Debt is on the rise throughout Virginia and the rest of the U.S. In fact, American consumers owe a total of nearly $14 trillion in debt. While these debts are increasing, credit card defaults are actually dropping.
A credit card default will result result in a charge-off. Generally, this happens after a person misses credit card payments for six months. However, it does not take six months for the missed payments to start affecting the cardholder’s credit. Once the account is charged off, however, the account is closed and the person’s ability to get other types of credit is often affected.
People should keep an eye on their credit scores to make sure that there are no reported errors. There are also steps they can take to stay out of debt. For example, people should only charge as much on a card as they can pay off monthly. Unfortunately, this is not realistic for those who suddenly face financial issues. If it’s possible to build up an emergency fund, this will help prevent the need to put unexpected expenses on the credit card. Those who are already in debt may be able to pay it down by focusing on either the smallest debt or the card with the highest interest rate.
In some instances, people are simply struggling with too much debt to pay off. If this is the case, they may want to visit an attorney to discuss their options. Legal counsel could find out if the client is a good candidate for bankruptcy. A Chapter 13 bankruptcy may allow a person to keep vital assets such as a home. Furthermore, the initial filing would put a stop to foreclosure or other creditor actions.