Consumer debt has grown to an all-time high in California and in other states. The national consumer revolving debt is now around $1,037 trillion. Consumers can easily let credit card debt accumulate on their accounts if they are not paying close attention.
Individuals in California and around the country who are struggling with significant debt often put off filing for bankruptcy because they are concerned about the possible consequences. However, a recent study suggests that this delay can often be far more financially damaging. Researchers from the Notre Dame University Law Review came to this conclusion after scrutinizing data from the Consumer Bankruptcy Project.
At least four of the U.S. Circuit Courts of Appeals, including the 9th Circuit that includes California, have ruled that damages for emotional distress may be warranted in cases of a willful violation of a bankruptcy's automatic stay. The purpose of the automatic stay of collection efforts is to provide the bankruptcy petitioner with a breathing spell and temporarily relieve them of the financial pressures that led to the bankruptcy.
Bankruptcy can offer a life-changing escape and debt relief opportunity to people in California struggling with crushing debt. While the opportunities presented by filing for bankruptcy can be substantial, people are often hesitant to commit to filing. There are a number of reasons why this is the case: Sometimes, people simply want to see if they can avoid taking the additional step of bankruptcy. Other times, people feel a sense of guilt or shame. However, waiting to file bankruptcy can make a person's debt burden even harder to overcome.
Many California residents may be battling with debt. Some individuals purchase things that they cannot afford, so they put the things they buy on credit. This becomes problematic when the borrower can no longer repay the lender.
Those who are planning on filing for bankruptcy in California or any other state should understand its true impact on their credit. For instance, some believe that a lack of negative information on their credit report prior to filing for bankruptcy will reduce its negative impact. However, the fact that someone has filed for bankruptcy will be a significant negative mark regardless of what happened before he or she did so.
For those in California having difficulty repaying student loans, the new Federal Reserve Chairman is wondering why these loans are not dischargeable in a bankruptcy. However, this is a question only Congress can answer.
Medical debts plague every adult age group in California, but data collected by Comet showed that members of Generation X are currently carrying the highest balances. Generation X represents people in their late 30s to early 50s. Their financial burdens include supporting children, paying for mortgages and keeping up with high credit card bills. These existing financial pressures too often make the timely payment of medical bills impossible.
The recession of 2008 imposed financial difficulties on people in California, especially among those who are 65 years old and older. Approximately 8 percent of debtors seeking bankruptcy relief fall within that demographic. Medical debt represents the top reason seniors fall behind on their bills, and once collection agencies start to contact them, their stress rises significantly.
When people living in California find themselves overwhelmed by debt, they may decide to file for bankruptcy. If they opt for Chapter 13 bankruptcy, they will be in a court-supervised debt payment plan for the next three to five years. During this time, much of the debtor's income gets earmarked for creditor repayment.