Christopher Todd Morrison, P.C.
Affordable Bankruptcy

Houston Bankruptcy Blog

Credit card burden higher in some states than in others

It takes longer for people in some states to pay off their credit card debts than it takes for people in others. Texas is one of the states where people carry the highest balances on their cards, but it's not among the worst when it comes to payoff time. The length of time it takes a person to pay off his or her credit card debt is sometimes called the credit card burden.

According to an analyst from, the question comes down to income and debt rather than debt level alone. The states with the highest credit card burden levels included New Mexico and Louisiana. Based on the average income in New Mexico, $46,744, and the average household credit card debt there, $8,323, it would take almost a year and a half to pay off the credit cards. In Louisiana, it would take 17 months for the average household to pay off credit card debt.

Senior citizens increasingly filing for bankruptcy

Bankruptcy is something that affects all age groups. Even senior citizens, who many people assume are more financially stable given a long working life and safety nets such as retirement accounts and savings, are vulnerable to the effects of overwhelming credit card debt.

There are many reasons why debt has a negative impact on all age levels, but it can hit senior citizens particularly hard. This is due to a variety of factors, including the lack of opportunities to earn wages to pay off debt.

Consumer debt on the rise nationwide

Debts owed by consumers in Texas and across the U.S. are expected to hit $4 trillion by the end of 2018, but the chief economist from LendingTree says it's not a reason to worry. While total consumer debt is a big number, he said, the economy is more stable and income is also increasing. Through September 2018, American consumer debt totaled $3.93 trillion, $1 trillion of which was from credit cards. The other $2.93 trillion was from things like auto loans and student loans.

According to LendingTree, holiday shopping in 2018 is likely to increase total consumer debt by 5 percent at least, or $600 million in new debt. Delinquency rates are below average and individual incomes have been rising faster than debts, says the economist. Consumer deposits and real estate values have also increased more than debt. Specifically, deposits have outpaced debt by $2.5 trillion and home equity has increased by almost $10 trillion in the past 10 years.

Time limits to know about when filing for bankruptcy

While bankruptcy may help Texas residents gain control over their finances, there are limits to how often a person can file. Individuals who filed for Chapter 7 bankruptcy cannot file another Chapter 7 petition for eight years. Furthermore, they cannot file for Chapter 13 bankruptcy for at least four years after the Chapter 7 case was filed. The rules are slightly different for debtors who file for Chapter 13 protection.

For example, they can generally file another Chapter 13 case as soon as their current one is closed. To convert a Chapter 13 case to a Chapter 7, six years must have passed from the date that the Chapter 13 case was filed. To file before that point, a debtor must show a good faith effort to follow through with a repayment plan. Furthermore, at least 70 percent of unsecured debts must have been repaid.

Avoiding the debt forgiveness trap

Debt forgiveness may sound like an attractive option to Texas consumers who are overwhelmed by their financial obligations, but the companies offering these services often fail to live up to the promises they make. Even when they do, their customers are usually left with lower credit scores and unexpected tax bills. Debt forgiveness is based on the idea that lenders will agree to cut balances significantly in order to get at least some of their money back, but things rarely work out that way in the real world.

Companies offering debt forgiveness services sometimes advise their clients to stop making all of their monthly payments. They say that doing this will prompt lenders to enter into negotiations. There is no guarantee that this strategy will be successful, but consumers who choose this path can expect their credit scores to fall precipitously and will find borrowing far more difficult in the future.

How to recover from bankruptcy

Texas consumers who file for bankruptcy may find that its relatively easy to improve their credit score after doing so. According to a Lending Tree report, 65 percent of Americans had a credit score of at least 640 three years after filing. There are many steps that people can take after filing for bankruptcy to improve their credit score.

First, they should be sure to pay existing bills on time, and it may be a good idea to pay more than the monthly minimum. Obtaining gas or retail credit cards can be helpful as it can be relatively easy to repay those balances in full each month. It is important to note that a bankruptcy will appear on a credit report for at least seven years. However, the impact of that event will fade over time, which may make it easier to apply for credit before it falls off of the report.

Can bankruptcy help me keep my utilities on?

If you have been procrastinating on your financial situation and are not sure of how much longer you can keep the utilities on, you may want to file for bankruptcy in Houston. Even though you are doing everything in your power to cover the household expenses and feed your child, it could be time for you to throw in the towel and learn how bankruptcy can help keep your utilities on while you work on improving your situation. 

Keep in mind that bankruptcy is not a final solution for your financial troubles. Once the courts accept your filing, it will stop all collection activity and reorganize your debts so that repayment is manageable. A significant factor that can help determine which bankruptcy option is ideal for you is the means test

Bankruptcy and getting out of debt

Debt has become a huge problem for consumers throughout Texas and the rest of America. U.S. citizens collectively owe $1.41 trillion in student loans, $1.23 trillion in auto loans and $815 billion in credit card debt. However, there are several important steps a person who wants to get out of debt can take.

A debtor should make sure they understand how the terms of their loan affect payments and interest. For example, the amount of interest may be compounded by being added to the principal amount of the loan. This means that interest will then be charged based on the combined amounts.

Court ruling may expand definition of consumer in debt cases

Some people in Texas might be interested in the recent decision in a legal case involving a consumer who said he did not owe the debt issued by a credit card company. The man filed a lawsuit against Main Street Acquisition Corporation that alleged that the company had violated the Fair Debt Collection Practices Act.

Main Street had purchased the charged-off debt that was in the plaintiff's name. However, the plaintiff's lawsuit said that he did not owe the debt and that the attempts to collect the debt were time-barred. The district court dismissed the lawsuit on the grounds that the man could not be considered a "consumer." The court reached this decision because it said a consumer was someone who was obligated to repay a debt, and the man said that he was not.

Credit bureau says medical debt now tops $127 billion

Medical debt is a growing problem nationwide. According to data published by credit reporting agency Experian, unpaid medical bills were in excess of $127 billion last year. People in Texas with outstanding medical debts might receive collections calls or demand letters. They might even end up in court due to these debts. Almost 20 percent of Americans have had their credit scores negatively impacted because of unpaid medical debt.

Chapter 13 bankruptcy protection might allow some people to repay medical and other debts under terms they can manage. According to an analysis by NerdWallet Health, unpaid medical bills were the most common type of debt leading to bankruptcy in 2013. Health care costs ranked higher than credit card debts or outstanding mortgages.