Americans have been working hard to pay off their credit card debt. Consumers in Connecticut and across the rest of the nation paid off a collective $40.8 billion in the first quarter of 2018 alone, but it still might not be enough to dig themselves out of debt. When working hard to pay back debt is no longer enough, Chapter 7 bankruptcy might be the smartest financial path.
The first quarter of 2018 was the second ever largest payoff of debt in U.S. history. Despite this, the average household now carries $8,284 in credit card debt, up 2 percent from 2017. Collectively, credit card users owe a total of $974.2 billion. But if everyone is paying back more than they owe, will the problem eventually get better? Maybe not.
People are already carrying nearly as much debt as the average person during the Great Recession and the Federal Reserve will increase interest rates in Dec. 2018, making paying things off that much harder, but that’s not all. Even without rising interest rates, debt is ready to reach a turning point. WalletHub — a personal finance website — recently analyzed debt data and came to a startling conclusion. The current average debt is only $177 shy from becoming unsustainable.
Despite paying off billions in debt early in the year, consumers have already added back $38 billion to their cards. Whether from unexpected medical bills, job losses or other financial surprises, paying back this much might feel impossible for the average person in Connecticut. When finances spin out of control, Chapter 7 bankruptcy can help re-anchor people’s finances by discharging qualifying debt and giving them the opportunity to move forward with their lives.