Mississippi Consumer Help Blog
Americans are in record debt – for the first time ever, credit card debt passes $1 trillion! Along with the skyrocketing of the country’s national deficit, a debt crisis is hovering over the private sector. New information shows Americans are more in debt now than at any point in history. According to the Federal Reserve, for the first time in our nation’s history, American credit card debt flew past the $1 trillion mark, with $250 billion in the last two years alone and $45 billion in the last quarter alone. Just to put this into context, American credit card debt is now larger than the GDP of all but 17 countries on earth. Wow.
Even though some may think that reckless spending habits might play some role in this, the reality is that more and more Americans are being forced into credit card debt trying to pay off monthly living expenses. Over the last two years, as inflation has taken hold of the economy, the cost of necessary goods has hit the roof. A newly released report from Moody’s shows that the average American family pays $709 more now each month for the same goods they were purchasing in 2021. With around 60% of Americans living paycheck to paycheck and 54% saying they wouldn’t be able to cover an unexpected $400 payment, it only takes a small monthly change to drive people into debt just to make ends meet. Another side effect of the Fed’s continuous rate hikes, the average credit card interest rate is now around 20% (which is the highest mark on record), translating to the cost of that debt being even higher.
Keep in mind that one of the fastest ways to negatively impact your credit score is to max out your credit card debt. It doesn’t matter that you’re paying on time nearly as much as it matters that you have maximized all available credit limits. If you are only paying minimum credit card payments monthly, you will be paying on that credit card debt for years and years. It will take a long time to ever pay down this debt, even enough to the point to regain traction on your credit score. One small change in your income or overall financial situation can then cause late payments, which tank your credit score even further. Without a decent credit score, lenders are unwilling to provide you with debt consolidation loan options. Or if they do, they are at enormous interest rates. Many consumers, over the past two or so years, have consolidated their credit card debt only to then again run up the credit cards that were paid off in the consolidation.
So what do you do if you are one of the millions in this situation, who has done everything they knew to do to survive what the last few years have thrown at them? Carrying this kind of credit card debt can destroy you if you don’t take control of it. Financial stress is one of the main causes of divorce and other negative impacts it can have upon a person are numerous to list.
You have two options that are your Constitutional Right to utilize, should you be in such a situation as this. Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. I’m here to tell you that filing Bankruptcy can be your saving grace. Bankruptcy is not the end of your financial life – it breathes new life into it.
A Chapter 7 Bankruptcy can wipe out your credit card debt completely. Yes, you take a hit to your credit score, but if you’re one of the people that is in the situation I’m talking about, hasn’t it already been (or soon to be) hit hard? You can wipe out your debt and rebuild within 12-18 months. Bankruptcy was created to protect you, the American consumer, from such a time as this. Creditors are not lining up to help you. They will, however, line up to garnish your wages. Bankruptcy stops all that and allows you to regroup. But what if you don’t qualify for a Chapter 7 due to high income?
A Chapter 13 Bankruptcy can help still help you if you don’t qualify for a Chapter 7. The Chapter 13 rolls all your credit card debt into one note (stopping interest by the way) and allows you to pay it off through a 5 yr Chapter 13 Plan. Depending on your income and where it falls when you have gone through the Means Test, you may only have to pay a certain % on the dollar and not even pay the full debt. There are a lot of other benefits to filing a Chapter 13 – click here to review more information about this financial super-tool.
I want you to know you have options. You do not have to face this alone. You do not need to empty your retirement account to deal with credit card debt. You do not need to mortgage your home. You do not need to sell your property. PLEASE call and speak to me or any other bankruptcy attorney for advice before you are pressured by this overwhelming burden of debt into making decisions that do cause devastation to you financially.
When should you call for advice? Now. 601.948.4450. It costs you nothing to speak with me – and it might actually save you everything.