Most people find having revolving lines of credit to be a necessity in the modern economy. Credit cards help people balance budgets when they don’t have enough income one month or have unexpectedly high expenses. People can borrow money in a short-term manner for necessary expenses without needing to apply for a loan each time.
However, credit cards can quickly become a financial burden when people fail to pay them off and instead start carrying a balance. Even the most favorable credit cards typically charge double-digit interest rates. If someone misses a payment, they will pay a fee. Having a balance that exceeds the maximum credit line, even if fees and interest charges are what push the account over the limit, will also result in fees.
The average American currently has so much credit card debt that they may not be able to pay it off in the near future.
How much debt do people carry?
Many factors, ranging from someone’s age and education level to where they live will influence how much credit card debt they carry. According to a recent report from CNBC, the average American adult owes a shocking $6,194 in credit card debt, at least according to a 2019 Experian report on consumer credit card usage.
All told, credit cards are the source of more than $930 million in domestic debt. Tennessee residents had a slightly lower average of $5,688 in credit card debt. Even $5,000 worth of credit card debt might be more than someone makes in a month, and no individual can allocate all of their income toward debt. Once someone ends up trapped in a cycle of minimum payments and monthly fees, bankruptcy may be the best possible solution.
How bankruptcy helps
If you file for personal bankruptcy because your credit card debt is unsustainable, the courts will issue an automatic stay. You won’t need to worry about collection activity until the courts make decisions about your bankruptcy filing.
If they determine that you are eligible, you may be able to discharge your credit card debt so that you don’t have to pay it back. Recognizing that bankruptcy can be a solution for uncontrolled credit card debt can help those currently trapped by ever-mounting fees and interest charges.