Consumer debt has hit an all-time high, and much of the credit goes to charge cards used by individuals in Virginia and across the U.S. Some consumers may be looking at Chapter 13 bankruptcy filings for relief from overwhelming debt while others might be able to pay off creditors before diving in for another round. The new records in credit card debt agree with other measures of economic stress, including a lack of savings to ride out any unemployment and the ever-worrisome threat of a new recession.
The Federal Reserve recently estimated that such revolving credit rose over the past year to $1.023 trillion, about $55.1 billion more than the year before. This new figure is an increase of 5.7 percent and about $2 billion more than the credit card load amassed by consumers in 2008 just before the recession caused by the implosion of the housing bubble.
However, experts say that the situation is not as perilous as that faced by the U.S. economy a decade ago. The important measure is the ratio between revolving debt and the country’s gross domestic product, or GDP. That figure is currently 5 percent, which financial strategists note is much better than the 6.5 percent recorded in 2008.
Moreover, the credit card delinquency rate stands at just 7.5 percent, which is less than the 9 percent historical average and just half of the 15 percent rate found during the financial crisis. However, the rate has increased by 0.5 percent over the last year, and a continued rise would indicate a worsening consumer debt picture.
Credit card users might seek Chapter 13 bankruptcy to reorganize debt into an affordable payment plan, help with non-dischargeable debt, or other ways to protect property like retirement accounts. An attorney with experience in helping clients get out from under crushing debt may be able to provide assistance.