As many people in Texas know, it is sometimes necessary to file bankruptcy. Things happen that cause financial hardship, and debtors need relief. Chapter 13 bankruptcies can span three years or five years, sometimes creating a challenge for debtors who find themselves needing to purchase an automobile during this time.
Texas residents considering filing for bankruptcy to handle their substantial debts should be aware that not every type of debt is eligible to be discharged. People should also understand the differences between the two types of bankruptcies they are most likely to file.
An increasing number of people in Houston and across the country are finding it difficult to pay the bills for their store-branded credit cards. Delinquencies of 60 days or greater on the payments for these bills have gone up to 4.65 percent as of May 2018, an increase from 4.08 percent in March 2017. This is the highest rate of default that Equifax, the credit bureau, has seen for this type of card since 2011. The agency warned that it could be a sign of growing trouble for household debts across the board.
According to an infographic from Supermoney that draws on a report from the credit agency Experian, the average credit card debt of people in Texas falls somewhere in the middle of the national average. People in Iowa carry the lowest balances with an average of $5,155. Alaskans have the highest at $8,515. In Texas, the average is $6,902.
Unemployment, medical emergencies or unexpected vehicle repairs can send people in Texas reaching for their credit cards. Although numerous reasons can cause someone to fall into debt, the balances need to be paid at some point. Debtors have several approaches to choose from when confronting credit card balances and high interest rates.
When a Texas resident files for bankruptcy, tax debts could be discharged along with any other outstanding balances. However, it is not a given that a tax debt will be eliminated. If that debt is related to withholding taxes owed, it generally won't go away in either a Chapter 7 or Chapter 13 case. The same is true if a person is trying to use the bankruptcy system in an effort to evade a tax bill.
Texas patients who can't afford to pay their medical bills may be able to find help doing so. Across the United States, hospitals offered $38 billion in what is referred to as charity care. Sutter Health offers families of four without insurance who make up to $100,400 the ability to have their bills waived entirely. Those who have insurance can still ask to have their payment obligations waived.
The typical Texas resident has some level of debt. According to Experian, the average American household debt excluding mortgages was $24,706 in 2017. The average credit card debt last year totaled $6,354, which was a 2.7 increase throughout 2017. Those in the Generation X and Millennial age groups saw their credit card burden go up the most. Retail credit card debt grew 4 percent for an average balance of $1,841.
For people in Texas struggling with the burden of overwhelming debt, bankruptcy can be a real solution to help create a way out of a difficult situation. However, when considering filing for bankruptcy, it is important for a person to have an accurate and thorough understanding of how this process will affect his or her credit in the near future and the long term. Filing for bankruptcy is a serious action that can enable people to pay off their debts and get some relief, but it can also cause their credit scores to drop by 200 points.
Some people in Texas may be carrying a significant amount of credit card debt. By the end of 2017, Americans collectively added the most debt to their credit cards since before the recession of 2007. In all, total credit card debt is more than $1 trillion.