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Senior debt is a growing problem

As an elderly American suffering from debt, you are not alone. Nearly half of seniors are struggling with bills they may or may not be able to pay. The Financial Times reports that one in seven people that are filing for bankruptcy are now over 65 years of age, "an almost fivefold increase over just 25 years."

This debt can take many forms, such as credit card debt, loans or mortgages. Sometimes debt taken out for the benefit of other family members can become overwhelming after retirement. There are many reasons why today's seniors are facing such an unprecedented challenge.

What are the dangers of a borrow-now-worry-later mentality?

A recent report found an increase in the number of people carrying credit card debt across generations.

The number of Gen Xers with credit cards increased by 3%, Millennials increased by 5% and Gen Zers increased by a whopping 41%. Although this is a stunning percent increase compared to the older generations, Gen Z is paying their bills at approximately the same rate.

Creditors can sue for credit card debt repayment for only so long

Most people use credit cards either for their perks or financial need. As a result, numerous Illinois residents have credit card debt that they are struggling to repay. When debts aren't paid, creditors can take legal action in an effort to recover the funds owed them, but they only have so much time in which they can do this. 

When it comes to credit card debt, specifically, according to a recently published article, creditors only have five years to pursue repayment through legal means. This statute of limitations is just for the state of Illinois. Every state has different laws regarding this issue. 

How is consumer debt treated during the probate process?

A recently published article discussed consumer debt in the United States and how it is treated after a person dies. The simple truth is, creditors have the right to still get paid, which means they can go after the money during the probate process. In Illinois, who has to foot the bill, though?

Some may worry that they will be held personally responsible for their loved one's debts. Depending on who really owned the debt, that may not be true. Typically, any obligations have to be paid for with the decedent's assets -- such as his or her car, home and funds in financial accounts. The only reason a surviving family member may have to pay the debt is if he or she is the joint owner of an account. For instance, if a husband and wife are both listed as borrowers on a car loan, if either dies, the other is still responsible for repayment

Chapter 7 may help young parents who are struggling with debt

Being young and a recent college graduate with young children to provide for can be an extremely challenging time of life. Too many Illinois residents know the strain of trying to pay off student loans, pay for childcare and meet their other financial obligations. Many times, there seems to be too little money at the end of the month. Chapter 7 bankruptcy may help individuals in this position.

An article was recently published that talked about the number of people who are struggling to cover their debts and care for their families. About a quarter of Americans are carrying student loans. The average amount owed is around $37,000, which comes out to a repayment plan of about $400 per month for the life of the loan repayment period. That is not a small chunk of change for most people. 

Consumer protection bill signed into law

At the end of July, the Governor signed a bill into law that will protect Illinois residents who are dealing with debt collection agencies. The consumer protection bill does not stop debt collectors from doing their jobs, but it does offer those in debt a bit of relief. Here is what Illinois residents need to know about it. 

Currently, debt collectors are allowed to charge Illinois residents an interest rate of 9% -- about the highest in the country. Under the new law, which will take effect Jan. 1, 2020, the interest rate will drop to 5%, which is more in line with other states. It is believed that this will save those in debt thousands over the course of their repayment periods. 

Chapter 13 or Chapter 7, which is right for me?

If your debt situation is out of control, there are some things you can do about it. You can start by reviewing your finances and creating a budget. You can try to work with your creditors to lower how much you owe or adjust payment terms so that they are more affordable for you. You can also look into filing for bankruptcy with the assistance of an Illinois-based bankruptcy law attorney if you feel that would best suit your needs. If you choose to go this route, which type of bankruptcy -- Chapter 13 or chapter 7 -- is right for you?

Chapter 13 and Chapter 7 each have their benefits. Both can result in you achieving debt relief; they just go about it in different ways. Chapter 7 can result in the complete discharge of any qualifying debts -- primarily consumer debts. Chapter 13, on the other hand, results in the creation of an affordable payment schedule -- so you still pay your creditors, just in a way that works with your current income level. With Chapter 7, you may have to give up certain assets; whereas, with Chapter 13, you will get to keep the majority of your property unless you choose to get rid of it. 

Debt is being called modern-day slavery

Spending more than one brings in is something many people in Illinois and elsewhere are doing now and have been doing for a while. Consumer debt is at an all-time high -- sitting at roughly $13.5 trillion. It is to the point where most people feel that they will never be able to pay back what they owe.

According to a recently published article, the average person between the ages of 18 and 34 has roughly $36,000 in debt. Approximately 50% of these individuals do not know how they will pay off their debts. Another 20% believe that they will take the debt with them to the grave.

The advantages and disadvantages of filing for bankruptcy

Choosing to file for bankruptcy can feel like an overwhelmingly large decision to make. On average, it tends to affect a person's finances and your credit score for seven to 10 years.

But, there are plenty of lasting advantages that come with this choice. Here are the pros and cons to consider. 

Chapter 7 bankruptcy: What people have to say about it

Illinois residents who are in debt know what it is like to constantly worry about their finances. It is no way to live, yet many people in this situation struggle to make the call that may end the stress and the financial worry. Filing for Chapter 7 bankruptcy is not for everyone, but there are those who will and have benefited from it even though others told them that would not be the case. Several people recently shared their debt and bankruptcy stories. Here is a quick rundown of what they had to say.

The three individuals who shared their stories each stated, in their own words, that bankruptcy was not their first choice, but it the end it made the most sense for their situations, and it gave them each a clean slate -- something other debt-relief options could not provide. One woman said that the personal finance classes she took as part of the bankruptcy process has helped her budget and only use her credit cards for emergencies. Another woman said it saved her from having her wages garnished at a time in her life when money was already tight and she could not afford it. A man said it allowed him to walk away from his marriage without having to worry about being fully responsible for the shared marital debt.

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