For Virginians and people across the nation, debt is reaching critical levels. Student loans are perceived to be the culprit for the debt problems many Americans face, but there are other reasons. For example, people rely on credit cards to a troubling degree. The combination is making it nearly impossible to get ahead and forcing debtors to consider solutions like Chapter 13 bankruptcy.
About four years after the start of the 2008 financial crisis, the U.S. Federal Judiciary pointed out that people were using more non-attorney preparers to file bankruptcy, much as many use tax preparers who are not practicing lawyers.
Every year, almost one in three Americans who file Chapter 7 bankruptcies are burdened by student loans. However, this kind of debt is not usually dischargeable in Virginia or any other state. When filers have these loans, they usually account for about half of their total financial obligations. These were two of the discoveries made by researchers who studied 1,083 Chapter 7 cases from the financial online marketplace LendEDU.
A growing number of people in Virginia are facing escalating credit card balances. According to the New York Federal Reserve, younger Americans traditionally steered clear of credit card debt. Many millennials came of age during the financial crisis in 2008 and became more thrifty as a result. However, credit card delinquencies for 90 days or more have risen the most among younger Americans. For people age 18 to 29, these types of delinquencies reached 8% of all credit card balances in the first quarter of 2019.
The Supreme Court ruled on June 3 that creditors in Virginia and around the country may be held in civil contempt if they pursue payment of a debt that has been discharged in a bankruptcy. The nation's highest court applied an objective reasonableness standard to decide a case involving an Oregon business center's efforts to collect a debt from a real estate developer who had filed for bankruptcy. This standard means that creditors can be held in contempt when they seek payment of a debt that they have no reasonable basis to believe is not included in a discharge order.