According to statistics posted by Yahoo! Finance, consumer debt has increased since 2013 by more than $1 trillion. Total consumer debt in Virginia and across the U.S. is expected to reach $4 trillion before the end of 2018. The total debt numbers break down into $1.04 trillion in credit card or revolving debt and non-revolving debt of $2.9 trillion. Non-revolving debt includes debt tied to auto loans and student loans. Mortgage debt is not included in consumer debt figures.
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.
People in Louisiana and across the country are facing increasingly high levels of household debt. In the second quarter of 2018, household debt increased for the 16th consecutive reporting period, reaching close to $14 trillion in collective debt. While $9.43 trillion is classified as housing debt, usually in the form of home mortgages, consumer debt is also on the rise. Credit card debt is increasing, but statistics indicate that default rates are still on the decline.
Filing for bankruptcy may have many consequences for those who file in Virginia or any other state. Anyone who files may see their credit score go down, and individuals who file for Chapter 13 protection generally have to make payments to creditors over three or five years. One other consequence of bankruptcy is that it can be harder to purchase a vehicle. This can be true whether a person is filing for Chapter 7 or Chapter 13 protection.
Women in Virginia might carry more student loan, credit card and other types of debt than men. According to Comet Financial, women have over $6,000 more in student loan debt, over $1,000 more in credit card debt and over $1,500 more in auto loan debt. This may in part be due to the wage gap between men and women.
Virginia consumers may believe that credit cards are nothing more than an easy way to get into too much debt. However, they can also be an effective way to cut down on travel expenses or offer other perks. Rewards cards are usually available to those with a credit score of 690 or higher, and credit scores generally increase as balances decline.
Virginia residents who owe credit card debt are expected to repay it in full. They may also be liable for interest charges and other fees that a lender may charge. While a credit card debt settlement may be one way to obtain relief, it isn't necessarily a debtor's best option. Those who choose to work with a debt settlement company could be charged a fee that is equal to a percentage of the amount forgiven.
According to the Federal Reserve, the total amount of student loan debt now exceeds $1.5 trillion in America. It accounts for 11 percent of collective household debt (this is second behind only mortgage debt). However, student loans are not the biggest creditor for millennials throughout Virginia and the rest of the U.S. Rather, credit card debt exceeds student debt for this group, according to the Northwestern Mutual 2018 Planning and Progress Study. Credit card balances currently makes up a quarter of the total debt burden of older millennials, aged 25 to 34.
Virginia residents who are experiencing financial difficulties may use bankruptcy as a way to get control over their debts. Prior to bankruptcy, courts require the filer to take a credit counseling course. Furthermore, it's necessary to take continuing education courses after filing.
When a Virginia debtor has a credit card balance forgiven, they aren't always totally in the clear. In some cases, only a portion of the balance is forgiven. Furthermore, it is possible that the forgiven debt could be treated as income by the IRS. This would make it necessary to pay taxes on that amount. How flexible a creditor is about repaying a credit card balance depends on who holds the debt.