You'veprobably heard about the marked decline in the overall credit card debt levels since this recession took hold. You might find this a bit odd. Maybe you expected just the opposite at a time like this. Well, you're on to something there. True, credit card debt is on the decline. It has tapered off six months in a row, by $5.4 billion last month alone. But these figures don't prove as much as one might think. They don't signal a turnaround in the economy. They don't reflect a change in Americans spending habits. And, they don't even show that people are struggling less with unmanageable credit card debt.
First, let's consider the reasons for the decline in credit card debt levels. People are buying less, that'sfor sure. But why? Because they've decided to buckle down and pay off their credit cards? A noble pursuit, for sure. But in an economy where hundreds of millions of people are losing their jobs every month, few people will make paying off credit card debt a top priority; nor should they when they have more important expenses to cover, like rent, car payments, and utility bills. Indeed, the delinquency rate for credit cards was 5.56 percent in the fourth quarter of last year; the highest rate on record.
More likely, people are just charging less and because they have no choice. Those dealing with pay cuts and job losses have had to cut back their spending in general to absorb the blow. And those willing and able to use credit are having a harder time getting it. Banks have become stingy in issuing new credit. You've probably noticed a significant drop-off in the number of credit card offers you've received in recent months (a nice breather after having your mailbox stuffed with these obnoxious things for years, huh?) In other words, people haven't abandoned the plastic; it'sjust becoming harder and less feasible to use.
Second, and perhaps more significantly, people are filing bankruptcy in droves=specifically because of unmanageable credit card debt. Let's remember that, despite the precipitous decline of late, the overall credit card debt is still no measly sum. It remains a staggering $945.9 billion. Over a million people filed bankruptcy last year, and the filings so far this year show that number will swell even more in 2009. This has forced the credit card companies to literally wipe out billions and billions of dollars in credit card debt over the last couple of years.
What's more, it is quite apparent that Americans are still carrying a very high level of credit card debt compared to their incomes. In Charlotte, North Carolina, for example, the average household spends more than 14 percent of its income solely on credit card debt. This figure is particularly troublesome given that Charlotte's unemployment rate was 11.4 percent in March. And the picture is even more troublesome in other cities around the country. The average household in Orlando and Los Angeles owes more than 16 percent of its income to the credit card companies. In Tampa, it's more than 17 percent. And in Miami, where the recession has taken a particularly heavy toll, debtors fork over 22.61 percent of their income for credit card debt every month.
The point is, regardless of the overall debt levels, credit card debt remains a significant problem for millions of Americans. If you're struggling with these types of debts, it's time to consider bankruptcy yourself. Stop throwing your money down the drain with interest payments! You can't afford it. And you don't have to. Bankruptcy was designed to help people break free of unmanageable debts and make a fresh start. Call a bankruptcy attorney today.
In North Carolina, contact The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) +1-919-646-2654, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.