The average household in America that carries a debt owes a total of $131,431. This includes mortgage debt, and other common obligations include student and auto loans and credit cards The average credit card balance is $15,654 while the average student loan debt is $46,597. Americans have an average auto loan debt of $27,669. One way for Virginia consumers to pay off that debt may be to dip into a 401(k).
Some people in Virginia might feel it is not possible to pay off all their debt. According to a survey by Credit.com, more than two-thirds of adults think they will never be able to pay debts in full.
Consumer debt has hit an all-time high, and much of the credit goes to charge cards used by individuals in Virginia and across the U.S. Some consumers may be looking at Chapter 13 bankruptcy filings for relief from overwhelming debt while others might be able to pay off creditors before diving in for another round. The new records in credit card debt agree with other measures of economic stress, including a lack of savings to ride out any unemployment and the ever-worrisome threat of a new recession.
Virginia residents or others may find themselves in a financial emergency for any number of reasons. One way to possibly get out of that hardship is to apply for a 401k hardship withdrawal. A person may be eligible for such a withdrawal if he or she faces an emergency expense related to a medical issue or a home repair. It may also possible to qualify if making a payment will help the employee to avoid eviction or provides funds to pay for funeral expenses.
For many people, owning a home may be a better financial decision than renting. This is because homeowners can take advantage of tax credits while they build equity. However, it's important for Virginia residents to pay attention to the additional costs of homeownership as they decide whether they should rent or buy.
People in Virginia who have filed for bankruptcy or who are considering filing for bankruptcy might wonder if they can still buy a house afterward. It is possible to purchase a home after bankruptcy, although certain conditions must be in place for this to happen.
Virginia residents who are filing for Chapter 13 bankruptcy can exclude 401(k) deductions when they are calculating their disposable income for their bankruptcy payment plan, even if the contributions were not made during the six months preceding the bankruptcy. This is according to an Oct. 30 ruling by an Illinois bankruptcy court.
The patterns of people filing for bankruptcy in Virginia and around the country often correlate with economic trends. An expanding economy and lowered unemployment rate may lead to fewer bankruptcies while downturns or higher interest rates may force more debtors to seek relief through the courts.
Consumer borrowing in Virginia and around the country slowed in August according to a report released by the U.S. Federal Reserve on Oct. 6. The central bank says the nation's consumer debt load rose by $13.1 billion in August after surging by $17.7 billion in July, but the increase is far lower than the $16 billion predicted by experts. The figures pegged the annual rate of credit growth back to 4.2 percent. The annual rate stood at 5.7 percent at the end of July.
Virginia debtors will experience both short- and long-term effects after filing for bankruptcy. Typically, people falling behind on payments have declining credit scores. Although declaring bankruptcy represents a negative on a credit report, people often gain points on their credit reports in the immediate aftermath. Researchers determined that the short-term rebound occurs because the debtors' scores had dropped so low that the initial clearing out of debt improves their ratings.