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Iowa consumers should beware of some personal loans

Sometimes, individuals may need a loan but have bad credit. Companies are out there that are willing to issue bad credit personal loans, but often at a huge price. There are loans that Iowa consumers may want to avoid.

One loan consumers may want to avoid is a payday loan. These are designed as small loans that can range from $100 to $1,000 as long as an individual simply shows proof of income. These loans are usually due two weeks later, and if someone only borrowed $400, they will owe the lending company $460. Another loan consumers may want to avoid is a bad credit auto loan, as the interest rates are usually high. One woman took out a $15,000 auto loan for $300 per month, but it would take her 84 months to pay it off.

Methods of paying off high-interest credit card debt

It is common for consumers to carry credit cards in case of an unexpected expense. However, those cards can become more expensive in the long run when cards are overused and interest piles up. However, there are ways that Iowa consumers can pay off their high-interest credit card debt.

One woman carries two cards that have high interest rates. She’s not sure if she should obtain a home equity line of credit to pay off one card and pay down the other or if she should take out two zero-percent-interest credit cards and transfer the balances. Both are good ideas, and the woman would be able to benefit from either choice as long as she pays off the cards as soon as she can. Some financial professionals have recommended that consumers simply pay off their balances as fast as possible, but they should avoid taking on new debt.

Patients could reduce their medical bills

Seeking medical care is expensive for most people, and one can rack up hundreds or even thousands of dollars in debt. Iowa consumers with health insurance can often find medical debt to be overwhelming. However, there may be help for those who have high medical bills by hiring medical billing advocates.

A 36-year-old woman gave birth to her daughter on Mother’s Day, but the baby was born premature and spent almost three weeks in the NICU. In addition, doctors determined that the woman had a heart defect that could be deadly, which resulted in her spending two weeks in the hospital. In spite of the woman having health insurance, she still received a bill for over $64,000. This amount was way too much for the woman to handle, especially since it’s more than three times what she earns per year.

Ways for consumers to free themselves from credit card debt

The average amount of credit card debt throughout the United States is a little over $15,000. Although the amount could be different for each household, the fact remains that many people view this as a huge barrier to achieving financial freedom. There are ways Iowa consumers can free themselves from credit card debt.

One way for people to free themselves from card debt is to restore their budget by finding ways to have more cash available. People can do this by eliminating unneeded expenses including going out to eat and cable. Once a budget is made, it’s recommended that consumers keep track of their spending. The next step is to stop making charges on credit cards. Instead of using the cards, just use cash on hand which can result in less spending.

How credit card debt can affect getting a mortgage

There comes a time when individuals want to stop renting and decide to purchase a home. In order for Iowa residents to be able to buy a home, they must become approved for a loan first. However, credit card debt can have an effect on qualifying for a mortgage.

Banks generally look into a few items to see if an individual will qualify. One of the primary items banks will look at is one's credit score, which often needs to be around 640 or higher to be approved. Another factor taken into consideration is someone’s income, which needs to be high enough to meet all of the mortgage payments. Also, banks would prefer that potential borrowers have a steady job history.

How medical bills can affect Iowa consumer's credit

Between doctor appointments and hospital visits, medical debt can start to add up quickly. Sometimes medical bills become difficult for Iowa consumers to pay, and the bills go unpaid. Unfortunately, unpaid medical bills can end up with a collection agency and have a negative impact on credit reports.

One man has a number of bills due each month, including his auto payments and mortgage payments. Recently, he tried to apply for a credit card with zero percent interest, but he discovered that $640 in unpaid medical bills turned up on his credit report. His credit score went down to 660 and his application was denied. In addition, this can also affect his ability to be approved for low-interest loans from other creditors.

What Iowa consumers can do about creditor harassment

Creditors have the right to make reasonable attempts to collect debts. In some instances, creditors take matters too far, and Iowa consumers are faced with creditor harassment. An auto lender was forced to pay over $5 million for allegedly using unlawful strategies to collect on consumer accounts.

The Federal Trade Commission stepped into the matter for multiple violations. The company was agreeable on settling with over 120,000 consumers by either issuing refunds or making adjustments to their accounts. According to reports, the company repeatedly harassed its consumers and other third parties, including family and friends, about debts. Some of the debts the company was harassing the consumers about were not even owed.

Iowa debtors can learn from couple who paid off credit card debt

A couple originally looked at their credit card debt as no big deal and continued to rack up outstanding balances. However, after the birth of their daughter, they started to have a change in their attitudes and finally added everything up. When they realized that they had $30,000 in credit card debt, they launched a plan to pay it off, and Iowa consumers may benefit from knowing how they got out of debt.

The couple began to track their expenses for a few months and made a budget. After they cut back on their expenses, they discovered that they saved hundreds per month. In spite of that, the couple realized that they needed to bring in more income, which prompted the wife to start working an extra day at her optometry practice. In addition, the husband earned his master’s degree by taking online classes, which increased his income potential. The wife helped streamline getting rid of the debt by paying off the smaller balances first and using the snowball method.

Credit card debt can lead to a complicated financial situation

When homeowners are facing a large amount of credit card debt, it can lead to a complicated financial situation. Shortly after the economic downturn, many homeowners managed to make payments on their credit cards while making late payments on their mortgage. Now that the economic situation has improved, many Iowa homeowners are keeping up with house payments while defaulting on their credit card debt.

Anytime an individual trades off debt payments simply to "stay afloat," it often leads to more debt and an overwhelming debt balance. Experts in the financial field believe that the relationship between the credit card and mortgage payments could be related to rising home prices. As home values rise, people tend to make timely payments on their mortgage, making credit card debt the second priority.

Tips for Iowa consumers paying high credit card debt

Credit cards are not always a bad idea as long as the monthly payments are paid on time and the balances are not too high. Carrying high credit card debt can affect credit scores in negative ways, however. Iowa consumers who wish to raise their credit scores can do so by paying down their outstanding balances.

Individuals who are planning on applying for a mortgage or car loan in the near future may benefit from using the snowball method. This method is a way for consumers to pay in an expedited fashion. To do this, consumers use extra money on hand to pay one debt at a time until it’s paid off. Another method consumers can use is to transfer balances to a zero percent interest card. This can help consumers pay off debt faster and improve their credit scores.

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