Can bankruptcy address five-figure credit card debts?

On Behalf of | Jun 27, 2019 | Bankruptcy

Consumers in Connecticut generally do not want to carry a balance on their credit cards. Still, many have trouble when it comes to actually paying those balances off. Consumers who have higher balances might struggle more than others when it comes to paying down debts, and some may benefit from considering bankruptcy.

American consumers currently owe over $1 trillion on their credit cards. Some of these consumers owe as little as $1,000 or even less, which can be paid off relatively easily with a bit of sustained effort and a modest income. By the time that balance reaches $5,000, paying it down becomes a lot harder. However, it is the consumers who are carrying $10,000 or more on their credit cards that face the most hurdles to paying everything off. A 17% interest rate on a $10,000 balance translates to an extra $141.66 in monthly interest.

According to researchers, it is not low-income individuals who generally end up with the most credit card debt. Instead, high-income people living in some of the nation’s wealthiest cities have the highest share of this form of debt. One historic city in Connecticut has the highest number percentage wise of consumers who owe at least $10,000 on their credit cards. Not only do 23% of the city’s residents owe that much, but another 2% owe over $50,000.

There is a common misconception that only low-income individuals or those with poor financial planning skills can end up with more debt than they can handle. In reality, individuals of any income level or financial knowledge can find themselves in difficult financial situations. Regardless of how a person might have found him or herself in such a position, pursuing bankruptcy can be a smart idea for addressing overwhelming or even impossible debts.