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chapter 13 bankruptcy Archives

Bankruptcy options: Chapter 7 and Chapter 13

When people in Texas face overwhelming debt and are no longer able to make ends meet, they may look for options to find some relief from pending credit card debts, medical bills and other looming obligations. Personal bankruptcy can be an important choice that allows people to move forward to a new financial future. When people file for bankruptcy, they can do so in two forms: Chapter 7 and Chapter 13. There are several reasons why people may choose one or the other.

Chapter 13 allows for repayment of debts over time

Bankruptcy may be an effective option to eliminate debts or make them more manageable for people in Texas. Individuals typically file for bankruptcy protection under Chapter 7 or Chapter 13. While Chapter 7 is sometimes called liquidation bankruptcy, Chapter 13 is often referred to as wage-earners or repayment bankruptcy. In a Chapter 13 bankruptcy, the trustee approves and supervises repayment of debts on a plan that lasts between three and five years.

How to file for Chapter 13 bankruptcy

People in Texas who are dealing with crippling debt may wonder about the rules for filing for Chapter 13 bankruptcy. Eligibility for Chapter 13 bankruptcy includes having a regular income that will allow the person to pay creditors back on a payment plan each month. Furthermore, the filer cannot have more than the maximum allowable unsecured and secured debt.

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.

Millennials carry large debt load in San Antonio

Of all American cities, San Antonio is where millennials have the highest median debt. Those between the ages of 22 and 37 who live in San Antonio have a median balance of $27,122, according to LendingTree. While student loan balances make up the majority of that debt nationally, auto loans are the largest source of debt in San Antonio. On average, car loans make up 43 percent of what is owed to creditors.

Medical debts can create headaches for patients

In a recent study, more than 2 percent of credit reports had a medical debt of less than $200 sent to a collection agency. The study, which was published in the journal Health Affairs, looked at 4 million credit reports from 2016 to come to that conclusion. While these medical debts may seem small, they can turn into major issues for Texas residents who have them sent to collection.

Study reveals high debt levels among young Americans

A study released recently by the investment bank Charles Schwab suggests that many young people in Texas and around the country get into problems with debt even before they are old enough to legally purchase alcohol. The researchers also found that many millennials and members of Generation Z see student loans and mortgages as bad debt while viewing credit card balances as good debt. Financial experts generally believe the opposite.

Household debt increasing to record levels

In October 2009, the unemployment rate throughout the country was 10 percent. Roughly 10 percent of credit card accounts went into bad status. Between 2008 and 2013, Texans and other Americans had begun to make paying down debt a priority as a result of the recession. However, by the first quarter of 2018, household debt in the United States was at $13.2 trillion, which was the highest total ever recorded.

Interest rate hikes may mean higher bills for consumers

Some Texas consumers may be paying a significant amount of money in credit card fees and interest. The personal finance website MagnifyMoney looked at data provided by the Federal Deposit Insurance Corporation and found that Americans had paid over $104 billion in interest and fees over the past year. That number is anticipated to increase.

Chapter 13 bankruptcy may allow for additional financing

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.