Bankruptcy Can Offer A Fresh Start To Those With Credit Card Debt
Credit card debt and mortgages are leading causes of debt in households throughout the United States. In some instances, bankruptcy can offer a fresh financial start for those struggling to meet their financial obligations.
American households are struggling with debt. According to a recent report by NerdWallet, a personal finance website, credit card debt is the third largest source of debt for households throughout the United States. The average household in the United States that carries credit card debt carries an average balance of $15,611.
More on the report
The report was based on data gathered from the Federal Reserve and other government agencies. Based on this data, the reporters provided information on two different types of households: those that carried credit card debt and those that do not. Of those that carry debt, the average was over $15,000. Of those that did not, the average debt was $7,283.
Other notable findings include:
- Average mortgages for American families: $155,192
- Average student loan debt for typical household in U.S.: $32,264
- Total amount of debt held by American consumers: $11.74 trillion
The total amount of consumer debt in the U.S. rose by 3.3 percent from 2014 to 2013.
Role of bankruptcy
Those who are struggling with credit card debt may find it difficult to make mortgage payments and meet other financial obligations. In some instances, bankruptcy may be an option for a fresh financial start. For most individuals, there are two primary forms of bankruptcy: Chapter 7 and Chapter 13.
- Chapter 7: This form of bankruptcy is likely the most well known. It leads to the discharge of certain, qualifying debts. The process is relatively quick for those who qualify, taking about three to six months from filing a petition to receiving relief from debt.
- Chapter 13. This form of bankruptcy leads to a court supervised repayment plan. The repayment plan is designed to be more manageable than the applicant’s current payment requirements and is generally structured to last three to five years. In most cases, those who move forward with a Chapter 13 petition are more likely to keep their homes than those who seek relief under a Chapter 7 petition.
Determining which petition for relief is best for your situation depends on your circumstances. It is also wise to keep in mind that bankruptcy can negatively impact the filer’s credit. As a result, those considering filing for bankruptcy should seek the counsel of an experienced bankruptcy lawyer. Your lawyer will review the details of your case and explain which options are best for your unique situation, working to better ensure a more favorable outcome.