Bill collectors in Texas and around the country must abide by the provisions of the Fair Debt Collection Practices Act, but many of them do not. The 1977 law strictly prohibits harassment, but individuals struggling with overwhelming debts often receive calls from collection agencies on a daily basis and at inconvenient hours. Bill collectors are not permitted to publicize debts and must cease calling workplaces when asked to do so, but these rules are also widely flouted.
The latest report about bankruptcy filings produced by Supreme Court Chief Justice John Roberts indicated that filings have reached their lowest number since 2010. Prior to 2010, consumers had sought bankruptcy protection in increasing numbers due to the financial collapse of 2007 and 2008. Although debts remain a concern for many people in Texas, multiple economic forces appear to be reducing the caseloads at bankruptcy courts.
Military veterans make up about 10% of the population in Texas and around the country, and about 1 in 4 receive disability benefits from the Veterans Benefits Administration. Disability benefits paid by the Social Security Administration are protected from creditors during a personal bankruptcy, but bankruptcy judges ruled in five recent cases that Veterans Affairs benefits were not, meaning that disabled veterans were required to include their VA benefits in their disposable income disclosure paperwork.
Those who file for bankruptcy in Texas will likely notice that the filing is listed on their credit reports. How long it stays on a credit report depends on what type of protection an individual sought. If a person filed for Chapter 7 bankruptcy, it will stay on that individual's credit report for up to a decade. A Chapter 13 bankruptcy only stays on a credit report for seven years.
An increasing number of older people in Texas and across the country are filing for bankruptcy. There are a number of factors contributing to the problem of people facing severe economic crisis after they reach retirement age. While in 1991, only 2% of all bankruptcy claims were made by elders, that figure has now reached 12%. Personal bankruptcy can provide relief from most types of debt, but it does exclude some major obligations, including student loans and certain taxes. In many cases, elders may accumulate student loan debt as co-signers for younger relatives.
Those who need help getting their finances in order could do so by filing for bankruptcy. In most cases, a debtor in Texas or any other state will file for either Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy is for those who have unsecured debts and make less than the median income in their state. It generally takes about three to six months to have debts discharged.
While some Texas millennials might be burdened by student loans, far more are likely to carry credit card debt. According to a report from CompareCards.com, only 37% of millennials around the country said they had student loan debt compared to 67% who had credit card debt.
Personal beliefs often motivate people in Texas to avoid bankruptcy even if the struggle to pay debts becomes overwhelming. However, bankruptcy can be a positive decision that gives applicants a second chance. The process could include financial counseling that helps people eliminate bad money habits and avoid debt in the future.
People in Texas may have options for defending themselves when sued by debt collectors. If a debtor takes no action to respond to a lawsuit, a judge will side with the plaintiff, who is the debt collector. The resulting judgment could give the collector the right to garnish the debtor's wages or seize his or her assets. To potentially prevent this default judgment, a debtor could demand that the plaintiff show documentation that proves the right to sue in the first place.
Many people in Texas have around three or four credit cards. A study by The Ascent found that, on average, millennials have three credit cards while baby boomers and Gen Xers have four. In all age groups, 1 in 10 people said they had six or more credit cards. There are advantages and disadvantages to having multiple credit cards.