American Consumer Debt and Bankruptcy Options
How common is it for consumers in Florida and throughout the country to struggle with debt? And how often do those consumers who are struggling to repay their debt decide to file for bankruptcy? When bankruptcy is an option, what types are most common for consumers? A recent article in Business Insider Reported that the average American currently holds more than $100,000 in debt. Some are struggling to repay what they owe while others are still up-to-date on payments. Our West Palm Beach bankruptcy lawyers can say more.
Understanding Consumer Debt in 2024
For the average American, according to Business Insider, that $100,000-plus debt includes auto loans, credit card debt, home equity credit lines, mortgage loans, personal loans, and student loans. For most consumers in the US, mortgage debt makes up the majority of the debt they carry, although the article points to data that shows combined credit card debt totals about $1.13 trillion. Millennials and Gen-X consumers tend to carry the highest amounts of debt, followed by Baby Boomers and older adults in the Silent Generation, aged 78 and up.
Consumers in Florida carry high debt loads, especially compared to debtors who reside in other states. The average debt in Florida is about $94,933 — less than the national average, but still markedly higher than in a majority of the other states. While some debtors carrying tens of thousands of dollars in debt are making payments, many cannot repay what they owe. Bankruptcy could be an option.
Common Types of Consumer Bankruptcy
When a consumer is struggling with debt and wants to consider filing for bankruptcy, there are generally two types of bankruptcy that the consumer may be able to consider: Chapter 7 bankruptcy and Chapter 13 bankruptcy. It is essential to learn more about each type of bankruptcy well before you make plans to file since eligibility can be a factor. In addition, these two types of bankruptcy are quite different from one another, and they can have different benefits and limitations to a consumer, depending on that consumer’s individual circumstances.
Chapter 7 bankruptcy is a liquidation bankruptcy. In a liquidation bankruptcy, a consumer can have eligible debts discharged — and relatively quickly, usually within four to six months from filing their bankruptcy petition — and can get a fresh start. With a new process in place for student loans and bankruptcy, it is easier than ever to have your student loan debt discharged in your Chapter 7 bankruptcy case. In order to have debts discharged (meaning that you are no longer liable for them), your non-exempt assets will need to be liquidated. There are a wide range of exemptions in Florida, so you should not expect that all — or even close to all — of your property will be liquidated. To be sure, you will be able to retain a wide range of assets. To be eligible for Chapter 7 bankruptcy, you will need to pass the means test.
Chapter 13 bankruptcy is a type of reorganization bankruptcy that typically lasts from three to five years and does not require liquidation of any assets. Rather, in this type of bankruptcy, the debtor develops a repayment plan over the course of that three-to-five-year period, and at the end, remaining eligible debts can also be discharged. A reorganization bankruptcy has the added benefit of allowing a debtor to stop a foreclosure, catch up on their mortgage, and remain in their property.
Contact Our West Palm Beach Bankruptcy Attorneys Today
If you have any questions about consumer bankruptcy or want to get started on your filing, an experienced West Palm Beach bankruptcy lawyer at Kelley Kaplan & Eller, PLLC can begin working with you today. Contact us for more information.
Sources:
businessinsider.com/personal-finance/average-american-debt
law.cornell.edu/uscode/text/
