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Debt relief may be needed more for certain age groups

Excessive amounts of debt wreak havoc on the financial well-being of many Connecticut consumers and others who reside elsewhere. Recent reports show that certain age groups have incurred larger amounts of debt than others. Yet, regardless of age and demographic group, the burden of carrying a lot of debt may prompt some to seek debt relief in a variety of ways.

A national financial services organization recently published survey findings that showed older millennials -- those adults ages 24-34 -- have an average of $42,000 of personal debt. This is the highest level of any demographic reported. Those between the ages of 35 and 49 -- known as Generation X -- had the next highest amount at an average of $39,000. The lowest amount of personal debt was among young millennials -- those ages 18-24 -- at $22,000.

More seniors faced with filing Chapter 7 or Chapter 13 bankruptcy

As Connecticut residents or others around the country reach retirement age, many dream of spending time with their families, traveling, taking up a new hobby or embarking on a different career. However, increasing numbers of retirees are experiencing financial turmoil. Reports from the Employee Benefit Research Institute show that the average amount of debt for seniors has risen from just over $32,000 to over $36,750 from 2010 to 2016. This is almost a 15 percent increase in just six years. Many older consumers are now considering filing for Chapter 7 or Chapter 13 bankruptcy for relief.

A factor in the increase in debt for senior adults is the rise in the cost of health care. In addition, the cost of living continues to rise; however, incomes are not increasing at the same rate. Some individuals may want to retire, yet cannot do so because they have significant debt and no savings. Social Security benefits are often not enough to cover routine expenses, health care costs and debt payments.

Credit card deliquencies rising, creating need for debt relief

Many Connecticut residents and others around the nation are overwhelmed with credit card debt. Recent reports show that the level of debt in the country is over $1 trillion. While most consumers are able to make their payments on time, nearly one quarter of the nation's total debt is delinquent. As some individuals seek debt relief because of these delinquencies, experts offer some insight on how this situation has evolved.

A delinquency is defined as a payment that is more than 30 days past due. Over 20 percent of consumers have reported that they have made late payments on a credit card at least one time. A personal finance website recently surveyed consumers about the reasons why others missed payments to their credit card companies as well as their personal reasons. Demographic questions were also asked to evaluate behavior among the various age groups.

New Medical Debt Relief Act proposed by Congress

Serious accidents or unexpected illnesses can be devastating for Connecticut families and others around the country. In addition to dealing with the physical issues of recovery, many families become saddled with exorbitant medical bills. As consumers deal with these hardships, lawmakers have taken notice. In fact, a recent bill has been proposed that may provide some debt relief to those struggling with mounting medical expenses.

A U.S. senator from another state has recommended changes to how medical debt is reported under the Fair Credit Reporting Act. This proposed Medical Debt Relief Act would require collection agencies to wait 180 days before reporting a delinquency to credit bureaus. In addition, the National Consumer Assistance Plan provides instructions to delete those accounts from credit reports when they have been paid in full or settled by insurance.

Increase in senior citizens filing for Chapter 7 bankruptcy

In most cases, senior citizens in Connecticut and throughout the country look forward to their retirement years. Plans to travel, spend time with family or take up a new hobby are prevalent in the minds of many on the cusp of leaving the daily grind of work. However, for an increasing number of retirees, their financial situations will not allow them to experience retirement the way they had imagined. Filing for Chapter 7 bankruptcy has become a reality for those hoping to ease their financial burdens.

Some seniors rely on Social Security benefits as their sole source of income. These payments are often inadequate to cover the cost of insurance, medications, housing and food. According to financial planners, credit cards are frequently used to make ends meet. As credit card balances mount, it becomes increasingly more difficult for those on a fixed income to make more than the minimum payments. Interest continues to accumulate, thus leaving consumers with debts that will be difficult, if not impossible, to pay off in a reasonable time.

Debt relief: How to effectively reduce credit card debt

Credit cards are a useful financial option for many Connecticut residents and others around the nation. However, their use can also wreak havoc on a person's debt levels, credit scores and overall financial health. In fact, many consumers must seek debt relief to rid themselves of the burden of credit card debt. Financial experts offer some advice on how to effectively reduce or eliminate debt from credit card usage.

Many advisers recommend obtaining a personal loan, most often unsecured with a fixed interest rate. Typically, the interest rates are considerably lower than those for credit cards, thus creating an opportunity to save some money. Various loans are paid off, leaving just one consolidated payment to make. Instead of debt consolidation, someone may also decide to use a personal loan to pay off one high interest credit card balance.

Tackling debt relief concerns requires planning

Debt is one of the most stressful elements of modern life. For many Connecticut residents, carrying debts like credit card balances, auto loans and student loans can be a heavy financial load, sometimes becoming overwhelming. Thankfully, there are a variety of debt relief options available, depending on the specifics of a particular situation.

The first step in tackling any debt is to create a plan. This means taking account of existing debts -- many people do not realize how much debt they are carrying until they sit down and look at the big picture. Planning out a budget to handle that debt is also important: some experts suggest setting aside up to 20 percent of after-tax income to put toward debt repayment.

Handling debt through Chapter 7 and other means

There are many reasons why Americans can fall into debt. Sometimes, it can be a question of poor planning or financial habits, but for many Connecticut residents, unexpected circumstances like divorce or loss of a job can also cause debt to mount. Thankfully, there are a variety of ways to reduce debt, from credit counseling to Chapter 7 bankruptcy.

A good first step to take is to review a household's expenses to see where corners can be cut. Reducing spending on entertainment or dining out might be a necessary sacrifice in the service of lowering monthy expenses and redirecting funds to pay down debt. Seeking professional support in developing a comprehensive budget can also be a smart move, especially if budgeting is not something an individual has much experience with.

Car loans still possible after Chapter 7

One of the biggest fears surrounding a bankruptcy filing is the effect this financial move will have on an individual's credit rating. Specifically, Connecticut residents who file for Chapter 7 bankruptcy are often concerned they will be unable to secure loans after filing. In fact, at least in the case of car loans, the opposite is sometimes true.

The point of a Chapter 7 filing is to pay down or otherwise discharge existing debts that threaten to become overwhelming. A bankruptcy trustee is appointed by the court, who works with the debtor to determine what assets can be liquidated to pay down creditors. Unsecured debt left behind, including credit card debt and other forms of debt, can then be discharged by the court.

Improving credit score as part of debt relief

Credit card debt is among the most insidious and tenacious forms of debt facing American citizens today. In Connecticut and elsewhere, many families and individuals are on the lookout for debt relief due to a high-interest balance on one or more credit cards. Of course, such balances can negatively affect credit scores, which in turn influence an individual or family's ability to secure additional loans, mortgages and other financial assets crucial to long-term stability. Thankfully, there are a variety of ways to improve a credit score, even after a Chapter 7 bankruptcy filing. 

Some 35 percent of credit scores are based on the consumer's ability to pay his or her bills on time. Bill history is measured by the ability to pay down credit, as well as the frequency with which an individual does so. Late notifications, insufficient funds fees and other indicators of a failure to pay on time can negatively affect a credit score. Paying bills in full, especially in advance, can help to repair a score affected by previous late payments.