Federal bankruptcy laws create protections for people who are struggling to keep up with their financial obligations in Florida. Individuals who are considering bankruptcy have two options, generally speaking: Chapter 7 and Chapter 13. It is important to understand the differences between these two types of bankruptcy as one or the other may be better depending on the specific facts of a person's situation.
Many Florida residents are facing the growing burden of credit card debt balances. The state's residents accumulated the third-highest amount of debt in the country in the second quarter of 2019, adding $2.3 billion to their collective credit card bills. Of course, credit card debt isn't limited to Florida. Across the country, Americans began 2019 owing more than $1 trillion in credit card debt. Nationally, the second quarter brought an additional $35.6 billion in debt, a record for debt accumulation at that time of the year. These numbers were released as part of a WalletHub study predicting that consumers would garner another $70 billion in debt by the end of 2019.
Military veterans in Florida and around the country were given some much-needed financial protection on Aug. 23 when President Donald Trump signed the Honoring American Veterans in Extreme Need Act into law. The HAVEN Act changes the bankruptcy code to protect Veterans Benefits Administration disability benefits from creditors when veterans file for personal bankruptcy. Disability benefits paid by the Social Security Administration are already protected in this way.
Millennials in Florida and other states have a reputation for shying away from credit card debt and credit cards in general, likely because the late 2000s recession is still fresh in their minds. But this may not be the case anymore. Credit card delinquencies of 90 days or more among borrowers 18 to 29 are on the rise.
According to Consumer Reports, roughly 30 percent of all Americans have medical bills of $500 or more. An inability to pay those bills could have an impact on the credit score of those who live or work in Florida. For instance, a poor credit score or history could make it harder to rent an apartment. Furthermore, insurance rates, as well as interest rates on loans, could be higher for those who have a checkered credit past.
Unpaid medical bills often get reported to credit rating agencies, and they can seriously affect credit scores. While the uninsured are impacted by these bills more than other groups, more than a quarter of insured individuals and families encounter surprise medical bills that end up going on their credit reports. According to Consumer Reports, there are some things people can do to protect their scores when they encounter a bill.
The number of consumers in Florida and around the country who are finding it difficult or impossible to make their minimum monthly credit card payments is worrying economists. The delinquency rate on this type of debt in the United States has risen from 2.12 percent to 2.47 percent in just two years according to the Federal Reserve Bank of St. Louis, and many experts expect it to continue rising in the months ahead despite a thriving economy and low unemployment figures.
When people in Florida face a growing pile of debt due to credit card bills, medical bills, loans and other issues, bankruptcy can offer a way toward a renewed financial future. At the same time, despite the potential of bankruptcy filings to protect people's financial futures, they may be hesitant to file as soon as it is feasible. Many individuals attribute a sense of economic failure or social shame to filing for bankruptcy, and they may wait for a long time - even years - to file as a result. However, the effects of such a delayed filing can be significantly detrimental to the financial future that can be achieved through a bankruptcy filing.
The Fair Credit Reporting Act allows credit agencies to list bankruptcies of any kind for up to 10 years. However, the major credit agencies only list a Chapter 13 case for seven years. Florida consumers who are concerned about the impact of a bankruptcy on their credit report should know that its impact fades over time. This can be done by paying bills in a timely manner and not obtaining new debt.
Some Florida families may be among the households throughout the country that owe an average non-mortgage debt of more than $24,000. The credit reporting agency Experian also found that in 2017, people's average mortgage debt was over $200,000. On average, people owed more than $6,300 on their credit cards and $1,841 on retail cards. The average student loan debt set a new record at $34,144.