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Will consumer debt reach 4 trillion before 2019?

If you are currently dealing with high levels of credit-card debt, you are certainly not alone. Consumer debt levels in the United States have been growing steadily since 2012 and, before we reach 2019, those debt levels are expected to reach new heights.

Some analysts estimate that individuals in America spend approximately 10 percent of their monthly incomes paying debts related to automotive loans, student loans, credit cards and home mortgages.

Paying off debt with the snowball method

Imagine a little snowball that you pack tight with your hands. Now imagine putting that snowball on more snow on the ground and gently rolling it around until it gets bigger, and bigger and bigger. Now, push the giant snowball down a hill and watch it continue to pick up more snow until it's a gigantic force to be reckoned with. This is kind of how the snowball debt payoff method works.

First, you select the debts that have the highest interest rates and start to slowly pay them off first with whatever money you have available. Once you pay off that high interest rate debts, you can use the money you were applying to that debt and apply it to your debt with the next highest interest rate. When that debt is paid off, you pay the debts with the next highest interest rate.

How does the Chapter 13 bankruptcy process work?

When many people consider bankruptcy, they think they'll need to sell all of their assets as a part of the process. That simply is not true when it comes to Chapter 13 bankruptcy. Unlike Chapter 7, which is often referred to as the "liquidation" bankruptcy, Chapter 13 is referred to as the "reorganization" bankruptcy. Rather than serving as a debt elimination strategy, it's a way to reorganize debt to make it easier and more manageable for the debtor.

Borrowers who are struggling to repay their debts may be able to qualify for Chapter 13 "reorganization" if they have a regular and dependable income that is sufficient to pay off a certain percentage of their debts over a period of three to five years. During this three- to five-year period of time, the borrower will make one, payment to the bankruptcy court every month in an amount determined as part of the bankruptcy process. The bankruptcy court will then distribute this payment among the various creditors to gradually pay off the borrower's debts.

What does psychology say about my credit card debt habit?

Credit cards are valuable and useful when we use them responsibly. They can provide a first line of defense against an emergency financial need. They offer us convenience when making online purchases, and they allow us to skip carrying cash when we're out on the town. Nevertheless, according to one psychologist, credit cards are dangerous psychologically.

Apparently, psychological research has shown that credit cards stimulate people to overspend. In fact, people are willing to pay more for the same thing if they use a credit card instead of cash. This means that if you were shopping at Target and saw a t-shirt you liked, you might be willing to pay $15 with it if you were paying with cash, but if you were paying with a credit card, you're suddenly willing to pay $20. This psychological "trick" allows retailers to make more money when they encourage you to pay with a credit card. Simultaneously, it also allows credit card companies to make more money by charging interest on the borrowed money you used to make your purchase.

How often can I file for bankruptcy?

The waiting time that bankruptcy filers must endure before they can file again -- after a previously successful bankruptcy -- depends on a variety of circumstances, including the type of bankruptcy they filed for in their previous debt dissolution processes. If you have filed for bankruptcy in the past, and you're in debt trouble again, here's some general information you need to know in terms of wait times:

Previously filed for Chapter 7 and wants to file for Chapter 7 again: Your wait time is going to be eight years between two successful Chapter 7 filings.

Do I have too much credit card debt?

Credit card debt can quickly grow from being a general nuisance into a full-blown financial catastrophe very quickly. However, when you're trying to evaluate how much credit card debt is "too much," you might not have a point of basis for comparison. That's exactly what this article intends to provide.

A little bit of debt is certainly okay -- and according to some it might even be healthy -- but too much debt can be damaging to your health, wealth and happiness. One simple metric for evaluating whether you're in the throes of a debt problem is to analyze your debt-to-income ratio. If you hold debts in excess of 50 percent of the income you generate in a year, then you're probably feeling extremely overwhelmed. Even before you hit a 50 percent debt to income ratio, you may be feeling stressed and worried even if you can still manage to keep up with your payments.

Can a creditor take my personal assets?

If you're in the midst of a devastating debt situation and you haven't been making your monthly payments, the creditor can actually sue you to collect your unpaid debt. In these cases, the creditor can pursue an enforceable court judgment against you by proving that you have failed to pay a specific amount owed. If the creditor files such a lawsuit, you can fight it in court. If you fail to contest the matter, the judge may automatically rule against you.

If the creditor successfully secures a judgment against you, it can enforce the order by claiming your property. By filing the appropriate paperwork, the creditor can use the sheriff in your area to seize your property. The judgment will be paid once the property has been liquidated.

Can I file for Chapter 13 bankruptcy?

Chapter 13 bankruptcy proceedings are open to any borrower who meets the requirements. If you'd like to know if you qualify for this option, in which you'll devise a monthly payment plan with the bankruptcy court, keep reading.

Key requirements for Chapter 13 bankruptcy include the following:

Would you give up Facebook to erase your credit card debt?

It's hard to believe, but Americans are so fed up with looming credit card debt that many admitted in a recent survey they would give up some of their favorite things for the chance to be debt free. The debt survey conducted by Mr. Cooper showed that 33 percent of Americans admitted that credit card debt caused them to lose sleep, and 25 percent said that credit card debt is interfering with the family relationships.

Many of those who were surveyed by Mr. Cooper admitted that they would do some crazy things to get rid of their debt, even prior to turning to a professional for financial advice. In fact, the majority of those surveyed said that they would exit all social media in exchange for deleting their credit card bills. Would you be willing to do the same?

Bankruptcy exemptions: Can I keep my family jewels?

Family jewels or family heirlooms are often not exempt from Chapter 7 bankruptcy proceedings. Even though many bankruptcy filers are surprised to find that a large bulk of their property will be exempt from liquidation, most luxury items like expensive jewelry, luxury cars, luxurious real estate property -- and even if they're family heirlooms -- will not be exempt from liquidation.

Here's a short list of things that you may have to let go of during your bankruptcy proceeding:

  • High-cost musical instruments unless the instruments are being used by the bankruptcy filer in a professional capacity;
  • Stamp, coin and other collections of valuable items;
  • Family heirlooms like expensive inherited jewelry, even if it has been in the family for years;
  • A second vehicle or truck;
  • Cash, stocks, bonds, bank accounts and other kinds of investments; and
  • A second home or a vacation home.

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