People in Virginia who are struggling to make payments on their debts might consider filing for bankruptcy. There are a number of factors they should consider before they file, including the total amount of debt, types of debt and income levels. For most individual filers, there are two types of bankruptcy that might work to discharge their debts: Chapter 7 and Chapter 13.
Virginia residents may be interested in knowing some of the reasons why bankruptcy filings are at a 10-year low. According to a report from a Supreme Court Justice, both consumer and corporate bankruptcy filing rates are the lowest they have been in a decade. But the reason is not necessarily that people are doing better financially.
Only 13% percent of people who are part of the millennial generation and have credit cards are debt free, according to a report. The report, released by CompareCards.com, also found that credit card debt is a greater drag on the finances of millennials in Virginia and around the country than student loans. Among Generation Xers, only 11% who have credit cards are debt free.
Medical treatment can leave people in Virginia struggling with massive quantities of medical debt. People across the country are facing costly medical bills that they cannot afford to pay, even when they have health insurance in place. In fact, medical debt is the leading issue linked to personal bankruptcy filings across the country. Patients worried about medical bills can take some steps to minimize their exposure to health-related debt.
The purpose of Chapter 7 personal bankruptcy is to provide a fresh start for an individual who has fallen behind on obligations to creditors. Most Virginia residents are aware to some degree that certain categories of debt are not dischargeable in accordance with federal law. These include student loans, child support and alimony and government taxes. However, a question remains whether or not a judgment entered against the debtor can be discharged.
According to Federal Reserve Data, Virginia residents and others have combined to accumulate $1.05 trillion in revolving consumer debt as of the fourth quarter of 2018. Consumers have accrued $870 billion in credit card debt, which beats the previous record high set in 2008. At the end of 2018, there were about 100 million more credit card accounts than in 2010. Between the final quarter of 2017 and 2018, there were an additional 37 million accounts that were 90 days past due.
Statistics show that the U.S. spends more on health care per capita than any other country. However, not all of this is government spending. Many Virginia residents carry a heavy burden of medical bills. This has resulted in an ever increasing inability to pay for out-of-pocket costs associated with expensive medical necessities.
Most people would rather not go through bankruptcy; however, after creditors make life miserable, the day may come when bankruptcy sounds like a good option.
Households in Virginia and throughout the country carried an average credit card balance of $8,284 in the third quarter of 2018. That was a 2 percent increase from the third quarter of 2017, according to a study from WalletHub. As debt levels increase, it may become more difficult for households to repay them. Increasing interest rates may also make it harder to repay those balances.
The amount consumers in Virginia and around the country owe to banks and credit card companies is expected to surpass $4 trillion by the end of 2018. This figure, which reflects revolving and installment debt but does not include mortgage balances, has risen by $1 trillion in just the last five years. Experts voiced few concerns over growing consumer debt levels when interest rates were close to historic lows, but a recent wave of rate hikes with the promise of more increases to come have prompted them to start issuing grim warnings about credit bubbles and unsustainable borrowing.