A new study from the personal finance website CardHub shows that Americans added $57 billion in new credit card debt last year. Total credit card debt in the U.S. currently stands at $831 billion, and American consumers have continued to add on to the total credit card debt every year since 2009.
For some households, the loss of a job or other emergencies can create financial situations where credit card payments become very difficult or impossible.
What Are The Consequences Of Defaulted Credit Card Debt?
Credit card debt can have severe consequences if it goes into default, but one of the most significant is a damaged credit rating.
- With damaged credit ratings, borrowers may have to take out loans with higher interest rates, which can compound other financial problems. In many cases, applications will be rejected for cars, homes and other large purchases.
- Poor credit ratings can make it difficult to secure leases on apartments, mortgages and other living arrangements.
- Borrowers with poor credit may have to pay more for utilities deposits and insurance premiums.
- Applications to finance mobile phones can be rejected due to low credit scores.
- Securing employment can become more difficult, as some employers check credit histories during the hiring process.
Can Credit Card Debt Be Discharged In Bankruptcy?
In many cases, credit card debt is considered unsecured and can be discharged in Chapter 7 bankruptcy. However, some lines of credit are secured, such as credit cards issued by department stores. In Chapter 13 bankruptcy, depending on the situation and assets involved, monthly payments on secured debts can be reduced and eventually discharged upon completion of an agreed-upon payment plan.
Contacting a bankruptcy attorney can help borrowers burdened with excessive credit card debt find solutions for paying or discharging debts.
The Sader Law Firm – Kansas City Bankruptcy Attorneys