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Consumer credit balances surpass $3 trillion

Considering the low unemployment and second quarter increase in consumer spending, economic indicators appear strong in Massachusetts and nationwide. However, credit card balances continue to set records. Rates of borrowing have slowed, but the total balances owed on consumer loans like credit cards have reached a record level of $3.86 trillion.

In July, U.S. employers created 209,000 jobs, but a report from the Department of Commerce warned that incomes were stagnating. Since interest rates are rising, some industry analysts believe that those credit card balances will continue to increase. People may want to get their debts paid down because an emergency could force them to take on more debts unexpectedly.

A credit report from the Federal Reserve identified a June increase of $4.1 billion in revolving debts, which includes credit cards. This marked a drop from the increase in May, when people drew an extra $6.9 billion from their credit accounts. As of the fourth quarter of 2016, revolving debts had exceeded $1 trillion, similar to the level reached during the Great Recession.

Regardless of overall economic health, an individual could face financial hardships at any time due to job loss or a medical emergency. Someone overwhelmed by medical bills could seek legal advice about managing debts. Depending on the extent of the person's debts and income, an attorney might recommend filing for bankruptcy. A bankruptcy has the potential to discharge medical debts or establish a payment plan that the person can keep up with. An attorney could guide a debtor through the court procedures for the bankruptcy. After a court approves a bankruptcy, an attorney could explain the terms so that the client can comply with the plan and rebuild a financial life.

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