Thompson Law Group, P.C.

Warrendale, Pennsylvania, Bankruptcy Law Blog

Generation X, baby boomers struggling with credit card debt

Debt does not discriminate against Pennsylvania consumers, and people of any age can end up owing more than they can handle. However, the average debt carried by different generations does vary and may indicate which age groups face the biggest financial struggles. Whether looking at credit card debt or more, Generation X seems to have the most trouble getting debt under control.

Adults between the ages of 40 and 55 are considered Gen X. The average consumer in this generation owes $135,841. This amount covers all types of debt, including credit card balances, auto loans, mortgages and student loans. The typical Gen Xer has a $8,215 credit card balance, $21,570 auto loans and $39,981 in student loans. Those with mortgages owe an average of $238,344, with home equity loan balances of just under $40,000.

Some property is exempt under Chapter 7 bankruptcy

When a person files Chapter 7 bankruptcy, they often have to give up some property in order to receive financial relief. However, many people do not realize that they can file under Chapter 7 and still keep many kinds of personal property. With a strong legal strategy and careful planning, a bankruptcy can offer struggling individuals and families a fresh start in a difficult season.

Most of the property that a person may keep under Chapter 7 is essential in some way or another, but the law is sometimes flexible about what qualifies as essential. If you believe that bankruptcy may offer the relief that you need right now, it is wise to understand what you may have to sacrifice and what you may be able to keep. A strong bankruptcy strategy is an important part of the bankruptcy process, allowing you to understand the risks and potential complications so that you can keep your rights protected.

Honored to speak at the Allegheny County Bar Association 32nd Annual Bankruptcy Symposium

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I was honored to be invited to speak on a panel that included The Honorable Thomas P. Argesti, United States Bankruptcy Judge, W.D. PA, Jill Locnikar, Assistant U.S. Attorney, and Keri Ebeck, Esquire on December 6, 2019, at the Allegheny County Bar Association 32nd Annual Bankruptcy Symposium. The panel was moderated by appointed Chapter 12 Trustee, Ronda J. Winnecour. As part of the panel, I was able to speak to attendees about the newly revamped Chapter 12 bankruptcy process implemented in the Western District of Pennsylvania along with the other panelist. Chapter 12 of the Bankruptcy Code provides specific relief to family farmers and farming operations of certain sizes to seek relief from their debt and protect their assets.

Saving the car during uncertain times

Having a car is more of a necessity than a luxury in a lot of places in Pennsylvania. Unfortunately vehicles are expensive, and very few people can afford to purchase one outright. This means the average person has to take out an auto loan when getting a car. As the COVID-19 virus continues to affect the American economy and even put some people out of work, saving the car amid this difficult time could be difficult.

Americans had $1.33 trillion in auto debt during the fourth quarter of 2019. Between the third and fourth quarters, vehicle owners added $16 billion to reach that total. But debt alone is not necessarily the problem. A bigger issue is the number of people who are already delinquent on their auto loans.

Consumer debt makes saving the home a priority

Most adults in Pennsylvania have at least some consumer debt. This includes things like credit card balances, medical bills and student loans, but excludes mortgages and auto loans. But carrying consumer debt can actually complicate a homeowner's ability to keep up with mortgage payments. As these balances build up, saving the home often becomes a priority.

Nearly 90% of Americans have at least some amount of consumer debt, and half of all consumers owe anywhere from $1,000 to as much as $20,000. In a survey conducted by Discover, most people said that medical expenses and student loans were the biggest reasons they ended up taking on so much consumer debt. In total, 60% of adults feel burdened by their debt.

Can financial literacy help me handle my credit card debt?

Managing finances is not always easy, but most people do the best they can. The problem is that many consumers do not have a strong understanding of what is actually going on with their money. Without any financial literacy, adults in Pennsylvania are likely to end up falling deeper and deeper into credit card debt.

It is not just Pennsylvania residents who are struggling. One study shows that only 57% of people in American consumers can pass even the simplest financial literacy test. There are 13 countries with higher passing rates. Part of the problem is that a lot of adults were thrown into the world of handling their own finances without any kind of preparation at all.

Protecting your rights at the scene of a car accident

When a car accident occurs, it is not always easy to know what you should do to protect yourself. Of course, the most important thing in any collision is your physical safety and the safety of others. Also, it is important to protect your rights at the scene of the accident and afterward. By taking specific actions and avoiding some others, you may increase your likelihood of recovery from injuries while keeping your rights secure.

Keep in mind that it is not wise to leave the scene of an accident until medical personnel and/or law enforcement arrive, particularly if any party in the accident suffered injuries or lost their life. In many cases, leaving the scene of an accident may lead to criminal charges.

Chapter 13 bankruptcy can be the key to saving your home

There are a few things that everyone in Pennsylvania needs, and one of those is keeping a roof over your head. You probably felt like you were securing that need when you purchased your home. Now that you are facing foreclosure, your biggest priority should be saving your home. Bankruptcy tends to be depicted as a pretty negative process on TV and in the movies, so you might not understand that filing for bankruptcy is one of the best options for stopping foreclosure.

It is very easy to find yourself buried underneath debt, and it is even harder to dig yourself out. Your lender could already be foreclosing on your property by the time you realize how many monthly payments you have missed. But if you choose to file for Chapter 13 bankruptcy, your lender will have to at least temporarily stop pursuing this action. 

Overspending contributes to credit card debt

Overspending is not uncommon, but that does not mean it is harmless. Even spending a little bit extra here and there can quickly build up, leaving people with more credit card debt than they can handle. Even Pennsylvania consumers who budget struggle to get their spending under control.

Research from Slickdeals found that 74% of consumers create budgets. But creating budgets is not helpful if nobody sticks to them. That same research shows that 79% of people with budgets still overspend, and not by trivial amounts either. On average, people spend $143 more per week than they budgeted. This adds up to an extra $7,400 a year.

Saving the car when auto loan terms are too long

New and used cars alike often cost tens of thousands of dollars, and the vast majority of people just do not have that kind of cash on hand. Auto loans make it easy for the average person in Pennsylvania to get a secure form of transportation. While it might be reassuring to know that a large number of consumers are paying back their loans just fine, someone who is struggling with repayment might be more interested in methods for saving the car.

There are expected to be approximately 17 million light-vehicle sales in 2020. Although this marks the fifth year of sales of 17 million units or more, it is also about a 2% decrease from 2019. One of the reasons behind that decrease could be the rising cost of vehicles. The typical transaction price for a vehicle is already over $35,000 with auto loan terms of around 68 or 69 months. As transaction prices push past $35,000, loan terms are also expected to lengthen.

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