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Ann Arbor Law Blog

The possible benefits of debt consolidation

Michigan residents who are looking for ways to better handle their high-interest debts may want to look into debt consolidation. This may allow them and others to make one payment each month at a lower interest rate than what is currently being paid. Debt consolidation may be best for those who have total debts that are less than 50 percent of their income.

It is also best for those who have good enough credit to qualify for zero percent interest credit cards. Those who can't qualify may also benefit by using personal loans for consolidation. Personal loans generally come with a lower interest rate than credit cards and are paid off in a set amount of time. However, those who have small debts that may be paid off within the next year may not benefit from such action.

Pitfalls to avoid when trying to escape credit card debt

Consumers in Michigan and around the country often turn to credit cards following an unexpected financial setback such as a layoff or illness. Paying revolving debt off can be difficult for people who are struggling to make ends meet because minimum monthly payments are made up almost entirely of interest, and other options to pay down debt, such as selling assets or borrowing at more attractive rates, are often not available to those with unmanageable financial situations.

Many credit card companies make their offerings more attractive by setting up rewards programs and offering cashback bonuses, but these incentives can make it more difficult for consumers to escape the revolving debt trap. While these benefits do have a cash value, they often end up costing consumers far more in interest charges and fees than they save them in discounts and bonuses. Another pitfall to avoid is transferring balances to new cards with low promotional rates that increase significantly after just a few months.

When your adult child causes you unsurmountable debt

Although each bankruptcy case is unique, there are many common financial issues. A job loss, divorce or injury can put you in enough distress to declare bankruptcy. However, another common reason for financial turmoil is providing financial assistance to a child.

How can your adult children cause you to have no choice but to file for bankruptcy? What can you do to recover your finances? Here are some helpful insights for dealing with this type of situation.

Americans may carry credit card debt for years

Roughly half of Americans in Michigan and elsewhere who hold credit card debt carry a balance for at least two years. Of those who admitted to carrying a balance for at least two years, half said that they have had it for five years. This was according to a study of 2,000 adults conducted by Baby boomers and those in the Silent Generation were the most likely to carry such debt.

Baby boomers are between the ages of 63 and 71, and 63 percent said that they had credit card debt. The Silent Generation consists of those who are 72 years and older, and 57 percent in that age group admitted to having credit card debt. The survey also found that most people didn't accumulate credit card debt because they were splurging on expensive items. Instead, the debt was accumulated paying for groceries, utility bills and other necessities.

3 Halloween co-parenting tips

October is here, which means it is almost time for Halloween. If you recently divorced and have a parenting plan, you might be wondering how to handle this holiday. Holidays come with unique challenges for divorced parents. Who will take the kids trick or treating? 

Fear not! Candy night does not have to be a nightmare. Here are a few tips for making the best out of Halloween and ensuring your children are happy. 

Chapter 13 and getting a home

Michigan debtors who are considering filing for Chapter 13 bankruptcy may want to know if purchasing or renting a home would be feasible. Because Chapter 13 bankruptcy can remain on a person's credit for years, obtaining a home can be difficult. However, it would not be impossible.

Chapter 13 bankruptcy can be used by individuals who want to pay their debts but are unable to meet their obligations in the short term. People with a stream of income, an unsecured debt total that is less than $394,725 and secured debts that are less than $1,184,200 are eligible to file for Chapter 13. In the United States, Chapter 13 bankruptcies make up a third of all filings.

Certain professions have higher divorce rates

The national divorce rate average hovers around 35 percent of all marriages. However, a study using 2015 data from the American Community Survey suggests that some married couples in Michigan are more likely to get divorced than others. One factor that plays a significant role in determining whether a couple stays together is the spouses' occupations.

The recent study found that people whose jobs require extensive travel or nighttime hours are more likely to get divorced. Physicians, scientists and software developers are among those with the lowest divorce rates. There are a few reasons why nightclub and casino workers tend to consult a family law attorney more often.

Medical collection accounts may impact credit scores

Changes to the way that medical debts are treated on credit reports may be helpful to some Michigan residents. Starting on Sept. 15, 180 days must pass before an unpaid medical debt can appear on a person's credit report. In addition, a medical account in collections will be deleted if the balance is eventually paid for by a health insurance provider. While these changes may help, they may not help as many people as anticipated.

Of the 43 million Americans who have medical collection accounts on their credit reports, only 8 percent will be listed as paid. Even fewer will be paid by an insurance company. FICO found that roughly 200,000 people will be helped by the 180-day credit reporting waiting period, which is less than 0.1 percent of everyone who has a credit report. Furthermore, many medical providers already wait 180 days before reporting late payments on a credit report.

3 things to do if you cannot make your credit card payment

Being strapped for cash can feel humiliating and stressful. You might try to ignore it, but the reality is setting in that you are unable to make the minimum payment on your credit card bill. Whether you lost your job, had an unexpected expense or you have been spending unwisely, it is a serious problem. 

Now that you are at this point, you can either give up or try to resolve the issue. Here are some options for getting back on track with your credit. 

Types and costs of bankruptcy

Michigan consumers who are considering filing for bankruptcy might wonder what it will cost and whether it is the right choice for them. Depending on the situation, a person might file for Chapter 7, Chapter 12 or Chapter 13 bankruptcy. Each type has different filing fees, and if the debtor chooses to obtain legal representation, there will be attorney's fees as well. Possible alternatives to bankruptcy include negotiating the debt with creditors and selling something of value to pay off bills.

Chapter 7 bankruptcy is the most common, and it is best for people who do not have any way to repay their bills and who are facing legal action. Filing fees for Chapter 7 are $335. This type of bankruptcy remains on a person's credit report for 10 years.

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