Credit Card Debt May Force More Students Into Bankruptcy

A survey conducted by student loan provider Sallie Mae shows that the average credit card balance of graduating college seniors has risen to $4,100 from $2,900 in 2004, when the last study was conducted.

Credit card debt is being used more and more by students to pay for books and other necessities as they work on their undergraduate degrees.

The survey showed that 92 percent of undergraduate credit cardholders charged textbooks, school supplies and other direct education expenses. That group charged an average of $2,200 on education-related expenses, more than double the average of $942 in the 2004 survey.

“Too many students are at risk of overpaying for college by pulling out credit cards to pay for textbooks or even part of their tuition bill, instead of using less-expensive financial aid to cover these items,” said Marie O’Malley, consumer research director for Sallie Mae.

In today’s job market where it is expected to be harder for college graduates to find a job, more students may graduate to bankruptcy if they can’t find some way to cover these debts. In some ways, this may be smarter than taking out student loans to pay for college since credit card debt can be dismissed in a Chapter 7 bankruptcy and student loans cannot.

 

 

 

Attitude Shift Seen Among Bankruptcy Filers

A blog post on Bankruptcy Corner that cites a story from the Detroit News says that consumer credit counselors have noticed a shift in attitudes about bankruptcy.

The counselors tell reporters that more people who are considering filing for bankruptcy think of it not as a personal failure, but a “product of the times.”

The report comes from Michigan, which has seen its bankruptcy rates increase exponentially with declines in the housing market and auto industry hitting the state hard.

Michigan ranked fifth in per capita bankruptcy filings in 2008, according to statistics released by the Administrative Office of the U.S. Courts, which keeps records for the U.S. Bankruptcy Courts.

Georgia was third in per capita filings in 2008 with 6.35 filings per 1,000 residents, and bankruptcy filings continue to rise in the Atlanta Metro area. 

Economic Crisis May Increase Bankruptcy Filings

Atlanta, Georgia has had an increase in home foreclosures over the last several months with over 10,000 lender-owned properties up for auction last month alone. The jobless rate in the metro Atlanta area has also increased to 8.7 percent this year. This unemployment rate is at the highest level it has been since 1976 when jobless measurements rates were first standardized and tracked. The combination of unemployment, home foreclosures and the current economic downturn may continue to cause people not to be able to pay their bills.

If you are unable to pay your home mortgage and face an economic crisis, it may be necessary to contact a Atlanta Bankruptcy attorney to discuss your option of filing for Atlanta personal bankruptcy. Personal bankruptcy is the legal process of selling or surrendering your assets to pay your creditors. An Atlanta Bankruptcy lawyer can help you understand the current bankruptcy laws for filing an Atlanta bankruptcy.

The two most common types of Atlanta Bankruptcy filings that an Atlanta Bankruptcy attorney can help you file are Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. Chapter 7 Bankruptcy is a liquidation of all the non-exempt property you own. Your Atlanta Bankruptcy Lawyer can help you identify and disclose your non-exempt debt and establish a trustee to liquidate all of the assets.

Chapter 13 Bankruptcy is another Atlanta Bankruptcy option. Unlike Chapter 7 Bankruptcy, it does not relieve your debts immediately, but will give you some relief from debt collections efforts and is supervised by the federal bankruptcy court. It is important if you are filing Chapter 13 bankruptcy in Atlanta to discuss your options with an Atlanta Bankruptcy lawyer.  An Atlanta Bankruptcy attorney will work with you to outline a three to five year debt repayment plan to repay your creditors. The benefit of Chapter 13 Bankruptcy is to help individuals keep their home and stop the home foreclosure process. Home mortgage payments must still be paid during the Chapter 13 Bankruptcy three to five year repayment period. Under Chapter 13 Bankruptcy laws you will be protected from creditor contact and harassment and you will instead work directly with your trustee who will receive all debt payments and redistribute them according to the bankruptcy repayment schedule.  

The type of Atlanta bankruptcy you will want to consider filing and discussing with you Atlanta Bankruptcy Attorney will depend on your personal financial goals. If you want to liquidate your personal debt and start over you may have the option to file Chapter 7 Bankruptcy. If you have a home or other assets that you want to keep and you do not qualify for Chapter 7 Bankruptcy, you may want to discuss the option of Chapter 13 Bankruptcy with you Atlanta Bankruptcy Attorney.

 

 

Death Won’t Stop The Debt Collector

Even though the person that is contacted usually has no obligation to pay the debt, collection companies are finding that the one group that is still paying their bills are the dead.

Collecting debts from dead people is a growth industry. Debt collection companies are benefiting from improved database technology that allows them to file timely claims on the estates of deceased debtors.

If there is no estate to probate, the companies are using the human touch, calling heirs and asking if there will be payment on the debt. 

A consultant to the debt collection industry told the New York Times that the relatives of the deceased usually pay the debts in an effort to let “the dead rest easy, knowing that their obligations are taken care of.”

If asked, the collector will confirm that the relative has no obligation to pay the debt with their own funds, but it isn’t disclosed upfront. 

 

 

Atlanta Bankruptcy Rates Expected To Climb In Continuing Economic Decline

To many Georgia residents, it’s no surprise Atlanta ranked 8th in the nation on the Forbes.com list of metropolitan areas with the worst housing markets. The first quarter of 2009 has been a continuation of the declines the area saw through most of 2008. Jobless rates are the highest they have been in the history of the state, and foreclosure rates continue to climb.

