to rely on credit to fund many everyday purchases. Filing for bankruptcy can help ease credit card debt, protect assets, and improve finances, making life with student loans a little easier.

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