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Credit card debt is rising at a time when it should be dropping

As Chattanooga residents know, it's the season when gift buying is at its peak and savings are at an all-time low. It is also a time when credit card debt will be increasing, which means some people may be taking on financial challenges they simply cannot afford.

During the third quarter this year, between July and September, credit card debt was 4.9 percent higher than it was the year before. It is likely this trend will continue with the holiday season. Banks have been issuing more credit cards than they did last year as well. For some people who need immediate help, this may be seen as good news. However, in the long run, this could hurt the economy, as it means people will be spending more of their income on paying off interest from the new credit card debt, especially if they are only making their minimum payments. It also means that people are more likely to have delinquent payments, which only hurts them more in the long run.

This load of consumer debt means that some people will not be able to continue to make their payments. One of the best ways a consumer can deal with unmanageable debt is by filing for bankruptcy. Depending on their situation, they can either file a Chapter 7 bankruptcy or Chapter 13 bankruptcy to deal with overwhelming consumer debt. Chapter 7 eliminates the credit card debts entirely through discharge. Chapter 13 usually requires a payment plan for three or five years to secure the discharge.

No matter what the reason, sometimes people find themselves in a situation where they rely too heavily on credit cards. When that happens, they should seek help as soon as they can to get the relief they need and to get a fresh start.

Source: San Francisco Chronicle, "Why Credit Card Debt Levels Are Rising," Nov. 30, 2012

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-624-4002
Toll Free: 800-257-7594
Fax: 423-624-0509
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