Surging inflation has left millions of Americans relying on credit cards to cover basic necessities, resulting in a sharp increase in defaults. Consumers owe a collective $1.14 trillion on their credit cards, according to the Federal Reserve.
While each consumer’s financial situation is different, there are ways to determine if your credit card debt is too high. Consider your answers to the following questions:
- Is your credit card debt impacting your financial and emotional health? Carrying large amounts of credit card debt can damage your credit score and cause you to experience financial and emotional stress. A good rule of thumb is to ensure your monthly payments are not more than 10 percent of your monthly income.
- Are you paying only the minimum? Credit cards typically have low monthly minimum payments, but that doesn’t mean they are affordable just because you can cover that amount. If you are only able to make the minimum payment, that can be a sign you have too much credit card debt.
- Is your credit card debt impacting your credit score? Credit cards can help your credit score- or hurt it, depending on how you use them. It is recommended that you keep your credit utilization below 30 percent. Having significant credit card debt can have a negative impact on your credit score. This can make other debts, like your mortgage and car payments more expensive.
As bankruptcy attorneys, we see credit card debt as one of the most common problems facing those with serious financial challenges.
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.
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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.
