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Credit card debt is on the rise again

Credit cards can be one of the most pernicious temptations of modern life. They make it easy to run up unmanageable levels of debt without one’s being aware of it. Many Massachusetts residents have found themselves in serious financial trouble because of credit cards. And according to a recent news report, Americans' credit card debt is on the increase.

That conclusion comes from a survey of 1,600 people. The survey found that 35 percent of respondents don't pay their card balances in full every month. This is a slight increase from last year. The number of people who carry a balance of at least $2,500 in credit card debt from month to month has also increased from last year, from 11 to 14 percent.

Credit card interest rates are expensive: the average is 15 percent. Even if a cardholder makes payments on time, if they only pay the minimum each month the interest charges continue to add up. This increases the total balance, which increases the minimum payments. At some point, the cardholder may discover they can no longer make the minimum payments. If a cardholder falls behind in payments, the interest rate can go up to almost 30 percent. 

Fortunately there are ways to escape from overwhelming credit card debt. A consumer who can no longer make the minimum payments on their credit cards can seek legal relief through a Chapter 7 or Chapter 13 bankruptcy filing. In a Chapter 7 bankruptcy, credit card debt can be discharged entirely. If the debtor does not meet the requirements for Chapter 7, a partial repayment plan under Chapter 13 is another option. An experienced bankruptcy attorney can evaluate a debtor's situation and recommend the best option for their case. 

Source: NBC News, "Americans Are Saving More, But Credit Card Debt Is Still a Problem" Herb Weisbaum, May 2, 2016

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