Credit card debt declined significantly during the Great Recession but that trend appears to be over. According to data recently compiled by WalletHub, Virginia families now have as much debt as they did prior to the recession. This means more people might be struggling to pay their bills. There are a couple of reasons why credit card debt is so high.
Lenders have started to extend credit to people with lower credit scores once again. Because these consumers are at a higher risk of default, delinquency rates rose half of a percentage point between 2016 and 2017. Consumers who cannot pay their credit card bills might be more likely to file for Chapter 13 bankruptcy relief now. The credit card delinquency rate was 15 percent during the peak of the recession. By the end of 2017, it had risen to 7.5 percent.
The average credit card debt per household also rose between 2016 and 2017. The majority of people who were contacted for the WalletHub survey reported that their debt stemmed from medical deductibles, copayments and coinsurance. Americans spent more than $300 billion on medical expenses in 2015.
Families that have more debt but not enough income to support the payments could face financial hardship. There are options to help people who have excessive credit card debt. One option is Chapter 13 bankruptcy. People with income and assets but insufficient funds to pay their debts may benefit from asking an attorney to help them file for bankruptcy protection. By filing for bankruptcy, they may keep their property and pay off credit card and other debts over an extended period of time. Those who use this method of debt relief can expect the payments to be affordable and the credit card debt to be discharged if they successfully complete the payment arrangement.