Louisiana residents have contributed to the nearly $4 trillion in debt that Americans owe collectively. About $1 trillion of that debt is attributed to credit cards with another $2.93 trillion from other debts such as auto and student loans. Mortgage balances are not considered to be part of the $3.93 trillion figure. According to LendingTree, credit card balances are expected to increase by 5 percent through the end of 2018, which could bring that number right to the $4 trillion mark.
Women in Louisiana may be at particular risk for a crippling burden of debt. The gender wage gap has been widely debated as a significant political and social issue. Some studies indicate that on average, women earn 72 to 82 cents for every dollar earned by men. At the same time, however, the gap is not only reflected in income but also in comparative levels of debt. Many more women have larger amounts of debt than their male counterparts. For example, women owe an average of $6,000 more on their student loans and almost $2,000 more on their auto loans.
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.
The amount of money owed by households in Louisiana and around the country to banks and credit card companies fell sharply in the wake of the 2008 financial crisis and remained fairly stable during the ensuing recession, but figures from the U.S. Federal Reserve reveal that it has now surpassed its pre-crisis levels. Household debt in the United States climbed to an all-time high of $13.2 trillion by the end of March 2018 according to the nation's central bank, and most financial experts expect this figure to rise even higher in the months and years ahead.
Households around the country with revolving debt balances owe an average of $6,081 to credit card companies. Paying this debt off can be difficult for Louisiana consumers who are struggling to meet their financial obligations, and many credit card holders are only able to make their minimum monthly payments. Credit card minimum payments are usually $20 or $25 when revolving balances are low, but they climb to 2 to 3 percent of the outstanding amount when debt levels rise.
Louisiana consumers who are trying to increase their credit score should refrain from carrying a credit card balance. As a general rule, doing so has no bearing on a person's ability to establish good credit. Instead, it results in a person paying interest unnecessarily. The average credit card interest rate is over 16 percent according to data from CreditCards.com. Those who carry too large of a balance on a credit card could actually put themselves at risk of lowering their score.
It's only natural for people to want to put off filing for bankruptcy, mainly because it's often seen as a sign of failure or viewed as something meant to be a last resort. However, a law review study suggests that the longer individuals wait to file bankruptcy, the more their personal and financial well-being may be affected. What this could mean for debtors in Louisiana considering bankruptcy is more of a struggle with getting a fresh start.
People in Louisiana overwhelmed by their debts have the option of pursuing bankruptcy protection under the provisions of Chapter 13. A Chapter 13 bankruptcy requires a debtor to develop a payment plan based on current income. A bankruptcy court will review this proposal, and, if approved, direct the trustee to collect payments from the debtor for three to five years.
People in Louisiana currently making payments as part of a Chapter 13 bankruptcy sometimes need to buy a vehicle. Because a Chapter 13 payment plan lasts three or five years, the legitimate need for a car could arise during that time. Bankruptcy law includes a process for financing a vehicle. A person must first arrange for a loan and then file a Motion to Incur Additional Debt so that the court can approve or deny the request.
Louisiana residents and others who are thinking about filing for bankruptcy can generally choose between filing for Chapter 7 or Chapter 13 protection. In a Chapter 7 case, eligible assets are sold with the money used to pay off as much debt as possible. In a Chapter 13 case, debts are reorganized and paid over a period of time. It is important to note that not all debts can be eliminated in a bankruptcy proceeding.