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Helping good people through bad times

Credit card debt lower now, but still a problem for many

For most people who are facing tough times economically, they will usually turn to their credit cards to try and get out of a tough situation. It appears, however, that total credit card debt has dropped over the course of a year.

In 2012, credit card debt at this time was well over $1 trillion, but it has now dropped to $850 billion. While this may be good news because it could show that people are paying down their credit cards, there are also other potential reasons for this lowering that are not as good.

The first is that many credit card companies lowered the credit line for many borrowers during the past few years. As such, those debtors could not use more credit, even if the wanted to.

Also, there were some "cash advances" that were used. Unfortunately, these types of transactions do not often offer the same protections as credit cards.

It is clear that many lower to moderate income households still used credit cards for basic expenses and for out-of-pocket medical costs. Specifically, for families struggling with unemployment, over 86 percent accumulated more credit card debt.

For many people facing financial challenges, credit cards are a life-line. Nonetheless, once that debt accumulated to a point, it can become insurmountable. When that happens, one of the sure ways to deal with the debt is to filing for bankruptcy.

Most of the time, if a person has a lot of credit card debt and medical bills, but not much or any other debt, a Chapter 7 bankruptcy can be filed, which eliminates all debts. This will allow the consumer to get a fresh start and move on with their life.

Getting over financial difficulties can be hard for anyone. Seeking out the right assistance is often necessary to move on.

Source: Atlanta Daily World, "Credit Card Debt Drops to $850 Billion," Charlene Crowell, Aug. 26, 2013.

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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