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Income plays a role in determining credit card debt burden

To properly assess the impact of credit card debt in Mississippi, it's important to compare debt levels with income levels. There is often a disparity in the American South. According to a study by CreditCards.com, however, New Mexico is the state most burdened by credit card debt. Massachusetts residents were the least burdened by such debt. The median income in New Mexico is $46,744 while the median income in Massachusetts was $77,385.

Residents in both states owed roughly the same to credit card companies, but New Mexico residents took nearly twice as long to pay down their balances. It took roughly 18 months for households to repay an average balance of $8,323. Households in Massachusetts took about nine months to repay an average balance of about $8,000. This assumes that a family was putting aside 15 percent of its earnings to repay money owed to creditors.

What can you do if you owe taxes?

Often, difficult financial situations seem to snowball. Various types of debt accumulate and become increasingly harder to get rid of.

If you owe federal or Mississippi state taxes, it is important to know ways to handle them. Some people assume tax debt just goes away after filing for bankruptcy, while others may have heard bankruptcy can never discharge tax debt. Both of these assumptions are wrong. The best way to handle tax debt can vary depending on your situation.

Consumer debt up significantly in the past five years

Mississippi residents and others are on pace to amass $4 trillion in collective consumer debt by the conclusion of 2018. That would be an increase of $1 trillion over the past five years alone. The increase is attributed to both revolving debts and others like student and auto loans that have a fixed end date. Revolving debt has increased 22 percent since 2013 while student and auto loan debt has increased by 30 percent in the same time period.

Credit card interest rates are hovering between 16 and 17 percent on average, and that number could go up. This is because the Federal Reserve is planning on increasing interest rates up to four times in 2019. In 2018, Americans who have credit card balances have paid more than $100 billion in interest and other fees. Cumulatively, Americans owe $1.04 trillion in credit card debt, and this figure is expected to rise 5 percent in the last month of 2018.

The ins and outs of filing for bankruptcy protection again

Anyone in Mississippi or any other state must wait for eight years before filing for Chapter 7 bankruptcy again. This means it's not possible to file for this same type of bankruptcy, which is popular because it wipes out most debt within months of the initial filing and approval, until the eight year period is up. Technically, there aren't limits on how many bankruptcy cases someone can file, but there are limitations on when this type of protection can be sought after a previous bankruptcy was successfully filed and completed.

With Chapter 7, the eight-year limit between filings is pretty much set in stone. If a debt holder wishes to go from Chapter 7 to Chapter 13, however, it's possible to file for Chapter 13 bankruptcy after Chapter 7 is discharged. The stipulation is that four years from the initial Chapter 7 filing date must have passed first. Going from Chapter 13 to Chapter 7 requires a six-year wait after a Chapter 13 debt is discharged.

Credit card debt is on the rise

In Mississippi and throughout the nation, fewer people are defaulting on their credit card debt balances. This is according to the S&P/Experian Consumer Credit Default Composite Index. However, debt levels for U.S. consumers are increasing. If a cardholder does not make payments on a card balance for six months or more, the debt may be charged-off. This can have a profound impact on a person's credit score as well as on his or her ability to get another card in the future.

Damage to a credit score begins as soon as the first payment is missed. Missing a single payment could make it harder to get a loan because it will result in a lower credit score. Of course, having a poor credit score or history doesn't mean that a person can't get a credit card. As economic conditions improve and defaults drop, lenders tend to allow a wider range of people to obtain credit.

Careful borrowing can mitigate the consequences of a bankruptcy

Mississippi residents sometimes put off pursuing bankruptcy because they believe that filing a Chapter 7 or Chapter 13 petition damages credit ratings for many years, but a Lending Tree study reveals that four out of 10 bankruptcy filers have credit scores of 640 or higher after just one year. The figures also suggest that a few years of careful borrowing can counteract the impact of a bankruptcy.

Bankruptcies appear on credit scores for up to 10 years, but that does not mean that they significantly affect borrowing for this amount of time. Recency is a crucial factor when credit is evaluated, and consumers who avoid falling into the traps that led to their financial problems in the first place can expect to be offered similar interest rates to individuals who have never filed for bankruptcy within a few years.

There can be a way out of debt

Debt for many residents of Mississippi is a way of life. However, when it continues to increase and cannot be whittled down, debt becomes burdensome. It is not only the economic strangle-hold of paying interest without seeing the principal go down; there is a stigma to carrying debt that may not be deserved. While some people acquire debt through irresponsible lifestyle choices, many others do so only when there is no other option.

Financial experts recommend a thorough understanding of debt and why it was acquired before a plan to get out of it can be contemplated. If debt continues to grow, a major lifestyle change may be in order. If the debt was the result of a past incident or necessity, such as a medical emergency or student loans, there may be a way to climb out of the hole. In either case, a realistic cash flow appraisal of how much money is coming in and where it goes must be made.

How bankruptcy impacts your savings and checking accounts

Numerous people throughout Mississippi file for bankruptcy every year. Many of their stories remain untold because most of the time, bankruptcies with larger companies end up making headlines. For example, three Mississippi hospitals, along with a parent company in Tennessee, have had to file for bankruptcy recently, citing over $70 million in debts. 

In the event you ever need to file for bankruptcy, you will undoubtedly have some questions. It is natural to feel concerned, particularly about how this action will affect your bank accounts. There may still be quite a bit of money in your checking and savings accounts, and you can rest assured that money will remain safe. 

Gender income disparity also evident in debt disparity

Debt can be a significant source of stress for both men and women in Mississippi. However, data collected by Comet Financial show that women carry higher debt loads than men on average. The average student loan balance for women was $30,716 while men owed amounts that averaged $24,323. Car loans produced another disparity, with women owing an average of $12,183 compared to $10,371 for men.

Credit card debts followed the same pattern. While women carried an average outstanding balance of $6,559, men's credit card debts averaged $5,163. Medical bills hit women harder as well. Their average medical debts were $1,110 more than that for men. The gender wage gap presents itself as the likely contributor of higher debts for women. In general, female workers only earn $0.72 to $0.82 for every $1 paid to male workers.

Things you should not do before filing bankruptcy

Credit card debt leads to numerous people filing for bankruptcy every year. Mississippi has one of the highest bankruptcy rates in the United States, with roughly 361 people out of every 100,000 having to file for bankruptcy every year. 

Filing for bankruptcy can be a viable option for many people to get their lives in order. However, there are actions many take directly before filing that significantly jeopardize the process. Therefore, before applying for bankruptcy, you should make sure you have not recently done the following. 

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