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Louisiana Legal Blog

Credit cards can help build credit when used wisely

Credit cards provide Louisiana residents with a straightforward and convenient way to borrow, but interest charges and fees can mount quickly if revolving balances are not paid in a timely manner. Using them wisely can also help to build credit, and the rewards programs that many lenders have in place give consumers more reasons to charge their purchases.

Some credit card companies reward spending with points that can be used to redeem merchandise, but the most popular loyalty programs offer cash back or discounted airline tickets. However, financial experts warn consumers not to let these perks lure them into the credit card debt trap. The consumer credit reporting agencies also encourage credit card use as credit scores fall when unused cards are cancelled by their issuers. This is because the total amount of available credit is reduced and records of on time payments are lost.

Is credit card debt settlement a good idea?

Many people in Louisiana are struggling with excessive amounts of credit card debt. They may have difficulty meeting their payment obligations on a monthly basis, racking up late fees and other additional expenses. When accounts begin to head toward default, creditors may agree to settle the debt for less than the full amount owed, especially when it comes to the amounts garnered through fees and interest charges. While debt settlement can be an attractive option for people to handle some of their debts, it may not always be the best choice.

A debt settlement is essentially a negotiation in which a lower amount is accepted in lieu of the full amount of the credit card debt. While people can handle this kind of negotiation on their own, many people think that going through a debt settlement company is necessary. In this case, the company negotiates with multiple creditors; the client pays the company each month, which it distributes among the creditors. Settlement companies also charge fees of their own, which can amount to 15 to 25 percent of the total debt. In other cases, people may stop making payments, which could have an adverse effect on their credit score.

Study finds more medical debt among younger people

Younger Louisiana residents may be more likely to fall into medical debt than their older counterparts. A study that appeared in the journal Health Affairs found that from the age 27 to 64, the size of medical debt went down almost 40 percent. This could be because older people have had more time to build up resources, and many are eligible for Medicaid. Younger people may also have more limited insurance with large deductibles.

The study also found that medical providers did not hesitate to send smaller bills to collections. More than 50 percent of collections were for bills under $600, and 2 percent were for bills of less than $200. Providers may send a bill to collections after it goes unpaid for 6 to 12 months. This may affect a person's credit rating.

Restructuring your business with a Chapter 11 bankruptcy

Although bankruptcy is a disheartening word in the world of business, many multi-national corporations use a Chapter 11 bankruptcy to avoid the demise of their business standings. Chapter 11 bankruptcies, commonly described as "restructures" or "reorganizations", allow businesses to continue to operate while creating a plan for repaying creditors.

Chapter 11 bankruptcy works to help businesses determine their assets, their debts, and those they owe to work toward paying back their heavy outstanding amounts. In cases of bankruptcy, whether your corporation owes extensive cash or your individual family lies heavily in debt to creditors, you may wish to hire an experienced bankruptcy attorney. He or she understands the crucial elements needed for filing bankruptcy and can offer advice on how to restructure your business to repay creditors. Bankruptcy may not indicate the closing of your dream and the end to your profession - it may simply mean a reorganization.

The impact of delaying filing for bankruptcy

Louisiana residents who have overwhelming debt may be reluctant to file for bankruptcy, as they believe that doing so implies that they have failed personally and financially. They may attempt to avoid or postpone filing for bankruptcy, which can make their situations worse.

The results of a study show that the longer debtors delay filing for bankruptcy, the more they tend to struggle. When they do finally file, the fresh start the process is able to provide for them is negatively impacted, as their finances and well-being are damaged.

How money mistakes really impact credit reports

Louisiana residents may think that their credit scores are only negatively impacted by late payments, exceeding credit limits or other related mistakes. However, even seemingly innocent actions like applying for a new credit card or loan can put a negative mark on a credit report.

A hard inquiry is what credit reporting agencies call a check on credit history by any lender or bank. It happens when someone applies for a credit card or a loan. Even someone with a high credit score and no late payments could see their number drop every time they apply for a new card or loan. Though getting more credit can actually help a credit score, hard inquiries inevitably knock a few points off, and they could stick around on the report for two years.

Important considerations before filing for personal bankruptcy

Not as many people are filing for personal bankruptcy protection these days. Still, some individuals in Louisiana may reach a point where debt is overwhelming enough to entertain thoughts of taking this step. There are times when this type of legal debt relief can be considered a smart move. However, debtors should keep certain factors in mind before exploring the possibilities with this legal lifeline.

A common oversight with bankruptcy is not declaring all debts. In order to eliminate or erase debt, the bankruptcy court needs to know all of the details related to what type of debt is owed and to whom it is owed. The assortment of paperwork required for filing is another potential source of preventable errors, such as not submitting bankruptcy schedules with listed debts and assets. It's equally critical for filers to meet bankruptcy criteria, such as mandatory debt counseling.

Strategies to delay or prevent home foreclosure

When financial hardships strike Louisiana residents, house payments often suffer. Missing mortgage payments will prompt a lender to initiate the foreclosure process after 90 days of delinquency. People in this situation might resolve the problem by working with their lenders or pursuing bankruptcy protection.

Mortgage lenders have a strong interest in avoiding the costly and time-consuming processing of foreclosing on a property. Many lenders will even offer a refinancing deal that could lower monthly payments. Similarly, a loan modification might allow someone to resume and keep up with payments. A repayment plan that provides someone a chance to catch up on payments presents another option. For those who do not expect to ever catch up payments, a short sale might prevent foreclosure. If the lender agrees to settle the loan by selling it for a reduced amount, then the borrower could resolve the debt and avoid a record of foreclosure.

When is it time to accept debt and file for bankruptcy?

Deciding to accept that you need to bankruptcy can be intimidating. Americans place a heavy stigma on bankruptcy, but that does not mean it is uncommon. While bankruptcy can be scary, it is a way that many individuals receive a fresh start.

Bankruptcy is not the end of the world and you are not alone. In 2016, Louisiana had one of the highest rates of bankruptcy, and in 2017 there were close to 800,000 total bankruptcies. While bankruptcy may be more common than you realize, how do you know if you are in a position where filing is your best option?

Finding A Balance Between Income And Debt

Many young adults who live in the Baton Rouge area and other cities across the United States area are already in debt with a large percentage not being of the legal age to drink. This age group is known as Generation Z or those who are between the ages of 16 and 20. The average debt of these young adults is about $4,300. Young adults who are between 21 and 25 are in debt by about $11,000 each with the amount being higher if they don't have as much financial aid as others while attending college or if they attend a university that is a bit more expensive than others.

In regards to a savings account, it's usually not something that young adults have established yet. Those who are considered Generation Z are attempting to turn the financial world around and are attending college in order to have a career to make money. However, there is a large percentage of these young adults who don't really understand the ramifications that can come with financial independence and sometimes don't make good choices.