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How is Chapter 7 bankruptcy different from Chapter 13?

Often, the news is filled with reports of how the nation's economy is improving. Statistics are presented that show higher employment figures or lower rates of inflation. While these are positive indicators, some Connecticut residents still find themselves in dire financial situations. These consumers may be considering bankruptcy as a means to get a fresh start with their finances. Therefore, it is important to understand the differences between filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy.

Chapter 7 bankruptcy is characterized by a total liquidation of one's debts. Basically, a person's assets are sold, and the proceeds are used to pay creditors. However, if someone has too much income or assets, he or she would be ineligible for Chapter 7. In most cases, only items deemed necessary for basic living would be exempt from liquidation. In this type of bankruptcy, there is no option to repay the debts.

Debt relief: Ways to pay off credit card balances faster

Credit card companies often extend offers to Connecticut college students or other young adults initially entering into the workplace. Many are excited about the possibility of getting their first credit card and accept the offers. While some cardholders maintain the habit of paying off their balances in full each month, there are others who are in a cycle of carrying ongoing debt on their cards. If unaddressed, some even find themselves in need of debt relief to break the cycle. Experts recommend taking control of one's debt and creating a plan to pay it off as quickly as possible.

Reports show that most consumers are taking longer to pay off their credit cards. Many have less emergency savings available than they do in credit card debt. It is then understandable that many people are forced to use credit cards when unexpected situations arise, such as medical situations or major car repair. Unfortunately, there is also a group that has to use credit cards just to pay for everyday expenses. Regardless of the reason for their use, it is imperative to use the cards properly in order to maintain good credit scores.

Debt collection process: From a late payment to asset forfeiture

Missing a payment for a credit card or another type of debt can certainly lead to a series of unfortunate events for Connecticut residents. Initially, late fees are assessed and the balances continue to mount. One's credit score can suffer once credit agencies are notified of delinquencies, thus affecting the ability to obtain the best interest rates when making major purchases. Continued skipped payments can lead to repeated calls from collection companies and possible asset forfeiture should creditors decide to start the repossession process. It is important to understand the process of debt collection and how to avoid potential problems.

Consumers should never ignore their debts, according to financial experts. It is much better to acknowledge the situation and take the appropriate steps to address it. Ignoring the issue could eventually result in wage garnishments and bankruptcy -- much greater issues than the stress of financial struggles.

Debt relief: Credit card debt outweighs emergency funds for many

While their recommendations may vary, most financial experts suggest that Connecticut residents and others living elsewhere around the country should have roughly six months of their income set aside as an emergency fund. This money could be used in the event of unforeseen expenses, unexpected illness or the loss of a job. The idea of having extra money set aside is certainly appealing; however, many consumers are at the opposite end of the spectrum and are in need of debt relief. In fact, a recent survey revealed that most households owe more in credit card debt than they have in their emergency savings.

The survey, conducted by a personal finance organization, reported that 29 percent of consumers in the country have less savings than credit card debt. This number has increased from the data provided in 2018, when 21 percent had more credit card debt than savings. Currently, over 40 percent of households have credit card balances averaging $5,700. Despite rising pay levels, higher costs of living have resulted in an actual decline in wages.

Chapter 13 can help to get mortgage payments current

For Connecticut residents who are battling major debt problems, the good news is that there are remedies to resolve such problems and to move forward with life. When other debt relief options are found to be lacking, bankruptcy often turns out to be the most effective and complete resolution that gives people a true fresh start opportunity. Chapter 13 is a special kind of program that is based on a payment plan.

In Chapter 13, a qualified individual or married couple are provided with a strong option to save their home if they have become past due or defaulted on the mortgage. If the person can afford to pay the regular mortgage payment each month and to pay some set amount on the arrears over a 36- to 60-month period, the mortgage can be brought up to date in the Chapter 13. The mortgagee is compelled by law to accept the monthly payments and to cooperate in the bankruptcy procedures.

