Unpaid medical bills confront many people in Texas. According to the Consumer Financial Protection Bureau, 43 million credit reports contain medical collections. Although the credit bureaus Equifax, Experian and TransUnion will alter how they report medical debts as part of two settlements with state attorneys general, consumer advocates expect little relief for consumers.
Some people in Texas may not realize that there are consequences to choosing debt settlement over bankruptcy. For example, they might not know there will be tax to pay on the forgiven debt. They might also think they will lose all their possessions in a bankruptcy, but laws protect against this. Furthermore, debt settlement still has a significant negative effect on a person's credit score.
When a Texas resident files for bankruptcy, it can be a scary and uncertain time. How a bankruptcy affects a person's life and assets depends heavily on the type of bankruptcy they file. While there are many questions a person should ask before choosing a bankruptcy type, one important question is what happens to investments.
Consumers in Texas will soon find it easier to file lawsuits against banks or credit card companies as part of large, class legal actions. The Consumer Financial Protection Bureau issued a new rule on July 10 that stops these consumer finance corporations from using arbitration clauses to prevent such lawsuits.
A bankruptcy court has ruled that secured creditors must file proofs of claim on time if they choose to file them. The specifics of the ruling may be enlightening to Texas residents who have filed for Chapter 13 bankruptcy protection. Chapter 13 gives individuals who have a regular source income the opportunity to restructure and relieve debt without requiring them to give up their property. Debtors must provide the court with a plan to repay debts using future income.
Texas consumers are likely to see monthly debt service payments increase following an interest rate hike by the Federal Reserve. Homeowners, home equity borrowers and individuals who use credit cards will pay more for their revolving loans as a consequence of the quarter-percentage point increase of the short-term key rate.
When Texas residents pursue Chapter 13 bankruptcies, their court-approved payment plans may be modified in certain situations. Some courts have ruled that such modifications require a substantial change in circumstances, but a judge on the U.S. Bankruptcy Court for the Western District of Arkansas found that only two circuit courts have addressed this issue. The case involved a couple who requested a modification after surrendering a financed vehicle, and the judge ruled on May 26 that a substantial change in circumstances was not needed.
According to ValuePenguin, the average American household has roughly $5,700 in credit card debt. However, those in Texas or elsewhere who are between the ages of 45 and 54 have $9,096 in credit card debt on average. Those who are under 35 have the lowest average credit card debt with $5,808. While credit cards may seem like an easy way to finance a person's lifestyle, credit card debt can have long-term implications for an individual.
Texas residents likely know that creditors generally cannot sue for the collection of debts once the statute of limitations has expired. However, courts have been divided as to whether or not filing a claim on a stale debt as part of a bankruptcy violates the Fair Debt Collection Practices Act. In May 2017, the Supreme Court ruled that it did not, reversing an 11th Circuit ruling.
Texas residents may know that a bankruptcy will stay on their credit report for either seven or 10 years. However, it may be possible for people to start rebuilding their credit right away. The first step is to create a budget that makes paying bills on time a top priority. A timely payment history makes up 35 percent of an individual's FICO credit score.