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Eugene Bankruptcy Law Blog

Companies are helping employees pay off debt

Many Oregon residents look to their employers to help them with things like health insurance and saving money for retirement. Now, some employees may be able to look to their employer to help them deal with their debt.

Many larger companies are helping their employees pay off their student loans. Others are including debt solutions as part of the benefits package they offer when they hire new employees. There are a number of approaches that are being tried, including offering interest-free loans to pay off debt. Some offer payday loans or payday advances to help struggling employees address immediate financial concerns with the goal of protecting them from the trap of payday loan institutions.

Young Americans carry $1 trillion in debt

Young people in Oregon and across the country are facing an increasing debt burden. According to statistics from the New York Fed Consumer Credit Panel and Equifax, people between the ages of 18 and 29 owe $1.05 trillion in debt. While student loans comprise a substantial amount of this debt, other common burdens include credit card debt, auto loans, mortgages and other types of loans or consumer credit. This marks an increase in debt among this demographic, which last owed this much money in the last quarter of 2007. The trend at that time was later disrupted by the 2008 financial crisis.

Of course, young people are not alone. People between the ages of 30 and 39 owe $2.9 trillion in debt while people aged 40 to 49 owe $3.4 trillion in debt. People between 50 and 59 years of age owe $3.2 trillion, those 60 through 69 owe $2 trillion, and those 70 and up owe $1 trillion in debt. This means that the youngest and oldest Americans have approximately the same collective debt burden. Student loan debt, which has been widely recognized as a national crisis, amounts to $1.5 trillion of all personal debt, affecting 44 million people. Some expect that 40 percent of borrowers may default by 2023.

Getting back on your feet after bankruptcy

Bankruptcy is a long and sometimes disheartening process. The benefits you reap at the end, however, are worth far more than the effort you had to put in.

Changing your lifestyle after bankruptcy doesn't have to mean sacrificing the things you love, it's simply a matter of tweaking the life you already have. Your debt is behind you, and now your focus can be on creating the financial stability you have been wishing for.

Medical bills are a factor in most personal bankruptcies

Medical debt is a factor in about two-thirds of personal bankruptcies filed in Oregon and around the country according to a study published recently in the American Journal of Public Health. The analysis of approximately 530,000 families pushed into inescapable debt by illness or injury is seen as significant as it is the first major study of its kind conducted since the passage of the Affordable Care Act in 2010. One of the primary goals of the landmark health care bill was to reduce and prevent medical debt-related bankruptcy filings.

After scrutinizing 910 personal bankruptcies filed between 2013 and 2016, the researchers discovered that medical bills prompted 58.5 percent of the petitioners to seek debt relief. Income losses caused by an injury or illness were cited as a reason in 44.3 percent of the bankruptcy cases, and many petitions revealed that both hospital expenses and lost wages played a role.

Outstanding medical debt doesn't have to end in disaster

Although Oregon residents enjoy a high standard of care when it comes to medical treatment, complex conditions can lead to large healthcare bills. Even people covered by medical insurance can find that an unexpected illness or injury may result in tens or hundreds of thousands of dollars in costs, possibly leading to mounting debt and collection activities from creditors. In some cases, people find themselves facing such large amounts of medical debt that they consider filing for bankruptcy.

To assist those dealing with medical debt, the St. George News provides some tips. First, it's important for individuals to understand their rights as they pertain to incurring debt, debt reporting, disputing debt and removing paid debts from credit reports. Next, individuals should have an understanding of how debt impacts the potential for future financial leverage. Although medical debt is typically not directly reported to credit agencies, this debt may be purchased by a collection agency that will then post the debt as outstanding. Outstanding debt can have an impact on everything from future mortgage decisions to personal loan interest rates.

How can you avoid credit card debt?

Getting into credit card debt can feel scary and intimidating, but it does not have to be this way. Sometimes the best way to handle credit card debt is not getting into it in the first place. However, this can be difficult. Unfortunately, this type of debt can be easy to get into. But there are tips you can use to avoid it.

How can you avoid debt?

Dealing with student loan debt in bankruptcy

For many people in Oregon struggling with insurmountable debt, student loans may comprise a significant portion of the overall burden. Across the country, over 44 million people collectively owe $1.5 trillion in student loan debt, forming the second-highest category of consumer debt. While home mortgages continue to take the lead, student loans outweigh credit card obligations for Americans nationwide. Despite the significant cost of student loan debt, it is one of the most difficult forms of obligation to discharge in bankruptcy.

Before 1976, it was significantly easier to include educational debt in a bankruptcy filing. A series of legal changes made it progressively harder to do so, and in 2005, Congress included private student loans in an exemption from bankruptcy relief. Nevertheless, some people still seek to discharge this debt in bankruptcy, even if there is a high burden to meet in order to do so. Most bankruptcy courts use a common test to determine whether a borrower is suffering undue hardship, the exceptional scenario in which Congress allows debt relief for student loans.

Why bankruptcy is more common as people age

In Oregon and throughout the country, older Americans are filing for bankruptcy at a higher rate than their younger counterparts. Part of the reason is that government benefit programs such as Social Security are replacing a lower portion of a worker's income after retirement. At the same time, health care costs are going up, which can further strain the finances of someone 65 or older.

It has been noted that the age group most likely to seek bankruptcy protection today has also been most likely to seek such protection in the past. According to the Consumer Bankruptcy Project, the age group with the highest level of bankruptcy filings in 1991 was between the ages of 25 and 44. Between 2013 and 2016, those same individuals were in the age group most likely to to do so. At that time, they were between the ages of 45 and 64.

Why is January 19 the most depressing day? Blame your debt

It is a day in January that has been calculated to be so depressing, it not only has been designated as the most depressing day of the year, but it has its own name. It is known as Blue Monday. That day this year falls on Monday, January 19.

If you are wondering how such a thing can be calculated, while it may not be the most scientific, there is a formula to it. The formula considers these factors:

Chapter 13 bankruptcy and the repayment plan

Oregon consumers who are considering filing for Chapter 13 bankruptcy might wonder what is involved in the repayment process. To file for Chapter 13 bankruptcy, it is necessary to go through the means test, which is income-based, and may have assets they want to keep. This might include the house. A Chapter 13 bankruptcy involves paying off debts over three or five years. Working with an attorney, the debtor creates a repayment plan that is then submitted to the bankruptcy trustee for approval. Many unsecured debts that remain at the end of the repayment period are discharged except for those that are not eligible. Among these are child support payments.

In general, the priorities are considered to be debts such as back taxes, alimony and child support. Secured debts, such as mortgages, come after this. Finally, there are unsecured debts. This includes medical and credit card debt.

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The Law Office of Kim Covington is a debt relief agency, and I have helped families, individuals and small businesses, file for bankruptcy relief under the U.S. Bankruptcy Code, for over 19 years.

The Law Office of Kim Covington

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