New Jersey residents who have credit card debt may be interested to know that the credit card debt rate in the United States has risen significantly. People often fail to realize the risks associated with uncontrolled borrowing and those who do not plan well may soon find themselves facing financial obstacles. Those people should understand that debt may seriously affect their economic and social life.
According to a recent report released by the U.S. Federal Reserve, consumer debt has reached a new record of $4.05 trillion. The figure shows that credit card debt rose by $2.95 billion, the biggest increase since November 2018. Household borrowing accounts for 70 percent of the country’s economic activity and it usually indicates how secure consumers are in taking on more debt to finance their expenses. Consumer spending is likely to pick up this quarter following a slowdown during the winter.
Rising consumer debt is not a good indication. It signifies that uncontrolled borrowing may bring forth financial distress to the borrowers. People often fail to manage their debt appropriately and are stuck in difficulties. Debtors who fail to pay off debt in time may have to face harassing calls and notices from creditors or collection agencies. Further, wage garnishment, recovery lawsuits and confiscation of property are also actions that may potentially shatter a debtor’s finances and peace of mind.
Filing for bankruptcy, either under Chapter 7 or Chapter 13 bankruptcy, whichever is the best fit, is often the cheapest and quickest option to get rid of all these troubles. After a bankruptcy filing, the bankruptcy court appoints a trustee to handle the debt. A bankruptcy filing stops all the actions of creditors toward debt collection. Not only that, it also ensures debtors a fresh financial start.