Total credit card debt reached $1.03 trillion in the second quarter of 2023, according to the Federal Reserve Bank of New York. That’s a 5% increase, or about $45 billion in consumer credit card debt. With student loan payments resuming in the fall, this can present challenges for borrowers going forward.
Not only are credit card balances higher, but more cardholders are also carrying debt from month-to-month, according to a separate Bankrate report, adding to the financial stress. Another rate hike by the Federal Reserve, which occurred last month, made the average credit card rate over 20%.
APR, or annual percentage rate, represents the yearly interest charged on loans. APRs make credit cards one of the most expensive ways to borrow money. With borrowers having to now make a $400 or $500 monthly student loan payment again, this could impact their ability to make even the minimum payment due on their credit cards.
To help reduce the financial impact of resuming student loan payments, the Biden administration has launched a series of relief measures for borrowers, including a 12-month “on ramp” to repayment, running from October 1, 2023, to September 30, 2024.
As bankruptcy attorneys, we see credit card debt as one of the most common problems facing those with serious financial challenges. It is not surprising with the high interest rates, unreasonable fees, harassing debt collection calls, penalties and never-ending minimum payments that do not even make a dent in your actual debt.
Filing for bankruptcy is a viable option for those struggling with insurmountable credit card debt. Chapter 7 is the fastest form of consumer bankruptcy and forgives most unsecured debts like credit card debt, medical bills, and personal loans. There are certain qualifications a consumer must meet in regard to income, assets, and expenses to file for Chapter 7 bankruptcy, which is determined by the bankruptcy means test.
If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.