Bankruptcy attorneys and financial experts expect that bankruptcy rates will continue to climb until the economy turns around.

Many people may not understand bankruptcy or they are not fully aware of the protections that it provides them.

If you are facing heavy financial burdens, the first thing you should do is talk with a bankruptcy lawyer. A bankruptcy attorney will have a deeper understanding of the different aspects of the law, and the advice that you get will allow you to make informed and educated decisions about your financial future.

Essentially, filing bankruptcy can help you erase or pay off many of the debts you have incurred. Filing for bankruptcy protections will allow you to obtain a start fresh and begin anew with a clean slate.

Statistically, most consumers file chapter 7 bankruptcy, which allows for most debt to be wiped out in about 90 days. There are some limitations. Some debts, such as student loans and child support, are not eligible for discharge in bankruptcy. Chapter 7 will clear most of your unsecured debts, such as credit cards and signature loans (loans for which no collateral was provided).

Changes to bankruptcy laws that went into effect in October 2005 did make it more difficult for consumers to file bankruptcy. One change required that all persons who consider filing for bankruptcy undergo a “means test” to determine if their income level is high enough to support some repayment of their debt.

If in the past six months, the debtor made more than the median income for the state they live in, they must file a chapter 13 bankruptcy case and make payments in an effort to pay off their debt in three to five years.

Chapter 13 bankruptcy does offer benefits. It will stop foreclosure and allow you to catch up mortgage payments over time. It also stop lawsuits, garnishments and even tax levies, so that you can get back in control of your finances.

Understanding your options is essential to protecting your financial future. Getting the assistance of an expert can be extremely valuable. Contact an Atlanta bankruptcy attorney to review your situation and see if bankruptcy is a viable option.

 

 

Citigroup, JPMorgan Announce Halt On Foreclosures

With many hoping that changes in the bankruptcy law that would allow judges to modify mortgages are imminent and the Obama administration developing plans to help stabilize the housing market, officials with JPMorgan and Citigroup have announced a halt to foreclosures on owner-occupied homes.

Many homeowners have sought protection from foreclosure through Chapter 13 bankruptcy in Atlanta, and been able to keep their homes.

The halt comes after congressional leaders have called for the industry to enact moratoriums on foreclosures until a program is in place to modify home loans for borrowers in danger of losing their homes. Reports have indicated that mortgages modified early in 2008 were again in arrears by the time the economic crisis began in September.

The Obama administration is working on a plan to use $50 billion on foreclosure preventions programs similar to the one used by IndyMac Bank in California after it was seized by the Federal Deposit Insurance Corporation (FDIC).

 

 

Atlanta Based Home Depot Cuts 7,000 Jobs

Home Depot, the Atlanta-based home improvement retailer, has announced that it will cut 7,000 jobs nationwide, including 500 at its corporate headquarters.

The company said that most of the jobs cut will come from its 34 Expo Design Centers, which the company is closing.

The retailer is one of many companies across the country cutting jobs in the face of the growing economic slowdown. Caterpillar, an Illinois based manufacturer of heavy equipment, announced it will cut 20,000 jobs, and Sprint Nextel will cut 8,000 jobs by March 31.

Unemployment rates have continued to rise across the country, with rates in Georgia reaching a 26-year high of 8.1 percent last week.

Economy Making Impact On Election

Recent turmoil in the credit markets and other bad economic news has many residents of Atlanta fearful about the effects of the credit crunch on Main Street. Many small businesses that need short term credit to make payroll and maintain inventories have begun to feel the pinch. Some are considering closing their doors and declaring bankruptcy.

It has also centered the attention of voters in the upcoming presidential elections squarely on the economy. Democratic candidate Barak Obama received a slight bounce in national polls as more attention focused on economic issues. His lead over Republican challenger John McCain has tightened in the final days of the campaign.

A poll released by BankruptcyHome.com, a Web site that provides information on bankruptcy and debt consolidation, showed that those seeking information about bankruptcy favor the Democrat to handle economic issues by 26.78 percent over McCain. Obama was chosen by 48.17 percent of the over 1,200 respondents when asked which candidate was better prepared to handle the economy. Just over 12 percent were either unsure or thought neither could do much to address economic issues.

Recent polls show McCain holds a 6 point lead in the polls in Georgia, and is expected to carry the state. However, recent economic news is casting doubt on the Republican’s chances to win the White House.

Obama supports changing bankruptcy laws so that a judge can rewrite a mortgage on a first home in order to keep families in their homes. McCain opposes changing the bankruptcy reforms passed in 2005.

Both candidates voted to approve the Treasury Department’s $700 billion bailout of financial institutions that has the government purchasing interests in the nation’s largest banks.

He said that the program, intended to restore stability to the financial system, will not stop every bank from going under and that some financial institutions will fail. The program, according to Paulson, is not intended to save institutions just for the sake of saving them.

The stock markets have had mixed results in response to the measures the government has taken to the economic crisis. All signs point to a prolonged recovery from the current economic slowdown. If you are feeling the pinch of the financial crisis and can’t get ahead of your own debts, you might out to consider consulting an experienced debt law firm.