People in California facing significant, unrepayable debt may turn to personal bankruptcy to find relief. There are two types of personal bankruptcy available: Chapter 7 and Chapter 13. If a person files for Chapter 7 bankruptcy, a trustee liquidates his or her assets, uses the proceeds to pay off some amount of the outstanding debt and discharges the remainder. However, Chapter 7 isn't the best option for everyone seeking debt relief, especially if they have certain key assets to maintain or they have a relatively high income.
California residents who have declared Chapter 13 bankruptcy might wonder how their payments will be calculated. There are a few kinds of bankruptcy a person might file for, but the most common types are Chapter 7 or 13. With Chapter 7, many eligible debts can be discharged.
In the first quarter of 2018, California residents and Americans throughout the country owed a total of $13.21 trillion in debt. Of this total, $1.41 trillion was in the form of student loans while they owed another $815 billion in credit card debt. For those who are interested in paying down their balances, the first step is to learn more about the balances that they owe.
Bankruptcy doesn't always exclude student loan debt, but under certain conditions, it may be available as dischargeable to Chapter 13 filers in California and elsewhere. There seems to be an increased sentiment among many in the judiciary to make relief from often crippling student loan debt more available to a broader spectrum of the general public than the current laws permit.
According to a survey by Charles Schwab, members of Generation Z in California and elsewhere around the country owe lenders an average of $4,343. That amount increases to $11,663 for those who are between the ages of 21 and 25. In addition to being in debt, roughly half of those who were surveyed had less than $250 in savings. Individuals who are between the ages of 16 and 25 are generally gaining the ability to make financial and other types of decisions for themselves. Therefore, it is important that they understand how to manage their debt.
Collectively, U.S. consumers, including millions in California, owed $1.03 trillion in revolving debt as of April 2018, and much of that came in the form of credit card balances. There is $687 billion in credit card debt that is held on a monthly basis according to MagnifyMoney. In 2017, Americans paid a total of $104 billion in interest and fees, which was an 11 percent increase from the year before.