Common Types Of Debt

How Big Of A Problem Is Personal Debt In The United States Today?

In this article, you will discover:

  • Most common types of debt
  • Questions that a bankruptcy attorney will ask
  • Who should consider bankruptcy

Pre-pandemic consumer debt was increasing, whether it was credit card debt, car loans, and/or mortgages. During the pandemic, we saw consumer debt levels dropping a bit. Recently, consumer debt levels have begun to increase again. The decrease in debt could be attributed to the federal assistance and temporary forbearance of student loans. Mortgages were also in forbearance during the pandemic, but those have begun to be lifted.

More Information:

What Type Of Debt Are Most Americans Saddled With Right Now?

Mortgage debt, vehicle debt, credit card debt and medical debt is pretty common right now. Anywhere from 40% to 50% of all debtors in a bankruptcy setting probably have unpaid medical debt. Additionally, there is an enormous amount of student loan debt in the US. Even though educational debt is not discharged in a bankruptcy, many people file Chapter 13 bankruptcy to help their student loan situation. Since loan providers are unsecured creditors, they will be paid pro rata based on the total amount of unsecured debt that the debtor has and disposable income available.

What Are Some Important Questions That You Are Asking As The Bankruptcy Attorney When Evaluating A Client’s Finances And Determining How To Proceed?

An attorney will inquire about the client’s income level and what kind of debt they have. If it is secured debt, we will need to know how much money they owe to creditors. Other critical questions that we ask them are if they have ever filed a bankruptcy before and what assets they own. We will also ask about income tax debt and student loan debt. Lastly, we will ask if the client is delinquent on payment of their secured debt. Often, if someone is delinquent on secured debt, the only solution might be a Chapter 13 bankruptcy.

How Serious Does My Debt Have To Be In Order To Consider Bankruptcy?

Whether or not to consider bankruptcy all depends on the overall financial condition of the person. For instance, if someone is making the median income and has $10,000 worth of credit card debt, we would not consider bankruptcy. But this could all depend on what obligations and living expenses the person has. If the person is on a fixed income and barely meeting their living expenses, then $10,000 worth of credit card debt will justify filing bankruptcy. It’s more likely that the fixed-income person will be in more dire straits than someone who has a larger earning capacity.

For more information on Dealing With Debts In The State Of Texas, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (888) 402-5557 today.

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