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Credit card companies report rise in charge-offs

Some consumers in Virginia may be struggling more with credit card debt than they were in the past. Bloomberg Intelligence reports that in the first quarter of 2019, the charge-off rate increased to 3.82%. These are loans that credit card companies do not expect to ever collect. This is the highest charge-off rate seen since 2012.

Furthermore, all of the major card issuers reported a rise in loans that were 30 days past due. This is considered a sign that there will be future charge-offs. One executive at a credit card issuer says that there is now less information available about people who had financial issues after the last financial crisis since that information is starting to fall off credit reports. Executives report caution in how they are dealing with consumers as a result. For example, the CEO at one major credit card company says they are being conservative about increasing credit lines for customers and are closing inactive accounts.

Credit card companies are balancing this caution with a desire to attract customers who have the ability to pick and choose among cards. In addition, with the unemployment rate low, charge-off rates still remain historically low despite the recent rise.

Health problems, job loss and divorce are some of the reasons people may fall behind on their payments and struggle with credit card and other types of debt. Some of these people may want to consider filing for bankruptcy. There are a few misconceptions about what this means. For example, some people may think bankruptcy means they will lose all their assets. In fact, filing for a Chapter 13 bankruptcy may stop foreclosure on a home and allow a person to keep that and other assets. This type of bankruptcy involves creating a payment plan to repay creditors over three to five years.

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