U.S. Credit Card Debt Breaks Through to $1 Trillion
For the first time in history, U.S. credit card debt has breached the $1 trillion mark. This startling revelation was shared by the Federal Reserve Bank of New York on Tuesday, August 8th, 2023.
In the latest quarter, a dramatic surge was observed, with credit card balances skyrocketing by $45 billion – an increase of approximately 4.6%, which leaves the total at a staggering $1.03 trillion, as highlighted in the New York Fed’s recent Household Debt and Credit Quarterly Report.
The surge in credit card and auto loan balances has boosted the overall household debt by 1%, reaching $17.06 trillion for this quarter. With interest rates remaining high and student loan repayments looming, could more Americans be facing the possibility of bankruptcy in the coming years?
We’re here to explain to you that bankruptcy does not have to mean the end of your financial future. On the contrary, in the face of these approaching hardships, it’s more important than ever to understand the benefits of bankruptcy as a tool for recovery, rather than a point of financial failure.
Bankruptcy is a Strategy
For the past five quarters, credit card balances have been consistently on the rise, displaying some of the sharpest increases in the past two decades. Currently, the average interest rate on credit cards is teetering near a record high at 20.53%. Obviously, this mounting debt will topple over, and bankruptcy will have to be a consideration for some of the borrowers buried underneath it.
In these financially turbulent times, bankruptcy emerges not as a last resort, but as a viable strategy for many Americans seeking a fresh start. Bankruptcy can offer a pathway to reset, restructure, or even erase certain debts. It provides the breathing room needed for households to reassess and rebuild their financial lives, free from the constant stress of mounting liabilities.
Here is a list of the benefits of filing bankruptcy to alleviate your increasing debt:
- Debt Discharge: One of the primary benefits of Chapter 7 bankruptcy is the potential to wipe out unsecured debts, including credit card balances. Once discharged, you’re no longer obligated to pay these debts.
- Automatic Stay: Filing for bankruptcy initiates an automatic stay, halting most creditors, including credit card companies, from taking collection actions, lawsuits, wage garnishments, or even making contact.
- Avoiding the Interest and Fee Spiral: Credit card debts often grow rapidly due to high-interest rates and late fees. Bankruptcy can halt this growth, allowing you to address the principal amount without the continuous accrual of interest and penalties.
- Credit Score Recovery: While initially, bankruptcy can negatively impact your credit score, in the long run, it can be the first step towards rebuilding it. By eliminating overwhelming debts, you can start fresh and rebuild your creditworthiness over time.
- Structured Repayment under Chapter 13: If you opt for Chapter 13 bankruptcy, you’ll be able to structure a repayment plan tailored to your income and essential expenses. This provides a more manageable approach to paying down debts over time.
Economic Strains Mounting on Consumers
Reports are showing an increase in early-stage delinquencies among borrowers with home, auto, credit card, and student loans. This could be a sign of an oncoming wave of bankruptcies that sweep the nation. With federal student loan payments resuming this October after a hiatus of over three years due to the pandemic and efforts by the Biden Administration for debt forgiveness, many are anxious.
It isn’t an indictment of your character or of your capacity to admit that you may need bankruptcy in order to free yourself from a mountain of debt. BankruptcyAttorneys.net has educational resources and a free, no-obligation bankruptcy consultation form that you can take right now by clicking here.
If you’d prefer to speak with an agent directly, then call (833) 598-1595 to get started on the path to financial recovery.