After the carefulness that consumers in Arkansas and elsewhere showed during and after the recession, they are starting to flex their spending muscles again with respect to the use of credit cards. Credit card debt is predicted to hit $1 trillion this year, which will be near the $1.02 trillion record set in 2008 at the beginning of the recession. Not only will carrying high debt balances have a negative impact on the consumer's credit score, but bankruptcy filings can be expected to rise in the near run.
When people begin to carry large loads of credit card debt and they do not pay the balance off each month, their credit scores will take a big hit. The trouble is that in an economy where the middle class is being crunched by low wages and high prices, many people find themselves struggling to survive. They can't stop incurring easy credit when their income is not enough to cover the monthly expenses.
With the high interest rates and fees on credit cards, the situation can get out of hand quickly. When that happens, credit scores are mainly a second thought for consumers; they are mostly concerned with trying to pay their monthly minimum payments. When consumers build up a credit load that cannot be comfortably paid off over the next five years by reasonable monthly payments, then bankruptcy becomes the most effective option for most people.
Some consumers may be maintaining the status quo by paying part of their credit card debt balances each month. However, that arrangement can be crushed quickly with emerging medical bills that are not insured. Crisis can come also by a layoff or other catastrophe. When that happens, bankruptcy may be the only true remedy available to cut one's losses and get a fresh start. To best determine whether one is qualified to file, and to learn the impact of filing, the consumer may contact an Arkansas consumer bankruptcy lawyer and arrange for an in-depth consultation.
Source: nwahomepage.com, "U.S. Credit Card Debt Set to Reach New High", June 1, 2016