Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog
I read today in the Pomp Letter that the average credit card balance is $21,000. And the average interest rate is 28.6%. Just wow. In 30 months, the debt would double. In our bankruptcy practice here in Tampa, Florida, we are regularly seeing people with 100k of credit card debt.
Many people are making only minimum payments of their bills – 10.75% according to a new report from the Philadelphia Federal Reserve (reviewing data for the third quarter of 2024.
I don’t know how you get out of that – unless you file bankruptcy. Or have some kind of windfall such as a much better paying new job, inheritance or something. Even with a much better paying new job, you would have to dedicate funds quickly to pay down that debt. Back during the foreclosure crisis we ran into a lot of people who thought that they could easily catch up once they started working again. Didn’t happen. Even a $20k increase in pay is not that much paycheck to paycheck. With interest so high, the balances got even larger or remained the same.
If you are in this boat, at least consider your options in bankruptcy, whether a Chapter 7 or 13. They are very different, and it’s best that you talk with a bankruptcy attorney in your area. We see all kinds of misconceptions out there. I know someone’s credit score is important. But did you know that having a score of 800 plus doesn’t mean much if you’ve maxed out your credit. Or financial conditions in the economy as a whole cause less credit to be offered.
We have a truck loan at 0% for a few more years. I can’t bring myself to pay it off since it’s zero percent interest. I haven’t read the paperwork, but I imagine that if I were to miss a payment though, the interest would jack up perhaps from the beginning of the loan. Read your loan docs. Keep an eye on your auto payments. Lots of automatic payments don’t go through and guess who is at fault when a payment isn’t made? While 0% interest sounds good, I can see the risk here. The only way the finance company makes money here is if I default. Maybe I should pay it off, avoid the risk. But what about all the people who were lucky enough to get 0% a few years ago, and can’t pay it off?
By the way, if you file bankruptcy, the 0% interest loan doesn’t go anywhere. You’ll have the option to keep the vehicle and its financing known as reaffirming the debt, or if it’s underwater and you can’t afford the payment, you can surrender it. Buy something you can afford.
The goal should be to become self sufficient. Sustainability is key. Get your finances in order so you’ll thrive in whatever environment we end up in.
At least know your options. And if you are in the Tampa Bay area including Hardee, Hernando, Hillsborough, Manatee, Pasco, Pinellas, Polk and Sarasota Counties, see what we can do to help!
