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Promoting a Proactive Approach towards Financial Security

January 2019 Archives

Is your business in debt? This information might be helpful

How long ago was it when your business was nothing more than an idea in your own mind? Whether it was less than a year ago or several decades ago, you likely recall what it was like to have a dream and wonder if you'd ever be able to bring it to fruition. You did. You succeeded, and if you're like many California business owners, you probably had to overcome numerous challenges along the way.

Dealing with major medical bills

Many California residents struggle to pay their bills, especially if they are hit with an insurmountable sum of medical debt. In many cases, the people for whom medical bills loom large are those least able to handle the financial burden, including the poor and the elderly. Middle-class families may also struggle to make ends meet if their health insurance fails to cover significant medical bills. Patients may not think of medical debt as similar to credit card bills, but it can have a significant impact on a person's credit record and debt collectors can purchase the obligation. As a result, vulnerable people may be facing ongoing collection calls demanding payment for these expenses.

Complicated factors contribute to drop in bankruptcy filings

Over the years, many people in California have sought consumer bankruptcy protection when their debts get out of control. According to a report from Supreme Court Chief Justice John Roberts, over 770,000 bankruptcy cases were filed in fiscal year 2018, but this represented a reduction by more than half compared to filings in 2010. Bankruptcy experts attribute the decline to many factors, such as an improving economy, more access to healthcare and the pressure that student loans place on younger people.

How bankruptcy courts treat student loan debt

In most cases, those in California and throughout the country who have student loan debt cannot discharge it in bankruptcy. This policy was put in place because of a fear that people would simply file for bankruptcy after getting their degree. However, there are exceptions to the rule for those who can pass the Brunner test. The Brunner test is invoked to determine if forcing a person to make student loan payments constitutes an undue hardship.

Minimum credit card payments could lead to debt for decades

Emergencies sometimes force people in California to use their credit cards. Reliance on credit cards has resulted in American households owing an average credit card balance of $8,195. A person with roughly $8,000 in credit card debt who only makes the minimum monthly payments would need about 23 years to pay off everything at an average interest rate of 17.41 percent.

Credit card balances in the U.S. continue to rise

Financial analysts in California and around the country have been voicing concerns about a looming consumer debt crisis for several years, and their arguments are growing more strident as American households sink deeper and deeper into debt. The financial information website WalletHub keeps track of revolving debt in the United States, and its report for the third quarter of 2018 reveals that American households now owe an average of $8,284 to credit card companies.