Even in a healthy economy with low unemployment, many residents find themselves struggling with credit card debt. If you are one of them, there are several debt relief solutions to help you get your finances back on track, one of them is doing debt consolidation in Indiana.
Debt consolidation is a process where a person takes out a new loan or a new credit card to pay off other outstanding debts. This can be beneficial because it can reduce the amount of accrued interest on the debt, and thus reduce monthly payments to one manageable amount.
The downside of debt consolidation is that the low interest loans and credit cards needed to secure this type of deal can be difficult to obtain and this type of debt the relief only serves to reduce the interest, not the principal balance of the debt.
Dealing with Debt in Indiana – Statistics
No one likes to feel overwhelmed by a dead end. But you’re not alone if you’re struggling with debt in Indiana or anywhere else in the United States. In fact, a lot of people are in the same boat, even if they make decent money. Indeed, it appears that households that earn higher incomes also have higher credit card debt.
For many Americans, credit card debt is a way of life. According to a recent study, US households in the highest income brackets have an average of $11,200 in credit card debt. That’s almost four times more than lower-tier households.
Here are some statistics on government debt:
- The average household has a debt of $7,030.
- The regular consumer has on average 2 credit cards
- Indians owe about 13.63% of their income to credit card companies.
- The average FICO credit score is 712
- Indiana students owe an average of $32,874 in student loans.
- Outstanding student debt currently stands at over $30 billion.
There is a lot of talk about consumer debt and its negative impact on people’s lives. But what exactly is consumer debt? Most people think of credit cards and loans when they think of debt, but there are other types of debt that fall under the category of consumer debt. This includes things like student loansmortgages, car loans and other personal loans.
There is a limited amount of time a debt collector can try to sue you for what you owe. After the expiry of this period, they are no longer able to take legal action. However, you will still be responsible for the outstanding debt. The debt collector can still attempt to collect the money by contacting you directly.
In Indiana, the time you have to file a lawsuit depends on the type of debt:
- Auto Loan Debt: 4 years
- Credit card debt: 6 years
- Medical debt: 6 years
- Mortgage debt: 6 years
- State tax debt: 10 years
- Oral contracts: 6 years
Debt can be a heavy burden to bear, but you don’t have to bear it alone. If you are consider filing for bankruptcy in Indiana, talk to a qualified bankruptcy attorney first. They can help you determine if this is the best option for your unique situation and guide you through the process.
There are two types of bankruptcy that people typically file for:
Chapter 13 of the bankruptcy code provides debt relief for individuals and families struggling to meet their financial obligations. This type of bankruptcy allows you to keep your assets or property, provided you have the means to pay.
Debtors are allowed to retain some or all of their assets in exchange for repaying some of their debts over time. It’s usually more complicated than Chapter 7, which allows full discharge of debts.
One of the most common types of bankruptcy individuals file is Chapter 7. In this type of bankruptcy, your assets are sold in order to pay off your creditors. The process usually takes around 4-6 months. Once all of your assets have been liquidated, all remaining eligible unsecured debt will be discharged or erased.
There are many things to consider before declaring bankruptcy. It is important to understand the difference between Chapter 7 and Chapter 13, as well as the pros and cons of each type. You may not be able to choose which type of bankruptcy you file for, as it depends on your particular situation.
Some states offer special protections for certain assets during bankruptcy proceedings. In Indiana, these asset classes include:
- Wages: Up to 75% of disposable income
- Education Savings Account: Up to $500
- Property: $19,300
- Wildcard: $10,250
- Retirement: As a general rule, there are no exemptions (some restrictions may apply).
Indiana Debt Consolidation: Credit Score
Consolidating your debt has many benefits, one of which is the ability to improve your credit score. According to many sources, consolidating your debt can increase your score by 20 to 30 points. It’s a great way to get out of debt and improve your financial situation.
Your credit score is important. It is a factor that determines whether or not you can get loans and how much interest you will pay. A high credit score means you’re a low-risk borrower, which is good for lenders. If you have high balances on your credit cards, your score could drop.
Credit scores are determined by a variety of factors, but two of the most important are the number of accounts with outstanding balances and the ratio of revolving credit to installment debt.
If you consolidate your loans and pay off multiple credit cards, you may see an increase in your credit score. In effect, you will reduce the number of lines of credit you have, which the credit bureaus prefer. Plus, by switching from revolving debt to installment debt, you’ll earn a few extra points. Installment debt is more predictable, especially with respect to interest rates, and is therefore considered more favorable by credit bureaus.
Is debt consolidation worth it?
Debt consolidation is a great solution for many people with debt problems. This can help you lower your monthly payments and pay off your debt faster. However, this is not the right solution for everyone. If your spending habits are causing you to become indebted or if you are already struggling to pay off your debts, debt consolidation may not be the best option for you.
By consolidating your debt into one loan with a lower interest rate, you can save on interest charges and pay off your debt faster. But consolidation does not eliminate or forgive your debt. You will still need to make monthly payments until the loan is paid off. If your debt is low, you may be able to pay it off within six months to a year at your current rate. However, consolidation may not save you a lot of money in the long run.
Have you ever had experience with debt consolidation loans? Tell us about it in the comments!
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