Credit card debt expected to rise in 2013

March 01, 2013 (Press-News.org) Credit card debt expected to rise in 2013

Article provided by The Law Office of Lauren Clark, L.L.C.
Visit us at http://www.laurenclarklaw.com

During the recent recession, many Americans imposed austerity measures on themselves. As a result, credit card debt declined. However, recent data indicates that many have become comfortable taking on more debt. According to a report issued by the Federal Reserve Bank of New York, credit card debt rose by $2 billion in the third quarter of 2012, even as the total debt held by Americans dropped by $74 billion.

Data from Transunion, the credit-reporting bureau, mirrored the Federal Reserve's findings. The bureau reported that the although the average American holds $4,996 in credit card debt, the amount is expected to increase to $5,446 by the end of 2013, the highest level since 2009.

Bankruptcy may offer relief

Unfortunately the rise in average credit card debt does not seem to indicate that economic recovery has positively affected many Americans. In November 2012, Transunion forecasted that the number of people who are more than 90 days late on their bills will increase in 2013.

Many people who are overburdened with credit card debt will likely turn to bankruptcy. For those who are qualified, bankruptcy can offer a fresh start--a release of their legal obligations to pay certain debts. Bankruptcy is especially useful in eliminating unsecured debt--debt that is not secured by collateral--such as medical bills, personal loans, debts for services and, of course, credit cards.

Debtors who seek bankruptcy typically have two choices: Chapter 7, also known as liquidation, or Chapter 13, also known as "wage earner's" bankruptcy. In Chapter 7 bankruptcy, a trustee gathers and sells the debtor's nonexempt property--property that can be sold under the bankruptcy laws. The average person typically has very little nonexempt property, so most debtors retain most of their property once the bankruptcy has concluded.

In Chapter 13 bankruptcy, the debtor enters into a repayment plan based on his or her disposable income. All of the debts are consolidated and restructured into the plan. The debtor then makes an affordable monthly payment to a bankruptcy trustee who uses the money to repay creditors. The debtor may keep his or her property as long as payments are made according to the plan. Payment plans usually last between three to five years. Once all payments have been made under the plan, the debtor receives a discharge of certain debts.

An attorney can help

Bankruptcy is a powerful tool for dealing with many types of debt such as credit cards. However, it is not for everyone. If you are overburdened by debt, it is wise to consult with an experienced bankruptcy attorney. An attorney can advise you of your debt relief options and recommend one based on your personal situation.