Can you file Chapter 7 or Chapter 13 bankruptcy more than once?

While recent reports indicate that the economy has improved, there remain many Connecticut residents and others around the country that continue to struggle to pay their bills each month. While certainly not the first course of action, some consumers make the decision to file for either Chapter 7 or Chapter 13 bankruptcy. Having the "clean slate" that bankruptcy often provides gives the impetus to get one's finances in order. However, things do not always go as hoped and some individuals may be wondering if they could actually file for bankruptcy a second time.

According to the U.S. Bankruptcy Code, a person may file bankruptcy a second time. It actually depends on what type of bankruptcy was filed to determine how long a person has to wait to do it again. With a Chapter 7 bankruptcy, someone's eligible debts are discharged. With this type, eight years must pass before another Chapter 7 bankruptcy could be filed.

Debt relief: States with highest average credit card debt

Connecticut residents love to see their state ranked near the top of many lists. It is always encouraging to know that one's state may rank highly as a good place to live or have wonderful educational facilities. However, being close to the top on certain rankings isn't always positive. As many consumers are struggling financially and in need of debt relief, it is not edifying to see the state nearly top the list of areas with the most credit card debt in the nation.

In the latest data provided by a credit card analysis company, Connecticut had the second highest credit card debt in the country. While the nation's average credit card debt was over $6,300, Connecticut's average was over $7,200. One possible contributor to a higher level of debt was a state's cost of living. Connecticut reported a cost of living that was almost 9 percent higher than the country's average.

Federal and some state laws proprosed to slow asset forfeiture

The government has been shut down for over a month now, and it has caused financial stress to Connecticut families and others all across the nation. While some households of government employees have lost one -- or both -- sources of income, many are certainly wondering how their bills are going to be paid. It is encouraging to see numerous local or national restaurants offering free meals to those furloughed employees. Now, one state has proposed legislation that will protect the employees affected by the shutdown from potential asset forfeiture, and other federal relief may be on the way.

The state bill provides an extension to the due dates for 2019 property taxes. Instead of being due on Jan. 31, government employees will now have 90 days after the shutdown is over to pay those taxes. A federal bill is pending that could offer some protection from mortgage foreclosure. This bi-partisan Federal Employees Civil Relief Act would provide this protection during the shutdown as well as in the following 30 days. The Act would also protect workers from defaulting on student loans, getting a car repossessed or being evicted from a residence.

Debt relief: Many approaches available to reduce credit card debt

Residents of Connecticut and elsewhere around the country often think of milestones as things to celebrate. Personally, birthdays and anniversaries are marked each year. On a national level, the government recognizes when the population reaches new records or unemployment hits an all-time low. However, some milestones are indicative of the financial struggles many are facing. These statistics reflect the need for debt relief for many consumers.

In 2018, reports state that the credit card debt for the country has now gone over $1 trillion. In addition, there are reports that the total of credit card fees and interest is over $104 billion. This averages out to almost $824 in fees and interest for each household in the nation. The average family has roughly $10,400 in credit card debt. Financial experts recommend several tips for reducing or eliminating this debt and its associated expenses.

Debt relief: Pay more than minimum due to credit card balance

Some Connecticut residents and others around the country may be dreading the arrival of their credit card bills this month. It can be easy to overspend during the holiday season, yet difficult to face the aftermath when the statements arrive. Yet those in need of debt relief who already struggling to make ends may only be able to make the minimum payments due each month. Experts share how this practice can affect a person's long-range financial situation.

National reports show that the average household has over $8,000 in debt. Balances of this amount could be paid off in roughly 13 months if consumers applied around 15 percent of their income to the bill. However, credit counselors suggest putting only 5 percent toward the debt, thus lengthening the period of time for repayment. Many cardholders pay only the minimum amount due, which is usually around 1 percent. Using this approach would leave a consumer paying on that $8,000 balance for two decades.