News reports say that the U.S. economy is improving, but it doesn’t feel that way to a lot of Maryland residents. The job market is still relatively weak and many people are still in over their heads with mortgages they took out during the boom years. Many more people are facing a heavy burden with credit card debt.
Indeed, according to a recent report by the Federal Reserve Bank of New York, overall consumer debt in the United States has been rising in the past few years and now stands at a frightening $11.52 trillion. This amount includes home loans, student loans, car loans and other big-ticket causes of debt, but one of the major components of this number is simple credit card debt.
According to another recent report, 28 percent of Americans currently have more credit card debt than they have in savings accounts. Banks are increasingly raising the limit on credit cards, encouraging consumers to go into more debt.
The problem with credit card debt, of course, is that it accumulates interest quickly. Credit card companies attract consumers with low introductory rates, but those rates can rise dramatically after the introductory period ends. As long as the borrower’s income is high enough to pay credit cards quickly, this doesn’t present much of a problem. However, if the borrower loses a job or suffers another setback, the unpaid balance gathers interest quickly and grows into a frightening mountain of debt.
Experienced Maryland attorneys can help people with their consumer debt problems. In some cases, Chapter 13 bankruptcy can be the best option to get rid of old debt. Unlike other forms of personal bankruptcy, Chapter 13 sets up a repayment plan so that the consumer is protected from creditors while paying off debt over a period of three to five years. At the end of that period, if everything has gone according to plan, a bankruptcy court may discharge much of the debt that remains. Those who have gone through the process with a Gaithersburg Maryland debt relief lawyer are then free to begin a healthier financial future.
Source: Time, “Americans Are Taking on Debt at Scary High Rates,” Sam Frizell, Feb. 19, 2014