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Credit card debt down as consumer borrowing increases

As many Tennessee readers may know, attempting to get out of debt can sometimes feel overwhelming and impossible. It often feels like as soon as one debt is paid, another becomes due, making the climb out of a financial hole seem never-ending..

Recent data suggests that many American consumers are facing this exact problem. Credit card debt was down for the second straight month, while other debt continued to rise. Credit card debt dropped $3.7 billion for a two-month total drop of $5.5 billion. Consumer debt is now at $2.85 trillion, based on information obtained by the Federal Reserve. These numbers show an increase of $10.4 billion in a month. Car and student loans comprised a large portion of non-credit card debt instruments used by consumers recently, increasing 8.1 percent compared to last year at this time. One explanation for these numbers is that the slow growth in employment and seemingly marginal wage increases have made many consumers more reluctant to charge to credit cards.

Another reason may be that people are already in so much debt with credit cards, that they are simply trying to pay them back rather than accrue more. However, for many people, that is often difficult if not impossible. Consumers often will make delinquent payments, pay only the minimum payments or face creditor harassment. And once the interest starts to pile up, it may be time to look to other options for climbing out of debt. An option available to many consumers is filing for bankruptcy. Filing for chapter 7 bankruptcy can make many types of consumer debt go away, giving the consumer a fresh financial start. At that point, the consumer is free to get back on track and deal with more important things than trying to pay off the mounting credit card debt.

Dealing with financial challenges can be very difficult for many people. An experienced bankruptcy can help explain how bankruptcy works and the best options for individual circumstances.

Source: The Buffalo News, "Consumer borrowing rises $10.4 billion, credit card use declines," Sept. 9, 2013

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