If you are struggling with mounting debt, you are not alone. Too many Americans are faced with debt that they cannot meet and are fighting to keep up with.
Nationwide, data reported by the Urban Institute in a new national map of indebtedness, shows that 33 percent of Americans hold debt that is currently in collection, with a median amount of $1,450.
Being in debt can cause problems in all areas of your life, from being less productive at work to having arguments over money at home, leading to divorce and family breakdown. Adding to the stress is the accompanying harassment by creditors and the fear of repossession of your property and foreclosure on your home.
Debt is a big problem, but there are answers. The skilled and seasoned Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer understand that even the most well-intentioned people can find themselves in a financial hole. We offer a free consultation to evaluate your financial situation. We can help by looking at your debts, your income, and your goals and coming up with a debt relief plan that’s best for you.
Call one of our conveniently located office branches at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati), or email for your free consultation.
WHAT AREAS OF THE U.S. HAVE THE MOST DEBT?
Debt varies greatly across our country, with certain states being more debt-prone than others.
Louisiana is America’s capital of past-due debt, with nearly half the residents of Louisiana having debt that has gone “into collections,” meaning unpaid bills that creditors have either closed or are trying to collect.
In general, rates of past-due debt are highest in southern and western states, and lowest in the upper Midwest. Minnesota has the lowest rate, with 17 percent of adults having debt in collections.
WHAT ARE DRIVERS OF DEBT?
The largest sources of debt are medical, student loan, credit card, and mortgage expenses.
Medical Costs
Medical debt is the most common cause of filing for bankruptcy in Ohio. According to the Peterson-KFF Health System Tracker 2024 – which monitors government data on the U.S. healthcare system – Americans owe an estimated $220 billion in medical debt. About 14 million people (6% of adults) owe over $1,000, and 3 million (1% of adults) owe more than $10,000 in medical debt.
Additional data from the 2021 Survey of Income and Program Participation (SIPP) highlights that approximately 20 million people (nearly 1 in 12 adults) have significant medical debt, with those in worse health, lower-income individuals, and the uninsured being the most affected.
Despite over 90% of the population having health insurance, medical debt remains widespread. High deductibles and cost-sharing contribute to unpaid medical bills, leading to financial hardship, including cutting spending on essentials and taking on additional debt.
The medical debt crisis in Ohio has thrusted city leaders to pursue avenues for medical debt relief. In 2023, Columbus city leaders and the Central Ohio Hospital Council (COHC) met to announce a solution to forgive $335 million in medical debt for residents. This amount, however, does not deal with the systemic issue of medical debt in Ohio, nor the greater United States.
Student Loans
Student loans make up the majority of American household debt after mortgages. Even with a college degree, many graduates entering the labor market are struggling to pay off student loans.
In 2024, U.S. student loan debt reached $1.753 trillion, with federal loans accounting for 91.2% of this amount. The average federal student loan balance is $37,853, while the total average balance, including private loans, is about $40,681. Despite a decline in student loan debt beginning in 2023, federal student loan debt slightly increased by $17.9 billion in the first half of 2024. Private loans, which make up 8.84% of total student debt, have a low default rate of less than 2%. The average student at a public university borrows $32,362 for a bachelor’s degree.
Ohio currently ranks in the top 10 states with the most student debt – sitting at ninth position.
Credit Card Debt
Credit card debt has become rampant due to a combination of factors, including high interest rates, rising living costs, and easy access to credit. With record inflation and stagnant wages, many Americans rely on credit cards to cover everyday expenses, leading to increasing balances.
Credit card debt hit a record $1.142 trillion in the second quarter of 2024, the highest since the Federal Reserve Bank of New York began tracking in 1999. Less than half of all adult credit cardholders in the U.S. (47%) carried a balance on a credit card for one month in the past year.
As of the fourth quarter of 2023, Ohio ranks 39th overall in terms of average credit card debt across the U.S., with an average of over $6,000 in credit card debt per cardholder.
Mortgage Debt
Mortgage debt is one of the most common forms of debt in the United States and in Ohio. It is responsible for the funding and procurement of most residential and commercial properties. The overwhelming majority of families carry some level of mortgage debt, be it from their principal residences or second or vacation properties.
People from all socioeconomic levels hold mortgage debt. It is a normal, healthy form of debt — at least it should be. In the best case, mortgage debt is reasonably manageable with the borrower’s basic salary or wage.
Sadly, various factors commonly come into play to make mortgages anything but manageable. These factors include stagnant wages, emergencies, and rising variable interest rates. Sometimes, multiple hardships fall upon a borrower simultaneously, leaving them in a difficult financial position.
Clients get effective solutions from the debt and bankruptcy attorneys at Fesenmyer Cousino Weinzimmer.
WHAT TO DO ABOUT DEBT
If you have found yourself in a situation where debt is more than you can handle, you need to take action to change things. Here are some suggestions:
- Set up a budget, prioritize your expenses, and cut spending where you can. Then set aside time twice a month for managing your finances — paying bills, balancing your checkbook, and further analyzing your expenses.
- Don’t make credit card purchases until you pay off your current balances; then, do not charge anything unless you can pay off the balance in 90 days or less.
- Get credit counseling if you need it. Credit counseling is an educational service where you meet with a counselor who helps you go through your debts and make plans to pay them off. Contact the National Foundation for Credit Counseling.
If you have taken these steps and still find your debt to be overwhelming, you may want to consider the fresh start available by filing for bankruptcy. Bankruptcy is a legal way to have many debts forgiven and get a fresh financial start. The most common types are Chapter 7 and Chapter 13. Chapter 7 is over in about 4 months and allows you to begin rebuilding your credit quickly, while Chapter 13 may allow you to keep property, such as a mortgaged house, while you complete a three- to five-year payment plan to have debts forgiven.
If you do decide to explore bankruptcy, you should be aware of the typical repercussions that follow. First, your credit report will suffer for a while. Fortunately, bankruptcies drop off credit reports after 7 years. Even though there will be a drop in your credit score right after filing for bankruptcy, once your debt is discharged your credit score will go up, and, generally, there will be an increase in your credit score from 60 to 100+ points a year after your discharge.
However, it is important to remember that the relief provided by bankruptcy may be worth the credit hit you take. Your circumstances will ultimately dictate whether bankruptcy is the right choice for you. The guidance of counsel goes a long way in helping you make an appropriate decision.
Ultimately, tens of thousands of people go through bankruptcy each year and find financial freedom in time. With the guidance of an experienced attorney, it can be an optimal choice.
Contact Us for Help
If your debts are mounting out of control, we can provide a helping hand. The experienced and compassionate Ohio debt relief attorneys at Fesenmyer Cousino Weinzimmer offer a free consultation to evaluate your entire financial situation. We will examine your income, your debts, and your goals and discuss the best fit for you. We will make sure you are aware of all of your options and help you decide on the path to a brighter future that makes sense in your individual case. We understand what you are going through and will handle every phase of the process.
Delaying can only make your situation worse, so call the Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer today! Call one of our conveniently located office branches at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) or email for your free consultation so we can determine what debt relief solutions will work best for you.
