How Big Of A Problem Is Personal Debt In The US Since COVID Began In 2020?
At the beginning of the COVID-19 pandemic, personal debt decreased due to the lockdowns, moratoriums, and enhanced benefits. People were not required to pay their mortgages if their homes were foreclosed, and if they didn’t pay, there would be no action on behalf of the creditor.
For the past few years, consumers and households have reduced personal debt. In the past six months, there have been some indicators that personal debt and defaults are on the rise.
What Kind Of Debt Do You See Americans Saddled With After COVID?
For non-homeowners, the money needed to pay for rent, food, transportation, and necessities has increased because of inflation. This has substantially affected their ability to meet their monthly obligations.
What Questions Do You Ask When Evaluating Your Client’s Financial Situation?
When an individual is seeking insolvency or bankruptcy relief related to their asset base, these are the essential questions:
- Do they live paycheck to paycheck?
- What is their average end-of-the-month bank statement?
- How much equity do they have in their house?
- How much equity do they have in their car?
- What types of savings accounts do they have?
Additionally, the type of debt that individuals hold is essential. Suppose they have failed to pay their federal income tax for the past few years or didn’t file their returns. Those types of debts are going to be non-dischargeable.
If an individual’s primary debts are tax or student loans, they are non-dischargeable. Bankruptcy may not be something that may not be an option for them.
One other consideration is for homeowners if they have a mortgage;
- Is that mortgage in foreclosure or default?
- If it’s in default, how many months behind are these individuals on their mortgage?
These are relevant considerations for individuals and homeowners who want to maintain the residence, keep the property, and structure some Chapter 13 plans to resolve mortgage delinquencies.
Get Information on the Problem Of Personal Debt In the US Since COVID, call Michael McLaughlin, LLC, for an initial consultation at (908) 373-8500 and get the legal answers you are seeking.
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