Kick the Credit Card Debt Cycle with Bankruptcy for a Better 2018

Credit card debt is on the rise in Wilmington

Image by Håkan Dahlström via Flickr

Credit card debt is rising again in Wilmington and all across North Carolina. In fact, this form of unsecured debt is higher now than it was in the Great Recession or any other time in history. Just because you’re carrying credit card debt doesn’t mean you’re in over your head, but you could be. Here’s a look at the state of credit card debt in America and what to do if you’re dealing with overwhelming debt.

Current Credit Card Debt Statistics

A recent analysis by Nerd Wallet shows that last year, credit card debt reached $905 billion, an 8% increase from 2016. The average household debt from credit cards, according to the source, is more than $15,600. This is more credit card debt than we’ve ever seen, but what’s driving this radical increase in debt? Nerd Wallet asserts that medical expenses and interest charges are responsible.

We wrote recently about the dangers of combined medical and credit card debt, and this study reinforces that notion. High deductibles on many insurance plans force Wilmington consumers to pay thousands of dollars for standard services which were once covered by basic insurance. Many normal and reasonable doctor visits fall under the deductible scheme and are out of pocket. If you charge medical costs to credit cards, you can also see interest charges added.

The statistics also say that the average credit card balance for those who pay off their bills monthly is about $1200. Credit Cards dot com reports an average household card debt of a little less than $10k. This type of debt can be unmanageable. The average debt per adult with a credit card is nearly $5,300. If you can’t pay off your credit card balances in full this month, that’s a problem. If you can’t pay it off within a year, that can be a financial crisis and means you’re caught in a debt cycle.

Causes of the Credit Card Debt Cycle

Most people think those stuck in the credit card debt cycle get into trouble because of rampant and careless overspending. In most cases, it’s not true. Most of the people stuck with credit card debt they can’t afford are normal folks like you who have experienced bad luck or an unfortunate circumstance that was unforeseeable and reduced your income or increased expenses. The worst-case scenario is that the situation affects both income and expenses.

One of the leading causes of unmanageable credit card debt is medical bills. In fact, this debt is a leading cause of bankruptcies in Wilmington and all across America, even for those with health insurance. If you need medical care, and swiping your plastic is the only way to pay for it, it’s understandable that you’d do it. Another cause of overwhelming credit card debt is prolonged job loss. Many people run up credit card debt paying household expenses while unemployed.

How Bankruptcy Can Help

If you’re trapped in a cycle where your credit card debt is climbing each month, and you can only afford to pay minimum payments (or you’re missing payments altogether), you may need a serious debt intervention. Filing Wilmington bankruptcy is one way to wipe out both credit cards and medical bills. If you qualify for Chapter 7 bankruptcy, it can put an end to medical bills and credit card debt within just a few months.

With Chapter 13 bankruptcy, it takes longer to shed debt since you’ll be on a three to five-year debt repayment plan, but you’ll still pay less on unsecured debt like credit cards and medical bills than you would otherwise, sometimes just pennies on the dollar.

To find out more about the benefits of bankruptcy, contact the Law Offices of John T. Orcutt. Read reviews from satisfied clients and then call +1-833-627-0115 for a free Wilmington bankruptcy consultation at one of our convenient locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro or Wilmington.

Resources:

Nerd Wallet

Credit Cards.Com