According to a 2018 study, the average person in the United States has $38,000 in debt not including a mortgage. Virginia residents who are unable to pay a debt balance may receive phone calls from creditors or agencies. While it may be stressful to receive those calls, debtors do have rights that creditors and other parties must respect. The Fair Debt Collection Practices Act prohibits activities such as telling an employer about a person's financial situation.
Tens of millions of people in Virginia and around the country are struggling with overwhelming debt. Many Americans begin taking on debt as college students and continue to borrow throughout their lives, and making the monthly payments on their loans and credit card bills often leaves them financially unprepared for retirement. Escaping the debt trap is especially difficult when individuals have significant credit card balances as it can take decades to pay them off if only minimum payments are made.
People in Virginia who have student loan debt are not alone. The total student loan debt in the United States is $1.59 trillion. Unfortunately, many people are struggling to pay off these loans, and they usually cannot discharge them in bankruptcy. However, there are other options.
Medical debt is often cited as a reason why people in Virginia and other states file for bankruptcy. While it might not be possible to predict when a health issue will arise, it may be possible to manage medical debt. Ideally, individuals will take time to read and understand their health insurance policies. In some cases, it will be necessary to obtain approval before seeing a specialist or having a procedure done.
Virginians who lost their homes through short sales or foreclosures were previously allowed to exclude up to $2 million in forgiven mortgage debt before 2018. However, the provision that allowed people to exclude forgiven mortgage debt ended in 2017. This means that people who have had mortgage debt forgiven may face thousands of dollars in taxes.
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.