Even in a healthy economy with low unemployment rates, many residents find themselves struggling with credit card debt. If you’re one of them, there are several debt relief solutions available to help you get your finances back on track, one of them is doing debt consolidation in Indiana.
Debt consolidation is a process whereby a person takes out a new loan or credit card to pay off other outstanding debts. This can be beneficial as it can lower the amount of interest being accrued on the debt, and thus reduce the monthly payments into one manageable amount.
The downside with debt consolidation is that the low-interest loans & credit cards needed to secure this type of deal can be hard to qualify for and this type of debt relief only works to reduce interest, not principal debt balance.
Dealing With Debt In Indiana – Stats
No one likes feeling like they’re in over their head with no way out. But you’re not alone if you’re struggling with debt in Indiana or anywhere else in the United States. In fact, many people are in the same boat, even if they make decent money. This is because it seems that households who bring in 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 top earning brackets have an average of $11,200 in credit card debt. That’s nearly four times as much as households in the lower brackets.
Here are some debt statistics for the state:
- The average household is $7,030 in debt.
- The regular consumer has 2 credit cards on average
- Indianans owe about 13.63% of their income to credit card companies.
- The average FICO credit score is 712
- Students in Indiana owe $32,874 in student loans, on average.
- The outstanding student loan debt currently totals more than $30 billion.
There is a lot of talk about consumer debt and how it’s negatively impacting 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 consumer debt umbrella. This includes things like student loans, mortgage loans, auto loans, and other personal loans.
Statute Of Limitations
There is a limited amount of time that a debt collector can try to sue you for what you owe. After the expiration of this time period, they are no longer able to initiate a lawsuit. However, you will still be responsible for the outstanding debt. The debt collector may still attempt to collect the money by contacting you directly.
In Indiana, the amount of 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 carry, but you don’t have to go through it alone. If you’re considering filing for bankruptcy in Indiana, speak to a qualified bankruptcy attorney first. They can help you determine if it’s 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 who are 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 keep some or all of their assets in exchange for repaying a portion of their debts over time. This is usually more complicated than Chapter 7, which allows for a complete discharge of debts.
One of the most common types of bankruptcy that individuals file is Chapter 7. In this type of bankruptcy, your assets are sold in order to repay your creditors. The process usually takes around 4 to 6 months to complete. Once all of your assets have been liquidated, any remaining eligible unsecured debts will be discharged or erased.
There are many things to consider before filing for 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 specific situation.
Some states offer special protections for certain assets during bankruptcy proceedings. In Indiana, these asset categories include:
- Wages: Up to 75% of disposable income
- Savings account for education: Up to $500
- Homestead: $19,300
- Wildcard: $10,250
- Retirement: Generally, there are no exemptions (some limitations may apply).
Debt Consolidation In Indiana: Credit Score
There are many benefits to consolidating your debt, one of which is the potential to improve your credit score. According to many sources, consolidating your debt can increase your score by 20-30 points. This is an excellent way to get out of debt and improve your financial situation.
Your credit score is important. It’s a factor in whether or not you’re able to get loans, and how much interest you’ll pay. A high credit score means you’re a low-risk borrower, which is good for lenders. If you carry 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. This is because you will be reducing the number of lines of credit you have, which the credit bureaus prefer. Additionally, by moving from revolving debt to installment debt, you will pick up a few more points. An installment debt is more predictable, especially when it comes to interest rates, and therefore is seen as more favorable by the credit bureaus.
Is Debt Consolidation Worth The Effort?
Debt consolidation is a great solution for many people with debt problems. It can help you lower your monthly payments and pay off your debt faster. However, it’s not the right solution for everyone. If your spending habits are the cause of your debt, or if you’re already struggling to make payments on 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 doesn’t eliminate or forgive your debt. You’ll still need to make monthly payments until the loan is paid off. If your debt load is small, you may be able to pay it off within six months to a year at your current pace. However, consolidation may not save you much money in the long run.
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Have you ever had experience with debt consolidation loans? Tell us about it in the comments!Clearone Advantage, Credit Associates, Credit 9, Americor Funding, Tripoint Lending, Lendvia, Simple Path Financial, New Start Capital, Point Break Financial, Sagemore Financial, Money Ladder, Advantage Preferred Financial, LoanQuo, Apply.Credit9, Mobilend