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Monmouth County Bankruptcy Law Blog

Credit card debt can easily become unmanageable

Many people pull out a credit card to pay for purchases without really thinking about the consequences that can come from that decision. It is possible to use credit responsibly, but it is also possible that something will happen that means you suddenly find yourself in debt too deep for you to come out of. One example of this is when you suddenly find yourself out of work and unable to keep up with payments that were once easy to make.

We realize that people fall into unmanageable credit card debt for a variety of reasons. We aren't here to judge the reason why you are in financial trouble right now. Instead, we are here to review your situation and help you to determine what options you have for taking control of the situation again.

Debt consolidation can be challenging

There are several avenues available in New Jersey to help those struggling with debt find a light at the end of the tunnel. Debt consolidation is one such avenue that can work for some people. However, it may not be the right thing for all, particularly if the debt is not low. This method can also take several years to fulfill, if successful.

Sources of debt consolidation loans

USA Today notes some forms of debt consolidation that people engage in include the following:

3 common reasons for foreclosures in New Jersey

Foreclosure is one of the worst nightmares a homeowner can face. You have worked hard to establish yourself financially and invest in a home you can call your own. When plans change and you find yourself unable to pay your mortgage, it can be devastating. You are far from alone, though, and there is a range of different circumstances that can lead to foreclosure.

According to WalletHub, New Jersey has the highest foreclosure rate of any state in the country. Higher than average housing costs and insufficient wages are certainly part of the problem, but there are many other issues that contribute to this epidemic. The following are three other common culprits.

Do you know what fees you're paying on your credit card?

Credit cards can have many advantages if you choose the right ones and use them responsibly. With so many cards to choose from, you can select the ones that give you rewards, cash back or other benefits without annual fees. If you pay your card off in full each month, you can avoid interest charges.

However, if, like many people, you don't pay the full balance due, you start accruing interest charges that can get you into far more debt than your purchases alone cost. Further, there are fees associated with most cards that can come as an unpleasant surprise to people who didn't fully read the disclosure information before they applied for or used the card. Let's look at a few of them.

Should bankruptcy be a last resort?

Should bankruptcy be a last resort, after all other forms of debt relief has been tried?

Sadly, many people believe this, trying debt consolidation schemes, dipping into retirement accounts and ways to solve debt problems before considering bankruptcy. Filing bankruptcy sooner may be a better option.

Are you a victim of lifestyle inflation?

If we're lucky, from the time we join the workforce until the time we retire, our income increases. With that comes lifestyle inflation. It's only natural at first that people will want to move out of their post-college studio apartment, sell their used car, invest in a better wardrobe and take vacations to Europe instead of a drive to the Jersey Shore.

However, this "lifestyle inflation" can involve unnecessary spending and potentially send you into debt. If you have a setback like a job loss or lengthy illness, that debt can spiral out of control.

Options for tackling overwhelming credit card debt

American consumer debt rate has once again returned to pre-2008 levels and many find themselves once again encumbered by record-setting credit card debt. The first step in figuring out how to tackle it involves you sitting down will your bills, making note of your balances, the minimum payments and interest rates for them.

You'll next want to determine what your overall debt to income ratio is. To do so, you'll want to first add up all of your outstanding credit card balances. Next, you'll want to divide that amount by your net salary.

Second mortgage and the Chapters 7 and 13 differences

Many New Jersey homeowners have felt the pinch of the weak economy over the past decade. At times, they may have felt it was a one-step-forward-two-steps-back exercise in frustration.

In some situations, bankruptcy may be the smarter choice over debt settlement or other options. It can be confusing to decide whether a Chapter 7 or a Chapter 13 bankruptcy would be best.

Deed in lieu of foreclosure may have expensive consequences

All too often, mortgage loan work-outs do not work out as planned, and a homeowner makes the tough decision to leave the home. Frequently, this is because the mortgage payments are not affordable and the owner has been unable to sell the home at a price that would pay off the mortgage balance.

Allowing a foreclosure to take place is an option, but one that can be messy. In addition, because it is a legal action in court filed against the homeowner, it can cause additional stress on the already stressed homeowner.

How should businesses handle credit card debt?

Credit card debt typically has an association with individual people. However, it can also impact businesses that rely on credit cards to keep operations going smoothly. In 2015, there were nearly 14 million credit card accounts for small businesses in the United States.

Businesses are able to file for Chapter 7, Chapter 11 or Chapter 13 bankruptcy. The best type will vary from one company to the next. Most businesses expect to be in some debt for a little bit. After all, there is the old adage, "You have to spend money to make money." However, it is important to know when debt is growing out of control. Before filing for bankruptcy, there are certain actions a business can take to try to relieve excessive credit card debt on its own.

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At the law offices of William H. Oliver, Jr. & Associates in Toms River and Lakewood, New Jersey, we represent clients in Toms River, Neptune, Trenton, Middletown, Red Bank, Wall, Lakewood, Lakehurst, Manchester, Asbury Park, Old Bridge, Jamesburg, Barnegat, Forked River, Manahawkin, Ocean Township, Brick, Manasquan, Howell, Freehold, Hazlet, Bradley Beach, Brown Mills, Long Branch, Keansburg, Marlboro, Bayville, Beachwood, Whiting, Sayreville, South River, East Brunswick, Monmouth County, Ocean County, Middlesex County, Burlington County and Mercer County.