Michael D. Hart, P.C.

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Payoff of credit card debt

| Jun 21, 2018 | Chapter 13 Bankruptcy |

According to information from the United States Census Bureau, the credit agency TransUnion and the Federal Reserve, people in Maryland and the rest of the country repaid $40.3 billion of credit card debt during the first three months of 2018. The amount represents the second-highest payoff amount in a single quarter since the $44 billion that was paid off in the first quarter of 2009.

However, the debts are not getting much smaller. By the end of 2017, United States residents had new credit card debt that totaled $91.6 billion, an amount that is reported to be the largest annual total since 2007 and 104 percent more than the post-recession average. The amount of unpaid credit card debt is at its second-highest point since closing of 2008.

Americans had $1.021 trillion in unpaid revolving debt in 2017, an amount that is a record high. According to the Federal Reserve, there was still more than $1.030 trillion to be paid off in April 2018.

Despite the large, recent payoff of debt, the payoff is not as significant as the dollar amount may make it appear. The reason for this is that the credit-card debt total owed by Americans has been increasing.

It is also worth noting that for every year, the debt payoff in the first quarter always seems impactful. This can be attributed to the fact that there tends to be significant spending the during last three months of each year during the holidays, and during the first quarter of the new year, work bonuses are used to pay off the debt that was accrued.

A bankruptcy attorney may advise clients about how Chapter 13 bankruptcy is available to provide debt relief from their creditors. The attorney may also assist with creating a payment plan to pay off some or all of a client’s debts.