Credit card debt in Colorado may be nearing ‘unsustainable’ levels again

Keeping credit card debt under control is an ongoing challenge for many people in Denver. Troublingly, a new report shows that American credit card debt is increasing, despite stagnation in average earnings. The same analysis suggests that the average consumer’s credit card debt may soon return to the potentially unsustainable level that it reached before the recession. New buildup of debtAccording to CBS News, an analysis from CardHub shows that Americans accrued $57.1 billion of credit card debt in 2014. This debt has increased for six consecutive quarters, and CardHub anticipates that it will rise another 5 percent in 2015. The average consumer currently has about $7,200 of credit card debt. This is not far below the $8,300 level that consumers held before the recession, which is labeled as “unsustainable” in the CardHub report. The same report also discussed some encouraging financial developments. During the first three months of 2015, Americans paid down $34.7 billion of debt, according to The Deseret News. This was more than they paid off during the first quarters of 2013 and 2014. Additionally, CBS News states that overall credit card charge-off rates, which reflect the amount of debt that is never collected, have reached the lowest point recorded since 1985. Still, the overall buildup of debt remains troubling.More Americans report feeling optimistic about the economy, and some are taking on additional debt, such as auto loans. However, there are various indications that many Americans are not prepared to handle adverse economic developments. Grim financial outlookAlthough credit card debt is growing again, household earnings simply aren’t keeping pace. A Pew report shows that these earnings have increased just 2 percent over 10 years. This suggests that many people are taking on liabilities that they might not be able to handle, given their current income.Additionally, many Americans are already dealing with other financial obligations or problems, such as student loans or inadequate income. More than half of Americans report feeling insecure and unprepared for a financial emergency. For many of these people, an event such as job loss or a serious illness could have catastrophic effects. Options for reliefPeople who no longer can keep up with credit card debt may be able to discharge it by filing bankruptcy. Many consumers who have credit card debt may be eligible for Chapter 7 bankruptcy. During this bankruptcy, a person’s assets, save certain exempt property, are liquidated, and the proceeds are applied to the debt. Debt that remains afterward may be eligible for discharge.Chapter 13 bankruptcy, which involves debt consolidation and repayment, may also be an option for consumers with substantial assets or other debt. During Chapter 13 bankruptcy, a person enters into a three- to five-year debt repayment plan. No assets are liquidated, and at the end of the plan, some debts may qualify for discharge.Bankruptcy may offer a fresh start for people who have become caught in a credit card debt cycle. However, determining whether filing bankruptcy is the right choice and, if so, which chapter is appropriate can be difficult. Anyone facing mounting debt should consider consulting with a bankruptcy attorney to review and better understand the available options.

Keeping credit card debt under control is an ongoing challenge for many people in Denver. Troublingly, a new report shows that American credit card debt is increasing, despite stagnation in average earnings. The same analysis suggests that the average consumer’s credit card debt may soon return to the potentially unsustainable level that it reached before the recession.

New buildup of debt

According to CBS News, an analysis from CardHub shows that Americans accrued $57.1 billion of credit card debt in 2014. This debt has increased for six consecutive quarters, and CardHub anticipates that it will rise another 5 percent in 2015. The average consumer currently has about $7,200 of credit card debt. This is not far below the $8,300 level that consumers held before the recession, which is labeled as “unsustainable” in the CardHub report.

The same report also discussed some encouraging financial developments. During the first three months of 2015, Americans paid down $34.7 billion of debt, according to The Deseret News. This was more than they paid off during the first quarters of 2013 and 2014. Additionally, CBS News states that overall credit card charge-off rates, which reflect the amount of debt that is never collected, have reached the lowest point recorded since 1985. Still, the overall buildup of debt remains troubling.

More Americans report feeling optimistic about the economy, and some are taking on additional debt, such as auto loans. However, there are various indications that many Americans are not prepared to handle adverse economic developments.

Grim financial outlook

Although credit card debt is growing again, household earnings simply aren’t keeping pace. A Pew report shows that these earnings have increased just 2 percent over 10 years. This suggests that many people are taking on liabilities that they might not be able to handle, given their current income.

Additionally, many Americans are already dealing with other financial obligations or problems, such as student loans or inadequate income. More than half of Americans report feeling insecure and unprepared for a financial emergency. For many of these people, an event such as job loss or a serious illness could have catastrophic effects.

Options for relief

People who no longer can keep up with credit card debt may be able to discharge it by filing bankruptcy. Many consumers who have credit card debt may be eligible for Chapter 7 bankruptcy. During this bankruptcy, a person’s assets, save certain exempt property, are liquidated, and the proceeds are applied to the debt. Debt that remains afterward may be eligible for discharge.

Chapter 13 bankruptcy, which involves debt consolidation and repayment, may also be an option for consumers with substantial assets or other debt. During Chapter 13 bankruptcy, a person enters into a three- to five-year debt repayment plan. No assets are liquidated, and at the end of the plan, some debts may qualify for discharge.

Bankruptcy may offer a fresh start for people who have become caught in a credit card debt cycle. However, determining whether filing bankruptcy is the right choice and, if so, which chapter is appropriate can be difficult. Anyone facing mounting debt should consider consulting with a bankruptcy attorney to review and better understand the available options.

Keywords: bankruptcy, credit card, Chapter 7, Chapter 13