Tag: credit cards

Millennials & Credit Cards

in Bankruptcy, Credit and Credit Cards

The types of people carrying credit card debt is changing in Georgia and around the country. Millennials, a group of people born between 1981 and 1996,  were once known for their aversion to overdue bills, especially as many of them became adults and entered the workforce during the Great Recession. Because of this experience, a significant number of millenials steered clear of credit cards. However, as they have experienced salary growth and with credit card issuers developing cards that are particularly appealing to younger people, millennials have taken on a larger and larger share of credit card debt.

Along with that overall increase in credit card debt, millennials now experience higher levels of delinquent debt. Over 8% of credit card balances carried by these younger Americans were more than three months past due. This marks a high in the level of delinquent debt carried by younger people not seen in nearly a decade. Experts say that millenials and other young people have been inspired to open credit cards as purchasing power and income has grown. Many of these new cardholders feel confident that they will be able to pay back whatever bills they run up. The problem is, life often gets in the way. Personal circumstances like an unexpected job loss or an illness can interfere with a person’s ability to pay. When credit cards are involved, interest rates are exceptionally high, occasionally topping 35%. Even people with exceptional credit often pay interest rates of 18%.

Credit card companies often tweak their marketing to appeal more strongly to young people. These companies use tons of data and studies show that traditional incentives like 0% interest and cash rewards are less enticing for millennials than sign-up bonuses or travel credits. The worst part about the rise of credit card debt is that it accompanies a big rise in interest rates recently by the Federal Reserve.  This makes it even more expensive to carry a balance on a revolving line of credit like your traditional credit card. 

When people find themselves facing insurmountable debt burdens, they may not see the light at the end of the tunnel. However, a qualified bankruptcy attorney could provide sage advice and educate people on the available options that can help you achieve your financial goals. If you find yourself drowning in debt contact the attorneys at Harmon and Gorove.  We have decades of experience helping people achieve the dream of being debt free. 

What is a Bankruptcy Risk Score?

in Bankruptcy

There is a little known piece of information out there floating around in the world of credit data that most people have never heard of.  In fact, I didn’t even know it existed until I became a bankruptcy attorney. Most everyone has heard of a credit score and I get tons of questions about what the credit score is, how its used and how you can improve it.  In fact, the discussion about credit scores is part of nearly every consultation we do at Harmon and Gorove. The piece of information that isn’t often discussed is a person’s bankruptcy risk score. A bankruptcy risk score is a number that indicates the likelihood of an individual filing for bankruptcy.  

According to bankrate.com, “According to financial experts, this score is used secondarily to the credit score when financial institutions scrutinize a consumer’s credit history. Kept tucked away from consumers for nearly 20 years, this number differs from the credit risk score, because it’s a little more specific. It measures how likely a person is to file for bankruptcy.”  The banking industry uses the number for a myriad of reasons including lending decisions and compliance. In other words, if your bankruptcy score is too high, they likely won’t lend to you and additionally, if banks know that they have a number of loans on the books that have a high risk of filing bankruptcy, they will know how much they need to keep in reserve to cover these potentially bad loans.  

Consumers also get a raw deal when it comes to figuring out what these scores actually mean.  Each bureau has their own ratings score. Whereas the credit bureaus generally use a scale from 300 to 850 with 850 being the highest, the bankruptcy risk score doesn’t have a standard index of measurement like credit scores. This means consumers are only able to get general information about their bankruptcy risk. This means that unlike credit scores, there’s no surefire way to know if your score is high or low compared to other numbers. 

The absolute last thing any creditor wants is for you to seek bankruptcy protection, particularly Chapter 7. Once that case is filed, they have to quit calling and leave you alone.  What that means for them is that they will get no money out of you, ever. The only debts that generally aren’t wiped out in bankruptcy are student loans and income taxes (and even those can be reduced or eliminated depending on your circumstances). If your bankruptcy risk score rises, even as you are in the worst financial shape you’ve ever been in and have the least ability to pay, collection efforts may grow extremely aggressive as creditors and their slimy collection agents often view this as their last chance to get anything from you before you are protected by the law. 

If you find yourself struggling financially and you’re tired of trying to keep your head above water, give the attorneys at Harmon and Gorove a call to see how we can help you get out of debt for good.  Our attorneys have over 30 years of experience helping good people out of tough situations.  Our attorneys work every day to help people just like you, get out of debt and get a fresh start on life.  Let us put our experience to work for you.

Tackling Credit Card Debt

in Credit and Credit Cards

With credit card debt in the United States nearing 1 TRILLION dollars, it’s easy to say that a great deal of people are feeling overwhelmed by the debts carried on their revolving accounts. Many people who carry balances on their credit cards pay just the monthly minimums and ignore the problem.  This is NOT a good plan. Pretending your debts don’t exist just makes the problem that much worse. This strategy will backfire on you every time in the long run. It will make you miserable, it will cause you to be unable to save for the future and it could eventually drive you into bankruptcy.

If you are interested in trying to get started on paying down your long term credit card debts we have some advice for you.  The best strategy starts with the first step and that step is often to modify your spending habits by creating a budget and sticking to it. Just small modifications to your daily routine can mean big savings that you can then start using to pay down your balances one at a time, always starting with the payment with the highest interest rates.  

Step one is to decide on a repayment strategy.  Don’t allow yourself to continue to drown under the weight of multiple credit card payments each month.  If you start working your way down from the top (meaning you pay off your biggest balance or highest interest rate) you can begin to reduce your debts quickly, freeing up more and more disposable income that you can then use to continue to pay off other debts.

Another step you can take is to communicate with the people you owe money to. If you’re struggling with the exorbitantly high interest rates that are routinely charged by credit card companies, sometimes just giving them a call and asking for an interest rate reduction will allow you to free up more money to pay down the principal on the card each month.  Sometimes credit card companies will work with you on rates if you’ll commit to repaying the debt at that lower interest rate.

There are lots of options available to you if you feel like your drowning in credit card debt.  The attorneys at Harmon and Gorove can help you find a way out of debt for good. Contact us for a free, no obligation consultation to find out how we can get you started down a path to financial freedom.